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Operator: Good day, and thank you for standing by. Welcome to the SEB Financial Results Q4 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker to Johan Torgeby, CEO. Please go ahead. Johan Torgeby: Good morning, everyone, and welcome to SEB's financial results presentation for the full year of 2025 and Q4. I'll take this opportunity before we go into the material just to mention a few highlights of 2025 that we are particularly proud about. First, it is the very strong position in customer satisfaction surveys, not at least within financial institutions and corporate and investment banking. Even though we're not at the very top of private banking, we still made a meaningful improvement. Secondly, the employee engagement hit a new all-time high compared to our peers. We are now solidly placed in the top decile of happy employees within the financial industry. Also very constructive is to see our market position within CIB when it comes to league tables that we record a top level, particularly now as we've seen an activity pickup within this area. A meaningful symbolic event is that we've also established and opened our Amsterdam office. And lastly, after more than 10 years in the making, we achieved an upgrade by S&P to a weak AA rating, and we now join a very small group of banks in the world that has this formidable position when it comes to credit quality. Now flicking to Page 2 and the highlights for Q4. First, we saw a pickup in fees and commission across all divisions, offsetting the continuation of net interest income headwinds. As I mentioned, we got an upgrade by S&P. We are meeting our annual cost target and AirPlus is in line with plan. We have set the new cost target for 2026 to SEK 33.4 billion plus/minus SEK 250 million, particularly to take some -- have some room for variable compensation and other unforeseen events. The Board has proposed an ordinary dividend for 2025 of SEK 8.50 per share, plus a special dividend of SEK 2.50 per share. In addition to this, the Board has proposed a SEK 1.25 billion share buyback program for the first quarter of 2026. Flicking to Page 3, we have now received the full suite of the major customer satisfaction surveys. And we can conclude that we have maintained our position on large corporates as #1. In the Institutional Banking segment, we were #1 in Sweden, Finland, Norway, #3 in Denmark and #2 just like last year in total, and we achieved a first position in syndicated loans. Private banking improved from position 6 to 4, and we also got an award for the best Swedish equity fund of the year. On the next page, we'll go through the loan and exposure development, and we continue to see a predominantly sideline movement during the fourth quarter with some signs of improvement. Corporate lending on an FX-adjusted basis increased 3% year-on-year, and the total lending for the group increased by 2% compared to last year. Flicking to Page 5, just a very short update that we can now conclude '25 that we have adjusted or excluding all restructuring costs, a positive contribution from AirPlus, and therefore, this is EPS accretive. We are also now very well placed to grow our fee income from European payments industry given our exposure that we get with AirPlus. We're also on track to be EPS accretive, including implementation cost in 2026. Flicking to Page 6, our business plan update for 2026. We divide it in 3 simple areas: Wealth and Asset Management, Corporates and financial institutions and retail banking. And here is a selection of particular focus areas for the next year. In WAM, we want to improve our digital capabilities, and we have formed investment and Trading Solutions unit to faster develop these capabilities. We want to have more international distribution capabilities and improve our position within the pension market. For Corporates and Financial Institutions, we will continue to maintain our position, which is very strong in the Nordics and continue to selectively carefully grow outside the Nordics. We will have targeted efforts around the private capital markets. And as I previously mentioned, we expect AirPlus to contribute a bit more meaningfully during the year for the corporate payment area. In Retail Banking, it's focused on digital transformation, use data to increase sales and also go back to basics and have a simplified way of working. Flicking to Page 7. We just double-click on technology where we divide it into 2 areas. One is to work with what we have. We call that modernization of the tech stack. We have several core infrastructure transforming projects this year. And together with efficiency initiatives, we also need to increase speed of development and technological capabilities build-out. We also want to embrace new technologies and particularly, they're going to be around AI tools, both for the people that works in the bank, but also to try to get AI capabilities in front of our customers. And 2 particular projects we will focus on in the years to come. One is Sferical AI, which is the NVIDIA consortium. The other one is Qivalis, which is the stablecoin consortium with other European banks. Next page is just to say that whatever we design now in this business plan and for the future, we aim to come back to a medium- to long-term positive jaws. The last 2 years after the extreme uplift of profits coming from the sharp rate increases, we now see that we will have a different future. And whatever we do in the planning period right now, it is to at least have cost control in order to achieve positive jaws, but we do not dictate income, albeit we see some tentative signs of improvement in the year to come. With that, I'd like to hand over to Christoffer. Christoffer Malmer: Thank you, Johan. I'd now like to turn to the financials on the next slide. Before we look closer at the results for the fourth quarter, I'd like to comment briefly on the full year performance 2025. I think the year is a good example of how our diversified revenue mix provides stability over a business cycle. Lower rates continue to weigh on net interest income and net fee and commission income increased both organically and as a result of the consolidation of AirPlus. The impact from the stronger krona on our operating income has been meaningful during the year, and the stronger krona has had an impact on our operating income of about SEK 1 billion, affecting negatively both net interest income and fees and commissions. As a result of the stronger krona, the 2025 cost target has also been adjusted downwards by around SEK 500 million during the course of the year, and the final FX adjusted cost target came to SEK 32.5 billion plus/minus SEK 300 million. The reported operating expenses for the full year of SEK 32.6 billion is hence, in line with our FX adjusted cost target, and this includes the impact from the accelerated implementation program of AirPlus, which we mentioned as a potential action already in the previous quarter. This acceleration has added around SEK 100 million compared to our initial implementation cost guidance and took the total charges to around SEK 800 million for the full year. We'll come back to the annual cost target for '26 in a moment. The return on equity for the full year, adjusting for those items affecting comparability came to 14% with a cost-income ratio of 42%. Turning to the next slide and the results for the fourth quarter. The operating income of SEK 18.9 billion increased somewhat from the previous quarter despite lower interest rates continuing to weigh on our net interest income as fees and commissions increased by 8% or around SEK 500 million quarter-on-quarter. Compared to the same quarter of last year, the increase in fees and commission was 5% and 8% in constant FX. Net financial income in the quarter of SEK 2 billion is somewhat below our historical quarterly average. Operating expenses for the fourth quarter came in at SEK 8.5 billion, taking the full year cost base to SEK 32.6 billion inside our FX adjusted cost target, as I just mentioned. We can see that our efforts to continue consolidating the cost base, as stated earlier in the year, are having effects. The total number of FTEs declined during 2025 for the first time since 2018, and we will maintain the external hiring pause to continue challenge our need for external replacement hiring across the bank with continued exceptions for business-critical roles. So as such, our strategy to make room for investments in prioritized areas through consolidating prior investments remains intact. This means that even though we expect to see higher FTEs in a number of focus areas in 2026, the total FTEs in the group should remain stable. Net expected credit losses of just under SEK 400 million corresponds to 5 basis points, and overall asset quality remains stable. And the development in the quarter follows the pattern from earlier in the year with a handful of counterparties requiring provisions in specific portfolios. Imposed levies at SEK 812 million, just under our full year guidance of around SEK 3.5 billion for the year. And for 2026, we expect levies to decline slightly to around SEK 3.4 billion. So under items affecting comparability that I mentioned previously, we report a negative SEK 400 million attributable to the outcome of our annual impairment test of intangible assets. More specifically, this write-down relates to an acquisition within the Norwegian consumer card business back in 2002. And it is continued pressure on returns that has triggered a revaluation of the assets. The goodwill is written off in full, and we do not see any other intangible assets at the risk of impairment at this point. This particular asset was highlighted in our annual disclosure last year as an asset at the risk of impairment. The tax rate for the fourth quarter at 17.2%. This is, as you noticed, below our normal tax rate of around 21%, and it reflects a positive tax effect that occurred in connection with the full year closing. And going forward, we expect that the tax rate should revert to around 21%. ROE for the quarter in isolation at 13.6%, excluding those items affecting comparability, i.e., the goodwill write-down. On the next slide, we take a closer look at the development of our net interest income for the quarter. Average STIBOR rates declined by around 20 basis points over the period, which impacted our rate-sensitive deposits, particularly in Corporate & Investment Banking and in Business & Retail Banking. And as Johan mentioned, FX-adjusted lending volumes in these 2 divisions were moving largely sideways in the quarter, the results of the lower STIBOR impacted those divisions by between SEK 150 million to SEK 200 million, respectively. This delta also reflects the impact from FX headwinds. Within CIB, the net interest income in our markets business performed well and benefited from favorable market conditions, partly mitigating the negative effects from the lower rates and FX. In the Baltics, average euro rates remained largely unchanged during the quarter and net interest income in local currency increased slightly from Q3. So this represents the first quarter-on-quarter increase in net interest income in the Baltic division since 2023. Now due to the stronger krona versus the euro, the NII for the quarter in krona was largely flat. The NII in the Baltics was supported by continued strong volume growth, offsetting some of the lagging headwinds on deposit margins that has been triggered by rate cuts earlier in the year. And the volume growth in division is broad-based across all 3 countries and spans both retail, mortgages and corporates. Mortgage sales, in particular, continued to be strong, up 43% from the same quarter of last year in local FX. The contribution from our treasury operations, including some of the benefits that we enjoyed from short-term funding during Q3 remained largely unchanged and supported NII in Q4 as well. Looking forward, we continue to expect the impact from lower rates on our NII to bottom out some 3 to 6 months after the last rate cut, which then based on current rate expectations, should occur sometime in the first half of this year. Also bear in mind that the first quarter has some technical headwinds, for example, a 2-day lower day count. And we also expect a slight increase in our cost of the deposit insurance guarantee for seasonality. And of course, the FX effects we'll continue to monitor. Turning to the next slide and fee and commission income. The fourth quarter saw an increase of just over SEK 500 million compared to Q3, and this increase is broad-based with all operating divisions reporting a positive development. Within CIB, the increase was notably driven by corporate finance, equities and debt capital markets. Within BRB, the Business & Retail Banking, card fees, in particular, represented the strongest increase quarter-on-quarter, partly seasonality, but also a pickup both in the SEB Kort's traditional markets as well as in the markets of AirPlus, which, of course, has an emphasis on Continental Europe and Germany. In Wealth and Asset Management, there was higher asset values and also performance fees, which drove the increase quarter-on-quarter. Net new money for the quarter came in at SEK 6 billion with a largely even distribution from Wealth Management, Retail and the Baltic divisions. Fee and commission income in the Baltics continued to develop positively and remains on a positive trajectory supported by a number of different savings initiatives. Turning to the next slide. We'll look at the net financial income. The income came at SEK 2 billion for the quarter, which is, as I mentioned, below our 16-quarter average, but still inside the sort of standard deviation that we have seen movements around in the past. During the final quarter, we saw good performance from both FX and commodities and fixed income was more in line with its seasonal pattern of a stronger first half and a lower second half. We also had some lower market volatility impacting income in NFI. On the next slide, before we go on to the cost target for '26, just coming back to some of the AI developments and priorities that Johan mentioned briefly in the business plan presentation. In the last quarter, we introduced the SEB AI triangle that we use more as a framework as to how we engage with AI in a couple of different dimensions. We're talking about building AI into our offering; secondly, to build it into our business and running our operations more effectively; and thirdly, importantly, also supporting the AI community and growing together with AI-related companies in our part of the world. During '25, we did scale up some of our early use cases from pilots to production tools. And at the same time, we continue to roll out general purpose AI tools, so Github for Developers and the Microsoft 365 Copilot for nondevelopers to help our employees integrate AI into their everyday workflows. As we now head into '26, we'll put emphasis on a few areas where then building on the experience that we had from last year, we'll look to implement at larger scale and get AI-powered automation as a result. It's early days, but it is looking encouraging. And the areas in particular are the process-heavy parts of our value chain and on the other hand, customer-facing capabilities and ideally looking to apply AI where we get a combination of productivity gains and enhanced customer experience. Some examples include some of the customer service processes, onboarding, KYC and also parts of the mortgage process. And then finally, we'll continue to support the AI community through offering both scale-up products and services like venture debt in CIB, everyday banking and also supporting both founders and entrepreneurs in the WAM division. On the next slide, we'll look through the cost targets for 2026. And when we arrive at the number for the year, we take a couple of factors into consideration. First, we expect inflation to add around SEK 1 billion to the cost base. We expect part of this increase to be offset by efficiency gains of around SEK 700 million. This is a combination of the effects from our continued external hiring pause, efficiency gains that we've achieved through increased degree of automation as well as improved ways of working through closer integration between operating divisions, technology and business support. Now turning to investments. We make here a distinction between the ongoing investments in the business. They include the continuous work on our technology road maps, the regular system upgrades, selected hiring, incremental product development, et cetera, and this is expected to amount to about SEK 400 million. So if you add these factors together, the increase from inflation, the efficiency gains and those investments will come to an underlying cost increase of around 2%. And this is then also excluding the positive effects we're going to get from lower implementation charges at AirPlus. Now in addition to those ongoing operations, we plan to take a couple of dedicated investments in AI, regulatory and technological resilience and also building out our digital asset capabilities. So this is expected to around SEK 500 million for the year. And some of these investments we've already communicated. And a couple of them include, first of all, our initiative to secure access to sovereign compute, as Johan also mentioned, this Sferical initiative that we're expecting to ramp up during the year. Secondly, we're also investing in AI-specific tools for specific initiatives that I mentioned previously, where we're looking to scale up our activities. Thirdly, also ramping up our IRB road map initiative and here to obtain regulatory approval from relevant authorities as swiftly as possible, addressing the capital add-ons that we currently carry. Fourthly, we're also looking to invest in our operational contingency considering the geopolitical uncertainty and the backdrop we're operating in. And finally, also the build-out of the digital asset capabilities and notably our initiative that Johan also alluded to, to launch a euro-denominated stablecoin in a European banking consortium. So these are the prioritized investments, which we have wanted to make room for through our ongoing cost consolidation and the restrictive external hiring. And this, we expect will allow us to enhance operational efficiency over time. So in total, it takes the full year cost target to SEK 33.4 million plus/minus SEK 250 million for the reasons Johan mentioned. And we expect some of these additional investments to have a peak year in 2026. So the cost trajectory for the coming 3-year period should taper out. On the next slide, we turn to the development of our capital position. We closed the third quarter at the end of September with a CET1 buffer above the regulatory minimum of 360 basis points on a reported level. We also showed that we are at 290 basis points on a pro forma level, taking into account the announced but not yet fully phased in impact from our Baltic IRB models. During the quarter, we then added around 20 basis points from our retained earnings and FX contributed positively by roughly the same amount. While going the other way, the continued phase-in in the Baltics had a negative impact of around 20 as well and other REA movements had a total impact of negative 15 basis points. Now that includes the operational risk REA that we flagged in Q3, which actually in the end came in at 7 basis points, so lower than our initial estimate. So to finish the year back at our target capital range of 100 to 300, we deduct the approved buyback program of SEK 1.25 billion, which corresponds to 13 basis points and then the dividend -- the special dividend of SEK 2.50, which is another 50 basis points. So that takes us to the 300 basis points above the minimum and implying a buffer of 250 basis points on a pro forma level adjusting for the remaining phase-in in the Baltics. On the next slide, we are looking at our financial targets. And this is a familiar picture and the targets remain unchanged. So from left to right, the payout ratio with an ordinary dividend of SEK 8.50, the ratio comes out at around 54%, so in line with our target of around 50%. Secondly, the 100 to 300 basis point management buffer. We remain committed to operate within this range and as we've said, to take action if the buffer exceeds 300 basis points. And therefore, just like this year, we use a combination of continued buybacks and a special dividend to ensure that we arrive at the management buffer in line with our targets. From an ROE perspective, our ROE came to 14% underlying, which is below our 15% ROE target, and we are committed to enhancing our returns going forward, including some of the actions that Johan presented as part of the upcoming business plan. In the context of our ROE development, it is worth noting that the surplus capital in our defined benefit pension plan has continued to expand. And at the end of the year, that surplus was substantial, and there is some SEK 24 billion deducted from our CET1 capital, but included in shareholders' funds. So we have for 2025 increased the upstreaming of capital from the pension fund to the bank to around SEK 2 billion, and this compares to between SEK 1 billion and SEK 1.5 billion over the last couple of years. This additional contribution will become visible in our capital base gradually during 2026 and will be adding around 10 basis points. Nonetheless, the impact on our ROE from the pension fund surplus, which is, as I mentioned, part of our shareholders' equity is around 1.2 percentage points on our stated ROE. So bearing in mind, this impact was effectively negligible up until 2021 when the surplus was considerably smaller. So therefore, for comparability of the development of our underlying profitability, we quantify this effect. So with that, we're concluding our prepared remarks, and we are happy to take your questions, and I'll hand over to the operator. Operator: [Operator Instructions] We will now take the first question from the line of Namita Samtani from Barclays. Namita Samtani: The first one, what percentage of the workforce do you think AI will take the place of? And secondly, just on the risk-weighted assets, when you're writing new business on the lending side, particularly on the corporate side, what type of risk densities are these at? Are they lower than the average risk weighting of the corporate lending book? Christoffer Malmer: Thanks for your questions. On the percentage of the workforce impacted by AI, I think we come back to our previous comments on this topic. I think it's a bit early to conclude. As we mentioned, we have, during last year, rolled out a number of AI initiatives, both for developers and nondevelopers with very encouraging developments. We have, as part of our hiring force, external hiring force, also made sure that in the conversations we're having about replacing in the event of an exit that we have the conversation around the possibility to introduce more efficiency gains or productivity enhancements through the use of technology, including AI. But to put a number on this at this point, we do think it's a bit early, but the outlook remains encouraging for broader productivity gains. And then, of course, Namita, we also have to take the question whether we want to see more productivity from our existing resources or if there are areas where we do think that we could do the same amount of work with less. On your second question, it will very much depend on the type of business that we are adding. So the risk weight on our corporate business will then depend on the type of counterpart, the risk class, et cetera, that dictates the risk weighting. On our mortgages, as you know, that's another very transparent risk weight, which, of course, is based on our risk weight floors. And across the book, it's the risk weight of the business that we're growing into that decides. As we've highlighted in this particular quarter, it has been a relatively stable development, particularly within CIB. So you'll see that there is no meaningful impact from any REA density deviating from the average of the book. Operator: We will now take the next question from the line of Magnus Andersson from ABGSC. Magnus Andersson: Yes. I just had a question on volumes as corporate lending remains rather sluggish quarter-on-quarter. And it looks -- I know you don't want to talk about the statistics, but if they -- if the numbers tell us anything, it looks like you've been losing market share in Sweden for a while as well. So just if you can tell us anything about what you see here, if there are any signs of a potential pickup in bread and butter corporate lending during '26 or how you expect to grow back into your previous market shares. Secondly, on volumes, just in the only area that actually seems to be growing, which is the Baltics where you're growing by 10%, 11% in Latvia, Lithuania year-on-year, local currencies, 8% in Estonia, how you see the sustainability of the releveraging process that seems to be ongoing. Christoffer Malmer: Thank you, Magnus. So if I start with the first question on the CIB, I think you're right to say that it is hard looking at the numbers from [ SCB ], I guess, is what you're referring to. And we are trying to find better data to follow this more numerically to be able to conclude exactly on your question, what is our actual market share and how is it developing? Now since we have seen in the SCB data, the same trend that you have seen, we're also, of course, in discussions with CIB, whether there are any such developments. And I think a couple of things to highlight. We have a sense that we're doing the business that we like to do. So we don't get the feeling that there's a lot of business going around that we would have liked to do that we're not in. So I think that's from our perspective of our activity level. And I think the second thing could be worth highlighting is that we have had towards the back end of the year, very high activity levels. It has now, as you see in the numbers, translated into a pickup in fees and commissions in the advisory and the markets-related business, but not yet in the balance sheet-related business. So I think our best conclusion is that we are in the areas where we want to be. We are active in the dialogues where we want to be. And as the volumes start to pick up, this should materialize in increases in our balance as well. But we're monitoring this closely and would love to get better detailed numbers on exact the market share rather than relying on the SCB data. Your second question on the Baltics, you're right, that's the standout performer in terms of volume growth. And it has been a stable pickup and, of course, partly reflecting the strong macroeconomic backdrop. And I think our sense right now is that there continues to be a constructive outlook for Baltic growth with a broader momentum and the sentiment in the -- all of the 3 countries. And in areas that you're referring to in terms of leveraging and homeownership, there are indications there from a structural perspective that suggests that there's room to grow. Operator: We will now take the next question from the line of Nicolas McBeath from DNB Carnegie. Nicolas McBeath: First a question on the capital distributions here in the quarter. So why the decision to make the extra dividend combined with the slowdown in buybacks? If I annualize now the buyback pace that you're running with your latest buyback program, it's around SEK 5 billion annualized, which is SEK 5 billion less than last year. But if you wouldn't have done the extra dividend, I guess it couldn't have continued at a similar pace. So yes, why that decision to shift more to dividends from buybacks in terms of your capital distributions? Christoffer Malmer: Thank you, Nicolas. Yes. So the main point here is to solve for our 300 basis point management buffer. And with the ordinary, we're at a payout of 54%. So we're sort of in the upper end of our around 50% guidance. And then the blend of the other 2. If you look historically, we have had buybacks between SEK 5 billion, SEK 7 billion and SEK 10 billion annual pace. And we're conscious to maintain ongoing buyback track record. And as you know, we're also one of the banks in Europe that have had the longest suite of consecutive buybacks. So we want to maintain that. At the same time, we want to ensure that we maintain maximum capital flexibility. And in that context, we propose to the Board a mix of a special dividend, buybacks and ordinary. And we've also taken impact, of course, and conscious from the conversation we had around this last year that there are preferences in some camps for buybacks over dividends and in some comps, there are preferences the other way around. So we're trying to put together a balanced mix of capital distribution. And in this quarter, we wanted to -- for this year, we want to maintain buybacks, but also put a blend and a mix to get us to the 300 basis points. Nicolas McBeath: All right. Then I had a question on your NFI line, which has been now below SEK 2 billion for a couple of quarters, which is closer to the levels we saw prior to the 2022 rate hikes. And any reason to update your kind of guidance of normal NFI. And is the NFI level impacted by interest rate levels or the slope of the yield curve? If so, how? Christoffer Malmer: Yes. So on the NFI, you're right that we have been fluctuating between the -- around that SEK 2.5 billion. And this is, as you know, by definition, a difficult line to predict. And looking at some of the structural elements that you referred to, the tightening of credit spreads, the way that rates have moved, of course, there has been, for some time, a favorable development that has supported the level of NFI. But also bearing in mind that the fourth quarter, particularly in fixed income, is the seasonally weakest quarter of the year. And if you look at fixed income in isolation, it's not that different from where it was in Q4 of last year and in Q4 the year before. So I think we need to see a little bit how the seasonality plays out as we go into next year to see if there's a reason for us to revisit the level and the range that we are within at the moment. Operator: We will now take the next question from the line of Sofie Peterzens from Goldman Sachs. Sofie Caroline Peterzens: This is Sofie from Goldman Sachs. So my first question would be around the Baltic risk models. You note that the impact will be around 50 basis points, but there were some headlines a few weeks ago that the ECB had identified some deficiencies in the Baltics. Are these fully captured by the current models? Or do you need to do any additional work on that? And then my second question would be on the share buyback. So just a follow-up. So is it fair to assume that the share buyback will be SEK 125 billion quarterly run rate throughout 2026? And why didn't you kind of ask for the full year share buyback with Q4 similar to what you did last year? Christoffer Malmer: Thank you, Sofie. So for the Baltic development, we maintain our guidance, there are expectations of the impact on capital for phasing in of the IRB impact in the Baltics. So no change to that. And we also provide those pro forma numbers in the slide. On your second question, I'll come back a little bit to what I said to Nicolas. This is a -- for us, together with the board, of course, to come up with a mix of getting us down to 300 basis points. And in coming up with that mix, we take into account, of course, the dividend component, the special and the size of the buyback. And of course, last year, we were at a point where we're a much more elevated buffer level. I think we were at 460 basis points prior to distribution. And there, you remember, we took a sizable one-off deduction to a full year buyback program. And this year, we are around 360 basis points prior to distribution and then solving for the 300 together with the Board, this is the mix that we suggest and that we came up with. So I think that's the color that we can give you on that. Sofie Caroline Peterzens: But basically, it's fair to assume that you will continue with a quarterly share buyback. Christoffer Malmer: Well, as always, we take a quarter at a time and it's subject to both Board and regulatory approval as we go along. But yes, you're right, it implies a 5-year run rate for the full year -- SEK 5 billion, sorry. Operator: We will now take the next question from the line of Martin Ekstedt from Handelsbanken, please go ahead. Martin Ekstedt: So first, I just wanted to ask one on dividends. So you do a reversal back to annual dividends from previous announcement of semiannual dividends. I'm sorry if I missed part of this answer before I was a bit late on to the call. But you do this as a result of what you call in the report feedback from market participants. Could you just share a little bit more of that feedback with us and what in the end made you reverse this decision? Christoffer Malmer: Yes. So that's right. What we opened the conversation at this point last year was to look into the possibility of semiannual dividends. And the market participants, of course, it's a lot to do with listening to our shareholders and having discussions around the process within which this could be done. And one option is, of course, to have a dividend approved at the AGM and then distributed in 2 installments. But the feedback from our shareholders was that this is effectively just waiting a little bit longer for the dividend to be handed out. So the feedback on that model would also deviate a little bit from what we see in the rest of Europe, where distributions are made from current year's rolling earnings. This, however, in our jurisdiction requires an extra general meeting of shareholders. So it immediately creates a slightly bigger process and a procedure around this in order to get this into place in a shareholder-friendly way, which would then be to do the forward-leaning semiannual dividends. And this, of course, has been a conversation with primarily investors. And I think this -- the model that we would then have to introduce in Sweden would be less appreciated. Now we're not entirely ruling this out to if there is a way that we could put this in place in a shareholder-friendly way, then something we could revisit. But for now, the proposal is that we continue with 1 annual distribution. Martin Ekstedt: Okay. And then for my second question, just quickly taking a step back and focusing on your return on equity, which was 12.9% in the quarter, i.e., well below a 16% long-term target and below some of your Swedish peers as well. So I mean, we talked a bit about the costs on this call, right? But recognizing that a lot of the macro factors impacting your revenues are outside of your control. What do you think would need to happen in Sweden macroeconomically for you to close that gap to target 15% and to peers? And when do you see the timing of this, i.e., kind of a wish list macroeconomically from you guys? Johan Torgeby: I can elaborate a bit on that. Thank you. First, I'll just let us establish the baseline. So first, we have a significant surplus in our pension fund. Historically, we haven't really been talking about it because it has not been meaningful. But right now, it's actually very significant. So if you say that the SEK 24 billion of surplus, which is not available to do business, but it's included in the return on equity calculation. We don't adjust for it. It equates to 110 basis points pickup. On top of that, it is, of course, the capital that we have on -- or capital add-ons that we have, which is also outside the normal course of business as we are approving the IRB models over time. And that's another almost 200 basis points equivalent or so of a drag. So that's the baseline. So the thing that is comparable with others are, of course, without these 2, which is not a comparable number when you want to see what's the underlying profitability. So that equates to quite a lot in totality. Now what is required for top line because you're so right, you don't dictate income, I would love to, but we dictate cost and there we have a more modest trajectory going forward, as you can see from today's announcement, and we started already last year. And of course, we also now have a little bit of pause on increasing the number of FTEs in order to address efficiency and make sure shaking the tree that we have maximum optimal capital allocation also in the operational side of things that we have the right cost base. But what we do need in my book is consumption. So the -- all things look pretty promising, but it's on leading indicators. It's not really happening to the full extent. And if I look at the relative weakness for investments to really come along for that to be debt financed or equity financed, which is, of course, where we come into the picture. It is for both households and corporates to take that last step. And for me, it is consumption, and consumption is weak. I just consumed our own macroeconomics Nordic outlook the other day. And it's a pretty constructive view, and I don't think they are far off consensus. There's a strong group of consensus around a 3% growth of GDP in Sweden next year, which would have been a fairly significant acceleration. If it happens or not, we will know next year, but it's definitely the one that I'm on the watchout for income to come up, both for transactional banking, payments banking and balance sheet banking. All 3 areas will benefit from that. Operator: We will now take the next question from the line of Markus Sandgren from Kepler Cheuvreux. Markus Sandgren: So I just had 2 questions coming back to what some others have asked about. But if we're starting with the buybacks. So last year, you did SEK 10 billion for the next year, and now you're doing SEK 125 billion and then you can annualize that, of course, I guess. But Nevertheless, it seems like you really want to defend the 300 bps. So your target to be within 100 to 300, is that kind of obsolete is more like 300 plus/minus something. Is that what we should expect going forward? So that's the first one. Christoffer Malmer: Yes. I think at this point in time, considering the broader geopolitical uncertainty, the outlook that we have to Johan's previous answer, hoping, of course, that balance sheet growth should come back again. We've had tremendous tailwinds from the FX. And of course, that could go the other way. So I think at this point in time, we feel it's appropriate to be at the upper end. Just to mention also, we are on a pro forma basis, taking into account the remaining phase-in of the IRB effect in the Baltics down to 250. So to some extent, you could argue that, that's sort of moving and dipping into the buffer. But all things taken into account, I think it's cautious. And as you know, we are a cautious and a conservative bank to operate at the upper end of the range. Markus Sandgren: Okay. And then coming back to costs, as Namita was alluding to what AI can do and so on and so forth. But I mean, you were saying that you expect cost to taper off after '26. So I mean, in terms of numbers, one of your competitors has said they expect cost to grow by 2% annually until 2030. Is there something similar you're expecting? Or what should we read into this tapering off? Christoffer Malmer: Yes. So as you know, we provide annual cost targets and not the longer-term cost guidance. But what we're trying to elaborate a little bit around in the slide there is to show what that underlying cost growth is at the moment and also to highlight that some of these incremental investments we're undertaking in 2026 should peak in 2026 and then fade thereafter. And I think that the -- when it comes to the productivity gains and the efficiency gains that we're starting to see, if you look at our underlying cost growth, adjusting for the consolidation of AirPlus and the implementation charges, you'll see that it's gradually come down during the course of the year. And underlying in the fourth quarter, it is actually in that range or even a little bit below. So of course, to the extent that we can continue to enhance productivity going forward, working with the churn and the efficiency gains that we have lined up, there is, of course, a possibility to continuously improve on that cost growth. But the main message with the tapering is really to say that the current growth trajectory that we're on should taper from here going forward. Operator: We will now take the next question from the line of Riccardo Rovere from Mediobanca. Riccardo Rovere: A couple, if I may. The first one is on -- sorry to get back to loan growth, but accounting rules are the same for everyone in the loan book, corporate and retail, so forget governments, repos, collateral margin, all that stuff. The book is flat quarter-on-quarter and it's flat, kind of flat year-on-year. So the NII, considering you give the margins in your fact book and the margins are stable quarter-on-quarter and actually up versus Q2. It looks to be more a problem of absence of growth in general terms, also in retail, while the rest of the rest of Scandinavia is somehow responsive to the easing in monetary policy. So I was wondering why you don't seem to be responsive to that. And what you're planning, if you are planning anything to start resuming growth in 2026. This is the first question. The second question I had is if there is any room maybe on SRTs or something like that to keep RWA under control and eventually and so to keep the capital return as it is. And on this topic, SEK 10 billion buyback on SEK 986 billion risk-weighted assets would throw 100 basis points of capital into the fireplace to cancel at SEK 203 per share to cancel less than 2.5% of your share count. So reducing the buyback to me is the most sensible thing you could have done. So that's to be clear because the share price can move by 2.5% any minute of an hour. So canceling -- I would have canceled it personally, but reducing it and giving cash to shareholders is the best thing you can do in my view. But again, on risk-weighted assets, is there anything you can do to keep it under control on the SRTs and stuff like that? Johan Torgeby: Riccardo, Johan here. I can start with growth. So one is a constant disappointment on growth, as you are pointing out correctly in your question that the transmission mechanism, rates are going down from the central bank, banks are lowering rates and you see economic activity go up has been very disappointing. There are some signs in the retail market that things are picking up, but it's been remarkably slow to act. This is actually quite normal and very frustrating as you probably have 4- to 5-year cycles when you look at loan growth. You can just take a graph on SCB's corporate lending exposure, and you see that it moves slowly and it has not picked up. My potential explanation because I don't know why, is the capacity utilization in the industrial side on the corporate side has been fairly low. And therefore, any demand that they have met in this slightly more stabilized environment, they've been able to cover with cash at hand or existing loans and therefore, not used more capital to increase capacity. That's back to my original point on consumption. So we are looking at that, and it's one potential explanation, and it looks promising if things pan out as economists say that there will be a catch-up effect for that going forward. I also say that the leading indicators, which is typically having a 12-month lag to actual lending is the industrial sentiment indices, and they all point more than modestly. They are upwards, but not particularly impressive yet. On the retail side, there is signs of things waking up. There's clearly -- we do one, which is the house price expectations, which is a leading indicator, and that has clearly recovered. However, then you have the specifics for SEB to our earlier question around market share. So we do see that we are not performing to the best of our ability in the mortgage market, which is also partly explaining where we have some work to do there in the coming year or 2. Christoffer Malmer: On your question, Riccardo, about the SRTs, yes, I mean, as you know, we have not been active in that space historically, but it is a space that we are looking into. It is, as you also know, something that is top of the regulatory agenda in Europe, and there seems to be a lot of initiatives providing more favorable conditions for such transactions to take place. So it is something that we are looking into. Also, the pricing environment has changed there. So from an attractiveness financially speaking, it has also become increasingly attractive. So it is something that we are evaluating. And then just on your final comment, thank you for the comment on the dividend. We'll pass that also to the Board. Riccardo Rovere: Christoffer, if I may follow up very, very briefly. Have you identified in SEK billions, the maximum amount of portfolio that eventually could be part of SRT's program because that instrument -- I mean there are banks that are very active on that, and they are keeping risk-weighted assets kind of flattish or eventually down. So I was wondering what is the theoretical maximum capacity that you could have there? Christoffer Malmer: Riccardo, there is -- it's too early to share any numbers on sizes of portfolios. But one thing that we need to take into account is the regulatory environment in Sweden, which has some impact on the amount of capital release that could be achieved from an SRT. So that is one aspect into this, which then, of course, will dictate the attractiveness of the type of transaction and volume, et cetera. But no volumes to share at this point, Riccardo. Johan Torgeby: We have a hard -- thank you, Riccardo. We have a hard deadline, so we'll try to be a little bit quick. So please go ahead. Operator: We will now take the last question from the line of Shrey Srivastava from Citi. Shrey Srivastava: My first one centers around the SEK 500 million uplift from sort of AI regulatory and resilience. If you were to break this down between sort of regulatory and resilience and actual sort of AI initiatives or put another way, investments and revenue synergies versus cost synergies, where would you -- sort of would you where would you land on this, if we could just have some more color? Christoffer Malmer: Thank you. We don't break that down any further. But given that we're mentioning these 3, they all 3 have a meaningful contribution to the total number. But we don't provide an additional breakdown to that number. Shrey Srivastava: And just a second brief one. If I was look to look at your comment on the sort of uptick in investment banking activity, could we just have a little bit of color on that, specifically around if you're seeing an increase in demand from corporates operating in broader Europe around any REA initiatives. Johan Torgeby: Yes, I can take that. So generally speaking, it's a quite unusual world where the financial markets depending business lines are doing very well. It's really say that share prices are good, rates are low. It's been quite a lot of activity, very resilient financial market given the risks that we see. However, the real economy has not really performed, which is more linked to the actual funding, actual loans, house buying, factory openings. So it's a quite divided world. This seems to be -- continue. I have no reason to believe that this recent more uptick in investment banking in capital markets supported by resilient financial markets will continue until we have another, call it, situation in the market. And now we're hoping that the other part of the real economy, where you actually need new funds will come and help us. On Europe, I would say no, there are -- this is again the position where leading indicators are pointing to a better future. But I couldn't say that we have really seen it materialize yet to the point where you see -- because half of the book, of course, in corporate lending is outside Sweden. And it's quite muted still. Operator: Thank you. I would now like to turn the conference back to Johan Torgeby for closing remarks. Johan Torgeby: Yes. Thank you. And usually, we ask you to close early. Thank you for helping us with that because I know there's a lot of other calls we have today from your side. Thank you for participating. I wish you a good day. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Monika Schaller: Good morning, and thank you very much for joining us today for our Q4 and full year results press conference. A warm welcome to everyone here in the room, and of course, a warm welcome to everyone joining us virtually. As always, Christian, our CEO; and Dominik, our CFO, will share some brief remarks, and we will then move into the Q&A session. Everyone joining online, please feel free to submit questions at any time. Maybe one disclaimer, as always, unless stated otherwise, all numbers on these calls are non-IFRS and growth rates and percentage point changes are non-IFRS year-on-year at constant currencies. And with this, let's not waste any time. Over to you, Christian. Christian Klein: Yes. Thank you, Monika, and welcome, everyone, here at our headquarter in Walldorf and of course, also to those who are joining us virtually from all over the world. I have actually, from my remarks, I have 2 rather big points. First, 2025, you have seen the numbers. Let me share also some more background on these numbers and then, of course, also the outlook for 2026 and the years to come. And of course, there, I will also double down on the topic of AI. Now talking about 2025. I mean, first, when you look at the set of numbers, I would say I'm very happy with how SAP once again delivered a very successful year. You can look at cloud and software. We achieved our outlook. And please also remember, in the half year 1, we had a rough start. There were some geopolitical tensions. We -- especially in the public sector, we actually had our challenges to actually do deals. And still, we achieved our outlook for the year. We overachieved and beat our outlook for operating profit and cash flow. It's not only about cost discipline. It's also the way how we transform SAP, how we make the internal processes more efficient, how we're also now applying AI in all parts of the company. I will come later to that when it comes to 2026. Also in 2025 in Q4, we actually had our best bookings result of the year. So I know there's still some discussions out there on CCB. I will touch base on that in a moment. But actually, Q4 was our best quarter with regard to bookings. We had lower churn than expected and also the discounts we have given actually were pretty stable. So actually, net-net, a very good Q4. Now again, we started our transformation 5 years back. And we were sitting here, I was sitting here, made a pretty bold commitment about the 2025 ambition we have as a company. There were many doubts out there, but we delivered. The company delivered. I'm super thankful to our 100,000 colleagues worldwide to the customers for the trust because with RISE and GROW, we made a big bet, not only on lifting and shifting our customers to the cloud, but really helping them to transform. And what came out of that is one of the biggest success stories and definitely the biggest transformation in SAP's history. Now when you deep dive a bit on GROW, I mean, SAP, I know, is known for running large enterprises in the world. And yes, we are very proud about that. But what we also managed over the last years is that actually several thousand net new customers joined from the mid-market. Then the mid-market is actually by far now the fastest-growing market within our customer base. We are expanding our ecosystem because a lot of that will be also covered by our partners. And in 2025, and that is also -- shows the success of our cloud transformation. Actually, our public cloud business was growing 5x faster than our private cloud business. And also look at the resilience, what actually SAP in the meantime gained. We have a large recurring revenue share. We actually tripled our cloud revenue over the last year. So definitely, I would say, a huge success story. But we are living in a fast-moving industry. I would say this is probably the fastest-moving industry in the world. And so we can't rest. Now what we also did when you look at this half moon is actually we put a lot of clarity into our product strategy. I mean we said, hey, all lines of businesses have to come together on one platform. The PDP is now in the meantime the platform for integration and extensibility. We put a BTM business transformation portfolio together, again, helping our customers to do the process transformation to be world-class in enterprise architecture and also just help them to transform on the business side. We launched a lot of new innovations around sustainability, the business network and all these businesses contributing to the overall growth of SAP. Very important, obviously, is also what we did in the last years around AI and the Business Data Cloud. The Business Data Cloud now produced, in the meantime, over EUR 2 billion of order entry since its launch in January, shows the success, but even more important, shows the strategic relevance because when we talk about AI, we talk a lot about data quality. And for the customers, it's super important to have this semantic layer of bringing SAP and non-SAP data together, and that is also then resulting in the huge success of BDC within the first 12 months. But of course, we are not stopping here. I mean you have seen our total cloud backlog increased by 30% to EUR 77 billion. I mean, what a number. And that also shows why we are so confident on our guidance to accelerate total revenue growth in the years to come. I mean, with this backlog and the contract duration is around about 4 years. So you can see there is already a lot in the books, which will help us to say with confidence that SAP will be a growth company. The cloud business, when you compare this revenue growth numbers here of 26% in 2025, these are on an average, 10 percentage points faster than our peers, than our competitors, just shows how also SAP is gaining market share. So net-net, also operating profit, free cash flow, Dominik will talk about that. So no need for me to dig deeper. But also there, we beat our outlook, and that speaks for itself. On -- in Q4, we closed a lot of business, best bookings quarter. Now I can tell you -- share with you a story about all of them. I want to pick 2. And I picked those 2 just to show the relevance of SAP AI in the world going forward. H&M, we all know them, a great retailer. And they came to us and said, "Hey, our business will change a lot as a retailer." And then we prototyped together over the complete year, and we closed the deal in Q4. They wanted to see, "Okay, we are happy with your commerce platform. But in the future, our consumers expect a more personalized shopping experience." So we custom coded for them a prototype on how shopping experience will change. We brought this back into the standard. And they said, "Wow, this is exactly what we need to really address our consumer needs, the consumer trends right in the store online." Second, we talked about certain things about returns claims management, people ordering stuff, sending it back. How can we make this more efficient? How we can improve the consumer experience? Can we actually propose to the consumer a different good if they are not happy with the one thing? What if a certain good is not available in one store? Can an AI agent help to find the right store to deliver next day or even in the same evening? So -- and we showed them this was the SAP transactional application in the old world. And this is what you get with AI in the new world. And it was tremendous what they have found out on to really personalize the consumer experience to make the supply chain more dynamic, more agile with regard to also delivering the stuff faster to the consumers. And then finally, of course, they saw all the agents working together also into the back office into finance. And that is what made this deal happen. It was not only the cloud move and get rid of the legacy. It was really the AI embedded in the different parts of our apps, which made this happen. Fresenius, we did a press release already, super happy about that. We got a lot of feedback, especially in Germany, hey, you were great in patient management, but why do you not deliver the next generation. Together with Fresenius and Avelios, we are now coding on our platform a new patient management solution. And we started to do that. Avelios is our main partner here, and it will revolutionize how much more efficient we can make the doctors and the nurses to spend more time with the people in the hospital, making them more efficient, making more efficient decisions and just also make the whole operations in a hospital way more efficient than it is today. And again, AI agents taking a lot of manual work over what the nurses and the doctors had to do in the past. And we showed this to many other health care customers and they said, wow, this is it. We definitely want to join SAP in delivering the next-generation patient management. Now talking about the future of AI, talking about the future of SAP. And I know there is a general concern out there in the market about, oh, how will software sustain in the world of AI? Cannot everyone code software? I would say clearly no. Because what we are already seeing with many customers is, of course, they are doing certain -- building certain customer agents for cash flow collection, et cetera, with those LLM providers. But what you always see as a roadblock, and this is now what customers see more and more, and that's why it also explains why we sold 2/3 of our deals with AI. They, first of all, see, oh, an LLM can read when I build a cash flow agent, can read a support ticket. It could be that because of the support of an issue of the customer, customer is not paying. You can read mails, okay. But what about the P&L data? What about certain sales negotiations, deals in the pipeline? What about certain payment information, which are also necessary for the agent to understand why is this customer not paying? So it always goes together. The LLMs are super good in the unstructured data, but you need the business data and which company has petabytes of data, which we are using to which we are using to fine-tune our AI foundation, this is SAP, and we are using the world's best LLMs for the different use cases, bring this together, have a so-called knowledge graph to correlate the unstructured data with the structured data. And of course, BDC helps to bring the semantical data together for the structured data in the company. And that is the winning formula. And then the second piece is when you want to change a retailer like H&M, you cannot just go there and said, the IT embed a certain agent in my operations. You have to fundamentally rethink like we do in SAP how will I run a certain industry going forward? How will cash collection work? How will recruiting work? How will workforce management work? So our product managers are just sitting there using the rich information, knowledge what we have about industries and business processes to really redefine how these agents have to work. An inventory agent as a matter of fact, you can do an inventory. But if the inventory agent has no clue what is happening on the demand side, the inventory agent is not so intelligent, I can tell you. And then, of course, there are a lot of things that, what kind of information can I actually feed into an agent. There are certain security authorization requirements, which all sits in our beloved apps. Now super important for us is business data, business process, security and trust and, of course, completely rethink how we run those companies, our customers going forward. And so when I think about the future of AI and SAP, I'm super happy that I have our ERP. I'm super happy that I have our apps because without those apps, I wouldn't have the data. And without the data, I wouldn't have an AI. So I know there is a lot of talk about, oh, what can the LLMs take over. The LLMs can take over coding of software, for sure. I mean, because this is unstructured information code. They understand the patterns, how our developers code in the past. But everything related to business data is actually something what SAP can offer, which is pretty unique to us. So when you think about how will SAP grow its business going forward? And I find it pretty remarkable that we -- on an already heavily growing business, we said we're going to further accelerate our total revenue. Five pillars where we have a clear right to win. We cannot win everywhere, but we have 5 pillars, which are very important for our customers. When you think about SAP and UX in the past, this was not a big success story. I mean we know that Joule cannot take over today every skill of an end user, but we are getting there. And we will not only take over manual work. We will take over analytical requests. We will train Joule also with correlations to understand, not only do analytical reporting, but also give smart recommendations, how to source the best for this good, what I'm looking for, how to actually do inventory planning the best, looking into what is happening on the demand side, what is happening on the market side. So Joule will not only be connected to an LLM like GPT, Joule will be connected to our AI foundation to get the 2 worlds together. And what it will does is when you think about how often did I sit in front of my desktop or mobile typing into data into SAPs, this will completely change the design, the user experience, the simplicity. And at the end, the productivity of every end user will change. Second, I mean, this is logic. We are running business processes today, transactions, workflows, complex. We are now embedding not further features into these apps. We are embedding agents. So the agents will take over the features. And the agent will talk to each other. So we are actually infusing across the most mission-critical business process in the world, our agents, and we will train them, again, to also contextualize information because no agent can work in isolation. Otherwise, you are not running businesses. Very important in that space, in the second space, AI assistant. Not every AI assistant will look the same, for example, the cash flow example. So extensibility is key. So you're getting access in our agent builder to, first of all, understand the process better. And then you can also enhance those agents based on individual needs of a treasurer, of a person in supply chain training and so on. And we have both. We have the tool set for the developers, and we have the low-code tool set for the business users. Third, industry-specific capabilities already today, super important. I mentioned Fresenius. We had another large deal in Q4 where we could show the customer, oh, you're doing last-mile delivery with SAP. Now we're going to show you how your trucks arrive faster at your stores with AI in the future, how you can improve load optimization of your trucks with AI. So these things are super, super important because here is the value of a customer. This is how customers can differentiate in their industry. These are the main, main capabilities, for example, trade promotion for a retailer, personalized shopping experience, supply chain resiliency in manufacturing, asset management for the navies of the world. These are the things which SAP knows how we run it in the past. And now we were reimagining those capabilities with AI. Fourth, business data cloud. I mean, again, the biggest road blocker for business AI is today, data, data harmonization, data silos. This is actually what constrains our customers the most. And this is what you have seen in the numbers. BDC is a big success because SAP said, "Hey, we are not a closed shop anymore and really bringing our data together with non-SAP data, BDC and it's only in BDC, we are going to allow you to harmonize SAP data with whatever other business data you have in your company sitting in non-SAP apps. And then fifth, obviously, this is what is close to our heart for many SAP customers said, Christian, I just do the RISE journey. But guess what? We are paying $1 to SAP. I mean, not exactly $1, but we are paying them $10 more to DSI. I said that is not good. So what we are doing is, I mean, why can AI not take over certain parts of the ERP migration. Think about data migration, think about configuration of the system, think about test automation. So these things are super important. We are doing this together with our partners because they understand as well, hey, in the world of AI, it's not only about putting a consultant to work. This work can be done way easier, way faster and way more efficient. And obviously, when we talk about ERP migrations, I think about SAP, and this is definitely a big focus area for us. Then coming to our -- I mean, to be credible in AI, we need to use Joule. We need to use our own AI. And yes, does everything already work to perfection? No. But even more important is that we are a role model underpinning our great cash flow results and profit results with the use of AI. And you can ask all of our people, we are pushing this really heavily. So we mean it. So in R&D, code-generation tools, tool for developer, [ APA. ] We have thousands of developers who already see, oh, now I have much more time on developing those agents and making the agent orchestration work and less about my time producing code. In sales, already in Q4, we did a lot with AI on quoting, on pricing, on packaging, help me to find the best deal for my customer. Help me now to find in the pipeline, the best opportunities for me to close out the year. In HR, recruiting, we made the acquisition with SmartRecruiters, but also on skills, a lot will be handled, and we will work smarter with infused AI into our SuccessFactors solutions and then, of course, into our own HR operations. So in tech, innovations come at a very fast pace. The most important thing is next to having the right strategy is our people. So AI is, first of all, not only a technology who can run a company smarter, it's also about the skills of the people. So reskilling is a big topic within SAP, and we will double down on that because AI will affect every job, and we need to prepare our people for that. That doesn't mean that we need less people. I want to say this very clearly, but we need different skills. And honestly, there will be a change of the mix of the job profiles going forward. But as long as we post such great top line results, we are not thinking about restructuring, we're rather thinking about how we can reskill our existing employee base to make them fit for the next chapter of our transformation. Now when we then look forward, and in a second, I will hand over to Dominik, let me just share some geopolitical observations. I mean, SAP is, I guess, by far, the biggest tech company in Europe. But what will be very important for the future of SAP and for Europe is clearly, first of all, talent. So we really need to make sure that we are changing our education system and really our universities give us access to the best talent. That's actually working quite well. But when you think into every job the next generation has to do, it will change. And then super important, and I'm talking about this since quite a while, especially here in Germany, I see a lot of movement now, the willingness to digitize Germany. But when I think about our home market and compare this to the U.S., oh my God, the regulation, I mean, layers of layers. And that is, of course, something when we are closing deals in Q4 in the U.S., it's FedRAMP, you have clear -- we are not even talking with customers about regulation. They are clear. And here, you -- on the state level, you have regulation, everyone reads a little bit different. The [indiscernible]. Then on the federal level, you find other people who have other ideas on regulations on sovereignty. And then you come to the European layer and then you have layer and layer and layer. And now that is not good for SAP, but think about all of our start-ups where you find the same startup like an NNN in China and the U.S. And so this digital union to come together and harmonize that is of such an essential importance because it's not only about funding and access to capital, it's really about speed and the speed is especially super important for all of the great start-ups we are having. So with that, I said enough. I'm super confident about our outlook for 2026. Strategy is the right one, and we will also -- you're going to see SAP clearly as a winner in AI. And with that, Dominik, over to you. Dominik Asam: Thank you, Christian, and thank you all for joining us this morning. I'd also like to wish you all a happy and healthy year 2026. SAP's strong close to the year reflects steady execution against our priorities. As we navigated a rapidly shifting macroeconomic backdrop at the beginning of the year, we remain focused throughout the year on operational discipline and driving value for our customers in times of unprecedented technological change. Our ability to drive top line growth while consistently exceeding our profitability and cash flow expectations reflects the consistent execution against the outlook we provided at the beginning of the year. While challenges persisted, we took deliberate steps to reinforce our foundation and align the business for durable, sustainable performance. As a result, we closed the year in a position of strength and the progress we've made has set the stage for continued advancement towards our financial and strategic priorities in the years ahead. RISE and GROW with SAP, both remain core pillars of our transformation strategy, serving as go-to solutions for large-scale enterprises and high-growth midsized companies undergoing complex end-to-end transformations and modernization efforts. And as Christian just highlighted, AI and the Business Data Cloud are beginning to show real commercial impact emerging as meaningful contributors to customer decisions and deal activity. The combined momentum continues to materialize in large cloud transactions with deal volumes greater than EUR 5 million, contributing a record 71% to our cloud order entry in the fourth quarter. These results validate our role as a partner of choice, trusted by world-class organizations navigating high-stakes transformations and speed at scale. Now let me provide more details around the financial highlights. The current cloud backlog reached EUR 21 billion, up 25%. Quite frankly, this is a more pronounced slowdown than we had anticipated and more than the slight deceleration we guided at the beginning of last year. Echoing Christian's remark, the outcome reflects a deal mix weighted towards larger transformations, many of which include longer ramp periods or flexible structuring, reducing the near-term CCB contribution. Also further mounting geopolitical tensions have led to many customers putting even more emphasis on exploring sovereign Software-as-a-Service solution options. While SAP is extremely well positioned in this segment, and we have a significant pipeline of opportunities due to the trust Germany and SAP continue to enjoy on a global scale, it takes longer to negotiate these more complex transactions and also longer to deploy and ramp as compared to plain vanilla offerings done by U.S. infrastructure service vendors. This is particularly true for any state-owned and related entities as well as defense, but starts to also affect commercial customers in certain particularly sensitive geographies and industries. Total cloud backlog for the year grew 30% to a record EUR 77 billion, again, significantly exceeding our current cloud backlog and cloud revenue growth. Cloud revenue actually grew 26% year-on-year in 2025, again, primarily driven by the strong performance of cloud ERP suite. Cloud ERP suite had another notable year, reinforcing its position as a key engine of growth with an increase of 32% in 2025. By the way, if you want to make that comparable to our U.S. competitor, at a couple of percentage points, if you make this constant currency number, U.S. dollar number, then it would have been 34%. This performance is especially meaningful given the expansion of its revenue base over time, highlighting its ability to scale at a sustainable growth rate, now accounting for 86% of total cloud revenue for the year. Software licenses revenue decreased by 27%. Finally, total revenue for the full year approached EUR 37 billion, up 11%. Now down the income statement. Our non-IFRS cloud gross margin for the full year continued its upward trend from last year and expanded by another 1.6 percentage points to 75%, driving cloud gross profit up by 29%. In the fourth quarter, IFRS operating profit increased 27% to EUR 2.6 billion. Non-IFRS operating profit was up 21%. Both IFRS and non-IFRS operating profit were growing negative -- negatively impacted by approximately EUR 100 million related to a 2025 workforce transformation. In addition, IFRS operating profit growth was negatively impacted by USD 200 million related to Teradata litigation expenses. For the full year, IFRS operating profit increased to EUR 9.8 billion and non-IFRS operating profit to EUR 10.4 billion. The IFRS effective tax rate for the full year was 28.5%. The non-IFRS tax rate was 30.4%, which is below the outlook of approximately 32%, mainly resulting from an increased ability to offset foreign withholding taxes in Germany. Looking forward, we expect the midterm non-IFRS effective tax rate to be in a range of 28% to 30%, which is the lower half of the previously communicated range of 28% to 32%. Free cash flow for the full year was around down EUR 8.2 billion, i.e., at the very high end of our revised outlook range of EUR 8 billion to EUR 8.2 billion. The increase was mainly attributable to higher profitability and to lower payments for restructuring and share-based compensation. This result reflects our continued emphasis on disciplined cash management and operating efficiency building on the progress we've made in strengthening the quality and consistency of our cash flow over time. We are very proud of the progress we've made this year and the business momentum that contributed to our strong net cash position. As a result, SAP has decided to further step up its capital returns with a new 2-year share repurchase program of up to EUR 10 billion scheduled to start in February. This decision reflects our confidence in sustainable strength of the business and our continued commitment to returning capital to shareholders in a disciplined and balanced way. Finally, non-IFRS basic earnings per share in fiscal year 2025 increased by 36% to EUR 6.15. Now on to the outlook. As you've likely all seen in the quarterly statement published earlier today, we have provided this year's outlook. We expect CCB growth to moderate slightly over the course of 2026. While some deceleration is anticipated, it is expected to be meaningfully less than what we saw in 2025. At the same time, we see a path for total revenue growth to accelerate, supported by the foundation we've built and the continued strength of our business. And our operating profit outlook reflects sustained operating discipline, driving expense to revenue growth ratio towards the lower end of our long-term operating leverage objectives of 80% to 90%, lower end being good, giving us the opportunity to continue to drive non-IFRS operating profit growth significantly above revenue growth. In addition, in 2026, we expect to generate record free cash flow of approximately EUR 10 billion, supported by continued efficiency improvements and operational rigor. Overall, our guidance reflects a balanced view of the opportunity ahead grounded in disciplined execution and an ongoing commitment to long-term value creation. With now 2025 behind us, we move into 2026 focused on consistency, clarity and execution. The groundwork we've laid across both transformation initiatives and commercial performance puts us in a strong position to deliver against the guidance we outlined today. While geopolitical and trade tensions have taken a certain toll on our top line performance in 2025, the growing need for sovereignty and resilience also offers unique opportunities for those vendors that could offer technologies and tools to reduce dependencies from dominant offerings. As the largest non-U.S. software SaaS and PaaS vendor, there is no company better positioned than SAP to satisfy this rapidly growing demand. Our strategy to design a stack, which is not locked into any particular Infrastructure as a Service vendor is a particular asset in that respect. And our decision to keep developing our powerful SAP sovereign cloud infrastructure, SCI, thereby preserving capability to run Infrastructure as a Service efficiently in our own data centers brought us with another now even more valuable option to deploy our SaaS and PaaS offerings. Despite an unpredictable macro and geopolitical environment, our strategy remains clear and our execution is already driving meaningful progress across the business. Customers are choosing us as their North Star to lead mission-critical change, and we remain committed to helping them move faster scale smarter, become more resilient and modernize with confidence. Thank you. Monika Schaller: Thank you very much, Christian. Thank you, Dominik. We have 30 minutes left, and we are going to move to the Q&A session now. Could you please at the beginning, limit your input to one question only. I have a couple of questions here in the tool already, but I want to kick it off here in the room, of course. Heidi? Unknown Analyst: I have a question related to the topic you mentioned last. You mentioned the better environment in the U.S. as to regulation. And you mentioned your opportunities here given the demand as to more sovereign and resilient infrastructure and solutions offering. But are you facing hurdles there in the U.S., like kind of against the backdrop of growing tensions between the 2 countries and maybe there are some hurdles your competitors are facing here. So they might backfire. Are there any indications for that? Christian Klein: No, actually, the U.S. public sector was one of the best-performing businesses in Q4, and that has completely changed. And those customers are actually less concerned around is the software coded in Europe or somewhere else. They have a clear regulatory framework, obviously, and it has high standards for very mission critical parts of the U.S. government, for example, and still standards for other businesses in regulated industries. So there is not a debate about are you from Europe, are you from the U.S., it's really about adhering to those standards. And that, of course, when you imagine now applying AI to these parts of the world and to their companies, it's very important because now you can really focus on the business value, you can focus on the technological questions. Here, you can find in Europe customers from the same country, asking you for very, very different regulatory standards because, again, there is really this many layers of regulation and that is something where when we really want to leverage the power of Europe, and I'm all in favor for you. We need Europe more than ever. But then at a certain point, someone has to give up power and say, okay, in order to come to one Europe. We can't regulate everywhere. And I guess that is the biggest difference. Also what we have seen, by the way, in Q4, it was very visible also in all the deal closing activities we had. Monika Schaller: Thank you. Let me build on that one. We have one question from writers here in the tools to the same topic. Are your solutions intended to diversify? Or are they intended to replace offerings from non-European providers in the long term? Christian Klein: I don't see it. I mean, Phil sometimes in Germany, we are discussing forever since years now, what does sovereignty mean? And then we are getting very theoretic in, okay, does it need to be a European provider, a U.S. provider. At the end, every little piece of hardware will come at some point of time, either from the U.S. or China, if you like it or don't like it. At the end, it's really about the competitiveness. SAP needs to be more competitive. Our AI needs to be stronger than the ones from our competitors. And then the customers, no matter where in the world will buy that. Obviously, they will also tell us what the sovereignty standards are. I mean, in India, we are also now going to build a new sovereignty standard with some local partners. We do the same in France. We do -- I mean, that is becoming different. But it's still also for SAP, absolutely manageable because when you think about what did we do in the past, there was less regulatory requirements on data and cloud because cloud was -- 30 years ago was not there. But we always localized our software for over 100 countries in the world, and that's now becoming more, especially with cloud and AI. But we have done that in the past. And now we are doing the same thing, obviously, with other requirements coming towards SAP on the cloud and the AI side. Monika Schaller: [indiscernible] Unknown Analyst: You've mentioned a couple of times how the geopolitical tensions impact the business. So how do you expect these tensions to impact the business going forward? I mean, I know there is an outlook, but what impact do you see in this outlook? Do you plan for a scenario in which the tensions might even escalate and maybe a very special question, I've heard that the next SAP leadership meeting is supposed to take place in Washington, D.C. So is there a reason why you have chosen this location? And do you consider changing it against the political backdrop? Christian Klein: I can take the leadership summit question because it came to my table, I didn't think about the geopolitical tensions when we are making these decisions. But obviously, we should probably, I don't know. Look, the leadership summit, it took place in beautiful road over the last 3 years, and we are a global company. And we love to spend our time here, but I also have to support our customers worldwide. And so we made a simple decision, but a long time ago, let's just make sure that everyone lives in peace, so we do it once in the U.S. We are coming back to Europe and then we go to [ ABJ. ] That is the only thing. And sorry to say, we are still a company who has to support global customers. So we cannot make these decisions depending on what is just happening in the world. I mean, obviously, if there would be a war and otherwise, of course. But at the end, we are a global company, and we have people everywhere in the world, and they want to feel part of SAP. And if I would say to my 30,000 people in the U.S., oh, sorry, I don't come anymore. I mean, what kind of signal would we send? I mean, sorry, but this is how we do it, and I feel we are doing it in the right way. Dominik? Dominik Asam: Maybe on the outlook, first of all, I want to emphasize that 2025 was not necessarily an easy year to put it mildly in terms of trade issues, geopolitical tensions. And I find it quite remarkable that on cloud revenues, despite all these adversities, I would call it, we have been able to be really within spitting distance to the midpoint of our cloud revenue guidance. That shows you how predictable that number is by now by virtue of the high share of more predictable revenues. So for the way we now scale the guidance for next year, we have basically assumed the 2025 environment to be the new normal. So I think '25 shows that we have a resilience even if some unexpected events hit us. But of course, we're not embarking any meltdown catastrophe scenarios here in that guidance. But it's, I'd say, a good base to build on because let's all hope that it's not getting worse than what we have seen in 2025. Monika Schaller: Okay. Let me continue with questions from the tool because we have a lot of questions with regards to our share price dropped today by 10% for a short time this morning. What is the market not understanding about the company? Christian Klein: So I'm doing this job now since 6 years. I have seen a lot of ups and downs. And I -- when we were meeting here a year ago and the share price looked really great. I mean we had a great one for 2 years. It's not a reason for me to lean back and say, hey, this is now -- this is it. And so we need to make our strategy and we need to drive our execution independent of what the capital market is right now telling us. And obviously, it's not only SAP when you have followed the market in the last 6 months. I mean, they are all our competitors in the SaaS space. I mean, Alexandra, our Head of IR tells me we are in the penalty box. We are in this penalty box because there are questions around, okay, what is the future of software in times where everyone maybe can generate and code apps. I mean I already alluded to that. When you look back into all of the technological innovations over the last 10 to 20 years, it always starts with -- I mean, these phones here became so powerful because there were better chips, better hardware. And the same is with the LLMs. It always starts with the chips, with the hardware. But I'm 100% sure in order to create value on the business side, you need to move up the stack, and it always happen like that. And what I explained before that these agents need to understand business data. They need to understand business processes in order to deliver the value for our customers. This is very true. And so while there is, of course, a lot of money now going into the chip and semiconductor space, which I totally get, I'm 100% sure that we are uniquely positioned to win the ways on business AI, and we're going to prove that. And so that's why such a share price today is not nice. But at the end, it's super important that we understand our strategy, that we hear from our customers that the strategy is the right one and that we now are laser-focused on the execution of that. And then I'm going to -- and then we will also see again different times. Dominik Asam: And maybe to add some numbers around it. I mean, it's almost like a philosophical war around where the value is created. Is it on the infrastructure layer, which is currently the flavor of the month where everybody is investing. By the way, that's actually good for SAP because we are agnostic and the more money flowing into that, the more competitive that infrastructure will be to run our PaaS and SaaS services on top. We are actually deemphasizing that business. Maybe that will stabilize at some point in time because of the sovereign debate we just had before. On the other side, if I look at the SaaS and the PaaS layer, which we continue to believe for the reasons Christian mentioned, will be a key layer, we are doing actually great, especially in comparison to competitors. You have seen results of some competitors like Dynamics and ServiceNow over the night. There's others to follow. And if you then adjust to an apples-to-apples dollar comparison, we are actually far ahead of the pack in terms of growth rates. So just to give you some data on SaaS, PaaS. In 2025, we had 30% growth in U.S. dollar terms. So that's what you need to compare our competitors to. And I'd say there are some hovering around 20%. There are some hovering around 10%, some in the mid-teens, but nobody is anywhere close there. So we have a strong degree of confidence. Right now, that kind of SaaS, PaaS layer is not super appreciated by capital markets. But I think the jury is still out what ultimately will happen. And by the way, we had a similar bifurcation, I'd say, in the last big tech bubble in 2000, where telecoms and fiber optics were going through the roof, infrastructure again because that's kind of rising tide lifts all boats. And I wonder how much dark fiber today is still in the ground, which has never been lit since then. And on the other hand, by the way, the dark fiber, you can still light today, whereas the GPUs you buy will not hold for 20 years. So jury is still out on that topic, I guess. Monika Schaller: Thank you. Before I move to my M&A question here from the tool, any questions in the room? [indiscernible] Unknown Analyst: Can you hear me? Yes. I have a question about the tariffs. How are the U.S. tariffs affecting your business, both directly and indirectly via delayed spending decisions by your customers? Christian Klein: I mean there are no tariffs on software or software services, which is good. So there is no direct impact, and we hope it stays like that because we have, again, customers everywhere in the world and tariffs -- digital tariffs would immediately fire back no matter where are you in the world. And then on the indirect impact, again, we saw in half year 1 2025, that was not great on the public sector. A lot of new requirements came up. We needed new certifications. But we overcome that. And Q4 was actually really good in the U.S. public sector. And yes, so no, today, there is no actually direct or indirect impact. Let's hope it stays like that. You never know. Let's see what's happening tomorrow morning. Monika Schaller: So back to my tool. The company plans to start a share buyback program. Is there really no other idea to invest for future revenue? Christian Klein: I mean yes, I knew that the question will come. And look, it's a fair question. But look, I mean, first of all, these share buybacks, what we are also doing with these shares, we have employees, and they -- actually, we are also paying them via our shares. So we have actually employee stock programs, and that resonates really well. And so I mean, there is a mean to it. It's not just about financially buying back shares. The second piece, obviously, I mean, we didn't do larger M&A over the last years. We didn't need to. I mean, still here, look at the quotes, we are posting the accelerated total revenue will come organically. No many tech companies can say this. And so -- but going forward, obviously, would I now rule out M&A? No. We will at some point, do M&A, but then more for technological reasons, especially in the data and AI space, whenever we're going to see there is a technology out there which can help to accelerate our AI and the data platform, we have enough financial flexibility to do that. So SAP is now after that share buyback not short of money. We have the flexibility to react. And we will react, but not from a financial standpoint, we will react if we find the right technology and the right company we are believing in. Dominik Asam: May I add on the financial aspects of that, Christian. First, I want to highlight that SAP today has an extremely strong credit profile. So we have a very good rating, much better than some of our competitors. And I dare say we have managed to base that rating more and more on recurring cash generation. Think about the EUR 10 billion guidance we have put out, EUR 8.2 billion that we delivered in '25. So we don't need to hoard an excess cash pile to sustain that extremely strong creditworthiness. So that's the philosophy. And frankly, we always benchmark investments like M&A against investing in our own shares. I always say, why should we do an M&A if investing in our own shares would give us more value. So this is why we think it's part of the mix. And I think it also is evidence to the success we have in really coming up on the free cash generation massively. Monika Schaller: Thank you. [indiscernible]. Unknown Analyst: You said you won't need less people. Does this apply to Germany as well? Christian Klein: That applies especially to Germany because there are -- people here in this part of the world are super well protected, and we are also super happy with these people. We are also investing in Munich, in Berlin, and there are major hubs now in the meantime, Munich more supply chain AI, Berlin, it's a lot about data. And so yes, just still -- I mean, I mentioned some of the headwinds we are having here. We can only always share with our government. Just look at what's happening in China and the U.S. and we can always agree or disagree with certain things. And if it adheres to our values, I will stay out of that. But what happens on the economical side is they are moving super fast. And when it comes to hiring new people, you have them on board in 2 weeks, matters. If you have to reskill your workforce, there's no one you need to ask on, can I apply now these code generation tools to my workforce. There are way less regulations. And all of that is a result when we are asking ourselves, why is there not another SAP here in Europe? I mean, you probably can find some of the reasons. Not everything is related to that. You need also great entrepreneurs. You need CEOs who need to make the right decisions. But of course, also the regulatory environment is very, very important, especially for a tech company because this industry moves much faster than any other industry in the world. Monika Schaller: So we'll talk about AI in a second here on the tool. Any other questions in the room? [indiscernible]? Unknown Analyst: How important are deals with the military for your company? Christian Klein: I mean they are as important as every other deal we are closing. I mean we are running a lot of military defense companies all over the world. I mean we are super proud. We have a project going on with the Japanese Navy. We're doing a lot with Australia and so on. So they are part of our customer base as every other customer. And of course, with AI, what we are doing oftentimes there, it's not about war. It's about things how we can make them more flexible, how can we help with AI on asset management, on the maintenance of their fleets, et cetera. So that is actually what SAP is doing. It's pretty similar to what we are also doing for other industries. So yes, they are part of our customer base, yes. And I mean, maybe just from the size of the industry, the public sector is ranked #5 when you -- and we are dealing with 22 industries round about, and it's ranked #5 from a revenue perspective. Monika Schaller: So 2 questions from the tool, AI first or current cloud backlog first? Let's start with current cloud backlog. Christian Klein: Yes. I mean the one doesn't come without the other. So the AI is actually part of the backlog. And AI is -- because oftentimes numbers -- people ask, what is your AI revenue? The AI sits within our apps. So the AI brings us the apps. The AI help us to win deals in SaaS. The AI helps us to bring more developers on our platform. So it's a natural part of everything what we do. And with that, obviously, it's also part of CCB. Dominik Asam: So what's the question? What's the question on CCB? Monika Schaller: Again, explain CCB. Dominik Asam: Yes. I presume the question might refer to the fact that we have come in at 25% in actual terms and that we had anticipated post Q3 to come in at 26%. You have to understand that when we forecast CCB, it's about also the granularity of all these contracts. And if you look at -- into the specific composition of the contracts we signed, it was slightly different. So the biggest impact we've seen, and we mentioned that in the introductory remarks is that we had a lot of very large deals, 71% of deals being EUR 5 million or higher. And in these large deals, it just takes longer to ramp because the customers start to start with smaller instances in the company and then tackle the really challenging big elephant, so to speak, in the room later. And so there's a little bit of a kind of back-end loading of the ramps there. Second point is that Christian mentioned the very strong traction we had on the defense side also on the other side of the pond. And there are sometimes procurement laws in certain jurisdictions where we have very mighty procurement departments that can impose a termination for convenience on the vendor. And then we cannot put it into the current cloud backlog because that backlog needs to be contractually committed and that option to walk is there. Now in reality, that option is, of course, sometimes theoretical because these are deeply embedded systems, which are extremely sticky. So we're very confident that the revenues out of this will come. But technically, we cannot put it into current cloud backlog. And the last point is what we discussed that there is more and more customers who say, can I really afford to have an off-the-shelf standard plain vanilla U.S. hyperscaler Infrastructure as a Service? Is there a risk that, that might go away quickly for whatever political reasons and look for alternatives? And these alternatives are just about to emerge. Some of them are already up and running. Some are just certified. The certification process takes some time. They also sometimes need to be built. So also from the signing of the contract till the deployment at the customer, it takes time. So these were the 3 factors that actually explain the delta. Each of them not super big, but if they compound together, we talk about that roundabout 1 percentage point. Monika Schaller: Thank you. Any other questions in the room? No. Okay. IDC. You are saying that connecting SAP AI to industry-specific processes is critical to winning customers such as H&M. How can SAP move into AI -- move AI into the industry-specific process at scale. What is your vision for that? After all, these processes vary greatly by industry. Christian Klein: Now I have to be careful that I'm not deep -- diving too deep in our industry technological layer. I mean, first of all, there was a certain reason why always customers lean towards SAP to build industry extensions. A lot of data which sits in an ERP needs to be then also flowing through an industry capability. I mean when you do return claims management, it would be good to have the order data from the ERP. If you talk about supply chain resiliency, you need to also understand how do you produce, how to transport and so on. So you always come back to the core. So then to extend that with industry capabilities makes total sense. And that's why a lot of customers also turning to SAP. So we have the knowledge, we have the people also here in Germany, by the way, a lot, who understand these industries extremely well. Now with AI, we can, of course, completely reimagine how these certain industry capabilities will be done. I mean a machine who needs maintenance, we can actually predict this now way better than with our former asset management solution of SAP because we have agents who are getting demand signals. We have agents which can read out by an LLM then in that case, the machine instruction when something is happening, how to put the machine up faster. We're, of course, getting -- we have the data in our ERP, where are the technical people who can fix the machine. And all of these agents are orchestrating all of that to improve the uptime of the assets of the company. And these are these industry capabilities, which we know very well from the past. And now we have to make sure that we also then co-innovate with our customers the next generation of AI industry capabilities they need. And so -- and technological-wise, I mean, it's the same like in the LOBs, we need the data scientists now. We need the people who can develop the AI, but we have those people. So now it's about going into this together. And I'm sure, especially this industry AI will be a big growth driver for SAP. Can you standardize this 100%? No. I mean, such an agent will look different even within one industry. One mining company will not exactly do asset management like another mining company or the Deutsche Bahn. And this is where we, of course, have to have the extensibility layer so that customers can go into our agent builder and can see, okay, I want to actually automate that process piece on top of what SAP provided. So this fine-tuning of agents, this extension of agents is a super critical capability as part of our solutions. Monika Schaller: If we don't have any other questions in the room, I'll take the final one from the tool combing 2. AI investments. Your peers are struggling to show real AI value. What is SAP's value on AI. And how do you define sales goals in terms of AI for salespeople, if you do not measure AI revenues? Christian Klein: Yes. I mean, first on the value. I mean, I described H&M, I described Fresenius, Avelios. We are doing for other large companies in the world, last mile delivery. So we are doing it already. Now is some of that still to be developed? Yes. But I can say, I speak for everyone in this industry that these things further need to mature. The very important part is of it, do you have the AI foundation? Do you have the data? Do you have the business process understanding? And I can tick like all of that. Now do we need some time and further investments to make that happen? Absolutely. But we are on a very good track and customers are already seeing the first AI agents, and they are believing in it. Just here in Germany, we had a big health care company, they just removed all of their 120 modules they had for cash flow because our AI foundation came in together with an LLM and showed, hey, we can do this way smarter. And then last but not least, how do we measure that? I mean when we are going into now the year, I mean, obviously, we review in how many deals is AI part of that. When you sell supply chain, when you sell HR, don't go to the customer and sell it in the old way, sell them the new capabilities with AI and how we can help to transform the customers' business. That's what we are looking at. We are looking at the value proposition and then obviously connecting it to our product road map so that what we are selling can also be adopted later on. And this is how we're going to steer AI inside SAP. Monika Schaller: Sales target. Christian Klein: Yes. I mean sales targets, again, we -- the people get incentives, if they're selling value to our customers, we see high adoption and AI is part of the solution. It's not like here is a piece of AI and here is the piece of supply chain software. It needs to come together. And only when it comes together, you're going to see that you also get higher incentives because we want to, of course, sell our customers the future, and that's how we steer it and how we incentivize our people. Monika Schaller: Perfect. We're running out of time now. Thank you, Christian. Thank you, Dominik. Thank you, everyone, for joining us today virtually. Of course, also here in the room.
Operator: Welcome to the Indutrade Q4 presentation for 2025. [Operator Instructions] Now I will hand the conference over to CEO, Bo Annvik; and CFO, Patrik Johnson. Please go ahead. Bo Annvik: Welcome, and good morning on our behalf as well. Let's start with a summary of the year 2025. It was a year with market uncertainty and continued dampened demand, although conditions improved throughout the year. We improved operationally and financially gradually during the year, and we also further strengthened our long-term strategic capability as our new segment structure now is fully established. In terms of financial numbers, 2% total growth in order intake, organically also plus 2%. Net sales decreased by 1% in total, of which minus 2% organically, driven mainly by backlog reductions during 2023 and 2024. The EBITA margin of 13.8%. Excluding extraordinary one-offs in the year, the EBITA margin came in at 14.1%. The cash flow was continued on a high level and the financial position of the group is very strong. In terms of acquisitions, we acquired 13 well-positioned and profitable companies during the year with a total annual turnover of SEK 1.3 billion. The Board proposes a dividend of SEK 3.1 per share. Looking at the Q4 highlights, organic order growth of plus 3% with positive development in many companies and all larger customer segments. Three out of 5 business areas grew organically and the remaining 2 were stable from last year. More than half of the companies had organic order growth. The strongest demand from customer was within Energy, Water & Wastewater and Infrastructure and Construction. Net sales decreased by 1% in total. Organically, it was unchanged. The reported EBITA margin came in at 13.3% compared to 14.6% the same period last year. However, underlying EBITA margin was strong at 14.9%, excluding the extraordinary one-offs in the quarter. And this we will comment more on later in the presentation. Underlying EBITA margin last year was 14.3%. Cash flow from operating activities amounted to SEK 1.6 billion, in line with the high level last year, and there were continued inventory reductions from our companies. The acquisition pace was good in Q4 with 4 announced acquisitions, and the pipeline also remains good, both short and long term. Moving into order intake and sales trends. Demand continued to improve and was stronger than last year with positive development in many companies, customer segments and geographies. Development was generally positive in all larger customer segments, and the strongest performance was seen in the Energy sector, Water & Wastewater and for companies with customers within Infrastructure and Construction. Order intake improved in the majority of the companies and was up 3% organically. Order intake was in line with sales, which is good as book-to-bill is seasonally weaker during the second half of the year. As you can see on the slide, currency has a large impact of minus 4%, which together with a minus 1% from divestments impacts total growth on orders and sales materially. Adjusted for currency and divestments, the underlying situation is clearly better with plus 7% growth in orders and plus 4% in sales. Organic sales development was strongest in the Industrial & Engineering business area and also Infrastructure & Construction grew organically, while it was weakest in Technology & System Solutions. Looking more specifically at the sales per geographical market. Sales to Sweden was flat from last year and down in Denmark due to the high comparables from last year when we still had some deliveries to Novo Nordisk from the large order we received 2 years ago. Finland was stable from last year and Norway stronger. Development in Norway is mainly connected to flow technology products for water and wastewater, aquaculture and marine applications as well as other products for infrastructure customers. For the rest of Europe, sales growth was strong in Benelux, mainly due to good development within valves for power generation and also single-use products for pharma production. U.K., Ireland and Germany was down as a result of the generally weaker business climate in those areas. Sales growth in Switzerland and Austria was strong with good developments for companies with customers within Infrastructure & Construction and MedTech & Pharmaceuticals. Sales development in North America and Asia is normally slightly volatile but was down compared to last year and, among other things, related to companies within business area Technology & System Solutions having a weaker demand on the back of the tariff situation. Total EBITA decreased 10% from the same period last year to SEK 1.1 billion, corresponding to an EBITA margin of 13.3%. However, this quarter was strongly affected by extraordinary one-offs, primarily connected to 2 companies in the U.K. within business area Technology & System Solutions. Patrik will elaborate a bit more on this later in the presentation, but I want to highlight that they are non-recurring and extraordinary and you shouldn't expect these type of items from Indutrade. Adjusted for the one-offs, the underlying EBITA margin was strong at 14.9% compared to the underlying EBITA margin of 14.3% last year. The gross margin was continued at a high level of 35.4% and even stronger than last year if you exclude these 2 U.K. companies I talked about. Organic expenses is under control. As mentioned earlier, organic sales growth was strongest in the business area Industrial & Engineering with positive development in many companies, for instance, infrastructure machinery and railway rolling stock. Infrastructure & Construction also had a slightly positive development, however, from low levels as the demand has been dampened for many quarters. We saw, for instance, strong development in the Water Distribution segment. In Life Science, there was a strong development in several areas, for example, single-use companies and broadly in the MedTech segment, but was offset by references connected to sales to Novo Nordisk last year, as I mentioned earlier. Also, Process, Energy & Water had tough references in many companies. And the main reason for negative development in business area Technology & System Solutions relates to project revenue recognition adjustments linked to the U.K. situation I spoke about earlier. Without those adjustments, the organic development was minus 2%, partly connected to the lower sales to the U.S. Moving into EBITA margin development per business area. As mentioned, the total gross margin was strong, which is driven by multiple factors like mix and currency, but it's also a sign of quality in our product offerings and strong pricing power. Industrial & Engineering improved EBITA margin as a result of the strength in gross margin, but also leverage on the organic sales growth. Infrastructure & Construction was close to last year's level, but was negatively affected by a lower gross margin in a few companies. Life Science also improved EBITA margin despite strong sales references from last year, mainly due to positive product mix with good sales development from some high-margin companies. Process, Energy & Water and Technology & Systems Solutions had a weaker EBITA margin compared to last year as a result of the organic sales development and slightly higher expense levels. The one-offs in Technology & Systems Solutions I mentioned earlier is recognized as group items outside the business area, so no impact on the EBITA margin from that in the BA. In 2025, we welcomed 13 profitable and well-positioned companies to the group with a total annual turnover of SEK 1.3 billion. The acquisition pace was lower during the first half of the year, but increased significantly during the second half with 10 acquisitions completed in the second half. In the fourth quarter, we announced 4 acquisitions where the acquisition of ATM Group marked our first acquisition in Spain. ATM is a technical trading company specialized in single-use components for Life Science applications. We have many similar companies in the single-use area in other geographies in Europe. So this acquisition is a good example of our ability to expand into new markets in a controlled yet opportunistic way. We have gradually strengthened our acquisition resources and our business areas work independently with different projects. This together with business segment leaders being more proactive in the acquisition work and internal pipeline generation is a strong platform to use in gradually increasing our acquisition pace going forward. The pipeline is good, both short and long term, and I look forward to announce the first acquisition in 2026 very soon. Looking at the longer trend, we are stepwise increasing number of acquisitions, although number of acquisitions per year can be a bit volatile. Looking at the bridge effect from acquisitions over the last 12 months, we have added over SEK 190 million to the group's EBITA in 2025. Furthermore, we can also see that the acquisitions are margin accretive with an accumulated EBITA margin of 16% for the quarter and 16.4% rolling 12 months. Good to note that this includes transaction costs, so the underlying margin is even higher. By that, I leave the word over to Patrik to comment more on the financial situation. Patrik Johnson: Thanks, Bo. So let's dive a little bit deeper into the data. Total growth for orders and sales in both the quarter and for the full year was plus 2% and minus 1%, respectively. Positively, book-to-bill is at 1 in quarter 4 and above 1 for the full year. And as mentioned earlier, there is a seasonality in the book-to-bill, where the first half of the year is normally stronger than the second. In quarter 4, the gross margin was at 35.4% versus 35.7% last year, but impacted by the one-offs in the quarter. Excluding the one-offs, it was higher than last year. And for the full year, the gross margin remains ahead of last year, even including the one-offs actually. Expenses, not in the table, but they are, as said, under control and increased organically only marginally with around 0.5 percentage point, excluding one-offs. EBITA decreased with 10% in the quarter and 5% for the full year as a result of the one-offs in the quarter. And talking about the one-offs then. First, we had the non-operational one-offs connected to earnout and goodwill write-downs as we have from time to time, and then the net effect of those was small, minus SEK 3 million. But then in addition, we had an extraordinary one-off items of, in total, SEK 125 million from 2 U.K.-based companies in the business area Technology & System Solutions where we identified the need to reassess projects in terms of cost estimates and also degree of completion, particularly related actually to a few large projects with long lead times that have both new complex technology and customer application areas. Excluding these one-offs in the quarter, the underlying EBITA margin improved to 14.9% versus 14.3% last year. Moving further down into the P&L. Finance net decreased by 5% in the quarter and 14% year-to-date because of both lower interest rates and lower debt level. Tax costs decreased 10% in the quarter and 1% year-to-date. Earnings per share was also impacted by the one-offs in the quarter amounting to SEK 1.72 in the quarter and SEK 7.03 for the full year. Return on capital employed declined slightly to 18%. Also that's mainly due to the one-offs in the quarter. Operational cash flow was unchanged from the very high levels last year, and I will elaborate some more on that on the coming slides. Net debt-to-EBITDA end of the quarter -- end of the year is at 1.4x, a low level, same as last year. So let's move on to the cash flow. And that is, as I said, in line with the record high levels of last year, amounting to SEK 1.6 billion in the quarter. Improvements versus last year relates to the strong underlying results in combination with continued good working capital reductions. I think it's good to note that the one-offs in the quarter had no impact on the cash flow. It's a bit of sort of proof that they are truly one-off costs. The organic inventory levels continued to decline sequentially and in relation to sales, and the ratio is now at a very good level, almost historically low levels. As we mentioned before, our companies are relatively capital light, and there is a continuous strong underlying cash flow reflected in a good cash conversion, as you can see also from the slide. And it continues to trend on a rolling 4-quarter basis on above 130%, which is the ninth -- actually ninth consecutive quarter with a cash conversion on that high level. The working capital efficiency also continued to improve. Moving on to looking at the earnings per share development over time. And for the quarter, it decreased 14% to SEK 1.72 mainly due to the one-offs we have spoken about. For the full year, it amounts to SEK 7.03, which is a decrease of 7% versus last year. And we are obviously not satisfied with the EPS development. Besides the one-offs, it is, of course, related to a weaker demand and result development in the last 2 years. Full focus is now to come back on good growth levels, and momentum, I think, is good, growth levels in line with our targets, and also with that then deliver earnings per share growth. And lastly, commenting on the financial position. The interest-bearing net debt decreased both sequentially and versus last year from SEK 8.2 billion to SEK 7.6 billion, driven by the strong operational cash flow. Our net debt ratios are stable and low from a longer historical perspective. Net debt/equity was 44% versus 49% last year. Net debt/EBITDA was, as I said, then 1.4, in line with last year. And if you exclude earn-outs, they were at 1.2 compared to 1.3 last year. And if you look at the financial net debt, which is the part of the debt that relates to borrowing that needs to be refinanced, that is historically low at 0.9. And in the quarter, we issued a new 5-year bond loan of in total SEK 1.3 billion at a margin of 1.13% against 3 months STIBOR, which I think shows our strong position in the credit markets. So in conclusion, our financial position is very strong, creating a good room and opportunity for value-accretive acquisitions and also organic growth initiatives going forward. So thanks from my side, and I leave over back to you, Bo. Bo Annvik: Good. And we summarize the key takeaways. Continued organic order growth of plus 3% and stable organic sales, growth of plus 7% and plus 4%, respectively, if you adjust for currency movements and divestments. We had a strong gross margin in the quarter and the expenses are under control, which resulted in an improved underlying EBITA margin of 14.9%. I also would like to comment -- I also would like to make one additional comment on the projects with the one-off effect we spoke about earlier. The projects are in the absolute final phases of completion. Based on the current information and analysis of the projects, all costs have now been accounted for in a prudent way. The 2 companies are independent from each other, but they have shared a couple of senior managers. There are also indications that they should have realized these deviations and accounted for them earlier. These persons have left the companies during last year. Again, this is an extraordinary situation, which would not be expected in the Indutrade group. Going forward, the market uncertainty remains. However, a slightly larger order book, higher acquisition pace and lower references provide some comfort about the earnings trend. 13 companies were acquired in 2025, and all business areas operate independently with acquisition projects and with a strong focus on internal pipeline generation. This provides good conditions for a gradually increasing acquisition pace. We are now fully focused on delivering annual growth of at least 10% per year over a business cycle and a stable EBITA margin of at least 14%. We have made deliberate strategic investments in our platform. Now it's time to harvest. By that, we close the presentation and open up for potential questions. Operator: [Operator Instructions] The next question comes from Zino Engdalen Ricciuti from Handelsbanken. Zino Engdalen Ricciuti: Just quickly on the projects. The comments you made now, Bo, it sounds like it was maybe a bit related to these individuals. So my question is how you ensure that anything similar does not happen in the rest of the group, so to say? Bo Annvik: Yes. I feel certain that this is non-reoccurring. I've been in this role now for almost 9 years and we have had nothing at all similar to this and, as far as I know, Indutrade has never reported anything like this before my time either. We obviously have internal control functions. We have Boards in all companies. We have our external auditors. We have business control functions on business area level, on group level. We have an internal bank. We have a lot of professional sort of control both processes and standards, which eventually will catch up with wrongdoings in different ways, which is also did this time. But if you have persons who deliberately hide things and they are in responsible positions and they cooperate, it can take some time, which it did. Zino Engdalen Ricciuti: Very clear. And just lastly, is it then, I would say, the very extraordinary circumstance that you put it in the group items and not the business area? Patrik Johnson: Yes, exactly, they are reported -- the result effect of this is reported then on group items, and that's correct. But it impacts the gross margins since they are -- it's related to these projects. Zino Engdalen Ricciuti: Understood. And a question on the Industrial & Engineering, which saw a strong margin. I think you commented that it was from lower levels as well given the business environment they occurred [indiscernible], that they have the ability to deliver on this level going forward as well. Bo Annvik: Generally, I'm quite optimistic that all business areas have opportunities to improve organically 2026 versus 2025. So even if there is not a dramatic business cycle improvement around the corner, there is slightly -- I would say, slightly better environment and more optimistic perspectives when we talk to our companies. So I expect a gradual improvement during the year. And we have now seen 2 quarters in a row with organic order intake improvements, so I think we are trending step-by-step in the right direction, and hopefully this will continue in 2026. Zino Engdalen Ricciuti: And just a last question for me that's M&A related. You previously made some comments about possibly looking into some larger acquisitions and when you maybe also more prioritize the organic growth possibilities of what you acquire. Relating to the average size of the companies acquired in '25, do you make any particular reflection about it? Bo Annvik: I would say that they were generally smaller on average than we usually acquire, and it would perhaps be surprising if that would also happen in 2026. So I think it was not a common average size for -- in a full year perspective on Indutrade. Our primary focus is to buy companies around, I would say, EUR 15 million in size, and that will be the intention also going forward. But sometimes, we find companies which are a bit larger. And if we feel that they still are managed by good entrepreneurs who are engaged in their business in the same way as in our general size scope of companies, we are also interested in them. If we are finding really much larger companies where the owner is not really too engaged and it's more like an externally recruited management team without large financial ownership in the companies, we are, I would say, less interested because that's not the typical type of individuals we would like to have engaged in the companies we buy. So that's a bit of a divide in terms of our interest. But -- so you will probably see mostly, hopefully, the EUR 15 million type of size, but sometimes a bit larger, and then it should be where management has been very engaged in the company also on the ownership side. Operator: The next question comes from Carl Ragnerstam from Nordea. Carl Ragnerstam: It's Carl from Nordea. A couple of questions from my side. Looking into the organic pace, the sales pace, you grew orders 3% above sales organically. On the other hand, Q4 is a bit of a small order quarter, book-to-bill is still at 1. So could you help me a bit understand the backlog dynamics and how comfortable you are in the organic sales trending up here, I guess, from Q1 and onwards? Bo Annvik: Quite confident that, that will happen. So there is a better order backlog, as you say yourself, and we see an organic momentum which is positive and has been positive for the autumn and fall here now. And I think the -- also governments in a lot of Western European countries are step-by-step increasing their infrastructure investments, defense investments. So it's not going to be a super significant step-up in Q1, but this trend -- I assume this trend will continue and at some point order intake will also be realized in sales. And yes, so I'm having an optimistic outlook for 2026 in that perspective. Carl Ragnerstam: That is very clear. And on the gross margin, looking at the underlying gross margin, I assume that it's around 36.5%. You mentioned divestitures, you mentioned acquisitions, you mentioned mix effect. So could you help me unpack a bit on an adjusted basis these levers? And I would also assume that Life Science was an important gross margin driver. You mentioned single-use coming back strongly. So how do you look at the sustainability of this quite good gross margin as you have on an adjusted basis in the quarter? Bo Annvik: Do you want to start, Patrik, from your side, and then I can finalize with some comments... Patrik Johnson: Yes. Yes. I mean we don't have a sort of a full detailed bridge on that, but sort of the gross margin improvement is sort of driven by multiple factors, and you mentioned a few of them. And we are –- I mean, our companies -- as we've talked about for a long time, our companies are good with pricing in general. So I think that's sort of the starting point. But then you have on top of that, I think you have favorable mix effects. And I think Life Science is a good example with the single-use area growing with good margins, and also many of our MedTech companies have good margins. So that's also increasing the underlying margin. And then actually currency then, because we have a lot of trading companies in Sweden benefiting from the stronger SEK. So those are the drivers. I can't give you sort of a breakup of that. Is it sustainable? I think it is. And also, you mentioned also acquisitions and divestments, those impacting. So I think it is sustainable. But of course, it will be difficult sort of to push it dramatically more up, I would say. Bo Annvik: Yes, I agree with Patrik. And I think that's been one of the key trademarks of Indutrade for a very, very long time that we have had stable gross margins. And I've spoken about this in a lot of other calls also that the DNA of an Indutrade Managing Director is really to protect gross margin, and I think they do that in a really good way. The risk factor at some point is maybe the currency. Otherwise, I think we are handling things really well. But I think we will handle that also well. But if that swings against us in this perspective with several percentage points, that will be maybe demanding in some situations. But no, I think this will continue at a good and stable level. Patrik Johnson: And if I sort of -- only one additional input. I think the currency is, of course, one if you talk about risks in the gross margin. Maybe also there is still a dampened -- we don't have a super strong business cycle and it's a little sort of dampened market still and fewer larger deals projects in the market than you would see in a higher growth environment. And when you have more daily business rather than bigger deals projects, the margins are slightly better. So good business cycle with more projects is maybe slightly dampening gross margins. Carl Ragnerstam: Very clear. Coming back to SG&A, you touched upon it a bit. It seems to have flattened out quite nicely. So if organic growth comes back, as you alluded to before here, how much could you hold back on cost? Is it more low performers you're working with perhaps fully offsetting the needs of hiring in some other growing companies? Bo Annvik: Yes. We have worked with SG&A and expenses quite actively, as you know, over the last 2 years, and we have had our ups and downs. And the culture within the group is the glass is half full and they are opportunity driven. I think we collectively have learned to watch certain parameters, and, not least, headcount I think is even higher on the agenda than it perhaps was before. So I think there's going to be a resistance in the system somehow to add headcount, which is going to be more obvious now than perhaps it was before. So some learnings from what we have experienced and some benefits from that going forward. So there, we will keep track on cost versus sales ratios and things like that in a good way. Carl Ragnerstam: Very good. And the final very quick one, sorry for that. Organic growth -- sales growth minus 1% in Life Science. What is it adjusted for the Novo Nordisk comps roughly? Bo Annvik: In the quarter, I think, roughly 3% almost, I think, or something. Patrik Johnson: Yes, almost. I think you have to correct it with around 3%, and so plus 2%. Operator: The next question comes from Opeyemi Otaniyi from GS. Opeyemi Otaniyi: Do you mind just talking through sort of outlook for margins from here? Performance in Q4 was quite strong. And so do you mind just talking through what's driving that? But also are you done with the cost, are you done here today, as we've talked through for most of last year? Bo Annvik: I must apologize, but I didn't exactly hear your question. Which business area did you refer to? Opeyemi Otaniyi: No, sorry, it was just on margin for group. So Q4 was quite strong. And so should we extrapolate that as we look forward into 2026? And so were there any key things driving margin? Was it sort of just the strong gross margin? Or was it the M&A accretion as well? Bo Annvik: Yes. I think you have picked it up yourself in a good way in that sense. It was a good gross margin and M&A is also accretive and costs are under control. So I would say that all those factors have implications on that, obviously. Patrik Johnson: And if you -- I mean, if you look ahead into quarter 1, I think in general you have a seasonality during the year, which is good to understand that quarter 1 is normally slightly weaker. And then margin normally comes back a bit in quarter 2 and is the strongest in quarter 3. And then quarter 4 is maybe sort of an average in line with quarter 2. So that's the normal seasonality. Then you could, of course, have things affecting that. But you start there, I think, then. So normally slightly lower in quarter 1 than quarter 4. Then, of course, it depends on -- organic development is sort of one key driver. And here, we have a slightly higher backlog supporting us going into the year, but still no sort of super strong cycle yet. So -- but again, slightly higher backlog. Opeyemi Otaniyi: Great. Understood. And maybe just switching gears and talking about M&A. Could you give any updates on the phasing of deal activity through the year? So is it kind of coming down from the pace you saw in Q3 and Q4? And could you also just give an update on divestment activity? I know it's a few minor transactions, maybe largely related to construction, but any updates on divestments would be appreciated. Bo Annvik: Yes. If you look at Q3, Q4, we are basically adding around SEK 0.5 billion or EUR 50 million on sales values in those quarters and approximately 5 acquisitions per quarter there. And I definitely think that pace will continue in Q1 and onwards in 2026, and medium term will even increase versus this. But short term, that this pace will continue into the next coming quarters. Divestments, should not really expect any divestments. It can happen. It probably will happen, but it's not very common. And I think we have done those we wanted to do relating to this business cycle situation and so on. So not a very active divestment sort of agenda going forward. Opeyemi Otaniyi: Great. And maybe just lastly, Technology & Systems Solutions organic growth there minus 6%. Do you mind just talking to the drivers there? Was that related to the situation in those 2 businesses you've talked about? Or were there other trends driving that? Bo Annvik: Yes. So if you exclude that U.K. situation, they were at minus 2%. And they -- that's our most international business area. So they have sales into North America and, not least, the U.S., and also to China, Asia. And there has been some weaker sales short term into the U.S. linked to the tariff situation. There has also been some impact in China. They have had more of a buy local policy since a couple of years, as you probably know. But I think most of our companies have realigned, yes, replaced some of that in -- and found other geographies and opportunities. So I think step-by-step, also TSS will improve in terms of both order intake and sales, and that will happen during 2026. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Bo Annvik: Well, then we thank you for participating and asking good questions and wish you a good continued day.
Ilkka Ottoila: Good morning, and welcome to Nordea's Fourth Quarter and Full Year 2025 Results. I'm Ilkka Ottoila, Head of Investor Relations. As usual, we'll start with the presentation by Group CEO, Frank Vang-Jensen, followed by a Q&A session with Frank and Group CFO, Ian Smith. Please remember to dial in to the teleconference to ask questions. With that, Frank, please go ahead. Frank Vang-Jensen: Good morning. Today, we have published our results for the fourth quarter of 2025. We finished the year well with high fourth quarter profitability, higher business volumes and lower costs. It was a strong result, despite the uncertain environment and despite consumer confidence in our Nordic home markets remained muted. For the full year, we delivered a return on equity of 15.5%, in line with the commitment we made 3 years ago. Our performance reflects the momentum we have built since we set out to reshape Nordea in the autumn of 2019. We have grown our business with existing and new customers and improved our customer experience. We are much more efficient today. Back in 2019, we spent EUR 0.57 to generate EUR 1 of income. Now it takes EUR 0.45. We are much more profitable. In 2019, we ranked near the bottom of the world's 100 largest banks based on return on equity. Now we are firmly in the top 20 and among the best in Europe. And we are creating sustainable value for shareholders. Total shareholder return over this period amount to 322% or 26% per annum. I was especially pleased to see us end 2025 on a high note on one other very important metric, customer satisfaction. Our scores are now 4 to 10 index points higher in all 4 business areas and performance has improved relatively to peers. Our results show that Nordea is performing well. By most measures, Nordea is stronger than it has ever been. We carry that strength into our new strategy period for which we have high ambitions as reflected in our new priorities and financial targets. I'll briefly return to those later. Being a strong and resilient financial services group, we also have the capacity to support our customers effectively in the current unsettled global environment. While the geopolitical backdrop remains uncertain, our focus is on ensuring we are consistently there for our customers with advice, with our capital and with a broad range of financial service and a very strong balance sheet. We're well equipped if conditions shift, no matter which direction they will go in. Our diversification is a key advantage among. Our Nordic peers, we are the most diversified financial services group. Income, lending and profits are well balanced across sectors and across our 4 home markets. We also benefit from operating in our home region with strong economies and fiscal positions and stable political systems. These features help us to navigate through volatility and adjust to external shocks. The largest Nordic businesses are export-driven and will feel some impacts. Still, they distinguish themselves by their quality, innovation and deep tech and engineering know-how and very importantly, by the agility and ability to adapt. That formula has enabled them to establish competitive positions in global market positions that are durable over time. For all these reasons, even while risks to the global outlook remain and impacts are difficult to assess, I'm confident that our region is well positioned to continue performing strongly. With that, let's return to the fourth quarter and look at some of the highlights. Our return on equity was strong at 14.4% compared with 14.3% a year earlier. Earnings per share were EUR 0.34, up from EUR 0.32. Corporate lending grew by 8% year-on-year and deposits were up 1%. Mortgage lending increased by 1% and retail deposits were up 6%. Assets under management increased by 13% to a record high of EUR 478 billion partly driven by higher asset values. Net inflows were strong at EUR 6.5 billion. Total income was flat against the previous year. Our net interest income continues to hold up well, supported by higher volumes and our deposit hedge. As expected, in the declining rate environment, it decreased by 5% year-on-year and by 1% quarter-on-quarter. Some of that due to the policy rate reductions in Sweden and Norway in Q3, which has a full quarter effect in Q4. Net fee and commission income was up 3% with solid growth in savings fee income. Net fair value result was up 28% for the quarter. This was driven by higher customer activity and a stronger result in treasury and our markets operations. Costs decreased by 3% year-on-year, reflecting continued active cost management and stable strategic investment levels. Full year operating expenses were EUR 5.4 billion, fully consistent with our guidance. The Q4 cost-to-income ratio was 46.2%, excluding regulatory fees. Operating profit increased by 3% year-on-year to EUR 1.5 billion. Our credit and asset quality remain very strong. Net loan losses and similar net result amounted to EUR 49 million or 5 basis points, once again, well below Nordea's long-term expectation. Due to continued strong credit quality, we were able to reduce our management judgment buffer by a further EUR 17 million in the quarter. Our strong capital generation continued and our CET1 ratio was 15.7% at the end of the quarter. That puts us 1.9 percentage points above the current regulatory requirements. Given our strong 2025 performance, our Board of Directors has proposed a dividend of EUR 0.96 per share for 2025, up from EUR 0.94 per share for 2024. Today, we have published our outlook for 2026, which is the first year of our new strategy period running to 2030. For the full year 2026, we expect a return on equity of greater than 15% and a cost-to-income ratio, excluding regulatory fees of around 45%. Following our strong Q4, we were able to close our strategy period having met or exceeded all of our targets. Our initial return on equity target was greater than 13%. As the environment shifted, we lifted it to greater than 15% and ultimately achieved 15.5% in 2025. We delivered on our guided cost-to-income ratio, even with a significant step-up in strategic investments and maintained strong credit quality and capital generation. All of this enabled strong shareholder distributions, distributions over the 4 years exceeds EUR 17 billion. This clearly surpassed our initial expectation and was right in the middle of the updated target level. Let's now return to Q4, starting with a look at our main income lines. During the quarter, net interest income continued to hold up well in the lower interest rate environment. Our NII was supported by both higher business volumes and our deposit hedge. The deposit has contributed positively to our income year-on-year, increasing NII by EUR 99 million. As expected, the policy rate reductions affected deposit and equity margins. Our net interest margin for the quarter was 1.57%, quite stable following 1.59% last quarter. We saw an encouraging trend in business activity on the corporate side with lending up 8% year-on-year. Mortgage lending also increased but at a slower rate. The 1% year-on-year increase was driven by Sweden and Norway as housing market activity continued to slowly pick up. Retail deposits were up 6%, while corporate deposits were up 1%. Net fee and commission income was up 3% year-on-year, driven by savings and higher customer activity levels. The higher savings fee income was driven by higher assets under management with positive net flows in all channels and higher asset values. The good momentum continued in our Nordic channels with net inflows at EUR 4.8 billion, roughly equally split between retail funds, private banking and Life & Pension. Net flows from international channels were EUR 1.7 billion with positive net flows in both wholesale distribution and international institutions. Brokerage and advisory income was lower, resulting from lower debt capital market income. The clear positive in the quarter was a very strong income growth from our secondary equities business. Net fair value result was strong in the quarter, increasing by 28% year-on-year. That increase was driven by higher customer activity in foreign exchange and interest rate hedging. We also benefited from good performance in treasury and market making. Costs decreased by 3% year-on-year as planned and in line with our guidance. This reflected stable strategic investment levels and continued active cost management including a reduction in the number of employees. During the quarter, we continued with our strategic investments in several areas, including technology, data and AI. At the same time, we are driving operational efficiency and increased productivity. This is our continued focus, and it is leading to more efficient ways of working and a leaner organization. For the full year, costs were EUR 5.4 billion, representing a modest 1% increase despite the inflationary pressures. The fourth quarter cost-to-income ratio was 46.2%, excluding regulatory fees compared to 47.9% a year earlier. For the full year, it was 45%, and we are targeting to take this down to 40% to 42% by 2030. Our credit quality continues to be very strong. Net loan losses and similar net result for Q4 was EUR 49 million or 5 basis points, well below our long-term expectation of approximately 10 basis points. The provisions in the quarter, were driven by corporates with no industry concentration or specific trends. Due to continued strong credit quality, we reduced our management adjustment buffer by 1/3 of EUR 17 million and it now stands at EUR 276 million. We continue to deliver strong capital generation and maintain our robust capital position. At the end of the quarter, our CET1 ratio was 15.7%, 1.9 percentage points above the current regulatory requirements. We continued to deploy capital to support business growth and we also continue to use share buybacks as a way to return excess capital to our shareholders, where we do not find profitable uses for it. During the quarter, we launched and completed a EUR 250 million share buyback program, our fourth of the year. After that, in December, we launched a new EUR 500 million program which is expected to be completed by no later than the 8th of May. Given our strong 2025 performance, our Board of Directors will propose to shareholders at the AGM a dividend of EUR 0.96 per share for 2025 compared with EUR 0.94 per share for 2024. Additionally, the Board has proposed a distribution of the midyear dividend in 2026, corresponding to approximately 50% of the net profit for the first half of 2026. Let's now turn to our business areas. In Personal Banking, we continued to deliver business volume growth with customer activity, again, highest in savings and investments. Households continue to prioritize strengthening their financial positions, increasing their deposits by 5% year-on-year during the quarter. Many customers are also increased their recurring savings amount and they put more money into investment funds. Q4 net flows in our Nordic retail funds were strong at EUR 1.7 billion, up from EUR 0.7 billion we had in Q3. With lower interest rates supporting confidence, housing markets continue to improve gradually, but the pace remained muted. We increased our mortgage lending by 1% year-on-year. In Sweden, we continued to grow, our mortgage market share capturing 27% of the market growth in the period from October to November compared to a back book market share of 14%. Digital activity continued to grow with app users and log-ins up 3% and 5%, respectively. In our previous strategy period, we set a target to ensure all every day banking needs could be met digitally by the end of 2025. We have now achieved this goal, and it has contributed to a stronger overall experience and that record high customer satisfaction level for personal banking. Total income decreased by 3%, driven by lower policy rates. The lower interest income was partly offset by continued net fee and commission momentum, especially in savings, payments and cards. Return on allocated equity with amortized resolution fees was 15%. The cost-to-income ratio was 51%, improving from 53%. In Business Banking, we performed well, driving strong volume growth with the support of our strong digital offering. Nordic SMEs continued to adapt well to the operating environment with stable interest rates supporting higher demand for lending. I'm quite pleased with the increased business activity. Lending volumes increased by 6% year-on-year, led by Sweden, but with growth across all Nordic countries. Deposits were up 5%. During the quarter, we improved customer experience by simplifying onboarding and introducing a new digital tool to enable customers to get started faster. We want to be the leading digital bank for SMEs and a big part of that effort has involved making sure our customers' everyday banking needs are met by our digital offering. In 2022, around 40% of our customers' daily banking needs were covered by self-service functionalities. By the end of the 2025, we stood at 80% in line with our target. Total income for Q3 was down 3% year-on-year with higher volumes and higher net fee and commission income partly offsetting lower deposit income. Return on allocated equity with amortized resolution fees was 15%. The cost-to-income ratio was 45%. In large corporates and institutions, we had a strong quarter, driving double-digit lending growth and higher overall income. Lending volumes were up 10% year-on-year, with particularly strong growth, 20% in Sweden. Deposit volumes decreased by 3% year-on-year. We interpret lower deposit volumes as a sign of increased risk appetite and greater willingness to invest. Debt capital markets activity remained high, if a little lower than in previous quarters, helping us maintain our leading positions for Nordic bonds and Nordic loans overall in '25. During the quarter, we arranged close to 140 transactions for a broad range of issuers that brought the total for the full year to over 600. Our secondary equities business performed strongly and income grew by 26% year-on-year. Nordea markets delivered strong results driven by solid trading performance and increased client activity compared with a year ago. Total income was up 4% year-on-year, mainly driven by higher ancillary income. Net fee and commission income increased by 10%, driven by equities, asset management, products and lending fee income. Return on adequate equity was 15% the cost-to-income ratio improved from 42% to 40%. In Asset & Wealth Management, we drove further strong momentum with growth in all our Nordic channels and strong investment performance. Net inflows in our Nordic channels were EUR 4.8 billion, with private banking contributing EUR 1.6 billion of that. In private banking, we finished the year as we began, with solid momentum and customer acquisition and high levels of customer activity. Overall, customer satisfaction remained at a record high level. In our International channels, we had net flows of EUR 1.7 billion, which was an improvement quarter-on-quarter. About half of that was from international institutions and half from the wholesale distribution channel. Net flows in Life & Pension were EUR 1.3 billion. The performance was again strong across our 4 markets, and we further reinforced our position as Nordics second largest player. Gross written premiums in the quarter amounted to EUR 3.3 billion, up from EUR 3.1 billion a year ago. That took premiums for the full year to an all-time high of EUR 12.9 billion. Assets under management increased by 13% year-on-year to EUR 478 billion, driven by market performance and the positive flows in all channels. Our Empower Europe fund launched in June continued to attract interest during the quarter. It has now secured a net flow of more than EUR 500 million. The fund invests in Europe's energy independence, industrial revitalization and defense. We also saw renewed strong interest in our sustainable investment approach. One of our new BetaPlus funds launched in the summer is already the largest actively managed sustainable ETF in Europe. Total income was down 2% year-on-year driven by lower net interest income. Net fee and commission income was down 1%, driven by customer preferences from lower risk and lower margin products. Return on allocated equity was 30%, that cost-to-income ratio was 48%. All in all, this was a good quarter and a year of success for Nordea. We now have two very successful strategy periods behind us, and we are aiming high for our third. Looking across to 2030, our priorities are clear: To grow strongly in several attractive areas and drive faster than market income growth. To further strengthen our customer offering and to unlock the full potential of our unique Nordic scale. Our Nordic scale is a key source of competitive advantage for Nordea. We have already realized a lot of scale benefits. However, most of the gains still lie ahead. In this next phase, we will take a decisive step to unlock these benefits across Nordea. The priorities and targets we have set are ambitious, and we are fully committed to achieving them. We are targeting a return on equity of greater than 15% each year through to 2030 and significantly higher in 2030 itself. We are also targeting a cost-to-income ratio, excluding regulatory fees, of 40% to 42% in 2030. We are at 45% today and coming down to our target level will be a gradual process. Accordingly, we expect to deliver a return on equity of greater than 15% for the full year 2026 and expect a cost-to-income ratio, excluding regulatory fees, of around 45%. Rest assured that our plan will be executed with the same rigor and focus we have applied over the past 2 strategy periods. We do what we say. We look forward to building on our progress and realizing our ambition to become the undisputed best performing financial services group in the Nordics. Thank you. Ilkka Ottoila: Operator, we are now ready to take the questions. And as usual, please as a courtesy to others, could you please limit yourself to 2 questions max. Thank you. Operator: [Operator Instructions] The next question comes from Martin Ekstedt from Handelsbanken. Martin Ekstedt: So I wanted to first ask about the management judgment allowance. It decreased by only EUR 70 million this quarter against roughly EUR 50 million each over the previous 2 quarters, right? And additionally, only EUR 10 million of that decrease was an actual release. So given I believe you've said at the CMD that you will either use or release the around EUR 300 million buffer that you had when entering '26, over the course of this year. I just wanted to check, should we now see this smaller release in this quarter meaning it's going to be more back-end loaded, the full release in the year 2026 or are you simply seeing a different credit risk environment currently causing you to take a more conservative stance overall? Ian Smith: Martin, thanks for the question. You shouldn't read anything different in terms of our intention on the release of the management judgment buffer. We did, as you pointed out, release more earlier in the year. Actually, Q3 saw quite a big release simply because of a different change in credit conditions, sort of macro related, but no, the portfolio continues to perform well. And as you see with the -- again, a net release of collective over the period, generally, conditions are improving. So there's nothing to read into that. It's simply that we tweaked it in Q4. Our intent remains the same that over time, we will either utilize or release. And as we've said so often, in calls like this, but also in other [indiscernible] that the strength of the portfolio and also the strength of conditions in our home markets means that it's harder and harder to hold on to it. So what we set out at Capital Markets Day remains the case. Martin Ekstedt: Okay. But just to clarify, I think you said that over time, you will either utilize the release, right? But I think at the CMD, you said over '26. Is that correct? Ian Smith: Yes. So that's what we said at CMD, no change. Martin Ekstedt: Okay. Okay. And then just secondly, if I could focus on M&A for a bit. I just wanted to see when we should expect to see some new acquisitions from you. And it is still the base case that you'll be turning your M&A machinery towards Sweden now, as you've said in the past, after your couple of deals in Norway, right? So the Danske piece in Norway deal, I think it was announced in July '23, i.e., it was more than 2 years ago now. In the past, you said that you're aiming for roughly 1 deal per year, considering, was it 25, 30 bps of capital deal, does this also mean that we should see something larger perhaps from you on the M&A front given some time has passed now since the Danske [indiscernible] the Norway deal? Frank Vang-Jensen: Thank you for the question, Martin, it's Frank speaking. We would like to do M&A as long as it's accretive to our business and helpful for our shareholders, but then we need a target -- available target. And it's -- you mentioned Sweden and it's right that we have -- in the new strategy of ours, we have a special strategic focus on Sweden and Norway but we want to grow in all 4 countries. So actually, we are, of course, interested in opportunities across the board as long as it fits well to our strategy. That's what we can say. And then these comes when they come, and you need two to do a tango. And right now, we have really not much to say more than unchanged ambition and we would like to use inorganic as a lever to grow Nordea as well. Martin Ekstedt: Okay. So it's availability on target more than anything else. But does this mean also that you've now saved up some dry powder perhaps? Frank Vang-Jensen: Yes, it's nothing to do with appetite. It's nothing to do with capital. It's nothing to do with us not having a clear view on where that we want to grow and who would we really like to team up with. It's basically about availability. Operator: The next question comes from Gulnara Saitkulova from Morgan Stanley. Gulnara Saitkulova: So the first question is on asset margins. At your CMD, you mentioned that you're not assuming any meaningful margin expansion. Is it reasonable to expect that asset margins will remain broadly stable in 2026? And how does your outlook on margins differ across your key geographies? And across the Nordic margins -- Nordic markets, where do you see the most margin pressure? And where do you believe margins can hold up or even improve? Ian Smith: Thanks, Gulnara. So yes, our base case assumption was that we're not relying on margin expansion. Obviously, very happy to see that come back. But I guess, conditions at the moment are as we've seen throughout 2025, still very thin volumes in the mortgage market and in those circumstances, we do see some of our competitors reducing pricing to try and chase business and things like that. So inevitably, that puts a bit of pressure on mortgage margins. Another feature we've seen, particularly in the second half of 2025 is we grew really, really strongly in corporate lending and particularly in our LC&I business, where our lending is at very much the sort of blue chip and it's been pretty competitive there. So those 2 dynamics have made margin expansion pretty difficult to deliver. So we continue to assume that we won't see margin expansion. History has shown us that when conditions ease and when demand increases as consumer confidence returns, we've seen an improvement in lending margins. And no reason not to expect that, but we do need to see that consumer sentiment improve and the market start moving again on the household side. I mean in terms of just different markets, there really isn't anything to choose between the markets in terms of what we're seeing on margins, particularly. Our competitors are active in most of those markets and where we're seeing them acting aggressively on margins, that's right across the board. But we do, I suppose, have good sort of -- if we split between where things are growing a little bit better, Sweden and Norway versus things being a little bit more flat in -- from a market perspective in Finland and Denmark. So I think that watching Sweden and Norway from a margin perspective is important. But I don't know, Frank, whether you want to add anything to that sort of perspective? Frank Vang-Jensen: No, I think you expressed it very well. So no further comments to that one. Gulnara Saitkulova: And another question on Sweden market share. In Sweden, you have been gaining front book market share. Can you remind us what is driving your ability to stay competitive and grow the front book ahead of the back book? And what do you see as the key levers and competitive advantages that Nordea has in Sweden? And looking ahead, how do you plan to sustain that momentum? And what are the targets that you are setting for the Swedish market? Frank Vang-Jensen: So we are gaining market share, and that's across the board, I would say, in Sweden. And as you know, we have had a special focus on Sweden and Norway for quite long as we have relatively smaller market share than in Finland and Denmark. And back -- I think it's 7 years ago, we decided that there -- now we want to grow our Sweden on mortgages, and we want to grow slightly above our back book market share. And I think we have done that probably each quarter for the last 6.5 years, something like that. So it's nothing new. What is probably a little bit new is that we are growing quite much faster than the back book this year. So 22-ish percentage points of the front book on the mortgage market is where at least the last days that I have and that should compare that with the back book of 14.03% something. So the momentum is strong and -- but it's nothing new. And yes, mortgage is not rocket science. It's about getting many -- retail is about detail. So getting many things right, the customer interface, digital tools, the self-service, getting the entire organization teamed up around what is it that we aim for, how do we do it, ensure that the value chain is effective that we respond well, fast and so on. And then you need to get the pricing right. So we are -- I would say we are slightly above average. So we are not using the tools to buy. We try to position us price-wise where we should in the corridor, but a bit above the average. And that works very effectively. So I'm very happy with the progress the team has made, but that's not really anything new. And when it comes to the auto businesses, they had actually a very nice growth, so SMEs. And within SMEs, we have grown above market for long and continue to do so. In LC&I. In Q4, we had a growth within lending of 20% quarter-over-quarter or quarter -- Q4-over-Q4 last year or '24. So it's -- it's just -- and then corporate banking, by the way, is on fire as well. So it's -- we are just in good shape, and the momentum is great. I don't know if that answered your question, but that's probably the most I can say. Operator: The next question comes from Magnus Andersson from Nordea. Magnus Andersson: It's Magnus Andersson from ABG. You haven't bought us yet as far as I know. Just beginning with a specific one, NII in Norway in Personal Banking was down 11% quarter-on-quarter in local currencies. If you could please shed some light on that? And also related to that comment on the competitive situation in Norway. I think we're getting quite negative signals. Secondly, just on your cost income ratio target, if you could say something about what kind of headcount outlook you have for 2026? And related to costs, anything on the restructuring charge you're supposed to book this year? Frank Vang-Jensen: All right. Thank you, Magnus. Ian, should I start with the competitive situation and then you take all the difficult stuff on the details. Yes, so Magnus, I think Norway is a very competitive country. And it's -- that has almost always been the case. And it's just sometimes it goes even further. Right now, there is a very intense competition and that goes across the board. I think we're doing very well, honestly. But there is a consolidation going on now in the Norwegian market, where the savings banks are becoming fewer and bigger. And then we have the 2 large players, DNB and us basically taking the rest, and then you have a lot of boutiques especially within wealth and investment banking. So it is a very competitive market, but it's also a very interesting market as it's growing. And it's -- as we know, the economy in the country is super strong due to the stronger oil foundation. We're well positioned. We grow across the board. Wealth looks really good. SME, really good. Personal banking looks good on lending and really good on doing more business with the current customers, ours, which has been a strategic initiative, basically race up the customers and cover much more than of the needs than just lending. And that goes very well. They're doing a great job over there. And then we have large corporates and institutions are doing a great job, but it's a tough competition for sure. And that also explains a little bit why the lending is down. But it is -- remember, in Norway, we have our shipping portfolio for the group and shipping has been consolidating itself heavily, which have impacted and then it's a very dollar-based business, which, of course, also impact us. It's -- the dollar has weakened. But I would say, in general, we are very well positioned, I would say. But Ian, do you have anything to add to this more like the strategic assessment or the market assessment before you go into the details? Ian Smith: No. I think you've captured it, Frank. Magnus, so in terms of the detail, yes, we did see a step down in net interest income in PEB Norway in the quarter. I guess a few things are going on in there. I mean, the rate cut in September further reduced deposit margins and where we saw a full quarter impact of that in Q4. Then we've also seen, I guess, in response to the rate cuts, which have been a little longer coming in Norway, a lot of customers have been actively renegotiating mortgage rates, and that really started with the first rate cut and we saw the full effect come through together with a little bit of impact of the September cut in Q4 because we have the usual sort of 2-month lag. And then we only got a partial offset from Nibor because 3-month Nibor didn't move to the same extent. So just a bit of margin pressure in Norway that I think will be felt across the market. I'd be surprised if we didn't see the same things in our competitors there. But look, as Frank says, firing on full cylinders in Norway and really, really pleased with both what we're doing, being able to provide customers with other products and also working with our new customer base that came across from Danske. So I guess those are the moving parts in Norway. In terms of cost, that kind of thing, so yes, we did I guess, through good sort of active management, see the headcount come down during 2025. And as we see us continue to implement our Nordic scale initiative with process improvements, consistency, and indeed, as we start to see some of the early impacts of AI, we would expect to see FTE continue to come down. So I think that trend is set to continue. And then in terms of restructuring, no news to report there. We're still going through our necessary processes, consultation and other things like that. So I guess, to repeat what we said at Capital Markets Day, we don't expect it to be material on a full year basis, certainly lower than the provision we took back in 2019. And we would expect to book that in full in '26. But I guess my advice for now is, because I know some people have made a bit of a guess of what it could be, is I'd say leave it out of estimates for now. We intend to treat it separately from our regular performance KPIs. And when we give our detail, we can talk through it fully then. Operator: The next question comes from Andreas Hakansson from SEB. Andreas Hakansson: So let's start with a quick one, I think. It's following up basically on Magnus' questions on costs. The 45% cost-to-income ratio is all good. Could you just help us a bit? You talked about the 2% cost CAGR over time, but it might be a little bit forward loaded -- or front loaded, so should we think about a 3% cost growth to reach that 45% cost-to-income? Ian Smith: So Andreas, I mean I think the sort of broad consensus is in not a bad place. So somewhere between 2% and 3%, I guess. The things people should bear in mind when thinking about cost-to-income, first of all, do exclude restructuring from that. And then the other is that regulatory fees makes a bit of an impact on cost growth. I mean we've seen really good growth in deposits over the year. Our expectations is that might feed through into slightly higher resolution fee for this year, but we don't have any information on that yet. But otherwise, broadly speaking, I think estimates for cost growth for next year are broadly in the right place. Andreas Hakansson: That's helpful. And then a bit country by country from me as well. And we covered the NII in Norway. But can we just talk a little bit about asset quality in Finland? I mean retail, I think, was at 20 bps, which is some level we haven't seen a retail banking for some time in the region and a business banking 35, so that's on that side. And then on the large corporate side, we saw quite an increase in impaired loans in large corporate in Sweden and Denmark, which was also, I thought, surprising. So could you tell us a bit about what's happening in those markets and in those areas, please? Ian Smith: Yes. So I mean, in terms of the large corporates first, these things are all relative, right? There is a fairly sort of low level of impaired assets across the book. And so where you see a particular situation arise that can have a sort of magnified short-term impact on the metrics. So there's nothing untoward or systemic going on with those movements that you've seen in Sweden and Denmark. In Finland, on both our SME book and on the retail side, we've got a slightly broader base book, a bit more consumer finance in there as a proportion than you see elsewhere in our business. And that tends to mean we have a slightly heavier burden in Finland from credit charges. And then we always have a bit of, I guess, a catch-up on write-off of impairs and other things towards the end of the year. So again, I wouldn't want you to take anything by a concern from that. But we do have a slightly different shape of the book in Finland compared to other countries. Andreas Hakansson: Okay. Fair enough. And then on -- just on the countries as well. If we think about net interest income outlook for 2026, I mean, ECB/Denmark, hasn't cut since June and Sweden cut in September and Norway, we at least believe it will continue to cut a bit further. And with the competitive pressure you talk about, should we see that the NII in Sweden, Finland and Denmark is stabilizing relatively soon, and it will continue to go down in Norway, is that the best way of looking at things? Ian Smith: I think that's a good summary, Andreas. Our expectation, as you say, is for rate stability or sort of rate flat in all countries apart from Norway and then 1 or possibly 2 cuts in Norway. So exactly, as you set out. And what that does is provide a little bit of stability. Into Q1, we've got a lower day count. So arithmetically, that means that we'd see slightly lower net interest income for the group in Q1 this year than the quarter just passed. And then from there, provided that rate picture plays out as both you and I have described then it's about volumes and some impact from margins. And so we're confident that we'll be able to grow as the market grows. And so Q1, probably the trough for NII on a quarterly basis. And then with rate stability, volume should help drive from there. Operator: The next question comes from Namita Samtani from Barclays. Namita Samtani: I just had one. The margin on the asset management business. If I just simply take the asset management revenues divided by the average AUM in '25, it was around 42 bps versus 47 to 48 bps in '22 to '24. So I was just wondering why you think that's the case as flows have been in the higher-margin businesses like private banking and how do you think your asset management franchise stacks up versus peers? Ian Smith: Thanks for the question. So yes, we've talked throughout the year of some of those margin dynamics in asset management and also what we've been able to achieve in terms of flows. So I think to start with, really pleased with the flows, EUR 4.8 billion in our Nordic channels in Q4 and then 1.7% in international. So I think that continued sort of good performance in flows that we saw in Q4 is really encouraging. There's 2 things playing into the -- your arithmetic there on what's happening with margins. The first is, yes, we have seen a bit of a sort of move in preference in the market towards lower-margin product that continues to be plenty of pressure and competition from passive versus active. Our own response to that has been to I guess, plan for it and understand that that's what's happening. And to respond with new product launches and others. And as we said in our report today, some of our sort of BetaPlus products that has a bit of active within them, but also designed to compete with that passive threat, they've performed really well in terms of attracting new money. So a bit of overall margin per share that we see right across the industry. And then something that we saw quite specifically in 2025 is a bit of a preference amongst our customers for lower risk, but then also lower margin products. So if we look at our Life & Pensions business, for example, a strong customer preference for our fixed income products, which we're really good at. So there's a margin and a mix impact going on in there that has driven the effect that you've seen. We're really proud of our asset management business. It's performance, it's a range of products. It's customer preference, all of those kinds of things. So in terms of your question of how we think it stacks up, I think we're in good shape. We recognize that it's a very competitive world out there. And the best response to that is to have the best products and the best performance, and we think we stack up pretty well there. Ilkka Ottoila: And operator, I think we have time for one more question. Thanks. Operator: The next question comes from Nicolas McBeath from DNB Carnegie. Nicolas McBeath: So I had a question on the cost to income outlook for 2026. So you're expecting 45%, which is flat from 2025. While at the CMD, you talked about fall in cost to income every year until 2030. So has anything made you a bit more cautious about the near-term cost to income trend? Yes, so that's my question. Frank Vang-Jensen: Should I take it in. Nicolas, it's Frank speaking. Our ambition has not changed. And what we are saying is around 45%. And of course, we are just recognizing that there is a lot of uncertainty and exactly how the year would play out, we need to be a little bit humble about but there's nothing negative that has happened, and our aspirations are not different to what they have been previously. So we just tried to reflect the start to the year and what is happening in the world, of course, can impact the momentum, but let's see. So don't put too much in that. Ian, I don't know, have you anything that you want to add to this specific question? Ian Smith: No, I think you covered it, Frank. Nicolas McBeath: Do I have room for another question or do you have to wrap up? Frank Vang-Jensen: Yes, you have -- so an extra one is fine. You did only one, so that's fine, so please go ahead. Nicolas McBeath: Okay. So then if may I ask also what explains the strong growth and increase in market share that we see in the large corporate segment in Sweden and Finland? Are you competing with lower margins, taking up the risk appetite or what is the recipe here? Any particular segments that account for much of the growth we're seeing here? Frank Vang-Jensen: So the risk appetite, no. So we are not changing our risk appetite. We are -- we have been there for so many years. So we do know that these things you shouldn't do, that's dangerous. Some will do. Some are doing it, but we are not. But of course, it's a very competitive market for sure. So you would like higher margins, but the market is as it is right now. So then it's about getting more of the customer's business, which we are. Sweden is simply -- we have changed a bit in the organization, leadership and also gotten agreed on the ambition level. And they are -- it's very visible, honestly. They are super ambitious. They're active. They are passionate. They're leaning in and that's what you see in the quarter. Then I -- we cannot deliver a 20% increase year-over-year for all years, but at least we can take a fair share of the market. So that's one. And the other one was about Finland. Now I think it's just about -- Finland has been a bit quiet. And we want Finland to be less quiet in LC&I. And I think that what we see now is a response to that. So no magic, it's just hard work, staying close to our customers and being on the beat. Nicolas McBeath: Any particular segments? Frank Vang-Jensen: In -- within LC&I? Nicolas McBeath: Yes. Frank Vang-Jensen: No. I think no, we are broad. So -- but of course, you cannot -- that will -- yes, we are broad. I would say, we are broadly focused. So there will always be -- in each country, there is always an industry composition that you have to understand, and you will be exposed to these industries then. But nothing really here that sticks out, I would say, not to my information at least. Ian, before we close, is there anything that you would like to highlight before we close the call? Anything we have talked -- not talked about or anything that you want to say? Ian Smith: I think we covered most of the key things, Frank. Maybe just a quick recap of the dynamics that we see going into 2026. So I talked about, we expect NII to come down quarter-on-quarter into Q1, mainly because of lower day count. And if we get that sort of fairly stable rate picture that we've been talking about, then I think Q1 '26 should be the quarterly trough. And after that, NII should grow in line with volumes and margin development. So -- and I think, again, with stable rates, a fairly stable contribution from the deposit hedge. I think as we look at the full year for 2026 on NII kind of expectations at the moment because of what we're seeing with margins and other things is maybe flat to slightly down for the full year. And I guess consensus is maybe a little bit on the high side there. But -- so that's NII. Fees and commissions, we ended the year quite strongly. We'd like to see those activity levels sustained and confidence is going to be key there with everything that's going on in the world. So I think '26, all being well in terms of activity levels, I guess, we expect NCI to increase. But estimating the pace of growth is probably a bit difficult at the moment. And then just a watch out for Q1. Q4, we had annual and semiannual fees of around EUR 26 million that won't be repeated in Q1. And so that was sort of lower day count, probably says that quarter-on-quarter, we might see NCI a little bit down. But look, I think a positive outlook for the year. And lastly, on costs, as I said on one of the questions, I think, broadly speaking, expectations for the full year in a decent place. For Q1, we might see a slightly higher resolution fee than the EUR 35 million we took last year, and we booked all of that in Q1, obviously, so makes it a slightly higher cost quarter than the average. And then we covered restructuring. As I said, I suggest people leave it out of estimates for now, and we'll get back to you when we have something to report, we'll exclude it from our KPIs for the year and as a guidance on size, just repeating what we said at the Capital Markets Day, lower than the provision that we took in 2019. So I think we've covered the key topics, Frank, and I'll hand back to you. Frank Vang-Jensen: Great. Thank you so much. And all, thank you so much for participating. We are here for you. If you have any questions, please revert, but else, thank you for today.
Alexander Bergendorf: Good morning. This is the Axfood Year-End Report 2025 Telephone Conference. And with me today are Simone Margulies, President and CEO; and Anders Lexmon, CFO. In the Investors section of our axfood.com website, you will find the presentation material for today's call. We encourage you to have that presentation at hand as you listen to our prepared commentary. After the presentation, we will be taking questions. A recording of this call will be made available on our website. So with that, I will now hand over the words to Simone. So please go to 2. Go ahead, Simone. Simone Margulies: Thank you, Alex, and good morning, everyone. We report another quarter of above market growth and stronger market positions for all our retail sales. By leveraging the strength of our business concept, we are also preparing for the future and investing in strategically important areas to continue attracting more customers, become even more efficient and strengthen our competitiveness. On this slide, you see some highlights for the quarter, highlights which we will cover during the course of this presentation. Turning to Page 3. So now as usual, I will start with a brief market overview and the review of the quarterly development. Let's go to Page 4. Market conditions in Swedish food retail continued to be characterized by a high activity level in the quarter with intense competition and continued high price awareness among consumers. Overall market growth amounted to 4.5%. Statistics Sweden reported that the annualized rate for food price inflation was 3.5%. This level was somewhat lower on a sequential basis and in absolute terms, the overall price level was quite stable. Growth in Axfood's retail sales amounted to 8.7% and 5.3% excluding City Gross. Our growth was thereby once again above the rate of the market, both including and excluding City Gross. Volume growth from increased customer traffic, strong customer loyalty and new store establishments contributed to the development. We have a long history of market share gains. With the Q4 performance, we have outperformed the market every quarter this year and are reporting our 11th consecutive year of market share gains. We are now on Page 5. Consolidated net sales for Axfood grew 4.4% in the quarter with higher volumes and positive trend in like-for-like sales in all our retail chains. We acquired City Gross in November 2024. So during the fourth quarter, we started annualizing their performance. However, only 2 months of the quarter, which is clear when you took -- look at their comparison figures. So please go to the next page, #6. Group operating profit increased to SEK 860 million, and the operating margin was higher at 3.8%. Operating profit included items affecting comparability of minus SEK 13 million related to City Gross. Last year, items affecting comparability pertained to a reevaluation of our previous minority stake in City Gross. Operating profit and margin on an adjusted basis, which excluded items affecting comparability, also increased. Adjusted operating profit was SEK 873 million and the adjusted operating margin amounted to 3.8%. The improved profitability was primarily driven by high sales volumes and good growth in both total and like-for-like sales, a stable gross margin trend and effective cost control. In 2025, we increased our focus on productivity and costs and implemented measures to improve efficiency within and between the group support functions. In the fourth quarter, we saw some effects from these measures through cost savings, not only in the various businesses, but also in joint group functions, which partly explains the positive profit development there. Let's now turn to Willys and Page 7. Willys continued to outperform the market in the fourth quarter. Growth primarily came from higher volumes as a result of an increased number of customer visits and new store establishments. Willys continues to attract new members into its customer loyalty program, Willys Plus, and see strong loyalty among its customers. Earnings grew to SEK 467 million, which corresponded to a stable operating margin of 3.7%. The increase in operating profit was primarily driven by the increased sales volumes, a stable gross margin development and good cost control. Moving on to Hemkop and Page 8. Hemkop's retail sales growth in the quarter exceeded that of the market. Hemkop saw volume growth driven by increase in customer traffic and in addition, a higher average ticket value impacted the sales development positively. Operating profit was higher at SEK 78 million, and the operating margin also increased to 3.5%. The increase in operating profit was mainly driven by the increased sales, a somewhat high gross margin and solid cost control. Earnings in the prior year was impacted by new store establishments. Turning to Page 9. City Gross demonstrated a positive performance during the fourth quarter. The financial comparison figures here obviously refer to the 2 months period November to December 2024. However, to give you a better understanding of City Gross' underlying sales performance, sales growth numbers are calculated with the full October to December period 2024 in the comparison base. While total growth was impacted by store closures, like-for-like growth was solid and amounted to 3%. City Gross reported a profit for the quarter of SEK 28 million on an adjusted basis, corresponding to an operating margin of 1.2% with positive contribution from its like-for-like growth. In addition, structure measures and efforts to streamline operations contributed to the development. As a reminder, the fourth quarter is generally a strong quarter for hypermarkets. On a reported basis, operating profit amounted to SEK 14 million, which corresponds to an operating margin of 0.6%. This included the items affecting comparability I just mentioned, which refers to structural measures, including discontinuation costs for stores and sales clearance within the nonfood assortment. Turning to Slide 10. Our restaurant wholesaler, Snabbgross delivered growth of 6% in the quarter on both a total and like-for-like basis. Higher volumes through increased customer traffic had a positive impact on sales in addition to higher ticket -- average ticket value. In terms of profitability, the quarterly development was weak. Operating profit amounted to SEK 35 million, corresponding to an operating margin of 2.5%. A lower gross margin associated with temporary market investment was not fully offset by volume growth, which had a negative impact on the earnings development in a very competitive market. Next, Page #11. During the year, Dagab has developed the group's assortment of affordable, good and sustainable food with a continued focus in the fourth quarter on ensuring that our chains can provide Swedish customers with a competitive offering. Dagab's fourth quarter net sales increased by almost 5%, driven by sales to Axfood's own concepts. Operating profit amounted to SEK 314 million and the operating margin was 1.5%. Operating profit was negatively impacted by a lower gross margin due to market investments and negative mix effects. The logistics center in Balsta, along with the high-bay warehouse in Backa and automation of fruit and vegetable warehouse in Landskrona has significantly increased Dagab's capacity and efficiency in logistics. Work continues to optimizing our new logistics structure. And later on in the presentation, I will come back to the next significant investment in our logistics structure, the facility in Kungsbacka that we plan to establish to increase capacity and efficiency also in the southern parts of Sweden. But before that, it's time for our CFO, Anders, to take you through the financials. We are now on Page 12, but please let's go to the next page, #13. And Anders, please go ahead. Anders Lexmon: Thank you, Simone. Net sales for the group increased by 6.1% to approximately SEK 89 billion. Including City Gross, retail sales increased by 16.4%. And excluding City Gross, the increase was 5.9%, which was higher than the food retail market in total, where growth amounted to 4.5%. Operating profit, excluding items affecting comparability, increased 7.4% to almost SEK 3.7 billion. The operating margin, excluding items affecting comparability, remains unchanged at 4.1%, where the City Gross acquisition impacted the margin with minus 0.2%. Then please turn to Page #14. During 2025, the cash flow was SEK 345 million, which was almost SEK 300 million higher compared to last year. We saw strong underlying operating cash flow from both for the fourth quarter and the full year, mainly due to a strong operational performance boosted by positive working capital changes. Last year was impacted by negative calendar effects in working capital. The negative cash flow from investment activities of SEK 1.7 billion was substantially lower than last year as last year was impacted by the City Gross acquisition. Excluding the City Gross effect, we have a higher pace in investments in our retail operations and a lower pace in automation investments compared to last year since we now are through with our investment in the Balsta logistics center. By year-end, Axfood utilized approximately SEK 2.7 billion of our credit facilities compared to SEK 3.1 billion by the end of Q3 and SEK 2.9 billion at year-end 2024. We are now on Page 15. During the last couple of quarters, we have seen a positive trend in the net debt development. The net debt increased with the acquisition of City Gross in Q4 last year and the dividend paid in March, but is now below 2 and excluding IFRS 16, just below 0.5. The equity ratio amounted to 21.2%, which was higher than last year and above the year-end target of 20%. Total investments, excluding leasehold and acquisition amounted to SEK 1.7 billion. In 2025, during the year, we established 9 new group-owned stores, 3 fewer stores compared to the previous year. Our investments in store modernizations have increased compared to last year. Please then turn to next page, Page #16. When we look at the capital efficiency, we had a negative development of our rolling 12-month net working capital. The impact of the City Gross acquisition has increased the KPI with approximately 0.3 percentage points on a rolling 12-month basis, which implies a positive underlying development. Capital employed has increased over the last years, mainly due to the acquisitions of Bergendahls Food and City Gross as well as the investments in Balsta. The level of capital employed increased slightly during 2025, mainly as a result of increased leasehold debt and equity. Due to the increase in capital employed, the return on capital employed decreased to 15.5% compared to last year despite an improved operating profit. And thereby, I have come to the end of my presentation and hand over to you again, Simone. Simone Margulies: Thank you, Anders. We are now on Page 17, and it's time for me to give you an update on our strategic agenda and priorities. So let's turn to Page 18. We have a clear house of brand strategy in our group, and it makes us unique in the Swedish food retail. We aim to deliver the strongest customer experiences, and we are present in all market segments with our different concepts. Our largest brands, Willys, Hemkop and City Gross made significant progress during the past year. With a clear focus on always delivering Sweden's cheapest bag of groceries, Willys once again took market share, increased its earnings and continue to expand with new store establishments. Willys has had a strong momentum for a long time and has excellent potential to reach even more customers. The aim is to open at least 10 new stores for Willys annually in the coming years by also continuously creating an even better customer experience in stores through continuous upgrades to its new store concept, Willys point 0 -- 5.0, sorry. Hemkop also gained market share during the year while improving its profitability. This was achieved through a high pace of store modernization and continuous development, focused on price value, sustainability, fresh products and meal solutions. For City Gross, it was a year of transformation with a series of improvement initiatives in many areas. Important steps forward were made, resulting in improved like-for-like sales growth, a lower cost level and positive earnings trend. We continue to work according to plan to strengthen the chain for the future to become a truly competitive player in the hypermarket segment with the aim to achieve profitability at some point during the second half of 2026. We are now on Page 19. To create the right conditions for our retail concepts to be able to succeed on the market, we leverage our strength as a group and focus on 6 strategic development areas. We elaborated these during the Capital Markets Day in September, and I would now like to go through some of our most important strategic priorities within these going forward. So please turn to Page 20. We strive to offer the market's most attractive assortment, a highly relevant offering that makes affordable, good and sustainable food available to everyone. This works includes both branded products and private labels, but now I will focus more on the latter. Because our extensive range, including the Garant and Eldorado brands, is a significant competitive edge. These products contribute to profitable growth by creating an attractive and distinctive assortment that strengthens the offerings within our various concepts. Our products represent quality and innovation, and we focus a lot on sustainability and health with a wide selection of sustainability label and organic products. In addition, we have a large selection of products with Swedish origin with more than 400 products under the Garant brand. During 2025, we continue to develop our private label offering and launched approximately 270 new products. Our total private label share of sales was diluted by City Gross and that has a lower private label share than Willys and Hemkop. The private label share continued to increase in each chain, a trend that we've seen for a long time. And in particular, now we see a strong growth also in City Gross. We are now on Page 21. We have an attractive store network, a network that we will continue to develop in the coming years by accelerating the pace of expansion while maintaining a high rate of modernization of existing stores. During 2025, we established 9 new group-owned stores. On a net basis, we have thereby expanded our network of group-owned stores with more than 100 in the last 10 years. And we aim to continue on this path also going forward. In addition to store establishments, we have continued to modernize and refurbish existing stores in a high pace. This is really about creating inspiring store environments and great experiences to drive customer traffic and profitable growth. Looking at major refurbishments from 2021, sales from these stores increased significantly more than the market and operating profit also increased. I also want to elaborate on how our house of brand strategy creates flexibility and opportunities in terms of our store presence. We can maximize the opportunity on each local marketplace by having the right concept in the right place. Last year, we converted 2 City Gross stores to Willys because we saw a better opportunity for Willys to be successful in those areas. These conversions have proven to be highly successful as both stores have experienced a substantial sales increase following the conversion. Adjusted for inflation, sales in the Bromma Blocks store in Stockholm was more than 50% higher during the September to December period last year compared to the same period the year earlier when the store was operating under the City Gross brand. And the corresponding increase for the Borlange store was more than 70% during the November to December. This really highlights the strength of our house of brand strategy and how we can leverage our strong portfolio of concepts. Next page, #22. Last year, we communicated that we are planning to establish a new highly automated logistics center in Kungsbacka to strengthen our supply chain in Southern Sweden. During the fourth quarter, we signed the agreement for the automation equipment with Witron, a market-leading dynamic warehouse and order picking systems. We have collaborated with Witron for several years as they have been our supplier of the automation solution in Balsta. The total contracted investment will amount to EUR 265 million during the period 2026 to 2031. On this slide, you can see how the investment undertaking is spread out in the next couple of years, which we communicated just over a month ago. The amount for 2026 is included in our CapEx guidance that I will provide you with shortly. We are continuing to build for the future, and this new logistics structure will create capacity for us to continue to grow and become even more competitive. We are now on Page 23. At Axfood, we have a highly ambitious agenda when it comes to sustainability and health. These are integral parts of our operations, and our scope is the entire food supply chain. During the fourth quarter, we reached a significant milestone as we completed our transition to fossil-free transports, both in our own operations and in procured transports. This is truly a great achievement, and I'm proud that we, as a group, have chosen to take a lead this way to reduce emissions. We now exclusively use renewable fuels or electricity, and we also have target to electrify 50% of our own transport fleet by 2030. Now while the impact on emissions from transition is not fully reflected in our numbers for the year, emissions from transports nevertheless went down substantially in 2025. And looking at the last 5 years period, transport emissions have decreased with approximately 70%. Another highlight during the quarter was that we applied to have 3 climate targets validated by the science-based target initiatives, and we are now on Page 24 in the presentation. We have been working on this for some time now, as you may know. For us, it is, of course, important that goals and ambitions are worked thoroughly through thoroughly. And during the process, we identified a need to develop and improve our existing climate reporting, mostly regarding Scope 3. This work now enable us to better establish a transition plan to show how we will reduce emissions in the long term. We commit to reduce emissions in our operations by at least 70% by 2030 compared to 2024, to have at least 70% of our suppliers set science-based climate targets by 2030, the latest, and to reduce flag emissions by at least 30% by 2030 compared with the base year 2024. Our application will now be revised by the SBTi, and we will come back to you when we have our targets validated. Please turn to the next page, #25. Today, we're issuing the outlook for 2026. We are continuing to invest in our business to strengthen competitiveness and create value for all our stakeholders. Investments are expected to amount to SEK 2.2 billion to SEK 2.3 billion, excluding acquisitions and right-of-use assets. The largest part of this is related to recurring investments in our operations and it also covers expansion through new stores. However, the amount also includes SEK 470 million automation investments for our future logistics center in Kungsbacka, as I just mentioned. To encourage even more customers to shop with us, we will continue to maintain a high rate of new store establishments in 2026 and beyond. Our ambition this year is to expand the store network by 10 to 15 new group-owned stores in 2026. In addition, we want to continue attracting franchisees and add new retailer-owned stores to expand our total store base. To further strengthen City Gross, we will incur SEK 50 million in structural costs in that business in 2026, which will be classified as items affecting comparability. These costs are mainly related to its store base. Moving on to the dividend on Page 26. Axfood has a strong financial position, and the Board of Directors will propose to the Annual General Meeting an increased dividend of SEK 9 per share. The dividend will be split into 2 payments, SEK 4.50 per share in March and SEK 4.50 per share in September. The dividend proposal corresponds to 83% of profit after tax, well in line with our dividend policy. Now turning to the final page of this presentation, Page 27. So let me sum up. We are summarizing a quarter and year in which we attracted growing numbers of customers with increased loyalty and strong positions in all our market segments. We are well positioned to remain a challenger and feel confident about the year ahead. We operate in dynamic markets that continue to be dominated by a strong focus on price value, and our aim is to continue to grow more than the market. That is because we have a strong business model and structure that create opportunities and competitive advantages. For us, the key to drive long-term growth and profitability is based on customer traffic, loyalty and volume growth. We have seen a strong development in all these areas over a long period also in 2025. Based on our great commitment and passion for food throughout the organization, we are leveraging the strength of our business model. And that was all for today. So now please turn to Page 28, and I hand over to the operator to open up the line for questions. Thank you. Operator: [Operator Instructions] The next question comes from Magnus Raman from SB1 Markets. Magnus Raman: I think I would like to start asking about City Gross, where we now see, if you look at the second half of '25 in total, it's a rather clear profitability that you reach H2 '25 on an adjusted EBIT basis. Could you elaborate a little bit on this in comparison to the target you set out to reach breakeven H2 '26. Should we view it that you have already achieved this target now 1 year earlier? Or is it a very big seasonality difference here that lead us to -- that you want to highlight when we look at H1 '26? Simone Margulies: Yes. Thank you very much. Within City Gross, we are in a transition, as you know. We are doing -- we're in the middle of our transformation plan and to do the turnaround. And our aim is to create a really strong core and to create a strong and competitive player within the hypermarket segment. And this is -- it comprises a lot of different initiatives, everything from the operating model to the store concept to the customer offering. We also made things -- restructuring the organization, et cetera. We're also investing in price. And within the fourth quarter, there are seasonal effects for the hypermarket segment that are in general stronger in the fourth quarter. However, we are taking really, really good steps within City Gross. But as you understand, we are in the middle of a journey, and it can go up and it can go down. And we are reiterating that in the second half of this year, we will create an attractive and profitable player within the hypermarket segment. So we are reiterating that goal. Magnus Raman: All right. Just another thing here on the like-for-like sales growth for City Gross. And forgive me if you've already mentioned this earlier in the presentation, I came in a bit later here, but you state in the table 1.5% like-for-like sales growth. And I assume that, that relates only to the November to December period. Can you say if that is correct? And then in the text, you write October to December, 3.1% like-for-like growth. Do I interpret this correctly? And so in that case, September sales, I assume must have been much stronger? Simone Margulies: To start with, yes, you have interpreted correctly. So 3% in the quarter and 1.5% for the November, December period. And that's actually -- as we talked a lot before, that's actually where it all starts. We have to have a positive growth in like-for-like, and that's why we're really, really happy to see that during the quarter. Magnus Raman: But considering that, I guess, that in the mix of these months in the normal quarter, I guess, that the last quarters, i.e., November and December must be -- should be larger. Nevertheless, October, I think I said September, I mean, of course, October, October must have been very strong for the full quarter figures to reach 3-plus percent, while the November to December was only 1.5%. Is that correct? Simone Margulies: We don't actually guide you monthly, but -- and it's also about how you say what kind of comparison figures you have, of course. I would say that we're really happy that we see the positive like-for-like growth that we've seen now for some time for City Gross. And as I told you, it's a journey, and that's why we're reiterating profitability somewhat in the second half of this year because it's -- and we're doing and taking large measures and initiatives to really create and building this strong core. And that's why we have to -- you have to look at the trend here because it can -- some months, it can go up and some months it can go down when we're doing so much changes as we do. So for us, it's about looking at the trend and it starts with the like-for-like growth, but we also made a lot of initiatives regarding cost and organizational changes and also operating model and now we're also developing the store concept. So I think it's important to see the trends. And also I think your 2 questions maybe are linked. We're on a journey, it can go up, it can go down since we're doing so much changes in the field. Magnus Raman: Right. But the trend, if we look at 2 figures, then the trend in like-for-like sales growth has been very stable because you've been delivering now on full quarters, 3 quarters in a row with above 3% positive like-for-like growth and you delivered 3 quarters on sort of adjusted operating profit level. You delivered 3 quarters in a row with sort of improving results then flat in Q3 and now a clear profit in Q4. So -- but all right thank you for the remarks. And then I'd like to ask on Dagab. You mentioned here as one explanatory factor to the weaker margin price investments from Dagab in the quarter. And I guess maybe it's been a special quarter to a certain extent, for example, with the PRO survey taking place in this quarter. Can you elaborate if you think or see that there were some temporary factors as it relates to price investments that weighed on Dagab's margin in Q4? Simone Margulies: To start with, the PRO doesn't have anything to do with this. And we do, as we always do, to deliver for Willys the cheapest bag grocers in the market and also for Hemkop and City Gross it's important to be highly competitive. So I say PRO doesn't -- we don't take that much measures about PRO. But to start -- but to go to Dagab, in Dagab, we see really good effects of the investments in -- we made in the logistics, both in Balsta, but also the fruit and vegetable in Landskrona and the new high-bay warehouse that we have automated in Backa. However, as we said, we have a negative effect in the margin, and that is due to both market investments, but also mix effects. And to elaborate a little bit more about mix effects, when we have changes in customer behaviors and also volatility commodity pricing and then that can vary from month-to-month and quarter-by-quarter. And for instance, we have very -- which we are happy to, we have good volume growth within fruit and vegetables, where we also have had deflation, and that has a negative effect in the earnings in Dagab. So I think it's important to see -- look on our result as a group, how we actually play our business model in the most efficient way. And by that, we're once again gaining market shares, the 11th year in a row and also improving our profitability as a group. Magnus Raman: Right. But do I interpret you rightly that when you then mention investments, you speak about capital investments that have been capitalized and then leading to a higher depreciation impacting results. Is that what you mean? Simone Margulies: No, it's market investment. Dagab is a supporting company for all our customers and their role is to help all the customers to be really competitive in the market and to have the right conditions to take the market development, and that is what we mean with the market investments. Magnus Raman: Exactly. That was my feeling. And then that means, of course, market investment means investment into reduced price, I guess, on certain merchandise for the retailers? Simone Margulies: Yes, it's to increase the competition. Magnus Raman: Yes, yes. And I mean -- so I mean, the quite aggressive price cuts that you took on several items in conjunction with PRO survey must have been impacting profitability somewhere in the chain, either in Willys or in Dagab or both. Isn't that correct? Simone Margulies: I have to start -- I mean, I don't like to talk about the PRO. I think Willys has handled those questions. I mean, Willys -- there are so many methodological errors in that survey. So we don't actually take that much action about that. For us, I think it's important to put our performance in the perspective of a high competition in the market from all the players. And I think that we are navigating that quite successfully since we're gaining market share. We have a high competition in the market, and we also have a consumer that is very conscious with a high focus on price and price awareness. And that's the market that we are navigating quite well, I would say, since we're gaining market share and strengthen our positions with all our brands, our strong brands. Magnus Raman: Great. Then on Snabbgross, you had a material setback in profitability in Snabbgross here in the quarter. And you mentioned temporary market investments here. So can you elaborate a little bit on that if perhaps you already did when you ran it through in the presentation, but for a reminder here on Snabbgross. Simone Margulies: Yes. Snabbgross made some marketing investment that they didn't really get the ROI on in volumes. They had a good growth with 6%, but it didn't actually -- it wasn't enough to cover the negative effects in the margin and in the profitability. So they made a weak performance for the quarter. Magnus Raman: So we should interpret that these will not be repeated, these type of investments then? Simone Margulies: As you know, I don't give any forecasts on the segments, but... Magnus Raman: No, no, without forecast but speak for itself. Simone Margulies: It was not the exact fit. So that way. Magnus Raman: Right. Okay. Okay. Great. And then on -- just looking forward then instead or not forward-looking statements, but looking at what we all know about the halving of the food VAT from 1st April. Do you think that this could -- I mean, we've had a period now where we had very high inflationary pressure where we've seen consumers trading down, so to speak, in the mix of what they consume. Do you think that the relief from the half food VAT might impact the mix in the other direction in any way? Simone Margulies: To start with, we look -- we are very positive -- we look very positive on the reduction of the VAT. I think we have a consumer that has been very cautious, and we still think that the consumer is cautious, and it's very difficult to make any forecast on how the consumer will act. They are -- I would say they're a little bit scared from the price shocks that we have experienced the last years. And also, we have a pretty high unemployment in Sweden. So we think the customer is still cautious and focus on price value and value for money. However, we hope that we will get some positive mix effect in the way that we see -- that we're hoping to see more increased, I would say, purchases within sustainability and sustainable label food, but that's what we're hoping for. We think it's difficult to give you a forecast. The customer is still very price conscious, and there is a high competition in the market. So it's difficult to give you any forecast on this. Magnus Raman: Right. And just a final one here on the falling international food commodity prices seen now for 4 months straight and also topped by the strengthening Swedish krona a bit, have you seen so far any effect as it related to your sort of dollar purchasing from this? Simone Margulies: If you look upon the commodity, we see, as you said, we had higher inflation in the beginning of the year due to dairy, meat and also to coffee, and that was stabilized in the second half of the year. And also with the strengthening of the Swedish currency, of course, it's positive, but more on a longer-term perspective for the consumers, since there's so many things that are affecting the prices. But of course, in the long-term perspective, it's positive for the consumers when we see a more stable development in the commodity pricing and also a strengthening in the Swedish currency. Operator: The next question comes from Rob Joyce from BNP Paribas. Robert Joyce: I'll go one by one as well. Just following on from the last one. So in terms of inflation you're seeing in the market, you mentioned deflation in fruit and veg. Are we seeing slowing inflation further as we start 2026? Simone Margulies: It's difficult to give any forecast on the pricing since there are so many things that are affecting. We also have a geopolitical situation. We have also, how do you say, the climate changes -- sorry, climate changes is also affecting, but we have had more stable pricing since the summer, I would say. How it will end up in the future, it's very difficult for me to give any forecast on. Robert Joyce: But in terms of the first month you've seen, are we seeing prices sort of stable versus December or will they falling slightly further? Simone Margulies: I can't give you any forecast on the pricing since there are so many things that are affecting the pricing. Robert Joyce: Okay. And then maybe you mentioned competitive intensity of the market. Are you seeing any changes in the more recent months? Has that competitive intensity stepped up any players you'd flag? Simone Margulies: I would say we have experienced a very competitive market for the last couple of years, I would say. And there has been a competition from all the competitors, I would say. So we're still in a market with high competition and also a consumer that is very price sensitive and cautious. Robert Joyce: Okay. But no real changes? Simone Margulies: No, we're pretty much in the same market as we've seen for the couple of years now. Robert Joyce: Okay. And then in terms of the VAT cut, is your expectation that, that will be immediately fully passed to consumers? Simone Margulies: Yes, definitely. The VAT is the tax, as you know, that the state put on the food. So I mean that is digitally transferred to the consumers. Robert Joyce: Okay. Okay. And in terms of historical price elasticities, I mean, I guess we don't have much data on when prices actually fall. But do you have any sort of data which suggests how consumers might react to a 6% fall in prices or 4% -- sorry, 5% probably works out? Simone Margulies: No. It's really difficult to know what the customers will do actually since we think it's very positive because the consumer have decreased their economy in the last years and by the lower VAT on food that will increase the buying power for the consumers. How they will act is difficult to forecast since they -- as I told a little bit before, they scarred from the years of high, the cost shock they've had high employment. So if they will save the money or they will buy other things than food or if they will place more money for, it's really difficult to forecast. So we actually don't do any forecast. And it's difficult also if you analyze different markets because it's been different situation in also in these markets. Robert Joyce: Okay. Understood. And just looking at the sort of the Dagab numbers now and how that -- I guess you're sharing the savings more broadly across the group. Do you think as we look to the next investment in the supply chain, we should think about that more as a kind of just cost of doing business. You need to make this investment to maintain competitiveness rather than thinking about this as a sort of SEK 300 million, SEK 400 million boost to EBIT, potentially the people that we were thinking about before from the last project? Simone Margulies: We will -- we are still negotiating regarding the building, the facility. And when we have everything set, of course, we will come back to you with the full scenario. But for us, it's important both to secure capacity for the southern part of Sweden from 2030 going forward. But also it's about strengthening our competitiveness. And when we will open the warehouse, we will have the same cost level as we have today, of course. But then, of course, we will improve our competitiveness over time. Robert Joyce: Okay. And just one more broadly, just thinking about the environment. I know over here in the U.K., when there have been certain cuts on sort of business rates, for example, the grocers in the U.K. didn't really take those to the bottom line. Is there -- what's the political environment about -- if there is a volume increase in grocery, is there room for profitability to improve? Or is it very much focused on driving that consumer experience? Simone Margulies: Could you rephrase the question? Robert Joyce: Just I guess, with the VAT cut, I mean the sort of the overall environment, when these cuts are given to grocers, the expectation is generally the consumer sees the benefit. And I've said in certain markets we cover as well, we've seen those benefits largely just passed to the consumer. But in terms of the potential volumes increasing on the back of lower prices in food, do we think that gets further invested in the consumer? Or can that drive the bottom line? Simone Margulies: Now, I understand. So first of all, as I said, we do not -- it's difficult to make forecast how the consumer will act. But the other part, we have a long-term goal -- target growth for our group set to 4.5%. And that will come from us to continue growing, attracting more customers and also improve our efficiencies within the entire group. So I mean, we're aiming and that's a long-term goal for us to strive towards. But also, I think it's important, if you look upon our figures last year and if you exclude City Gross, we're actually having a margin of 4.3%. So we're heading towards our goal, but it's set on the long term. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Simone Margulies: So that was all for today. Thank you all for your good questions, and see you in the next quarter.
Maria Caneman: Thank you for dialing in this morning. I am Maria Caneman, Head of Investor Relations here at Swedbank. Welcome to our fourth quarter 2025 results presentation. I'm joined today by our CEO, Jens Henriksson; and our CFO, Jon Lidefelt. Jens and Jon will start with their presentation, and then there will be an opportunity to ask questions. With that, I would like to hand it over to Jens. Jens Henriksson: Thank you, Maria. 2025 was a successful year for Swedbank. The target of a sustainable return on equity of 15% was achieved. During 2025, the global economy was, despite tariffs and geopolitical uncertainty, more resilient than expected. A few weeks ago, the International Monetary Fund released an update to its world economic outlook. It revised the world growth forecast slightly upwards for this year against the backdrop of a steady and resilient economy. However, with renewed global tensions and strained public finances, global growth could be curbed. In our home markets, the economic situation continues to brighten, thanks to large investments and strong private consumption. In Sweden, the recovery began in the second half of 2025 and our economist expects growth of more than 2.5% in 2026. Lithuania had a strong development in 2025, and growth is expected to pick up further this year. In Estonia and Latvia growth also is likely to rise in 2026. In these times, Swedbank has once again delivered a strong result. For the fourth quarter, we saw a return of equity of 14.7%, and the return on equity for the full year was 15.2%. Costs developed as planned and the cost-to-income ratio was 0.36, both during the quarter and for the full year. Cost control is strategically important issue and is reflected in all parts of the Bank. Credit quality is solid. Earnings per share for 2025 amounted to SEK 28.98. The Board of Directors is proposing to the Annual General Meeting, a total dividend of SEK 29.80 per share of which SEK 9.35 is a special dividend on the basis of the bank's strong capital position. Our CET1 capital buffer then amounts to 3 percentage points. Swedbank has a strong capital and liquidity position. During the past few years, we have by strengthening governance and internal controls, improved work methods and investments in new technology created a stable foundation for the bank. Now we are looking ahead with increased focus on our customers. At our Investor Day in June last year, we presented our direction, Swedbank 15/27 and it has a clear customer focus. We will strengthen our customer interactions, grow our volumes and increase our efficiency. Availability and efficiency are fundamental. Succeeding in these areas will enable us to be even more proactive, meet more customers and do more business. And in these areas, we've already made significant progress. Our availability in Sweden increased significantly last year. In 2025, we had over 30% more calls with our customers than a year before. At the end of 2024, we answered 29% of incoming calls in Sweden under 3 minutes. At the end of 2025, that figure has improved to more than 80%. We're also constantly working to increase our efficiency. Digitalization and newly developed AI tools are simplifying our work and reducing administration, and we see continued great opportunities in this area. We are now taking the next step. Our business areas will gain more influence and control in developing their businesses. To sharpen our focus on customers, business and productivity, the work of developing services and solutions should be closer to those responsible for our customers. By refining and moving roles and responsibilities and working more efficiently, we can better meet customer expectations and develop our offerings. The acquisition of Stabelo and Entercard have been completed. This will also provide us with new business opportunities and I've had the privilege of welcoming all our new colleagues to the bank. These acquisitions and the changes we are now implementing are all contributing to our 15/27 plan. We are now working to update our strategies and plans for Entercard and in connection with our next quarterly report, we will present what this entails for the bank going forward. During the year, Swedbank's lending increased by SEK 108 billion, excluding FX effects. Of these SEK 47 billion was lending to corporates. Entercard and Stabelo contributed with SEK 44 billion, and private loans increased organically by SEK 17 billion. Our mortgage portfolio is growing and during the quarter, lending and mortgages increased by SEK 23 billion, excluding currency effects in Sweden -- sorry, currency effects. Of this amount, SEK 17 billion came from the acquisition of Stabelo. Lending volumes in our own channels in Sweden increased by just over SEK 4 billion. And that means we have doubled our market share of new mortgages sold in our own channels in 2025 compared to 2024, but that is not enough. We want to grow at least in line with the market. Savings continued the positive development and net inflows to Swedbank Robur amounted to SEK 11 billion during the quarter. At the beginning of 2026, Premium and Private Banking will celebrate 2 years as its own business area. We are expanding our customer base and we strengthened our premium offering during the quarter. The corporate business is developing strongly, both in Sweden and in the Baltics. In Sweden, our market share increased by 0.5 percentage points to 15.2% at the end of November. We have a competitive offering and a strong customer focus. By building sector teams in defense, food production, and forestry and agriculture, we strengthen our capacity to advise customers in these sectors. At the same time, we continue to focus on local business relationships with small- and medium-sized companies by strengthening our local presence. On September 1, our partnership with the new investment bank SB1 Markets was officially launched. They have had a good start in Sweden and have completed several deals. And as you know, Swedbank owns 20% of the SB1 Markets. Given the geopolitical tensions, we continue to strengthen our resilience. Swedbank has a good ability and preparedness to manage the associated risks. After the end of the quarter, Swedbank was informed that the U.S. Department of Justice had closed its investigation into the bank without enforcement. That leaves us with one American investigation ongoing evolving the Department of Financial Services in New York. We cannot assess when it will be concluded, whether we will get any fines. And if we do get fines, the size of such a potential fine. Finally, let me say a few words about the bank's social commitment. In 2025, we met more than 100,000 children and young people in Sweden and educated them in personal finance. And at the end of last year, Swedbank donated EUR 10 million to the Vilnius University Foundation to support growth and prosperity in Lithuania. These are just a few examples of our efforts to create financial health and economic stability in our home markets. With that, let me hand over to our CFO, Jon, who will deep dive into the numbers. Jon Lidefelt: Thank you, Jens. Let me now walk you through the fourth quarter. We delivered a strong result with volume growth across markets and increasing income. We have continued our focus on long-term shareholder value through business growth and cost efficiency. Cost-to-income ratio in the fourth quarter was 0.36 and return on equity 14.7%. As you know, this quarter, we have consolidated both Entercard and Stabelo into our numbers. However, keep in mind that they did not add a full quarter effect. Entercard was incorporated as of December 1 and added SEK 27 billion of lending. Stabelo was incorporated as of November 4 and added SEK 17 billion of mortgages. The CET1 effect was in total 50 basis points in the quarter. As communicated earlier, we will de-risk Entercard's consumer finance business as the risk level is too high. The risk level for new lending has been adjusted. Our intention is also to divest Entercard's back book of consumer finance loans. And going forward, we will report it as held for sale. We have worked with strengthening our organization, and it will be effective as of March 1. The strategic review of Entercard is aligned with this and we will, hence, come back in conjunction with the Q1 report with more details and how this supports our 15/27 plan. Lending volumes grew by 3% in the quarter. Mortgage volumes in Sweden sold through our own channels increased by SEK 4.1 billion, while the savings banks reduced their mortgage volumes on our balance sheet by SEK 1.9 billion. Our Swedish mortgage front book market share in November sold through own channels was 11%, still below the back book market share of 18%. In total, with savings banks volumes on our balance sheet, we have a market share of 22%, the largest actor on the Swedish mortgage market. Stabelo's growth has picked up as Swedbank's strong balance sheet enables lending up to 85% in loan-to-value. In the corporate business in Sweden, the positive development continued with increasing volumes, mainly within the property management and public sector. In Baltic Banking, corporate loan demand continued to be strong across sectors, leading to a loan growth of SEK 5 billion in the quarter. Customer deposits increased in the quarter, driven by Baltic Banking, where we had a good growth in both private and corporate deposits. In Lithuania, deposits increased in the end of the year following the usual pattern due to the annual 1 month extra salary. In Sweden, private deposits decreased slightly as consumption is picking up. Corporate deposits in Sweden were impacted by end of year effects, mainly driven by the larger institutions as normal. Net interest income was unchanged compared to the previous quarter. We saw continued impact from lower rates. However, organic growth and acquisitions partly mitigated this. Higher business volumes had a positive impact of SEK 72 million in the quarter. With lower policy rates, our cash with central banks generate less income, but this is partly offset by lower wholesale funding cost. The Swedish Central Bank cut the policy rate effective as of first of October and ECB's latest rate cut was in June. By the end of the year, these policy rate changes were fully priced in. Hence, we should see the full quarterly NII effect of the rate cuts in the first quarter of 2026. Net commission income increased in the quarter, driven mainly by securities and corporate finance where the annual market maker fees contributed positively. We also had a one-off effect relating to the closure of some retail products, which were phased out several years ago. Asset management commissions benefited from strong net inflows of SEK 11 billion and positive stock market development, measured by assets under management, Robur is the largest player in the fund market in Sweden and the Baltics. Card commissions were lower in the quarter, in line with normal patterns. Net gains and losses increased from an already high level and amounted to SEK 982 million. Income was strong, driven by client trading. The treasury result was impacted by unrealized valuation effects in derivatives and equity holdings. The business activity remained high despite some seasonal slowdown towards the end of the year. Other income increased by 1%. Net insurance decreased, mainly driven by revaluation effects. A reminder of 2 things here, in the result from associated companies we now report the ownership stake of SB1 Markets and Entercard is fully consolidated since December 1. So in the fourth quarter, only 2 months are included under other income. As usual, also a reminder here that our collaboration with the savings banks include cost sharing, for IT development and administrative services. The savings banks share of the cost is included in Swedbank's total cost. And you can see the corresponding income under other income. We delivered on the 2025 cost guidance of SEK 25.3 million, which gives an underlying cost growth of around 3% adjusted for the VAT recoveries and the acquisitions. Costs in the fourth quarter were 4% higher compared to the previous quarter. But as you know, we had a number of moving parts this time. We have, during the fourth quarter, received VAT recoveries of SEK 963 million for the years 2019 to 2023. This including SEK 125 million for the year 2021. Our 2 acquisitions added SEK 180 million to the fourth quarter cost. So what does this mean for 2026? Our full year expenses for 2025 were SEK 24.5 billion. However, our underlying expenses were somewhat higher in total SEK 25.1 billion. This is due to the one-off VAT recoveries of SEK 1.5 billion, the temporary high investments of SEK 800 million and fourth quarter costs related to Entercard and Stabelo of SEK 180 million. Going into 2026, we also need to include the current run rate for our 2 acquisitions in order to have the correct starting point. These add SEK 1.6 billion, which together with our underlying expenses of SEK 25.1 billion gives a new starting point of SEK 26.7 billion. We expect costs to grow by approximately 3% in 2026, meaning costs of around SEK 27.5 billion. This is net of efficiencies, headwinds as well as investments and based on current FX rates. Strict cost control and focus on efficiency is key. Asset quality is solid. Total impairments for the fourth quarter amounted to SEK 355 million. The macroeconomic outlook has continued to improve and led to a release of SEK 186 million. Rating and stage migrations led to credit impairments of SEK 433 million mainly due to downgrades of a few corporate customers. This is partly offset by the continued release of the post-model adjustment, which now stands at SEK 131 million. The quarter also included effects from Entercard that in some increased credit impairments by SEK 415 million, mainly due to the SEK 354 million day 1 accounting effect for Stage 1 exposures. The estimated overall impact from Entercard going forward on the credit impairment ratio is an increase of 1 to 2 basis points. I feel comfortable with our strict credit origination standards and the solid collaterals that secure our lending. Our CET1 capital ratio was 17.8%. REA increased in the quarter due to lending growth and the annual revision of operational risks, which led to an increase due to the uptake of the rolling 3-year average income. Furthermore, as previously communicated, the acquisition of Stabelo and Entercard led to reduction of the CET1 capital ratio of around 50 basis points. The Board proposed a total dividend of SEK 29.8 per share of which SEK 20.45 is ordinary dividend and SEK 9.35 a special dividend. This reduces the buffer above requirement to around 300 basis points. Our capital target remains unchanged with a buffer range of 100 to 300 basis points above the requirement and over time we're targeting the midpoint, 200 basis points. To conclude, we continue to focus on growth and efficiency. We delivered strong profitability while maintaining prudent underwriting standards, strong liquidity and capital positions. With that, back to you, Jens. Jens Henriksson: Let me now summarize. Swedbank has had a successful 2025. We delivered a strong result with a return on equity of 15.2%. The Board of Directors is therefore proposing to the Annual General Meeting, a total dividend of SEK 29.80 per share of which SEK 9.35 is a special dividend on the basis of the bank's strong capital position. Swedbank is well positioned for sustainable growth and profitability. We will strengthen our customer interactions, grow our volumes and continue to increase our efficiency. The future of our customers is our focus. And with that, I give the word back to you, Maria. Maria Caneman: And we will now begin the Q&A session. I'd like to start with a kind reminder to please limit yourselves to 2 questions per turn. Operator, please go ahead. Operator: We will now begin the question and answer session. [Operator Instructions] The first question comes from the line of Andreas Hakansson from SEB. Andreas Hakansson: So first question on your net interest income. We saw some, of course, negative headwind in the fourth quarter from falling interest rates and you say that that's going to spill over into Q1. But what we've been a bit disappointed about over the last year when interest rates have been coming down is all the big -- all the banks' inability to improve mortgage margins that are now continue to be at a very, very low level. I mean the profitability of the mortgage product is today quite unsatisfactory. So my first question is, how do you see that mortgage margins could be developing over this year? Jens Henriksson: Well, I think, thank you for that question. I think it's my time to answer that. And I would say that we do not forecast on that. But as you rightly said, it is a tough competition out there. We've seen that our market share was around 5% of new loans in our own channels in 2024. It was up to around 10% in 2025. And then we have ambitions to reach at least our back book market share, which is 18%. But the competition is tough. [Audio Gap] Hello, I think I've given abrupt answer, but the answer is that the competition is tough. Andreas Hakansson: Yes. That's fine. I mean you have, of course, discounts. That's how the Swedish mortgage market work. Are you currently working with the discounts in order to improve the margins in that way? Jens Henriksson: Well, it is a competitive market, and I'm not going to talk about exactly how we meet our customers. But I think our offering, the key point is that we come as a full service bank. That means that we have attractive prices, we are much faster and we're available. And those who seek total digital solutions, they can go to Stabelo. And we've seen that they have gained market share as well. Andreas Hakansson: Right. And then my second question, on capital. And Jon, you mentioned already that it's still a 200 bps midpoint that you're targeting over time. Can I just ask you, is the timing of moving towards 200 related to the final investigation that's going on in the U.S.? Jens Henriksson: Well, I think I'd answer that in a little bit overall perspective, and that is to say that we have the capital buffer range, which is between 100 and 300 basis points and as Jon said, in our 15/27 plan, we target the middle of it, i.e. 200 basis points. And then talking about the dividend, we have a dividend policy of 60% to 70% with an earnings per share of SEK 29 gives us an ordinary dividend of, what is it, SEK 20.45. And on top of this, the Board has proposed an extra dividend in SEK 9.35. That means that we have a total dividend of SEK 29.8. And with this proposal to the AGM, Swedbank is within the capital buffer range. Further capital release continues to be a judgment call depending on several uncertainties such as the long-running U.S. investigation. Timing of IRB approvals and the uncertain world we live in, and we have no intention of holding more capital than necessary. Operator: The next question comes from the line of Gulnara Saitkulova from Morgan Stanley. Gulnara Saitkulova: Just a follow-up on the prior question. You mentioned the competitive nature of the Swedish market. And given that, could you remind us how you are approaching the defense of your back book market share? Are you prepared to be more flexible on the repricing to retain the existing customers or margin protection is a primary focus? Jens Henriksson: Well, of course, as Jon and I usually say, it's always a balance between market share and profitability. We've said that we want to increase the market share and when we work with our customers, always have individual price setting. And I think the main problem for us has been that we have not been fast enough or not available enough. And I boosted about that in my introduction because that's something we're very proud of. With fewer people working in -- with this, we've managed to reach above 80% of the calls that answer within 3 minutes. And we have had 30% more calls with our customers. And last time I checked, I think we had a waiting time of 14 or 13 seconds, I don't remember. But the key point is, we want to be available, we want to be fast, and we want to grow. Gulnara Saitkulova: And the second question on the volumes in Sweden and the Baltics. How are you thinking about the loan growth into this year? And in particular, given the fiscal stimulus in Sweden and a more constructive outlook for consumer sentiment and confidence where do you expect the loan growth in Sweden to settle? Would mid-single-digit loan growth be a fair estimate for Sweden in 2026? And how the trends differ between households and corporate lending? Jens Henriksson: Well, let me take that as well. And let me take a sort of a broader perspective in the sense that -- as I said in my introduction, the global economy has been a little bit more resilient than expected. And you saw this slightly upward revision by the IMF, but that was then closed before the trade tensions flared up again, which, of course, increased headwinds. And the good thing about Swedbank is that we operate in a region with very healthy fundamentals, strong public finances, low government debt, real wage growth, innovative companies, profitable banks and low interest rates means that our home markets remain well prepared for the future, and I mentioned the growth figures. Overall, loan demand from both corporates and private customers is still somewhat muted. In the Baltic, demand is stronger. And in terms of trade policies impacting our region, we are, as always, very close to our customers, and we can see only limited effects on companies directly exposed to increased tariffs. And the key point is that we expect growth to come from strong public investments and strong consumption. We do not go out and forecast what loan growth is what we expect for this year. But looking back at 2025, Jon talked about, we increased our loan book with SEK 108 billion with -- excluding FX effects. Operator: We now have a question from the line of Martin Ekstedt from Handelsbanken. Martin Ekstedt: So first, congratulations on the closure of the Department of Justice investigation. So just quickly, the outstanding DFS, New York investigation, how does this differ in scope from the one undertaken by the Department of Justice? That's my first question. Jens Henriksson: Well, I don't want to get into the scope. But as I said, after -- we've closed now the U.S. Department of Justice without any further action. That is, of course, a relief. But we are still on investigation by the Department of Financial Services in New York. I still do not know the timetable. We -- I still don't know whether we will get any fines and if we do get the fines, I cannot estimate the size of those. And we've been as transparent as possible during this long-running process. And when something material happens, we'll continue to adhere to that principle. Martin Ekstedt: And then secondly, we have some long-end yield curves deepening behind us now, and we've seen some upward movements on your longer-term mortgage rates as a result. But as Andreas alluded to in his question earlier, it's not really translated into mortgage margin improvement so much yet. So what is your experience currently on customers electing longer term fixed rate mortgages instead of the 3-month floating ones? That would clearly help our margins. We can see limited movement in Statistics Sweden data on a systemic level, but what is your own experience from your customer base? Jon Lidefelt: We see the interest for floating rate mortgages is still high. So we see no major movements towards fixed rates rather the opposite. Operator: The next question comes from the line of Magnus Andersson from ABG. Magnus Andersson: First of all, on lending, we saw that your loan growth in the Baltics was 10% year-on-year in local currencies. If you can tell us what you think about the sustainability of the re-leveraging that seems to take place currently? And secondly, if you could just give us some outlook about what -- if anything has changed on the bank tax front there? And secondly, just on your cost target, if you can give us some color on what is embedded there in terms of headcount development and net IT investments, please? Jens Henriksson: Well, don't get me going about bank taxes because then I need to sort of give the whole landscape. I do that, and then, Jon, you can follow up here. First, as I've done now for many quarters, let me remind you, we -- banks are an important part of our societies. We channel our customers hard earned deposits to lending thus empowering people and businesses to create a sustainable future. And to do that, we need to be profitable. And a sustainable bank is a profitable bank. We are proud taxpayers that contribute to the financing of welfare and security in our home markets. What we do not like are sector-specific taxes, retroactive measures and an unpredictable regulatory environment. What we do like is equal treatment, a rule-based system and an investment climate that fosters growth, financial stability and sustainable transformation. With that said, let me do a quick tour across our 4 home markets. In Estonia, corporate taxes are increasing. In Lithuania, corporate taxes are also up. And on top of this, since 2020, there is a 5% extra tax on banks. In Latvia, we are into the second year of 3 years with an investor tax on NII. That is bad for the investment climate and thus, the Latvian economy. During 2025, our Latvian loan portfolio increased enough to give us a deduction of 1 quarter on the investor tax. In Sweden, the government has decided on a base deduction to the bank tax while delivering the same tax revenues. The tax rate is therefore raised from 6 to 7 basis points in 2026, and the government inquiry will investigate the future design of bank tax further. Another defect of tax on the banking system is that since the end of October last year, we know we have been obliged to place an interest-free deposit of SEK 6 billion with the Riksbank. Jon? Jon Lidefelt: Thank you. If I just add the numbers on the bank tax then, in Sweden, the risk tax due to the base deduction that Jens talked about was increased to 6 basis points. That had an impact of us of SEK 50 million, around SEK 50 million. Then you have the SEK 6 billion in the Riksbank's reserve requirement that we do not get an interest rate for. The cost for that until June and then for 2026, which is the period is SEK 71 million. And we are reporting that under bank tax, and we have taken the full cost upfront in this quarter. So the total SEK 71 million is accounted for in this quarter. If I then move back to your question on cost target FTE and IT. I mean our cost target of SEK 27.5 million is inclusive of the fact that we know that we need to continue to invest quite a lot in order to make sure that we are relevant for our customers also going forward. So that is included in that. Then we do not forecast on FTEs. We have a strict hiring policy. We know that we need to continue to work heavily on efficiencies. Otherwise, we will not be able to meet our long-term objective that we set out when we presented 15/27, namely to over time in a stable [ rate environment ] to increase profit over time. In order to do so, we need to improve efficiencies. And of course, if you extrapolate that in the long run, then it will be very restrictive on FTEs and rather downwards and upwards, but we don't forecast that in the short-term. Magnus Andersson: Two follow-ups. First of all, my question regarding taxes was really, if there is anything new on the horizon in the Baltics, but it doesn't sound like it? And secondly, if you could comment on volume growth in the Baltics and the re-leverage, that's ongoing sustainability there, what do you see? Jon Lidefelt: Sorry, I forgot that one. But no, there is nothing new. The Lithuanian bank tax is falling off this year or has been falling off. Remember, though, that there is a 5% extra corporate income tax that is permanent for banks in Lithuania. The Latvia, as Jens alluded to, we have no news or any -- on any changes. Estonia, there is no bank tax, and they also withdraw the increased corporate income tax. It's not a bank tax, but they changed there. So short answer, no. When it comes to the sustainability of the growth in the Baltics, keep in mind that the loan to GDP, especially in Latvia and Lithuania, is very low, around 20% in Lithuania, both for corporate and private. So there is room to have a good and high continued increase without creating balances in that sense. The worry from our side would then rather be on the quite high salary inflation. If that is not met over time by productivity improvements and that in the longer run risk leading to some imbalances. But otherwise, the lending growth is not. In Latvia, even so that, I mean if you go back to the financial crisis, it's been a continuous de-leveraging in the society. Estonia has leveled out a bit. So I think it is sustainable as long as other things in the economy is sort of sustainable as well and then not at least then that the wage growth is in line over time with productivity. Operator: We now have a question from the line of Sofie Peterzens from Goldman Sachs. Sofie Caroline Peterzens: This is Sofie from Goldman Sachs. So my first question would be on Entercard. You mentioned a few times that you plan to de-risk and cost of risk will only be 1 to 2 basis points higher. If you look at the 2025 numbers, cost of risk would have been kind of 6 basis points roughly. How should we think about the net interest income impact from the deal -- de-risking and also the fact that you're selling some of the back book of Entercard? And then the second question would be on the VAT refunds. You had SEK 1.5 billion of VAT refunds in 2025. How should we think about VAT refunds in '26? Jon Lidefelt: Thank you, Sofie. Yes, you're right. We've put up, and I guess your question around NII and Entercard is then referring to the fact that I said that we will -- from going forward, we will report the back book of consumer finance as held for sale. It means that in the longer run, we would want to sell it. The new inflow has been adjusted. It will take some time. It's not going to happen in the near future, but over time, that will go out. I also said that we will implement a strengthening of our organization in the -- as of March 1, and that we look at the Entercard strategy in conjunction with that. So when we present the Q1 report, we will come back with more details on both those matters, how they are linked together and how they support 15/27. But there's no changes in the short-term when it comes to the back book. When it comes to the VAT, we have then 2024 that we could get something back for. The amounts are gradually shrinking a bit. And as the interest rate has come down and going forward, we have included this in our ordinary business unless something unexpected is coming in. And from this year -- from last year when we started to get the VAT back, we have also adjusted sort of how much VAT that we account for in our business. So I don't expect the same type of amounts going forward as we have had presented for 2025, it's going to be on a different level. Sofie Caroline Peterzens: Okay. And just to be clear, after 2026, we shouldn't see any more VAT refunds? Jon Lidefelt: No major ones. As I said, we have 2024 that could be up for something. We haven't applied for anything there. But compared to the amounts that we have seen now historically, it's much, much smaller amounts. Then there is always sort of small adjustments in the tax paid since -- but that's not on these major levels that we've seen. So nothing major going forward is what I expect. Operator: The next question comes from the line of Nicolas McBeath from DNB Carnegie. Nicolas McBeath: So I had a question on the implications from the DoJ investigations. So now that it's settled or closed actually without any penalties, and we are approaching the end of this investigation. Can you comment and help us understand if you have any substantial excess resources in the bank working with these investigations or with AML that you think you can reduce? There seems to be some expectations among some investors and parts of the market that there is significant potential here. So it would be helpful if you could help us kind of clarify this. Jens Henriksson: Well, when we started this work, it costs a lot of money, but we've seen that, that costs have decreased substantially. I think the last time we sort of gave it out as a special part of our cost was like more than a year ago. And I mean, we do not have -- it's very small costs associated with this. Nicolas McBeath: So that's for the investigations. Could you comment on how many employees you have in the bank working with AML and what you think is kind of the long-term level that you should be as to be compliant and be well resourced from a AML perspective? Jens Henriksson: I would say we have around 17,000 people in the bank working fighting money laundering, because that's everybody in the bank. And I think that everybody's role to do that. Then we have something called economic crime prevention, which is a group within the bank. And they always continue to adjust whether they can use new technology. And we always search for efficiencies there. The key point is this is an integral part of the bank's work and it will keep on being that way. So we don't get into the same position we were a few years ago. Nicolas McBeath: All right. And then my second question, just a question on the cost guidance. For the 2026 cost guidance, do you have any implementation costs for Entercard included? And have costs related to the consumer finance back book being excluded. So you're basing that cost guidance on some costs falling off from that business being divested? Jon Lidefelt: No, we have not adjusted the Entercard cost going forward. We have assumed sort of some efficiency gains from Entercard just as we generally do for the bank as a whole in the SEK 27.5 billion. But then you're right that in the longer run, there might be other synergies that we have on a very high level, talked about before. But when we present both the adjustments of the organization and the strategy for Entercard going forward, we will allude more on those. Operator: We now have a question from the line of Jacob Kruse from Autonomous Research. Jacob Kruse: [Technical Difficulty] Operator: The connection with the questioner has been lost. We will proceed by taking the next question, which comes from the line of Riccardo Rovere from Mediobanca. Riccardo Rovere: Just one, it's not 100% clear to me whether you think your managerial buffer for common equity Tier 1 [ purposes ] in the foreseeable future is going to be 300 or maybe the middle of the range, 200 basis points and somehow related to that. I just wanted to have an idea if you have been active in SRT or you think you could be active or something that you're looking at in the foreseeable future to optimize your capital absorption? Jon Lidefelt: Thank you, Riccardo. Yes, as Jens said, we are now in our buffer range of 100 to 300. Then the long-term target of 200 still stands. And when we will get in there, as Jens said, it's a judgment call based on the various uncertainties. I think if you look into the future that SRTs will be a tool, we have not used it now, but we're definitely not ruling it out in the future. Riccardo Rovere: Okay. And just a very, very quick follow-up. But in the foreseeable future, given maybe geopolitical tensions, do you think it's more appropriate at least for the moment to stay at 300? Jens Henriksson: Well, I think Jon answered that direct and that is that further capital release continues to be a judgment call depending on the several uncertainties such as the long-running U.S. investigation, the timing of the IRB approvals and the uncertain world we live in. And as I've said, we have no intention of holding more capital than necessary. Operator: The next question comes from the line of Markus Sandgren from Kepler Cheuvreux. Markus Sandgren: I was just going to come back to the capital question. The 100 bps you got in add-on in P2R for IRB noncompliance, is the best guess of the net effect of that and reinflation still 50 bps lower requirement net-net? Jon Lidefelt: Thank you, Markus. If you go back, if I take some time back, then we said that when we are through the IRB approvals, we expected at least 50 basis points positive impact, which then mainly was related to the fact that we have this Pillar 2 add-on in Sweden, and the fact that, that is also related to mortgages, which is under the mortgage floor. Then when we presented reports last year when we had the SREP in Q3 last year, then we concluded that they had adjusted that due to the new capital adequacy rules for standardized. So we back then got to 20 bps release. So of the 50, we had gotten 20. So in that sense, that would be 30 basis points left of that. Operator: [Operator Instructions] We now have a question from the line of Jacob Kruse from Autonomous Research. Jacob Kruse: I hope you can hear me this time. I just wanted to ask, firstly, on your AI -- where your thinking is on AI. Do you see at this point near-term opportunities to reduce staff by the deployment of AI? Or is it still more of an exploration mode? And then my second question is just on commission income. How do you think about the -- I think in the quarter, you had about SEK 100 million of one-offs? And I think it was a relatively solid quarter across most product lines. How do you think about the outlook here? Is this in line that can continue to grow? Or do you need to see a meaningful pickup in the domestic economies? Jens Henriksson: Well, first, a few words on AI and then Jon will follow up. And we've used AI for a long time. We used that in anomaly detection and we're using it more now. And one cool thing that me and the full Board was doing a few months ago was listening in on calls and you see call summarization by AI. This is a very cool feature. And that, of course, is an instrument that our customer representatives can use to be more available because they don't have to spend that much time on writing summaries. They can be there for our customers. And that's one of the reasons we're seeing that our availability has increased so much, and we have so many more calls with our customers. And we see continued use of AI within the bank. That said, we steered the bank on cost and not on FTEs. And we want -- which we're very clear for this, we want to do more business and we want to meet more customers. So that is my point on that. Jon? Jon Lidefelt: And if I then go into the NCI, yes, you're right, we had a one-off of roughly SEK 100 million part from the -- on this, which was then related to retail product that we decided to close several years ago, but that has now been running off. If you look at NCI, then -- and remember what I've said before is that we are the biggest when it comes to bank [indiscernible] and payment processing in Sweden. [ Bank Europe ] increased the commission expense for our customers by 30% in the beginning of this year. This is due to the big investments needed to transform the Swedish payment system. That is more visible. It's the same for everyone, but it's more visible for us since we are the biggest. What they also did in the fourth quarter, they added a one-off commission cost, which in our case, was around SEK 35 million that, of course, is weighing on this result. And I think this will be there as long as this is in the investment phase that the cost -- commission costs will be higher on that row and hence, weigh on the net. Card commissions are seasonally a bit lower in the quarter compared to the third quarter where you have the summer months and with people traveling and so forth. But then you also have, over time, a big movement between rows here because we are working more with concepts, both in the Baltics and Sweden, which means that some income has moved from the card line to service concepts. Over time, this is something that we believe is good both for our customers and for us. Asset Management is long-term growing. What you think you need to remember here is that we have around 40% of our fund capital denominated in U.S. dollars. And of course, the strengthening of the Swedish krona is, to some extent, and hence, counterbalancing the strong stock markets in U.S. But this is definitely over time, a good and growing income for us. And if you look at 15/27, this is an important area, and Jens also talked about now celebrating 2 years with the Premium and Private Banking business area, which is also a testament to that this is an area where we see long-term growth, and it is important and it's in our DNA. Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Maria Caneman, for any closing remarks. Jens Henriksson: Well, I'll steal the word then I say thank you for calling in. And I think as Jon and I have talked about today is that Swedbank is well positioned for sustainable growth and profitability by strengthening our customer tractions, grow our volumes and continue to increase efficiency and the future of our customers, our focus. Looking forward, meeting you either on the road, on teams or next time in April. Until then, take care, and thank you for calling in.
Operator: Good morning, and welcome to the Gjensidige Q4 2025 Results Presentation Call hosted by Mitra Hagen Negard, Head of IR; and Geir Holmgren, CEO. Please note this conference is being recorded. [Operator Instructions] I will now hand you over to Mitra Hagen Negard to begin today's conference. Thank you. Mitra Negård: Thank you, operator, and good morning, everyone. Welcome to this fourth quarter and full year 2025 presentation of Gjensidige. My name is Mitra Negard, and I am Head of Investor Relations. As always, we will start with our CEO, Geir Holmgren, who will give you the highlights of the quarter and the year, followed by our CFO, Jostein Amdal, who will run through the numbers in further detail. And we have plenty of time for Q&A after that. Geir, please. Geir Holmgren: Thank you, Mitra, and good morning, everyone. We have concluded a strong year, driven by solid efforts across the organization. We moved forward with confidence, guided by a clear commitment to honoring our purpose of being there for our customers when it matters most. Over the course of the year, we processed nearly 1 million claims, including a higher volume related to Storm Amy, maintaining a strong emphasis on speed and efficiency. We always continue to introduce innovative solutions that help prevent damage and simplify everyday life, further strengthening the value we provide. Our customers continue loyalty confirms the relevance of what we do. In parallel, sustained efficiency initiatives have contributed to a return to strong profitability. So let's turn to Page 2 for comments on our fourth quarter results before moving on to the full year results. We generated a general insurance service result of NOK 1.297 billion. This result includes a total of NOK 502 million in expenses related to a reduction of the book value of the core IT system and the downsizing of our workforce in Denmark. Adjusted for this, the insurance service result was up almost 8%, reflecting continued strong revenue growth, efficient operations and continued good cost control. The combined ratio when adjusting for the expenses I just mentioned, was 83.8%, and I'm very pleased with the 0.7 percentage points improvement in the underlying frequency loss ratio. Our investments generated returns of NOK 482 million, contributing to a profit before tax of NOK 1.754 billion and a solid return on equity of 27.3%. Jostein will revert with more detailed comments on the results for the quarter. Turning to Page 3 and looking at the year as a whole. We delivered on all financial targets. Our combined ratio improved by 2. 5 percentage points to 83.4%, thanks to a strong revenue growth of 11.5%, supported by successful implementation of pricing measures and continued operational improvements. Our cost ratio at 12.7% was well within our target. Adjusted for the NOK 502 million in expenses I just mentioned, our cost ratio was 11.5%. We have a solid capital position with a solvency ratio of 188% at the end of the year after subtracting total dividends of NOK 14.5 per share. Investment returns for the year were good, which together with the results from our pension business contributed to a return on equity of 27.3%. So let's turn to page -- to the next page for further comments on the proposed dividend. The Board has proposed a total dividend of NOK 7.250 billion for the year, consisting of a regular dividend of NOK 5 billion and a special dividend of NOK 2.250 billion. The regular dividend is equivalent to NOK 10 per share, up more than 11% from 2024. The special dividend is equivalent to NOK 4.5 per share. For our Norwegian general insurance customers, this once again bodes for distribution of a solid customer dividend from the foundation, Gjensidigestiftelsen. The regular dividend corresponds to a payout ratio of 76% for the group. The proposal requires approval from the FSA since the total amount, including the special dividend, exceeds 100% of net profit in Gjensidige Forsikring. Based on very strong capital position for the group, we expect the application to be approved. We have made a small technical revision of our dividend policy to clarify our target to pay out growing regular dividends. No other amendments have been made and the revision does not change our existing practice. Moving on to Page 5. The process of replacing our core IT system in Denmark started in 2018. The system is fully implemented for our Private portfolio in Denmark, and we are currently carrying out thorough testing and quality assurance before starting full implementation for the Commercial portfolio. We are strongly convinced of the operational benefits of the new core IT system in Denmark. Due to technological advancements and the continual evolution of business requirements, it has become evident that the operational lifespan of the existing core systems in Norway and potentially also in Sweden can be extended by several years. We now have high optionality in evaluating future alternatives. We expect to make the decision regarding Sweden first based on thorough assessment of business needs, available technology and the requirements for a system that offers sufficient flexibility to adapt to changing conditions. I will now turn to the next page. Private property insurance in Norway saw lower underlying profitability this quarter, mainly due to fires. Claims frequency was high, reflecting the impact from the Storm Amy in October with a claim recognized as a large loss, primarily in the corporate center. Repair costs developed as expected with 4% increase year-on-year. We continue to raise prices, though more moderately, with average premiums up just over 14% last year. And over the next 12 to 18 months, we expect the repair cost inflation to remain in the 3% to 5% range. Our current average price increase is 9%. For private motor insurance in Norway, underlying profitability improved year-on-year, supported by targeting prices and claims frequency was flat, reflecting Storm Amy and an underlying increase estimated at 1% to 2%, offset by the impact from a mild December. Repair costs rose 4.1% and average premiums increased 16.5%. Inflationary pressures are easing, but are likely to stay in the 3% to 6% range. Our current average price increase for private motor is 10%. And finally, on this slide, following 2.5 years of targeted pricing measures following large shift in both claims frequency and average claims cost, we will adjust the level of detail presented going forward as the underlying trends are now well established. I would nevertheless like to emphasize that we will continue to price at least in line with the development in claims cost. So moving to Page 7. The strong growth momentum in Norway continued this quarter, reflecting price increases across the Private and Commercial segment as well as some volume growth in Private. The general renewals for Commercial are solid, reflecting strong competitiveness in the SME part of the Commercial market. Our consistently high retention rates represent a strong vote of confidence from our customers. Underlying profitability for Private Norway improved year-on-year, while natural inherent volatility resulted in a lower underlying profitability for Commercial Denmark. Commercial. Denmark showed improved profitability in both the Private and Commercial portfolio, reflecting positive underlying development alongside reserve adjustment and normal inherent volatility. It is also very encouraging to see high retention for the Commercial portfolio. We continue to implement measures to enhance profitability in Denmark, most recently through a reduction in the workforce. While this may have a short-term impact on growth for the Private portfolio, it is a deliberate and expected trade-off to strengthen profitability. Our Swedish operations continue to build on their positive trajectory, showing sustained progress underpinned by solid growth and strengthened profitability. We have recently concluded the renewal of the majority of our reinsurance programs. We are satisfied with the required capacity -- that the required capacity has been renewed with unchanged retention levels. Reinsurance premiums represent approximately 2% of our premium income and the renewals were completed at lower risk-adjusted premium levels. Over to Page 8. I'm pleased with the strong sustainability progress through 2025 and the recognitions highlighted here. I'm also particularly pleased to have received renewed confirmation of our AAA rating for -- from MSCI. Our focus on damage prevention continues to create customer value, business impact and support our broader sustainability ambitions. Sustainability is at the core of our business, and we firmly believe that sustainable operations are essential to long-term value creation. So with that, I will leave the word to Jostein to present the fourth quarter results in more detail. Jostein Amdal: Thank you, Geir, and good morning, everybody. I will start on Page 10. We delivered a profit before tax of NOK 1.754 billion in the fourth quarter. The insurance service result was NOK 1.798 billion when adjusting for the increase in operating expenses related to the reduction in book value of the core IT system and the expenses related to the reduction in the workforce. The result also reflected higher large losses, which included NOK 349 million in claims related to the Storm Amy, net of reinsurance and including reinstatement premium. Higher runoff gains contributed positively. Private delivered a higher result, driven by both Norway and Denmark. The improvement in Norway reflects continued strong revenue growth and the lower underlying loss ratio for motor, travel and accident and health insurance. We also achieved a further decrease in the cost ratio. The positive development in Private Denmark was driven by a combination of revenue growth, reserve adjustments for property insurance and an improved cost ratio. Commercial also delivered a higher insurance service result. In Norway, the insurance service result reflected revenue growth, partly offset by natural inherent volatility in claims for property and accident and health insurance, while motor insurance showed improved profitability. In Denmark, higher results were driven by revenue growth and improved underlying frequency loss ratio for all the main products and a lower cost ratio. In Sweden, the increase in insurance service result was due to improved underlying profitability and revenue growth. Property insurance in both portfolios, private motor and payment protection insurance showed better profitability. Higher runoff gains also contributed positively. The Pension segment reported a pretax profit of NOK 187 million, mainly driven by a higher net finance income. The net result from our investment portfolios amounted to NOK 370 million in the quarter, with positive returns for most asset classes. Other items was minus NOK 100 million this quarter, with the improvement mainly reflecting a positive year-end balance related to the transfer of profits to Natural Perils Fund. In addition, mobility services had a higher result. Following the completion of ADB Gjensidige earlier this month, this is the last quarter in which the results of the Baltic business are reported. The decrease in result was due to a lower insurance service result and net financial income. Turning over to Page 11. Our strong growth momentum continued in the fourth quarter with insurance revenues for the group increasing by 10.4% in local currency. The increase was mainly driven by pricing measures across the Private and Commercial portfolios in all geographies in addition to higher volumes in Private, Commercial in Denmark and in Sweden. The growth in the Private segment was driven by both Norway and Denmark. Private Norway showed a strong growth momentum even when excluding the home seller insurance product. This strong development was primarily driven by price increases in all main product lines. But I'm also very pleased to see that volumes increased not insignificantly for motor, property, travel and accident and health insurance. The growth in Denmark was also strong, thanks to price increases and higher volumes for all main products. Growth in Commercial was also driven by both Norway and Denmark. In Norway, the growth was driven by price increases for all products and solid renewals. As in the previous quarters last year, growth for some products within accident and insurance and for larger customers was muted due to a continued focus on profitability improvements. Growth in Commercial Denmark was driven by price increases for all main products and higher volumes for property, accident and health and liability insurance. Growth in Sweden was primarily driven by higher volumes related to leisure both and payment protection insurance in the Private portfolio and motor insurance in the Commercial portfolio. Price increases for all main product lines also contributed to the growth in insurance revenue. Turning now to Page 12. The loss ratio increased by 1.3 percentage points, reflecting an increase in large losses. Higher runoff gains contributed positively. I'm very pleased with the development in the underlying frequency loss ratio, which improved by 0.7 percentage points, reflecting improvements in all segments and geographies except Commercial in Norway. Let's turn to Page 13. Our commitment to operational efficiency remains strong. The group's cost ratio was 15.9% this quarter. Excluding the expense related to the core IT system and workforce reduction in Denmark, the cost ratio improved by 0.8 percentage points, reflecting revenue growth, targeted efficiency measures and strict cost discipline. Both geographies in Private and Commercial in Denmark showed a lower cost ratio. We continue to strengthen our competitiveness, particularly in Denmark, and we're working to optimize our cost base across the group to create greater capacity for future investments in technology and growth. Over to Slide 14 for comments on our Pension operations. We are very pleased with the performance of our Pension business, which delivered a pretax profit of NOK 124 million, including the change in CSM this quarter. The increase over the fourth quarter in 2024 was mainly driven by a higher net finance income in addition to a positive effect from discontinuation of reinsurance contracts during the quarter. Higher profitability for the disability pension product also contributed positively, whereas lower results for child pension negatively impacted the results. Net finance income was NOK 73 million, reflecting running yield return from real estate, marginal spread tightening and an increase in interest rate levels. The unit-linked business continues to grow with a number of occupational members increasing by almost 18,000 members and assets under management up more than NOK 17 billion year-on-year. This drove administration fees and management income higher. However, higher expenses due to the growth in business weighed on the result, bringing it down compared with the same quarter in 2024. Moving on to the investment portfolio on Page 15. Our investment portfolio generated positive returns from most asset classes, driven by running yields, lower credit spreads and positive equity markets. The match portfolio net of unwinding and the impact of changes in financial assumptions returned around 50 basis points, mainly reflecting lower credit spreads and the fact that the investments did not fully match the accounting-based technical provisions. The free portfolio returned around 70 basis points, driven by running yields, lower credit spreads and positive equity markets. The risk in our free portfolio remained low. A few words on the latest development of our operational targets on Slide 16. Customer satisfaction in the fourth quarter of [ 77 ] was in line with the same period last year, but remained slightly below our target. We continue to take steps to further improve our customer offering and satisfaction levels. Retention in Norway remained high and stable at 91%. Retention outside Norway was unchanged at 84%, but we're pleased to see that Commercial Denmark increased retention from 85% to 86% this quarter. The improvement in the digital distribution index this quarter reflects a significant increase in digital sales and digital service as well as a steady number of digital customers. Distribution efficiency progressing well, primarily as a result of higher sales in Private Norway. Digital claims reporting was stable during the quarter with a slight increase in Sweden and automated claims processing in Norway improved further. Turning to Page 17. We had a solvency ratio of 188% at year-end, down from 191% last quarter. Note that the completion of the sale of operations in the Baltics will have a positive impact of approximately 5 percentage points on the solvency ratio. This impact will be recognized in the first quarter of 2026 as the transaction was completed after year-end. Solvency II operating earnings and returns from the free portfolio contributed positively to eligible own funds. Note that the reduction in book value of the core IT system does not impact eligible funds. The seasonal impact from premium provisions reflecting growth and higher profitability contributed to the operating earnings. The proposed dividend for 2025 reduced eligible own funds by NOK 3.1 billion this quarter. In addition, more of the Tier 2 capital is eligible this quarter. The impact from growth on the non-life capital requirement was offset by an approval of a minor change in internal model. Capital requirement for life decreased due to annual update of the model assumptions and parameters. Capital requirement for market risk increased due to recalibration of certain parameters and higher exposure towards equities in our Pension business. And with that, I hand the word back to Geir. Geir Holmgren: Thank you, Jostein. To sum up on Page 18, I'm encouraged by the progress we made in 2025, demonstrating our strong financial and operational resilience. We will continue our effort to retain our leading and unique position in the Norwegian market, while strengthening profitability and growth both in and outside Norway. We will ensure that pricing remains ahead of claims cost development and maintain a disciplined focus on operational efficiency. I am confident that we remain on a positive trajectory toward delivering on our financial targets for 2026. So finally, on Page 19. Before we open up for questions, a reminder of our Capital Markets Day on 26th of February. Please refer to the invitation published on 15th of January for further details. And with that, we will now open up the Q&A session of this presentation. Operator: [Operator Instructions] And the first question today comes from the line of David Barma from Bank of America. David Barma: So firstly, I wanted to ask you about the Danish business in the quarter on the Private side. And you note there was a support from reserve releases during the quarter. Can you come back on that and explain what that is, please? And then secondly, on private conditions and pricing conditions in Private Norway, please, the helpful comments you show on the pricing impact in January are still really positive. You're now at record combined ratios. So can you give us some color on how long you think that can last and what the rationale is to still be pricing that much ahead of claims inflation in 2026? And then lastly, coming back on the core IT system announcement. Can you explain your decision regarding this change and whether we should expect you to make further investments on your Norwegian and Swedish systems in '26? Jostein Amdal: Thank you, David. I'll start on the first one. As we -- as I said and we wrote during the year, reserves on claims already reported will be adjusted as they are going through the claims adjustment process. So that's a very natural part of the business. And in the fourth quarter, we have seen a positive effect on claims in -- especially property, Private Denmark, which were reported earlier this year. And that's improved, of course, the results in the fourth quarter in Private Denmark. We're not disclosing exact amounts there, but there's nothing particular or special about it. It's a natural part of the process. And we see that the underlying improvement in Private Denmark is very high in this quarter. But if you look at the year -- the whole year figures, they are not affected by those kind of intra-year movements on the reserves, and they also show a very solid improvement in the underlying frequency loss ratio of 4.5 percentage points. So there is a steadily increasing improvement, I would say, in the underlying profitability of the Private business in Denmark. Geir Holmgren: Yes. Regarding the Private business in Norway, I'm very satisfied with the development -- positive development we have had in the past. I see that we have succeeded with all our profitability measures, including changing terms and conditions, high retention levels or deductibles and also pricing measures. If you -- now in January, as mentioned and as you can see in the presentation, we are still increasing prices both for motor and property, which is above the inflation levels we are seeing at the moment. I will see that we have to consider on an ongoing basis what to do during the next quarter. So I can't share any comments on future pricing, but we will always have a position where we are doing the repricing at least in line with all the inflation numbers we are seeing. If you look at the retention level, still very high. We have very loyal customers in Norway. We have been through the Storm Amy and also in -- by the end of the year, we had a storm in the northern part of Norway. We see that the customers are very happy with the way we are handling the claims, which is very positive and probably our main purpose of being relevant for customers that we are helping customers when they actually need us. So -- and your last question regarding the core IT systems and what about investments in Sweden and Norway. We are doing an assessment what to do in Sweden as Sweden is definitely a smaller portfolio. So we have to definitely be assured that -- make sure that we are doing investments in Sweden, which are in -- at a level which could be easily handled by the Swedish business alone. The reduction on the book value we are doing this quarter gives us definitely higher optionality on what to do in Sweden and in Norway on a later basis. And the positive thing here is that we see that technological development we have seen in the past and definitely, we see the next years gives us more an improved optionality to what to do and -- which also I expect to have a good impact on expenses used in relative to Norwegian core IT system going forward. David Barma: Just coming back on the first one on Denmark. Is this a step change in profitability in the market? Or is it more a function of conservativeness in the attritional and how you book your attritional loss ratio earlier in the year, that was actually unwarranted? Jostein Amdal: No, I think this is a real improvement in profits, but the magnitude of this is somewhat influenced by these reserve adjustments. But there is no doubt about that in our portfolio, there is a real improvement in the underlying profitability there. Operator: The next question comes from the line of Vash Gosalia from Goldman Sachs. Vash Gosalia: I have 2 questions. The first one on claims frequency. So here, when I talk about claims frequency, I would love to get your inputs on how do you expect that to develop ex natural catastrophe? And what I'm trying to understand is, obviously, you're growing pricing at 9%, 10% with claims inflation mid-single digits. But I guess to get a better view on combined ratios, it would be helpful to understand how you think frequency is going to develop. And the other part to this particular question is, obviously, Norway is a bit more ahead of the curve in terms of vehicle adoption or new vehicle adoption. Do you see a structural decline as a result of that in your claims frequency, especially in motor? So that's the first one. The second one is on your cost ratio. So obviously, that has -- it's pretty strong adjusted for the NOK 502 million. And even in 3Q, it was pretty strong, in my opinion. So just trying to understand, is that like the new normal level? And can we expect that to improve further? Or is that -- or would you say that's like a fair level for our models and our forecast? Jostein Amdal: I'll start, Geir. Thank you, Vash. I mean we need to distinguish between the different products if we talk about claims frequency because they will be different. And with reference to nat cats, I assume you're mostly focused on the property side here. So for private property, we have talked about for a number of years that there is a long-term increase in the claims frequency due to climate change that there will be more water-related damages affecting our private book of business, and we need, therefore, to increase prices a bit more than just the inflation figures look like. And so we have done. We don't have any specific forecast for you on the claims frequency for neither property nor motor, except from what we've shown you in this page in the presentation where we do think there is -- except for these climate-related things on property, a fairly flat development in the claim frequency for property, whereas for private cars, vehicles, we do think there's an underlying small increase in claims frequency ongoing and at the same level that we talked about in the previous quarter, which is 1% to 2%. But the important part is that we are monitoring this very tightly and are ready to adjust pricing or terms if we see any unexpected developments. Geir Holmgren: Regarding cost ratio, you know our financial targets for 2026, and we are reporting cost ratios in the last quarters, excluding the expenses related to the IT core system in the last quarter, you see that it's below 13%. We have an organization where we have a very high level of cost discipline. We are many measures to improve cost efficiency on an ongoing basis. We see that our distribution efficiency, both in Norway and gradually in Denmark is improving based on use of data and how we actually run our business in the distribution area. You see that the hit rates when having a dialogue with customers is at a very high level, around 45% to 50% of every -- of the calls coming in are converted to sales. So -- and you also see on the more operational KPIs in the presentation that we are improving when it comes to automation and digitalization, which is helpful when it comes to cost and cost efficiency. So as an organization, we have a strong focus on cost discipline and referring to our financial targets is my best comment. Operator: The next question comes from the line of Hans Rettedal from Danske Bank. Hans Rettedal Christiansen: I was just wondering if you could clarify for me the write-down in the IT system because it's not completely clear exactly what it stems from, given the fact that you're saying you're extending the lifetime of the Norwegian and Swedish systems, but at the same time, sort of looking into the Swedish system here going forward. Am I correct in thinking that it's the value of implementing the Danish system into Norway and Sweden that's being written down? That's the first one. And then the second one is just again back on pricing in Private Norway. I understand that you can't say anything about the absolute pricing levels for 2026, but just trying to get understanding of what your expectation for inflation is because the range, 3% to 5% to 3% to 6% is quite large. So are you sort of pricing at the top end of that or middle end or lower end of that also considering the frequency? That's my 2 questions. Jostein Amdal: Yes. I'll start on the write-down, Hans. It's -- I think you're on to it. It's like we have developed a core system that started out as a group project. And then we see that given the technology development since we started this, the life span of the existing core systems, especially in Norway, but potentially also in Sweden might be enhanced for many more years. And that then when part of the investments that were allocated to kind of the Norwegian future core IT system is now taken down to 0. So the remaining book value is related to the Danish core system. And with the remaining book value, which we now have disclosed at a bit more than NOK 600 million, we do think we have a fairly cost-efficient core IT system covering both claims and sales and so on in Denmark. And also note that this system is in use for private. It's working well. And we're now in the process of implementing it for commercial Denmark. It will take some time, but we're doing it in a very thorough way and testing so to make sure that there is as little operational disturbances as possible when moving from one core IT system to another. Geir Holmgren: Yes. Regarding pricing in Norway, yes, it's not easy to comment on future pricing ambitions. But our core ambition is to price at least in line with the development of claims cost, which include that we have to be on the -- more on the conservative side when looking at the inflation interval, which also -- before we know the exact numbers on the inflation, we have to be assured that we are at least pricing in line with what we see on an inflation basis and claims development. So I have to admit that our starting point on doing this assessment is at the top end of the intervals commented. Hans Rettedal Christiansen: That's helpful. I was just wondering, just a quick clarification on the IT system. Maybe just why it sort of works in Denmark, but then it doesn't work in -- or you don't think it will work in Norway and Sweden. Jostein Amdal: I'm sorry, Hans, I was probably unclear. What I meant was that it is working in Denmark, but the existing system, which we have had for a number of years, is going to work for a longer time in Norway. We're not saying that we're not going to use the Danish system also in Norway and Sweden, but especially for Norway, this will be a number of years into the future before we are moving to any other -- any new core IT system. And the one we're using in Denmark is one of the candidates for a future Norwegian system. Geir Holmgren: I would say that now we have gained higher optionality when it comes to what to do in Norway and Sweden. And it's also a measured -- message here that actually, at the moment, we are very satisfied with how the system works in Norway. It gives us using all -- if you look at all the technological development we have been seeing during the last couple of years and what we expect in the future, we don't have to use the core system in Denmark also in Norway. We do have more alternatives, which is positive. Operator: And the next question comes from the line of Youdish Chicooree from Autonomous Research. Youdish Chicooree: If I may, please, I would like to stay on the topic of your core IT system. I was just wondering, I mean look, is there not a benefit from operating a unified system across all your geographies because I know some of your peers do that. And when you talk about the life span of the Norwegian system expanding by several years, it just sounds like you're just delaying the possibility of having like one platform across all your geographies. So your thoughts on the potential savings you could have further down the line by making the investments today would be interesting. And then secondly, on -- just on pricing and the competitive environment. You're still pricing at a decent margin above your expected claims inflation. I was wondering about whether there's been a change in the competition landscape considering that some of your other peers have talked about doubling the market share from single digits. So any comments around that would be actually quite helpful. Geir Holmgren: Yes. Starting with the core IT system. I would say if you looked at Norwegian platform, and I would say that everything we do in Norway, all the processes, including claims, distribution, everything is not only dependent on the core IT system. We are using technology in all our processes across our business. And my core idea a couple of years ago was to enhance the operational benefits of having operations in both Norway and Denmark. So we are seeing synergies on the way we are doing on the distribution side, how we use data. We are facing synergies on how we run the business, both in Private and Commercial segments in Norway and Denmark. It is not only dependent on having one single IT platform across the markets. It's more how we use data, how we have a common management team across Norway, Denmark and how we run the processes -- the core processes related to our business. So I would say that we have done many measures. We are facing progress when it comes to have more on the operational benefits and synergies across Norway and Denmark. So it's not dependent alone on a common core IT platform. Jostein Amdal: Yes. On the competitive landscape, it's -- I'm not sure I know which players you're referring to that are doubling their market share or have ambition of doubling their market share. Our experience is that competition is still very rational and disciplined. We still see all the major players having fairly similar or rather similar profitability targets, especially if we adjust for the cost advantage that Gjensidige has compared to the peers. And we don't see really any shifts in the competitive landscape so far at least. And that goes for both Norway and Denmark and Sweden. Operator: [Operator Instructions] The next question comes from the line of Thomas Svendsen from SEB. Thomas Svendsen: Yes. So a question on Sweden. It seems to be a very strong also underlying results for Q4 -- to be at Q4. So how will you describe the business in Sweden? Is this sort of a highlight or sort of underlying picture in Sweden? So this is a new better level in Sweden? And also how is price increases accepted in Sweden by the clients? Geir Holmgren: Thanks, Thomas. Well, I'm very satisfied with the development we have seen in Sweden during the last year. Very good profitability. We have a stable market position even though it's a minor or a smaller position. But if you see all the development we have done in the Swedish business during the last couple of years, we are doing progress when it comes to automation. We are doing progress when it comes to use of digital solutions. We are doing progress when it comes to risk selection and our competence and capabilities on underwriting. So I think that underlying development in the Swedish business is very healthy, and it's -- so it's a very good run and business with good progress. If we look at market conditions, it has been stable. We see that we are succeeding with the risk selection we are doing. And you can also in the presentation, see the growth numbers we are having in Sweden. But having this stable position is a good asset and strategically right for Gjensidige. Thomas Svendsen: Okay. And then maybe the final question on the IT system. So you wrote it down earlier in the year as well. So what has changed or what did you discover during Q4? I guess it was not smoothing of earnings, but that something has happened during Q4? Geir Holmgren: Yes. In the third quarter, we had a termination on the core IT system in the Pension business, which is a different system. So now we are running this business with the existing system and also recognize that we had a longer life span on the existing system. What we are doing now in this quarter is to give us higher optionality to what to do in Sweden and Norway because when we started this core system project many years ago, it was stated as a group project. Now we are giving ourselves a higher optionality to look at this as a Danish project. And then we have a good time and can use the time to decide what to do in Sweden and Norway with no kind of tense situation where we had to conclude in due course. Thomas Svendsen: And I guess if you just look at Q3 and Q4 in combined, I guess there are some learning points. And how we -- do you think for future investments in AI and new technology? Would you be very strict on that? Geir Holmgren: Yes. Definitely. I would say that we have picked up learning points, not only in the last 2 quarters, but during the couple of last years. I will see that now we are running IT project in -- and we have done this assessment very -- and used competent resources to do the assessments. And now we are running IT project with high level of management attention and with high level of control and steering, of course. And all the learning points we are picking up learning points for -- regarding all kind of investments and processes we are running. So it's not only on the IT core system. We always have to improve the way we are doing our business and running our business, including core IT systems investments. Operator: Our next question comes from the line of Qian Lu from UBS. Qian Lu: This is Qian Lu from UBS. Firstly, just a quick clarification on the IT system. So you mentioned that this write-down has kind of given you optionality as to what to do in Norway and Sweden. So does that mean it's still possible for us to see like utilization of this core system in Norway and Sweden in the future? And then secondly, just some long-term questions on autonomous vehicles, which are on the heavy debate lately. I'm keen to understand what you're seeing in the Norwegian market. So to what extent is the speed of change of the car fleet in Norway different to other Nordic countries and Continental Europe? When do you expect to see advanced AVs that L2+ to become a majority of the car fleet? And are you ensuring any AVs in your book at the moment? Jostein Amdal: Yes. On the IT system, we are definitely not saying that we're not going to use the Danish system. We are saying that by expanding the horizon for when we start a core -- a change of the core IT system in Norway in some areas, that was the reasoning behind the write-down of the IT system. But the current Danish system is definitely one candidate for -- also for Norway and Sweden in the future. Geir Holmgren: When it comes to autonomous driving, this is definitely a long-term trend. It's something we have followed for many, many years. As you know, we have a separate mobility strategy, which is integrated with our business and especially our motor insurance business. So having feet on ground with the RSA company is important and an important part of our mobility strategy. When it comes to risk development, you will probably see that over time, due to autonomous driving, you will see that risk and claims frequency could be reduced. But on the other side, we also see that the OEMs, the car producers will need to increase their kind of liability due to responsibility regarding the autonomous cars. And we don't expect this to have a short-term impact. The average age of the car in the Norwegian car fleet is above 10 years. We see that even though 97%, 98% of the cars -- new cars sold today are EVs, the total share in the total car portfolio is approximately 27% of the total car fleet. So it takes a long time before actually this will have a larger impact. And then you probably see that Nordic driving conditions are very different from what you see other places. And you need a lot of data to make the autonomous cars being able to have this autonomous driving on Norwegian and Nordic roads as well. So our response to that is that we are following this development very closely, and we are having our mobility strategy to be relevant for the OEMs and car retailers forward. And yes, and there are also opportunities regarding risk and risk exposures related to the autonomous cars, which are very interesting also on a long-term basis. Operator: [Operator Instructions] The next question comes from Michele Ballatore from KBW. Michele Ballatore: So I have 3 questions. So the first question is about the message, the change in messaging the dividend. So how should we read that? Why did you -- have you decided to change it? So that's the first question. The second question is on the special dividend. I mean it's quite a sizable special. I mean it's -- can you help us understand in terms of the expectation on this particular metric? I mean how should we think about this -- its development in the future? And then the third question, I'm really sorry to come back to the IT system thing. But I think -- I mean I will phrase the question slightly different from the others. If we look at the impact that this -- in terms of benefits, depreciation or whatever, the impact that this IT system had in the previous quarters or in the previous years, have they -- I mean are they going to change? I mean it's -- if you -- were this impact more optimistic, less optimistic? I'm trying to understand what will change in terms of the future versus the past. Geir Holmgren: Thank you. Starting with the minor changes regarding the dividend policy statement. It's -- if you look at what's been happening during the last -- or over many years, the actual dividend, regular dividend has been increasing year-by-year. So it's -- so changing the statement high and stable nominal dividend seems to be relevant to actually face what's actually happening. So it's a revision, which now reflects the actual situation we have seen in the past, and it doesn't change any practice going forward, I would say. When you go to the size of the special dividend for 2025, if you look at our dividend policy and everything we -- and what we actually is our main kind of thinking in the management and in the Board is that we don't aim to have much surplus capital in the group. We have this solvency interval, 140% to 190%, which is something we have to have in mind when stating the proposed dividend. So with this in our mind, we are -- and doing this forecast on the capital situation in the group as well, it seems to be very right to propose a dividend. And in this situation, a surplus dividend of NOK 4.5, which reflects the capital situation in the group and also what we have said, not having too much surplus capital in the group as well. Jostein Amdal: On the question on the IT system, the way we book this is that it's capitalized as we develop it. And then when we start taking the system in use, it's into annual depreciations affecting the P&L. And when we started using the private -- using the system for the Private segment in Denmark, we started depreciating on the kind of the investments allocated to the private segment in Denmark, and that's been included in the accounts for the previous quarters. The write-down now doesn't change this because what's remaining on the book value is related to Denmark, and we start depreciating the cost allocated to the commercial part of this system when we start taking into use in Denmark. And then over time, of course, we do have costs related to the existing system. And then that -- those costs will be fade out as we move the portfolio from one system to the other. Operator: There are no further questions. So handing back over to you, host, to conclude. Mitra Negård: Thank you. Thank you, everyone, for good questions. We will be participating in roadshow meetings in Oslo today and in other cities abroad after our Capital Markets Day, which, as mentioned, will be held on the 26th of February. Please see our financial calendar on our website for more details. Thank you for your attention, and have a nice day.
Operator: Good day, and thank you for standing by. Welcome to the SEB Financial Results Q4 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker to Johan Torgeby, CEO. Please go ahead. Johan Torgeby: Good morning, everyone, and welcome to SEB's financial results presentation for the full year of 2025 and Q4. I'll take this opportunity before we go into the material just to mention a few highlights of 2025 that we are particularly proud about. First, it is the very strong position in customer satisfaction surveys, not at least within financial institutions and corporate and investment banking. Even though we're not at the very top of private banking, we still made a meaningful improvement. Secondly, the employee engagement hit a new all-time high compared to our peers. We are now solidly placed in the top decile of happy employees within the financial industry. Also very constructive is to see our market position within CIB when it comes to league tables that we record a top level, particularly now as we've seen an activity pickup within this area. A meaningful symbolic event is that we've also established and opened our Amsterdam office. And lastly, after more than 10 years in the making, we achieved an upgrade by S&P to a weak AA rating, and we now join a very small group of banks in the world that has this formidable position when it comes to credit quality. Now flicking to Page 2 and the highlights for Q4. First, we saw a pickup in fees and commission across all divisions, offsetting the continuation of net interest income headwinds. As I mentioned, we got an upgrade by S&P. We are meeting our annual cost target and AirPlus is in line with plan. We have set the new cost target for 2026 to SEK 33.4 billion plus/minus SEK 250 million, particularly to take some -- have some room for variable compensation and other unforeseen events. The Board has proposed an ordinary dividend for 2025 of SEK 8.50 per share, plus a special dividend of SEK 2.50 per share. In addition to this, the Board has proposed a SEK 1.25 billion share buyback program for the first quarter of 2026. Flicking to Page 3, we have now received the full suite of the major customer satisfaction surveys. And we can conclude that we have maintained our position on large corporates as #1. In the Institutional Banking segment, we were #1 in Sweden, Finland, Norway, #3 in Denmark and #2 just like last year in total, and we achieved a first position in syndicated loans. Private banking improved from position 6 to 4, and we also got an award for the best Swedish equity fund of the year. On the next page, we'll go through the loan and exposure development, and we continue to see a predominantly sideline movement during the fourth quarter with some signs of improvement. Corporate lending on an FX-adjusted basis increased 3% year-on-year, and the total lending for the group increased by 2% compared to last year. Flicking to Page 5, just a very short update that we can now conclude '25 that we have adjusted or excluding all restructuring costs, a positive contribution from AirPlus, and therefore, this is EPS accretive. We are also now very well placed to grow our fee income from European payments industry given our exposure that we get with AirPlus. We're also on track to be EPS accretive, including implementation cost in 2026. Flicking to Page 6, our business plan update for 2026. We divide it in 3 simple areas: Wealth and Asset Management, Corporates and financial institutions and retail banking. And here is a selection of particular focus areas for the next year. In WAM, we want to improve our digital capabilities, and we have formed investment and Trading Solutions unit to faster develop these capabilities. We want to have more international distribution capabilities and improve our position within the pension market. For Corporates and Financial Institutions, we will continue to maintain our position, which is very strong in the Nordics and continue to selectively carefully grow outside the Nordics. We will have targeted efforts around the private capital markets. And as I previously mentioned, we expect AirPlus to contribute a bit more meaningfully during the year for the corporate payment area. In Retail Banking, it's focused on digital transformation, use data to increase sales and also go back to basics and have a simplified way of working. Flicking to Page 7. We just double-click on technology where we divide it into 2 areas. One is to work with what we have. We call that modernization of the tech stack. We have several core infrastructure transforming projects this year. And together with efficiency initiatives, we also need to increase speed of development and technological capabilities build-out. We also want to embrace new technologies and particularly, they're going to be around AI tools, both for the people that works in the bank, but also to try to get AI capabilities in front of our customers. And 2 particular projects we will focus on in the years to come. One is Sferical AI, which is the NVIDIA consortium. The other one is Qivalis, which is the stablecoin consortium with other European banks. Next page is just to say that whatever we design now in this business plan and for the future, we aim to come back to a medium- to long-term positive jaws. The last 2 years after the extreme uplift of profits coming from the sharp rate increases, we now see that we will have a different future. And whatever we do in the planning period right now, it is to at least have cost control in order to achieve positive jaws, but we do not dictate income, albeit we see some tentative signs of improvement in the year to come. With that, I'd like to hand over to Christoffer. Christoffer Malmer: Thank you, Johan. I'd now like to turn to the financials on the next slide. Before we look closer at the results for the fourth quarter, I'd like to comment briefly on the full year performance 2025. I think the year is a good example of how our diversified revenue mix provides stability over a business cycle. Lower rates continue to weigh on net interest income and net fee and commission income increased both organically and as a result of the consolidation of AirPlus. The impact from the stronger krona on our operating income has been meaningful during the year, and the stronger krona has had an impact on our operating income of about SEK 1 billion, affecting negatively both net interest income and fees and commissions. As a result of the stronger krona, the 2025 cost target has also been adjusted downwards by around SEK 500 million during the course of the year, and the final FX adjusted cost target came to SEK 32.5 billion plus/minus SEK 300 million. The reported operating expenses for the full year of SEK 32.6 billion is hence, in line with our FX adjusted cost target, and this includes the impact from the accelerated implementation program of AirPlus, which we mentioned as a potential action already in the previous quarter. This acceleration has added around SEK 100 million compared to our initial implementation cost guidance and took the total charges to around SEK 800 million for the full year. We'll come back to the annual cost target for '26 in a moment. The return on equity for the full year, adjusting for those items affecting comparability came to 14% with a cost-income ratio of 42%. Turning to the next slide and the results for the fourth quarter. The operating income of SEK 18.9 billion increased somewhat from the previous quarter despite lower interest rates continuing to weigh on our net interest income as fees and commissions increased by 8% or around SEK 500 million quarter-on-quarter. Compared to the same quarter of last year, the increase in fees and commission was 5% and 8% in constant FX. Net financial income in the quarter of SEK 2 billion is somewhat below our historical quarterly average. Operating expenses for the fourth quarter came in at SEK 8.5 billion, taking the full year cost base to SEK 32.6 billion inside our FX adjusted cost target, as I just mentioned. We can see that our efforts to continue consolidating the cost base, as stated earlier in the year, are having effects. The total number of FTEs declined during 2025 for the first time since 2018, and we will maintain the external hiring pause to continue challenge our need for external replacement hiring across the bank with continued exceptions for business-critical roles. So as such, our strategy to make room for investments in prioritized areas through consolidating prior investments remains intact. This means that even though we expect to see higher FTEs in a number of focus areas in 2026, the total FTEs in the group should remain stable. Net expected credit losses of just under SEK 400 million corresponds to 5 basis points, and overall asset quality remains stable. And the development in the quarter follows the pattern from earlier in the year with a handful of counterparties requiring provisions in specific portfolios. Imposed levies at SEK 812 million, just under our full year guidance of around SEK 3.5 billion for the year. And for 2026, we expect levies to decline slightly to around SEK 3.4 billion. So under items affecting comparability that I mentioned previously, we report a negative SEK 400 million attributable to the outcome of our annual impairment test of intangible assets. More specifically, this write-down relates to an acquisition within the Norwegian consumer card business back in 2002. And it is continued pressure on returns that has triggered a revaluation of the assets. The goodwill is written off in full, and we do not see any other intangible assets at the risk of impairment at this point. This particular asset was highlighted in our annual disclosure last year as an asset at the risk of impairment. The tax rate for the fourth quarter at 17.2%. This is, as you noticed, below our normal tax rate of around 21%, and it reflects a positive tax effect that occurred in connection with the full year closing. And going forward, we expect that the tax rate should revert to around 21%. ROE for the quarter in isolation at 13.6%, excluding those items affecting comparability, i.e., the goodwill write-down. On the next slide, we take a closer look at the development of our net interest income for the quarter. Average STIBOR rates declined by around 20 basis points over the period, which impacted our rate-sensitive deposits, particularly in Corporate & Investment Banking and in Business & Retail Banking. And as Johan mentioned, FX-adjusted lending volumes in these 2 divisions were moving largely sideways in the quarter, the results of the lower STIBOR impacted those divisions by between SEK 150 million to SEK 200 million, respectively. This delta also reflects the impact from FX headwinds. Within CIB, the net interest income in our markets business performed well and benefited from favorable market conditions, partly mitigating the negative effects from the lower rates and FX. In the Baltics, average euro rates remained largely unchanged during the quarter and net interest income in local currency increased slightly from Q3. So this represents the first quarter-on-quarter increase in net interest income in the Baltic division since 2023. Now due to the stronger krona versus the euro, the NII for the quarter in krona was largely flat. The NII in the Baltics was supported by continued strong volume growth, offsetting some of the lagging headwinds on deposit margins that has been triggered by rate cuts earlier in the year. And the volume growth in division is broad-based across all 3 countries and spans both retail, mortgages and corporates. Mortgage sales, in particular, continued to be strong, up 43% from the same quarter of last year in local FX. The contribution from our treasury operations, including some of the benefits that we enjoyed from short-term funding during Q3 remained largely unchanged and supported NII in Q4 as well. Looking forward, we continue to expect the impact from lower rates on our NII to bottom out some 3 to 6 months after the last rate cut, which then based on current rate expectations, should occur sometime in the first half of this year. Also bear in mind that the first quarter has some technical headwinds, for example, a 2-day lower day count. And we also expect a slight increase in our cost of the deposit insurance guarantee for seasonality. And of course, the FX effects we'll continue to monitor. Turning to the next slide and fee and commission income. The fourth quarter saw an increase of just over SEK 500 million compared to Q3, and this increase is broad-based with all operating divisions reporting a positive development. Within CIB, the increase was notably driven by corporate finance, equities and debt capital markets. Within BRB, the Business & Retail Banking, card fees, in particular, represented the strongest increase quarter-on-quarter, partly seasonality, but also a pickup both in the SEB Kort's traditional markets as well as in the markets of AirPlus, which, of course, has an emphasis on Continental Europe and Germany. In Wealth and Asset Management, there was higher asset values and also performance fees, which drove the increase quarter-on-quarter. Net new money for the quarter came in at SEK 6 billion with a largely even distribution from Wealth Management, Retail and the Baltic divisions. Fee and commission income in the Baltics continued to develop positively and remains on a positive trajectory supported by a number of different savings initiatives. Turning to the next slide. We'll look at the net financial income. The income came at SEK 2 billion for the quarter, which is, as I mentioned, below our 16-quarter average, but still inside the sort of standard deviation that we have seen movements around in the past. During the final quarter, we saw good performance from both FX and commodities and fixed income was more in line with its seasonal pattern of a stronger first half and a lower second half. We also had some lower market volatility impacting income in NFI. On the next slide, before we go on to the cost target for '26, just coming back to some of the AI developments and priorities that Johan mentioned briefly in the business plan presentation. In the last quarter, we introduced the SEB AI triangle that we use more as a framework as to how we engage with AI in a couple of different dimensions. We're talking about building AI into our offering; secondly, to build it into our business and running our operations more effectively; and thirdly, importantly, also supporting the AI community and growing together with AI-related companies in our part of the world. During '25, we did scale up some of our early use cases from pilots to production tools. And at the same time, we continue to roll out general purpose AI tools, so Github for Developers and the Microsoft 365 Copilot for nondevelopers to help our employees integrate AI into their everyday workflows. As we now head into '26, we'll put emphasis on a few areas where then building on the experience that we had from last year, we'll look to implement at larger scale and get AI-powered automation as a result. It's early days, but it is looking encouraging. And the areas in particular are the process-heavy parts of our value chain and on the other hand, customer-facing capabilities and ideally looking to apply AI where we get a combination of productivity gains and enhanced customer experience. Some examples include some of the customer service processes, onboarding, KYC and also parts of the mortgage process. And then finally, we'll continue to support the AI community through offering both scale-up products and services like venture debt in CIB, everyday banking and also supporting both founders and entrepreneurs in the WAM division. On the next slide, we'll look through the cost targets for 2026. And when we arrive at the number for the year, we take a couple of factors into consideration. First, we expect inflation to add around SEK 1 billion to the cost base. We expect part of this increase to be offset by efficiency gains of around SEK 700 million. This is a combination of the effects from our continued external hiring pause, efficiency gains that we've achieved through increased degree of automation as well as improved ways of working through closer integration between operating divisions, technology and business support. Now turning to investments. We make here a distinction between the ongoing investments in the business. They include the continuous work on our technology road maps, the regular system upgrades, selected hiring, incremental product development, et cetera, and this is expected to amount to about SEK 400 million. So if you add these factors together, the increase from inflation, the efficiency gains and those investments will come to an underlying cost increase of around 2%. And this is then also excluding the positive effects we're going to get from lower implementation charges at AirPlus. Now in addition to those ongoing operations, we plan to take a couple of dedicated investments in AI, regulatory and technological resilience and also building out our digital asset capabilities. So this is expected to around SEK 500 million for the year. And some of these investments we've already communicated. And a couple of them include, first of all, our initiative to secure access to sovereign compute, as Johan also mentioned, this Sferical initiative that we're expecting to ramp up during the year. Secondly, we're also investing in AI-specific tools for specific initiatives that I mentioned previously, where we're looking to scale up our activities. Thirdly, also ramping up our IRB road map initiative and here to obtain regulatory approval from relevant authorities as swiftly as possible, addressing the capital add-ons that we currently carry. Fourthly, we're also looking to invest in our operational contingency considering the geopolitical uncertainty and the backdrop we're operating in. And finally, also the build-out of the digital asset capabilities and notably our initiative that Johan also alluded to, to launch a euro-denominated stablecoin in a European banking consortium. So these are the prioritized investments, which we have wanted to make room for through our ongoing cost consolidation and the restrictive external hiring. And this, we expect will allow us to enhance operational efficiency over time. So in total, it takes the full year cost target to SEK 33.4 million plus/minus SEK 250 million for the reasons Johan mentioned. And we expect some of these additional investments to have a peak year in 2026. So the cost trajectory for the coming 3-year period should taper out. On the next slide, we turn to the development of our capital position. We closed the third quarter at the end of September with a CET1 buffer above the regulatory minimum of 360 basis points on a reported level. We also showed that we are at 290 basis points on a pro forma level, taking into account the announced but not yet fully phased in impact from our Baltic IRB models. During the quarter, we then added around 20 basis points from our retained earnings and FX contributed positively by roughly the same amount. While going the other way, the continued phase-in in the Baltics had a negative impact of around 20 as well and other REA movements had a total impact of negative 15 basis points. Now that includes the operational risk REA that we flagged in Q3, which actually in the end came in at 7 basis points, so lower than our initial estimate. So to finish the year back at our target capital range of 100 to 300, we deduct the approved buyback program of SEK 1.25 billion, which corresponds to 13 basis points and then the dividend -- the special dividend of SEK 2.50, which is another 50 basis points. So that takes us to the 300 basis points above the minimum and implying a buffer of 250 basis points on a pro forma level adjusting for the remaining phase-in in the Baltics. On the next slide, we are looking at our financial targets. And this is a familiar picture and the targets remain unchanged. So from left to right, the payout ratio with an ordinary dividend of SEK 8.50, the ratio comes out at around 54%, so in line with our target of around 50%. Secondly, the 100 to 300 basis point management buffer. We remain committed to operate within this range and as we've said, to take action if the buffer exceeds 300 basis points. And therefore, just like this year, we use a combination of continued buybacks and a special dividend to ensure that we arrive at the management buffer in line with our targets. From an ROE perspective, our ROE came to 14% underlying, which is below our 15% ROE target, and we are committed to enhancing our returns going forward, including some of the actions that Johan presented as part of the upcoming business plan. In the context of our ROE development, it is worth noting that the surplus capital in our defined benefit pension plan has continued to expand. And at the end of the year, that surplus was substantial, and there is some SEK 24 billion deducted from our CET1 capital, but included in shareholders' funds. So we have for 2025 increased the upstreaming of capital from the pension fund to the bank to around SEK 2 billion, and this compares to between SEK 1 billion and SEK 1.5 billion over the last couple of years. This additional contribution will become visible in our capital base gradually during 2026 and will be adding around 10 basis points. Nonetheless, the impact on our ROE from the pension fund surplus, which is, as I mentioned, part of our shareholders' equity is around 1.2 percentage points on our stated ROE. So bearing in mind, this impact was effectively negligible up until 2021 when the surplus was considerably smaller. So therefore, for comparability of the development of our underlying profitability, we quantify this effect. So with that, we're concluding our prepared remarks, and we are happy to take your questions, and I'll hand over to the operator. Operator: [Operator Instructions] We will now take the first question from the line of Namita Samtani from Barclays. Namita Samtani: The first one, what percentage of the workforce do you think AI will take the place of? And secondly, just on the risk-weighted assets, when you're writing new business on the lending side, particularly on the corporate side, what type of risk densities are these at? Are they lower than the average risk weighting of the corporate lending book? Christoffer Malmer: Thanks for your questions. On the percentage of the workforce impacted by AI, I think we come back to our previous comments on this topic. I think it's a bit early to conclude. As we mentioned, we have, during last year, rolled out a number of AI initiatives, both for developers and nondevelopers with very encouraging developments. We have, as part of our hiring force, external hiring force, also made sure that in the conversations we're having about replacing in the event of an exit that we have the conversation around the possibility to introduce more efficiency gains or productivity enhancements through the use of technology, including AI. But to put a number on this at this point, we do think it's a bit early, but the outlook remains encouraging for broader productivity gains. And then, of course, Namita, we also have to take the question whether we want to see more productivity from our existing resources or if there are areas where we do think that we could do the same amount of work with less. On your second question, it will very much depend on the type of business that we are adding. So the risk weight on our corporate business will then depend on the type of counterpart, the risk class, et cetera, that dictates the risk weighting. On our mortgages, as you know, that's another very transparent risk weight, which, of course, is based on our risk weight floors. And across the book, it's the risk weight of the business that we're growing into that decides. As we've highlighted in this particular quarter, it has been a relatively stable development, particularly within CIB. So you'll see that there is no meaningful impact from any REA density deviating from the average of the book. Operator: We will now take the next question from the line of Magnus Andersson from ABGSC. Magnus Andersson: Yes. I just had a question on volumes as corporate lending remains rather sluggish quarter-on-quarter. And it looks -- I know you don't want to talk about the statistics, but if they -- if the numbers tell us anything, it looks like you've been losing market share in Sweden for a while as well. So just if you can tell us anything about what you see here, if there are any signs of a potential pickup in bread and butter corporate lending during '26 or how you expect to grow back into your previous market shares. Secondly, on volumes, just in the only area that actually seems to be growing, which is the Baltics where you're growing by 10%, 11% in Latvia, Lithuania year-on-year, local currencies, 8% in Estonia, how you see the sustainability of the releveraging process that seems to be ongoing. Christoffer Malmer: Thank you, Magnus. So if I start with the first question on the CIB, I think you're right to say that it is hard looking at the numbers from [ SCB ], I guess, is what you're referring to. And we are trying to find better data to follow this more numerically to be able to conclude exactly on your question, what is our actual market share and how is it developing? Now since we have seen in the SCB data, the same trend that you have seen, we're also, of course, in discussions with CIB, whether there are any such developments. And I think a couple of things to highlight. We have a sense that we're doing the business that we like to do. So we don't get the feeling that there's a lot of business going around that we would have liked to do that we're not in. So I think that's from our perspective of our activity level. And I think the second thing could be worth highlighting is that we have had towards the back end of the year, very high activity levels. It has now, as you see in the numbers, translated into a pickup in fees and commissions in the advisory and the markets-related business, but not yet in the balance sheet-related business. So I think our best conclusion is that we are in the areas where we want to be. We are active in the dialogues where we want to be. And as the volumes start to pick up, this should materialize in increases in our balance as well. But we're monitoring this closely and would love to get better detailed numbers on exact the market share rather than relying on the SCB data. Your second question on the Baltics, you're right, that's the standout performer in terms of volume growth. And it has been a stable pickup and, of course, partly reflecting the strong macroeconomic backdrop. And I think our sense right now is that there continues to be a constructive outlook for Baltic growth with a broader momentum and the sentiment in the -- all of the 3 countries. And in areas that you're referring to in terms of leveraging and homeownership, there are indications there from a structural perspective that suggests that there's room to grow. Operator: We will now take the next question from the line of Nicolas McBeath from DNB Carnegie. Nicolas McBeath: First a question on the capital distributions here in the quarter. So why the decision to make the extra dividend combined with the slowdown in buybacks? If I annualize now the buyback pace that you're running with your latest buyback program, it's around SEK 5 billion annualized, which is SEK 5 billion less than last year. But if you wouldn't have done the extra dividend, I guess it couldn't have continued at a similar pace. So yes, why that decision to shift more to dividends from buybacks in terms of your capital distributions? Christoffer Malmer: Thank you, Nicolas. Yes. So the main point here is to solve for our 300 basis point management buffer. And with the ordinary, we're at a payout of 54%. So we're sort of in the upper end of our around 50% guidance. And then the blend of the other 2. If you look historically, we have had buybacks between SEK 5 billion, SEK 7 billion and SEK 10 billion annual pace. And we're conscious to maintain ongoing buyback track record. And as you know, we're also one of the banks in Europe that have had the longest suite of consecutive buybacks. So we want to maintain that. At the same time, we want to ensure that we maintain maximum capital flexibility. And in that context, we propose to the Board a mix of a special dividend, buybacks and ordinary. And we've also taken impact, of course, and conscious from the conversation we had around this last year that there are preferences in some camps for buybacks over dividends and in some comps, there are preferences the other way around. So we're trying to put together a balanced mix of capital distribution. And in this quarter, we wanted to -- for this year, we want to maintain buybacks, but also put a blend and a mix to get us to the 300 basis points. Nicolas McBeath: All right. Then I had a question on your NFI line, which has been now below SEK 2 billion for a couple of quarters, which is closer to the levels we saw prior to the 2022 rate hikes. And any reason to update your kind of guidance of normal NFI. And is the NFI level impacted by interest rate levels or the slope of the yield curve? If so, how? Christoffer Malmer: Yes. So on the NFI, you're right that we have been fluctuating between the -- around that SEK 2.5 billion. And this is, as you know, by definition, a difficult line to predict. And looking at some of the structural elements that you referred to, the tightening of credit spreads, the way that rates have moved, of course, there has been, for some time, a favorable development that has supported the level of NFI. But also bearing in mind that the fourth quarter, particularly in fixed income, is the seasonally weakest quarter of the year. And if you look at fixed income in isolation, it's not that different from where it was in Q4 of last year and in Q4 the year before. So I think we need to see a little bit how the seasonality plays out as we go into next year to see if there's a reason for us to revisit the level and the range that we are within at the moment. Operator: We will now take the next question from the line of Sofie Peterzens from Goldman Sachs. Sofie Caroline Peterzens: This is Sofie from Goldman Sachs. So my first question would be around the Baltic risk models. You note that the impact will be around 50 basis points, but there were some headlines a few weeks ago that the ECB had identified some deficiencies in the Baltics. Are these fully captured by the current models? Or do you need to do any additional work on that? And then my second question would be on the share buyback. So just a follow-up. So is it fair to assume that the share buyback will be SEK 125 billion quarterly run rate throughout 2026? And why didn't you kind of ask for the full year share buyback with Q4 similar to what you did last year? Christoffer Malmer: Thank you, Sofie. So for the Baltic development, we maintain our guidance, there are expectations of the impact on capital for phasing in of the IRB impact in the Baltics. So no change to that. And we also provide those pro forma numbers in the slide. On your second question, I'll come back a little bit to what I said to Nicolas. This is a -- for us, together with the board, of course, to come up with a mix of getting us down to 300 basis points. And in coming up with that mix, we take into account, of course, the dividend component, the special and the size of the buyback. And of course, last year, we were at a point where we're a much more elevated buffer level. I think we were at 460 basis points prior to distribution. And there, you remember, we took a sizable one-off deduction to a full year buyback program. And this year, we are around 360 basis points prior to distribution and then solving for the 300 together with the Board, this is the mix that we suggest and that we came up with. So I think that's the color that we can give you on that. Sofie Caroline Peterzens: But basically, it's fair to assume that you will continue with a quarterly share buyback. Christoffer Malmer: Well, as always, we take a quarter at a time and it's subject to both Board and regulatory approval as we go along. But yes, you're right, it implies a 5-year run rate for the full year -- SEK 5 billion, sorry. Operator: We will now take the next question from the line of Martin Ekstedt from Handelsbanken, please go ahead. Martin Ekstedt: So first, I just wanted to ask one on dividends. So you do a reversal back to annual dividends from previous announcement of semiannual dividends. I'm sorry if I missed part of this answer before I was a bit late on to the call. But you do this as a result of what you call in the report feedback from market participants. Could you just share a little bit more of that feedback with us and what in the end made you reverse this decision? Christoffer Malmer: Yes. So that's right. What we opened the conversation at this point last year was to look into the possibility of semiannual dividends. And the market participants, of course, it's a lot to do with listening to our shareholders and having discussions around the process within which this could be done. And one option is, of course, to have a dividend approved at the AGM and then distributed in 2 installments. But the feedback from our shareholders was that this is effectively just waiting a little bit longer for the dividend to be handed out. So the feedback on that model would also deviate a little bit from what we see in the rest of Europe, where distributions are made from current year's rolling earnings. This, however, in our jurisdiction requires an extra general meeting of shareholders. So it immediately creates a slightly bigger process and a procedure around this in order to get this into place in a shareholder-friendly way, which would then be to do the forward-leaning semiannual dividends. And this, of course, has been a conversation with primarily investors. And I think this -- the model that we would then have to introduce in Sweden would be less appreciated. Now we're not entirely ruling this out to if there is a way that we could put this in place in a shareholder-friendly way, then something we could revisit. But for now, the proposal is that we continue with 1 annual distribution. Martin Ekstedt: Okay. And then for my second question, just quickly taking a step back and focusing on your return on equity, which was 12.9% in the quarter, i.e., well below a 16% long-term target and below some of your Swedish peers as well. So I mean, we talked a bit about the costs on this call, right? But recognizing that a lot of the macro factors impacting your revenues are outside of your control. What do you think would need to happen in Sweden macroeconomically for you to close that gap to target 15% and to peers? And when do you see the timing of this, i.e., kind of a wish list macroeconomically from you guys? Johan Torgeby: I can elaborate a bit on that. Thank you. First, I'll just let us establish the baseline. So first, we have a significant surplus in our pension fund. Historically, we haven't really been talking about it because it has not been meaningful. But right now, it's actually very significant. So if you say that the SEK 24 billion of surplus, which is not available to do business, but it's included in the return on equity calculation. We don't adjust for it. It equates to 110 basis points pickup. On top of that, it is, of course, the capital that we have on -- or capital add-ons that we have, which is also outside the normal course of business as we are approving the IRB models over time. And that's another almost 200 basis points equivalent or so of a drag. So that's the baseline. So the thing that is comparable with others are, of course, without these 2, which is not a comparable number when you want to see what's the underlying profitability. So that equates to quite a lot in totality. Now what is required for top line because you're so right, you don't dictate income, I would love to, but we dictate cost and there we have a more modest trajectory going forward, as you can see from today's announcement, and we started already last year. And of course, we also now have a little bit of pause on increasing the number of FTEs in order to address efficiency and make sure shaking the tree that we have maximum optimal capital allocation also in the operational side of things that we have the right cost base. But what we do need in my book is consumption. So the -- all things look pretty promising, but it's on leading indicators. It's not really happening to the full extent. And if I look at the relative weakness for investments to really come along for that to be debt financed or equity financed, which is, of course, where we come into the picture. It is for both households and corporates to take that last step. And for me, it is consumption, and consumption is weak. I just consumed our own macroeconomics Nordic outlook the other day. And it's a pretty constructive view, and I don't think they are far off consensus. There's a strong group of consensus around a 3% growth of GDP in Sweden next year, which would have been a fairly significant acceleration. If it happens or not, we will know next year, but it's definitely the one that I'm on the watchout for income to come up, both for transactional banking, payments banking and balance sheet banking. All 3 areas will benefit from that. Operator: We will now take the next question from the line of Markus Sandgren from Kepler Cheuvreux. Markus Sandgren: So I just had 2 questions coming back to what some others have asked about. But if we're starting with the buybacks. So last year, you did SEK 10 billion for the next year, and now you're doing SEK 125 billion and then you can annualize that, of course, I guess. But Nevertheless, it seems like you really want to defend the 300 bps. So your target to be within 100 to 300, is that kind of obsolete is more like 300 plus/minus something. Is that what we should expect going forward? So that's the first one. Christoffer Malmer: Yes. I think at this point in time, considering the broader geopolitical uncertainty, the outlook that we have to Johan's previous answer, hoping, of course, that balance sheet growth should come back again. We've had tremendous tailwinds from the FX. And of course, that could go the other way. So I think at this point in time, we feel it's appropriate to be at the upper end. Just to mention also, we are on a pro forma basis, taking into account the remaining phase-in of the IRB effect in the Baltics down to 250. So to some extent, you could argue that, that's sort of moving and dipping into the buffer. But all things taken into account, I think it's cautious. And as you know, we are a cautious and a conservative bank to operate at the upper end of the range. Markus Sandgren: Okay. And then coming back to costs, as Namita was alluding to what AI can do and so on and so forth. But I mean, you were saying that you expect cost to taper off after '26. So I mean, in terms of numbers, one of your competitors has said they expect cost to grow by 2% annually until 2030. Is there something similar you're expecting? Or what should we read into this tapering off? Christoffer Malmer: Yes. So as you know, we provide annual cost targets and not the longer-term cost guidance. But what we're trying to elaborate a little bit around in the slide there is to show what that underlying cost growth is at the moment and also to highlight that some of these incremental investments we're undertaking in 2026 should peak in 2026 and then fade thereafter. And I think that the -- when it comes to the productivity gains and the efficiency gains that we're starting to see, if you look at our underlying cost growth, adjusting for the consolidation of AirPlus and the implementation charges, you'll see that it's gradually come down during the course of the year. And underlying in the fourth quarter, it is actually in that range or even a little bit below. So of course, to the extent that we can continue to enhance productivity going forward, working with the churn and the efficiency gains that we have lined up, there is, of course, a possibility to continuously improve on that cost growth. But the main message with the tapering is really to say that the current growth trajectory that we're on should taper from here going forward. Operator: We will now take the next question from the line of Riccardo Rovere from Mediobanca. Riccardo Rovere: A couple, if I may. The first one is on -- sorry to get back to loan growth, but accounting rules are the same for everyone in the loan book, corporate and retail, so forget governments, repos, collateral margin, all that stuff. The book is flat quarter-on-quarter and it's flat, kind of flat year-on-year. So the NII, considering you give the margins in your fact book and the margins are stable quarter-on-quarter and actually up versus Q2. It looks to be more a problem of absence of growth in general terms, also in retail, while the rest of the rest of Scandinavia is somehow responsive to the easing in monetary policy. So I was wondering why you don't seem to be responsive to that. And what you're planning, if you are planning anything to start resuming growth in 2026. This is the first question. The second question I had is if there is any room maybe on SRTs or something like that to keep RWA under control and eventually and so to keep the capital return as it is. And on this topic, SEK 10 billion buyback on SEK 986 billion risk-weighted assets would throw 100 basis points of capital into the fireplace to cancel at SEK 203 per share to cancel less than 2.5% of your share count. So reducing the buyback to me is the most sensible thing you could have done. So that's to be clear because the share price can move by 2.5% any minute of an hour. So canceling -- I would have canceled it personally, but reducing it and giving cash to shareholders is the best thing you can do in my view. But again, on risk-weighted assets, is there anything you can do to keep it under control on the SRTs and stuff like that? Johan Torgeby: Riccardo, Johan here. I can start with growth. So one is a constant disappointment on growth, as you are pointing out correctly in your question that the transmission mechanism, rates are going down from the central bank, banks are lowering rates and you see economic activity go up has been very disappointing. There are some signs in the retail market that things are picking up, but it's been remarkably slow to act. This is actually quite normal and very frustrating as you probably have 4- to 5-year cycles when you look at loan growth. You can just take a graph on SCB's corporate lending exposure, and you see that it moves slowly and it has not picked up. My potential explanation because I don't know why, is the capacity utilization in the industrial side on the corporate side has been fairly low. And therefore, any demand that they have met in this slightly more stabilized environment, they've been able to cover with cash at hand or existing loans and therefore, not used more capital to increase capacity. That's back to my original point on consumption. So we are looking at that, and it's one potential explanation, and it looks promising if things pan out as economists say that there will be a catch-up effect for that going forward. I also say that the leading indicators, which is typically having a 12-month lag to actual lending is the industrial sentiment indices, and they all point more than modestly. They are upwards, but not particularly impressive yet. On the retail side, there is signs of things waking up. There's clearly -- we do one, which is the house price expectations, which is a leading indicator, and that has clearly recovered. However, then you have the specifics for SEB to our earlier question around market share. So we do see that we are not performing to the best of our ability in the mortgage market, which is also partly explaining where we have some work to do there in the coming year or 2. Christoffer Malmer: On your question, Riccardo, about the SRTs, yes, I mean, as you know, we have not been active in that space historically, but it is a space that we are looking into. It is, as you also know, something that is top of the regulatory agenda in Europe, and there seems to be a lot of initiatives providing more favorable conditions for such transactions to take place. So it is something that we are looking into. Also, the pricing environment has changed there. So from an attractiveness financially speaking, it has also become increasingly attractive. So it is something that we are evaluating. And then just on your final comment, thank you for the comment on the dividend. We'll pass that also to the Board. Riccardo Rovere: Christoffer, if I may follow up very, very briefly. Have you identified in SEK billions, the maximum amount of portfolio that eventually could be part of SRT's program because that instrument -- I mean there are banks that are very active on that, and they are keeping risk-weighted assets kind of flattish or eventually down. So I was wondering what is the theoretical maximum capacity that you could have there? Christoffer Malmer: Riccardo, there is -- it's too early to share any numbers on sizes of portfolios. But one thing that we need to take into account is the regulatory environment in Sweden, which has some impact on the amount of capital release that could be achieved from an SRT. So that is one aspect into this, which then, of course, will dictate the attractiveness of the type of transaction and volume, et cetera. But no volumes to share at this point, Riccardo. Johan Torgeby: We have a hard -- thank you, Riccardo. We have a hard deadline, so we'll try to be a little bit quick. So please go ahead. Operator: We will now take the last question from the line of Shrey Srivastava from Citi. Shrey Srivastava: My first one centers around the SEK 500 million uplift from sort of AI regulatory and resilience. If you were to break this down between sort of regulatory and resilience and actual sort of AI initiatives or put another way, investments and revenue synergies versus cost synergies, where would you -- sort of would you where would you land on this, if we could just have some more color? Christoffer Malmer: Thank you. We don't break that down any further. But given that we're mentioning these 3, they all 3 have a meaningful contribution to the total number. But we don't provide an additional breakdown to that number. Shrey Srivastava: And just a second brief one. If I was look to look at your comment on the sort of uptick in investment banking activity, could we just have a little bit of color on that, specifically around if you're seeing an increase in demand from corporates operating in broader Europe around any REA initiatives. Johan Torgeby: Yes, I can take that. So generally speaking, it's a quite unusual world where the financial markets depending business lines are doing very well. It's really say that share prices are good, rates are low. It's been quite a lot of activity, very resilient financial market given the risks that we see. However, the real economy has not really performed, which is more linked to the actual funding, actual loans, house buying, factory openings. So it's a quite divided world. This seems to be -- continue. I have no reason to believe that this recent more uptick in investment banking in capital markets supported by resilient financial markets will continue until we have another, call it, situation in the market. And now we're hoping that the other part of the real economy, where you actually need new funds will come and help us. On Europe, I would say no, there are -- this is again the position where leading indicators are pointing to a better future. But I couldn't say that we have really seen it materialize yet to the point where you see -- because half of the book, of course, in corporate lending is outside Sweden. And it's quite muted still. Operator: Thank you. I would now like to turn the conference back to Johan Torgeby for closing remarks. Johan Torgeby: Yes. Thank you. And usually, we ask you to close early. Thank you for helping us with that because I know there's a lot of other calls we have today from your side. Thank you for participating. I wish you a good day. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Emma Culver: Good afternoon, everyone, and welcome to the Bannerman Energy quarterly update webinar for the December 2025 quarter. I'm Emma Culver, Investor Relations Manager at Bannerman Energy, and I'd like to thank you all for joining us this afternoon. I'm joined today by our Chief Executive Officer, Gavin Chamberlain, who will provide a short update on Bannerman, the highlights for the quarter and all the progress that is happening at our Etango Project in Namibia. Following this, we will answer Q&A or Gavin will answer Q&A. For those of you, you're mostly familiar with Zoom, but if you're not, at the bottom of your screen, you'll see the toolbar and the option for Q&A. Please write your questions in it, and then I can move through them once Gavin finishes his overview of the quarter. For now, I'd like to hand over to Gavin. We say good morning to him in Cape Town. And thank you for joining us as it is early, but I'm sure everyone is very much looking forward to hearing from you today, Gavin. Gavin Chamberlain: Thanks, Emma. And yes, good morning to everyone from a very early Cape Town. What an exciting time to be in uranium. I think with the current movement in the spot price, it's really a really, really good industry to be in. But what I'd like to talk about today is the progress that we made in the last quarter. We're very pleased with the progress we've made and in particular our safety record of 16 years without a lost time injury really stands out as a highlight. The fact that the team on site has come to grips with moving from effectively exploration into construction and has continued to maintain an LTI-free record is really pleasing for myself and the rest of the team. On the early works construction activities, we've continued with all of them in this last quarter in line with budget and schedule with significant new contractors now on site and also progressing extremely well. Our detailed design and procurement activities have continued to advance. We are moving well into the structural steel component of the dry plant area and the wet plant is slowly but surely starting to get traction as well. In terms of long-term infrastructure, the construction of the permanent water supply line has taken off and is moving on in line with our expectations, and we're very pleased with the contractor that we appointed in that area. And obviously, I think in the last quarter, we spoke about the fact that we had done the factory acceptance test of the HPGR, that's the high-pressure grind roller, which has now successfully been delivered to site. And I think, once again, a really good proof of the fact that the plans that we've put in place in terms of importing equipment for the project have now been tested and have come through and the team on site has once again passed with flying colors. So we're very comfortable with the fact that we managed to get all of the delivery boxes on to site with no real issues in country with clearance. We finished the quarter on a strong cash balance of AUD 89 million, and we still have additional liquid assets valued at AUD 12.7 million and obviously with no debt at all at the moment. And as I said, as I started in my introduction as well, the uranium price had increased nicely to $87, but has continued this trend, and we're very pleased to see that this is now becoming a reality in our lives. Emma? I thought we'd share a couple of photographs because a number of you may have been to site already, a number of you may be joining us, which we're really looking forward to in February. But for those who haven't been or who won't have the privilege of joining us in February, these are a couple of the photographs of the progress we've made on site. What you're looking at here is the heap leach pad, which is 1 kilometer long by 300 meters wide, and we've currently completed the first 3 cells and are on schedule to complete this in line with the construction schedule. The other contract that got up and running in the quarter was the blasting, crushing and screening of the drainage material that we required for the heap leach pad. This is one of the original capital saving ideas that was put forward during the FEED phase, where we have material on site which we're actually blasting. Then we crush it and we actually then do all the sieving required to actually get it to spec, and this material will then be used in the drainage on the heap leach pad. And the other big contract that really found traction in the last quarter was the concrete contract. So they started work in the primary crusher, and it's pleasing to see that the reinforcement is already almost up to ground level, which is 50% of the tower reinforcements, it means it has already been put in place. And once again, we're very happy with the way the concrete contractor has continued. The primary crusher will continue 10 meters above ground level. So what you're looking at there is plus/minus a 30% completion in terms of concrete work. Emma? No. And over and above that, the concrete contractor has continued both with the tertiary crusher, which is shown in this photograph, and also with the stockpile tunnel foundations as well, which was quite a highlight for us. It was one of the biggest pours done in Namibia in a long time, over 1,200 cubic meters of concrete poured in one continuous pour. And we're very proud of the fact that in all of these activities, the contractor, the site management team and my own team on site have managed to continue to meet their schedule and stay within budget. And I think really at this point is I'm quite comfortable to take any questions from anyone on the call, but really our message is: we are continuing with our work. We are prepared and we are currently in line with our financing moving ahead to keep the progress going on site. Emma Culver: Great. Thanks, Gavin, and thank you, everyone. Please pop in your questions in that Q&A box, send them through so we can get chatting. James, I see that you've got your hand up, but I just need you to just type the question in for me so we can see that one coming through. Gavin, I think to start off, in terms of the number of personnel at site now, how many do we have at site? I mean, I think we're up to close to like 400. How has that process gone? And how -- has there been any significant issues on site with the increase of personnel? Gavin Chamberlain: Yes, Emma, good question. The number has climbed to just under 400. I think last I checked it was 373. So for our people to get on to site and work, they have to go through 2 processes. The one process is to get themselves medically checked and the other process is to go through our induction. And I've been really, really pleased with Wood as our safety consultant on site. They put in a really good process and managed to make sure that no one has been kept waiting to do inductions. So it's actually been a very smooth process, and I think the longest anyone took to get on to site was just under a week, which in international standards is actually significantly low and a really big positive for the team on site. And the fact that we've managed to grow effectively in the quarter from 100 all the way up to 400 is a real significant step forward and really gives me a lot of confidence around the ability of our site team to actually step this up into the next level, which is when we would get structural steel onto site. Emma Culver: Okay. And given the momentum in the spot price and ongoing progress at site, can you offer any further clarity around FID on the project and how that's progressing? Gavin Chamberlain: Emma, it's very difficult to give too much clarity. But effectively, we are still on track in terms of achieving FID in line with our current bank balance and progress, and we believe that somewhere between 6 and 12 months we will have FID finalized. What I would say is that when we do finalize FID is we're not going to have to put the project -- slow the project down. We can continue on our current time lines and achieve the target that we wanted to do, which is to get uranium into the market by 2029. Emma Culver: Okay. Thanks, Gavin. And how are we thinking or you or the team thinking about contracting strategy? Are you looking to layer in additional contracts to those that have already been? This is utility contracts. And if they're going to be more base escalating or they're going to be hybrid or market-linked given the activities? Gavin Chamberlain: Yes. So obviously, we're in a very buoyant uranium market right now. Olga herself is actually currently in the U.S. at a conference, and we're continuing to talk to all utilities, and we will continue to respond to RHPs. And what we are doing though is, as we said post placing the first 2 contracts, is new contracts will need to be signed at a price that we are comfortable with. So we will continue to price RHPs to give the message in terms of what we were looking for in terms of pricing. We're not going to be rushing in to sign contracts. We are comfortable with the coverage that we've got at the moment in terms of the pricing. But what we want to do is obviously benefit from a rising uranium market. Emma Culver: And in terms of the budget, we're saying we're tracking on budget. How far through the budget are we to-date? And how much spend remains? Now we actually have a really good slide on this, which I wish I could bring up. I may be able to. But Gavin, you may be able to speak to that even without the slide in terms of the project spend and where we're at with that? Gavin Chamberlain: Yes. So our project spend at the moment in terms of spent and committed sits at around about just under 1/3 of the overall budget. We still have 2 major contracts to place, which would be the construction contract for the structural steel and the construction contract for electrical and instrumentation. In terms of mechanical orders, we've moved ahead significantly there. And even though we haven't got a payment commitment, what we have got is got orders placed where we secured the price of mechanical equipment for a large percentage of the project at the moment. So I think we're fairly well placed in terms of understanding where the capital expenditure is going. And at the moment, we have a degree of comfort that we'll be in line with the overall budget. Emma Culver: All right. And in terms of the contractors on site, are we seeing any issues with their performance? Is there anything that is keeping you up at night, I guess, Gavin, in terms of how things are going on site with the contractors? Gavin Chamberlain: Yes. I mean, so as you know, or you may not know, is all of our contractors on site at the moment are Namibian contractors. And that's part of our strategy, where we've actually reduced the size of contracts so that the Namibian contractors are capable of actually executing the work. We've been blown away by the progress and the commitment to safety and the commitment to schedule that we've seen from these contractors. They really -- it's almost like they're going the extra mile because they want to prove that as Namibians they can actually deliver. And we are super happy with the way they're performing on site at the moment. Emma Culver: And in terms of the long-term -- the utility supply contracts in country, how are they progressing? I know that the work at the permanent water station has started. But in terms of those agreements with NamWater and NamPower, how are they progressing? Gavin Chamberlain: Yes. So NamPower is signed and sealed, and we've also paid them their first deposit. So they've actually started with the design of the substation. So from the power side, we're 100% comfortable that it's moved ahead. On NamWater side, we're still waiting for the final signed contract, but we do have a binding MoU, which allowed us to actually start with -- commence with the construction of the permanent water line. So we wouldn't have commenced with that unless we were comfortable with the MoU. So that has been signed by all parties. Unfortunately, NamWater has been slightly diverted at the moment by looking at the finalization of the second desalination plant. And at the moment, it appears that the second desalination plant would be -- will be approved by government around about midyear this year. That's the latest news that we've received. But once again, I need to stress is we do not require the second desalination plant, but it has been a distraction to NamWater. Our contract is they will supply us with water. Whether it comes from the existing desalination plant or the new one actually doesn't affect us. There's sufficient water in the existing desalination plant. Emma Culver: All right. And we have a question here, which I'm going to rephrase a little bit. But the current progress that's been made on site in terms of the construction phase, is that still preserving the upward production optionality of the extension of the expansion case? If we do see demand come in from AI, are we still well positioned to and prepared to take advantage of that? And maybe it's just speaking through, I guess, at what stage we have those key decision points to make on that extension, on that expansion and which one we would go with? Gavin Chamberlain: Yes. So from that perspective, it's a really good question, because the 2 key design implications really for the extension would be the power and water. So on both power and water at the moment, we are installing a system that is capable to actually do the extension. So with the water line, we will increase the pressure and thereby increase the flow. And in our MoU with the Department of Water, we've actually already covered the fact that we will potentially increase the supply at a point in time. So from a water perspective, we're comfortable. And from a power perspective, the overhead power lines are sized according to both projects. So we have no issues when it comes to the infrastructure. And then obviously, the existing infrastructure on site has been set out such that we can actually build the extension while we're operating the main plant. So from that perspective is, if there was a push to accelerate the building of the extension, we would be able to do that with no real issues in relation to operating the Etango-8, as we call it, versus Etango-16. Emma Culver: Okay. Thanks, Gavin. And we have a question here around, I guess, labor and workforce in Namibia. So the current capability amongst the team is very well suited for the construction of this project. And I think you had -- I mean, you've worked with many of the project team previously. You know them well. We're quite comfortable with that. But what is the strategy of sourcing and securing skills as we move into the operation phase? And how is the dynamic on the supply of labor, especially in Namibia? There could be a few of... Gavin Chamberlain: Yes. Look, I mean, there's big pressure from the Namibian government to educate and develop Namibians as well. There is already a mining training center, which was set up many years ago by Rossing, which is still functional. And there's a lot of local labor that's already going through the training courses, which is available and currently is looking for work. So there's a shortage of employment in Namibia. So I don't believe we've got a shortage of people. Where we will have a strong focus in our operational readiness will be on upskilling and making sure we've got the right skills level available to us. Recently, we've employed a new COO for Bannerman Mining Resources Namibia, who comes out of a mining environment, and one of his main functions will be to drive the operational readiness process. And Danie will actually -- his first focus is on firming up the first step in operational readiness, which is effectively how you secure your people and when you employ them. So we have a timetable around that, which is linked back to the construction schedule, and that will become the responsibility of the in-country COO. Emma Culver: And Gavin, does the surging SA rand change your thinking at all around the pace of awarding contracts for work on site? Is there any incentive to bring forward certain aspects of the construction? Gavin Chamberlain: I suppose there's always some degree of incentive. However, we've -- the way we've actually tackled contracting on the project is we have placed a number of mechanical contracts to secure vendor data, but at the same time, we secured the cost of that supply. So to a large extent, we've already actually addressed the risk around the strengthening of the SA rand. There are no specific contracts that we would place earlier driven by the financial changes in terms of exchange rate. As I said, we've got 2 big contracts to place, but those contracts are actually -- it's more important for us to get the quantities right in those contracts than it is to worry about the exchange rate at this point in time. And as people know, is the rand exchange rate does tend to yo-yo a bit. So we keep an eye on it. And at the moment, we're not planning to change any of our strategies linked to contracting. Emma Culver: Great. Thanks, Gavin. And we haven't had any other questions come in. So I think -- actually, we do have one just now. See, these last minute questions that pop in just when you think that you're going to close it off. Can we offer any insight into the proposed change in legislation around the 10% free-carry interest in new mines in Namibia? Is Etango classified as a new mine? No, it's not. I will let you speak to this, Gavin, but I think this is actually an important point. We did discuss it at the last quarter, but we have had a change in that Namibian Mining Ministry. So for those that aren't aware of the updates there, can you just touch base on that? Gavin Chamberlain: Yes. So we've got a new Mining Minister. So the minister who made the statement around the 10% has been removed from his position and there's a new Mining Minister in. We actually -- our local Chairlady had a meeting with the Mining Minister yesterday, which was very positive. And when we are in Namibia with the investors' visit, myself and Murno will also be moving -- going and actually meeting him in person. But the rhetoric around 51% ownership, et cetera, has died down significantly. In fact, we're not hearing it at all. And we are pretty confident that we're definitely an old license, not a new license. But even on the new licenses, it's died significantly. There's a lot more focus at the moment on oil and gas. That doesn't mean that we've relaxed and we're 100% comfortable, but we do believe it's not going to be affecting us, but we also don't want it to affect other mines in the future because maybe those other mines could be ours. Emma Culver: And a question here, what's the thought process around bringing a new partner into the project? How has the interest been regarding the project? As most would be aware and has been reported in the quarterly, we do have a strategic funding work stream underway. It has been underway for quite some time. Gavin, any comments on how that's progressing? I think that you're pretty happy with the team and the progress that has been made in that aspect. Gavin Chamberlain: Yes, definitely. I mean we've seen -- for the last 6 months, we've seen a huge increase in interest and in people actually talking to us. And we -- as I said, is we believe within 6 to 12 months, we will be in a position to announce our FID. And our FID, as people are aware, is 100% related to the final funding for the project. So we're very comfortable with the progress that we've made in the last couple of months. Emma Culver: All right. Thanks. So look, I'm going to close the Q&A off there. If anyone does have any additional questions, please drop me an e-mail. I think most of you have my e-mail. Please drop me a line if there are any additional questions. Gavin, thank you very much for joining us. We do have an updated video that goes for, I think, about 2.5 minutes showing progress from the December quarter on site. For those of you that want to hang around and watch that, please stay on the line, and I will share the screen and begin that video. Gavin, thanks again for joining us. Thank you to everyone for joining the call. And reach out at any point if you have any questions. Thanks very much. Gavin Chamberlain: Thanks, Emma, and thanks to everyone who attended.
Emma Culver: Good afternoon, everyone, and welcome to the Bannerman Energy quarterly update webinar for the December 2025 quarter. I'm Emma Culver, Investor Relations Manager at Bannerman Energy, and I'd like to thank you all for joining us this afternoon. I'm joined today by our Chief Executive Officer, Gavin Chamberlain, who will provide a short update on Bannerman, the highlights for the quarter and all the progress that is happening at our Etango Project in Namibia. Following this, we will answer Q&A or Gavin will answer Q&A. For those of you, you're mostly familiar with Zoom, but if you're not, at the bottom of your screen, you'll see the toolbar and the option for Q&A. Please write your questions in it, and then I can move through them once Gavin finishes his overview of the quarter. For now, I'd like to hand over to Gavin. We say good morning to him in Cape Town. And thank you for joining us as it is early, but I'm sure everyone is very much looking forward to hearing from you today, Gavin. Gavin Chamberlain: Thanks, Emma. And yes, good morning to everyone from a very early Cape Town. What an exciting time to be in uranium. I think with the current movement in the spot price, it's really a really, really good industry to be in. But what I'd like to talk about today is the progress that we made in the last quarter. We're very pleased with the progress we've made and in particular our safety record of 16 years without a lost time injury really stands out as a highlight. The fact that the team on site has come to grips with moving from effectively exploration into construction and has continued to maintain an LTI-free record is really pleasing for myself and the rest of the team. On the early works construction activities, we've continued with all of them in this last quarter in line with budget and schedule with significant new contractors now on site and also progressing extremely well. Our detailed design and procurement activities have continued to advance. We are moving well into the structural steel component of the dry plant area and the wet plant is slowly but surely starting to get traction as well. In terms of long-term infrastructure, the construction of the permanent water supply line has taken off and is moving on in line with our expectations, and we're very pleased with the contractor that we appointed in that area. And obviously, I think in the last quarter, we spoke about the fact that we had done the factory acceptance test of the HPGR, that's the high-pressure grind roller, which has now successfully been delivered to site. And I think, once again, a really good proof of the fact that the plans that we've put in place in terms of importing equipment for the project have now been tested and have come through and the team on site has once again passed with flying colors. So we're very comfortable with the fact that we managed to get all of the delivery boxes on to site with no real issues in country with clearance. We finished the quarter on a strong cash balance of AUD 89 million, and we still have additional liquid assets valued at AUD 12.7 million and obviously with no debt at all at the moment. And as I said, as I started in my introduction as well, the uranium price had increased nicely to $87, but has continued this trend, and we're very pleased to see that this is now becoming a reality in our lives. Emma? I thought we'd share a couple of photographs because a number of you may have been to site already, a number of you may be joining us, which we're really looking forward to in February. But for those who haven't been or who won't have the privilege of joining us in February, these are a couple of the photographs of the progress we've made on site. What you're looking at here is the heap leach pad, which is 1 kilometer long by 300 meters wide, and we've currently completed the first 3 cells and are on schedule to complete this in line with the construction schedule. The other contract that got up and running in the quarter was the blasting, crushing and screening of the drainage material that we required for the heap leach pad. This is one of the original capital saving ideas that was put forward during the FEED phase, where we have material on site which we're actually blasting. Then we crush it and we actually then do all the sieving required to actually get it to spec, and this material will then be used in the drainage on the heap leach pad. And the other big contract that really found traction in the last quarter was the concrete contract. So they started work in the primary crusher, and it's pleasing to see that the reinforcement is already almost up to ground level, which is 50% of the tower reinforcements, it means it has already been put in place. And once again, we're very happy with the way the concrete contractor has continued. The primary crusher will continue 10 meters above ground level. So what you're looking at there is plus/minus a 30% completion in terms of concrete work. Emma? No. And over and above that, the concrete contractor has continued both with the tertiary crusher, which is shown in this photograph, and also with the stockpile tunnel foundations as well, which was quite a highlight for us. It was one of the biggest pours done in Namibia in a long time, over 1,200 cubic meters of concrete poured in one continuous pour. And we're very proud of the fact that in all of these activities, the contractor, the site management team and my own team on site have managed to continue to meet their schedule and stay within budget. And I think really at this point is I'm quite comfortable to take any questions from anyone on the call, but really our message is: we are continuing with our work. We are prepared and we are currently in line with our financing moving ahead to keep the progress going on site. Emma Culver: Great. Thanks, Gavin, and thank you, everyone. Please pop in your questions in that Q&A box, send them through so we can get chatting. James, I see that you've got your hand up, but I just need you to just type the question in for me so we can see that one coming through. Gavin, I think to start off, in terms of the number of personnel at site now, how many do we have at site? I mean, I think we're up to close to like 400. How has that process gone? And how -- has there been any significant issues on site with the increase of personnel? Gavin Chamberlain: Yes, Emma, good question. The number has climbed to just under 400. I think last I checked it was 373. So for our people to get on to site and work, they have to go through 2 processes. The one process is to get themselves medically checked and the other process is to go through our induction. And I've been really, really pleased with Wood as our safety consultant on site. They put in a really good process and managed to make sure that no one has been kept waiting to do inductions. So it's actually been a very smooth process, and I think the longest anyone took to get on to site was just under a week, which in international standards is actually significantly low and a really big positive for the team on site. And the fact that we've managed to grow effectively in the quarter from 100 all the way up to 400 is a real significant step forward and really gives me a lot of confidence around the ability of our site team to actually step this up into the next level, which is when we would get structural steel onto site. Emma Culver: Okay. And given the momentum in the spot price and ongoing progress at site, can you offer any further clarity around FID on the project and how that's progressing? Gavin Chamberlain: Emma, it's very difficult to give too much clarity. But effectively, we are still on track in terms of achieving FID in line with our current bank balance and progress, and we believe that somewhere between 6 and 12 months we will have FID finalized. What I would say is that when we do finalize FID is we're not going to have to put the project -- slow the project down. We can continue on our current time lines and achieve the target that we wanted to do, which is to get uranium into the market by 2029. Emma Culver: Okay. Thanks, Gavin. And how are we thinking or you or the team thinking about contracting strategy? Are you looking to layer in additional contracts to those that have already been? This is utility contracts. And if they're going to be more base escalating or they're going to be hybrid or market-linked given the activities? Gavin Chamberlain: Yes. So obviously, we're in a very buoyant uranium market right now. Olga herself is actually currently in the U.S. at a conference, and we're continuing to talk to all utilities, and we will continue to respond to RHPs. And what we are doing though is, as we said post placing the first 2 contracts, is new contracts will need to be signed at a price that we are comfortable with. So we will continue to price RHPs to give the message in terms of what we were looking for in terms of pricing. We're not going to be rushing in to sign contracts. We are comfortable with the coverage that we've got at the moment in terms of the pricing. But what we want to do is obviously benefit from a rising uranium market. Emma Culver: And in terms of the budget, we're saying we're tracking on budget. How far through the budget are we to-date? And how much spend remains? Now we actually have a really good slide on this, which I wish I could bring up. I may be able to. But Gavin, you may be able to speak to that even without the slide in terms of the project spend and where we're at with that? Gavin Chamberlain: Yes. So our project spend at the moment in terms of spent and committed sits at around about just under 1/3 of the overall budget. We still have 2 major contracts to place, which would be the construction contract for the structural steel and the construction contract for electrical and instrumentation. In terms of mechanical orders, we've moved ahead significantly there. And even though we haven't got a payment commitment, what we have got is got orders placed where we secured the price of mechanical equipment for a large percentage of the project at the moment. So I think we're fairly well placed in terms of understanding where the capital expenditure is going. And at the moment, we have a degree of comfort that we'll be in line with the overall budget. Emma Culver: All right. And in terms of the contractors on site, are we seeing any issues with their performance? Is there anything that is keeping you up at night, I guess, Gavin, in terms of how things are going on site with the contractors? Gavin Chamberlain: Yes. I mean, so as you know, or you may not know, is all of our contractors on site at the moment are Namibian contractors. And that's part of our strategy, where we've actually reduced the size of contracts so that the Namibian contractors are capable of actually executing the work. We've been blown away by the progress and the commitment to safety and the commitment to schedule that we've seen from these contractors. They really -- it's almost like they're going the extra mile because they want to prove that as Namibians they can actually deliver. And we are super happy with the way they're performing on site at the moment. Emma Culver: And in terms of the long-term -- the utility supply contracts in country, how are they progressing? I know that the work at the permanent water station has started. But in terms of those agreements with NamWater and NamPower, how are they progressing? Gavin Chamberlain: Yes. So NamPower is signed and sealed, and we've also paid them their first deposit. So they've actually started with the design of the substation. So from the power side, we're 100% comfortable that it's moved ahead. On NamWater side, we're still waiting for the final signed contract, but we do have a binding MoU, which allowed us to actually start with -- commence with the construction of the permanent water line. So we wouldn't have commenced with that unless we were comfortable with the MoU. So that has been signed by all parties. Unfortunately, NamWater has been slightly diverted at the moment by looking at the finalization of the second desalination plant. And at the moment, it appears that the second desalination plant would be -- will be approved by government around about midyear this year. That's the latest news that we've received. But once again, I need to stress is we do not require the second desalination plant, but it has been a distraction to NamWater. Our contract is they will supply us with water. Whether it comes from the existing desalination plant or the new one actually doesn't affect us. There's sufficient water in the existing desalination plant. Emma Culver: All right. And we have a question here, which I'm going to rephrase a little bit. But the current progress that's been made on site in terms of the construction phase, is that still preserving the upward production optionality of the extension of the expansion case? If we do see demand come in from AI, are we still well positioned to and prepared to take advantage of that? And maybe it's just speaking through, I guess, at what stage we have those key decision points to make on that extension, on that expansion and which one we would go with? Gavin Chamberlain: Yes. So from that perspective, it's a really good question, because the 2 key design implications really for the extension would be the power and water. So on both power and water at the moment, we are installing a system that is capable to actually do the extension. So with the water line, we will increase the pressure and thereby increase the flow. And in our MoU with the Department of Water, we've actually already covered the fact that we will potentially increase the supply at a point in time. So from a water perspective, we're comfortable. And from a power perspective, the overhead power lines are sized according to both projects. So we have no issues when it comes to the infrastructure. And then obviously, the existing infrastructure on site has been set out such that we can actually build the extension while we're operating the main plant. So from that perspective is, if there was a push to accelerate the building of the extension, we would be able to do that with no real issues in relation to operating the Etango-8, as we call it, versus Etango-16. Emma Culver: Okay. Thanks, Gavin. And we have a question here around, I guess, labor and workforce in Namibia. So the current capability amongst the team is very well suited for the construction of this project. And I think you had -- I mean, you've worked with many of the project team previously. You know them well. We're quite comfortable with that. But what is the strategy of sourcing and securing skills as we move into the operation phase? And how is the dynamic on the supply of labor, especially in Namibia? There could be a few of... Gavin Chamberlain: Yes. Look, I mean, there's big pressure from the Namibian government to educate and develop Namibians as well. There is already a mining training center, which was set up many years ago by Rossing, which is still functional. And there's a lot of local labor that's already going through the training courses, which is available and currently is looking for work. So there's a shortage of employment in Namibia. So I don't believe we've got a shortage of people. Where we will have a strong focus in our operational readiness will be on upskilling and making sure we've got the right skills level available to us. Recently, we've employed a new COO for Bannerman Mining Resources Namibia, who comes out of a mining environment, and one of his main functions will be to drive the operational readiness process. And Danie will actually -- his first focus is on firming up the first step in operational readiness, which is effectively how you secure your people and when you employ them. So we have a timetable around that, which is linked back to the construction schedule, and that will become the responsibility of the in-country COO. Emma Culver: And Gavin, does the surging SA rand change your thinking at all around the pace of awarding contracts for work on site? Is there any incentive to bring forward certain aspects of the construction? Gavin Chamberlain: I suppose there's always some degree of incentive. However, we've -- the way we've actually tackled contracting on the project is we have placed a number of mechanical contracts to secure vendor data, but at the same time, we secured the cost of that supply. So to a large extent, we've already actually addressed the risk around the strengthening of the SA rand. There are no specific contracts that we would place earlier driven by the financial changes in terms of exchange rate. As I said, we've got 2 big contracts to place, but those contracts are actually -- it's more important for us to get the quantities right in those contracts than it is to worry about the exchange rate at this point in time. And as people know, is the rand exchange rate does tend to yo-yo a bit. So we keep an eye on it. And at the moment, we're not planning to change any of our strategies linked to contracting. Emma Culver: Great. Thanks, Gavin. And we haven't had any other questions come in. So I think -- actually, we do have one just now. See, these last minute questions that pop in just when you think that you're going to close it off. Can we offer any insight into the proposed change in legislation around the 10% free-carry interest in new mines in Namibia? Is Etango classified as a new mine? No, it's not. I will let you speak to this, Gavin, but I think this is actually an important point. We did discuss it at the last quarter, but we have had a change in that Namibian Mining Ministry. So for those that aren't aware of the updates there, can you just touch base on that? Gavin Chamberlain: Yes. So we've got a new Mining Minister. So the minister who made the statement around the 10% has been removed from his position and there's a new Mining Minister in. We actually -- our local Chairlady had a meeting with the Mining Minister yesterday, which was very positive. And when we are in Namibia with the investors' visit, myself and Murno will also be moving -- going and actually meeting him in person. But the rhetoric around 51% ownership, et cetera, has died down significantly. In fact, we're not hearing it at all. And we are pretty confident that we're definitely an old license, not a new license. But even on the new licenses, it's died significantly. There's a lot more focus at the moment on oil and gas. That doesn't mean that we've relaxed and we're 100% comfortable, but we do believe it's not going to be affecting us, but we also don't want it to affect other mines in the future because maybe those other mines could be ours. Emma Culver: And a question here, what's the thought process around bringing a new partner into the project? How has the interest been regarding the project? As most would be aware and has been reported in the quarterly, we do have a strategic funding work stream underway. It has been underway for quite some time. Gavin, any comments on how that's progressing? I think that you're pretty happy with the team and the progress that has been made in that aspect. Gavin Chamberlain: Yes, definitely. I mean we've seen -- for the last 6 months, we've seen a huge increase in interest and in people actually talking to us. And we -- as I said, is we believe within 6 to 12 months, we will be in a position to announce our FID. And our FID, as people are aware, is 100% related to the final funding for the project. So we're very comfortable with the progress that we've made in the last couple of months. Emma Culver: All right. Thanks. So look, I'm going to close the Q&A off there. If anyone does have any additional questions, please drop me an e-mail. I think most of you have my e-mail. Please drop me a line if there are any additional questions. Gavin, thank you very much for joining us. We do have an updated video that goes for, I think, about 2.5 minutes showing progress from the December quarter on site. For those of you that want to hang around and watch that, please stay on the line, and I will share the screen and begin that video. Gavin, thanks again for joining us. Thank you to everyone for joining the call. And reach out at any point if you have any questions. Thanks very much. Gavin Chamberlain: Thanks, Emma, and thanks to everyone who attended.
Line Dovarn: Good morning, and welcome to today's presentation of Munters Q4 and 2025 Full Year Results. My name is Line Dovarn, and I'm Head of Investor Relations, joined by our CEO, Klas Forsstrom; and our CFO, Katharina Fischer. So Klas and Katharina will begin with presenting the results, and then we will have a Q&A session after that. Please go ahead. Klas Forsström: Thank you, Line, and good morning, everyone. Let me start with a few sentences to summarize the quarter and the year and then dig into the details then. The year 2025 ended up with a quarter showing the strength of our leading offer across our prioritized end markets. All in all, then resulting in more than 3x organic growth, I mean, over 200%, a book-to-bill of 1.6, I have to say, an exceptional achievement by our teams. Earnings weakened to 10%, primarily driven by dual site costs and underutilization in AirTech, as well as temporary tariffs and transition cost when it comes to moving different products in and out of the DCT system. I'm not pleased with the result, but very confident that most of this will diminish after quarter 1. All in all, 2025 was a year to be proud of, delivering record order intake, solid profit and strong cash flow. It was also a year building industry-leading capabilities to produce, to show stellar innovation and offer buildup paired with improved efficiencies. All this while balancing in a fast-changing world of trade conflicts and wars. I enter 2026 with a positive view on our end markets, strong or slightly improving market demands across our segments. Even better is the momentum across Munters. Innovation is the core of a company, an innovation drive that is reaching a vitality index of more than 50%. Production capacity built for current and future growth, we are able to handle 50% more growth, a modern and forward-leaning digital FoodTech, operational improvements in AirTech and accelerating this into 2026 and an order backlog that sets us up for a record 2026 and beyond. After Q1, when short-term holdbacks will diminish, we are set to deliver a 2026 with historically high turnover and strong margins in H2. In a nutshell, 2026, a year to look forward to. So let's dig in a little bit into the details then. And as I said, exceptional demand while earnings weakened. Order intake, plus 191%, organically 200%. Very pleasing, AirTech also delivered growth with a book-to-bill over 1. Data Center Technology, significant increase. Of the orders received, about SEK 5.7 billion was announced in orders before the quarter report. FoodTech organically declined, some lower software orders, partly offset by controllers, but we also met a very, very strong quarter here. Order backlog all in all, increased with 53%, currency adjusted with 80%. It's mainly DCT and orders to be delivered in 2026 and 2027. And as I said, a book-to-bill of 1.6. Net sales declined. AirTech declined, lower sales in EMEA. As you know, EMEA had a few working days less, but it was a weaker backlog that we had to eat from. DCT increased successful execution on order backlog, but also here in DCT, I mean, we closed for a couple of days, as always, during Christmas. FoodTech increased driven by strong growth in controllers, and that was partly offset by lower software. All in all, for the full year, net sales increased with 8% organically above that. Adjusted EBITA margin, 10% in the quarter. It's the tariffs that represents about 4% in DCT. When it comes to AirTech, lower volumes and underutilization due to weaker battery market that accounts for about 2% units and an adjusted EBITA margin in the year of close to 13%, 12.7%. When it comes to regions, significant variations in between the regions. Americas stands for 86% of our orders in the quarter. EMEA, about 11%; and APAC, 4%. Of course, it is DCT that stands out with 95% orders in Americas. But also very good to see 5% of the total orders in the quarter came in Europe. So we start to see a European data center market that is starting to grow, and we are taking our share in that. And then when it comes to FoodTech, a more, call it, normal balanced quarter. All in all, we look upon the quarter, AirTech, soft with pockets of growth pretty much in all the different regions, but clear signs of especially the base business, 95% of our business starting to show some growth moving forward. Data Center continue to rapidly expand in Americas. It is a smaller market in Europe, but we start to win here in a good way. And then when it comes to APAC, a good market outlook, especially in Southeast Asia and the Oceanic region. And FoodTech, very much a continued positive market as such. Moving into AirTech, a book-to-bill of 1.1. Order backlog stable. Pleasing to see that the order backlog did increase. And as you can see now, when it comes to the orders, about 90% of the -- in the year is outside battery. So it is a sign that we now are moving into capturing orders in a stronger market that is outside of battery. And here, I think it's very clear. This quarter is order intake-wise, one of the best, I would say, the best quarter in the last 8 quarters with one exception. And if I take a look upon outside battery, it's for sure, the best quarter in the last couple of years. Also important to see here, as you can see, there is an up picking trend the last couple of quarters. And so that is the reason why we are saying it is a market that seems to become stronger and stronger. When it came to net sales, a lower outcome due to -- and that resulted in a lower profitability. All in all then, something that was very good to see that is the share of service, 23%. And when it comes to components, 19%. Here, we have a shift in components then. So we have more evaporative pads than what we have then desiccant wheels. When I look upon our innovation pipeline, and you have heard me say that we have a vitality index of more than 50% now. I think this is an important slide to talk about. When it comes to AirTech, AirTech is exposed to many different end user segments. You drive energy efficiency and customer value to primarily 2 different components here. It is material science and technology leadership when it comes to the media. And then it is how you use and how you control your equipment. And if I take a look upon this, I mean, what I see that is the material science and the new media gives opportunities for customers to increase -- improve their energy efficiency in between 10% to 20% compared to old versions. And if we take the connectivity and using artificial intelligence and better controlling the setup, it is a similar value, 10% to 20% more improvements. And if you combine this, I mean, then you can have up to 40% energy efficiency. What is also clear that is that in some of the underlying segments there as pharma, defense, and service, I mean, we see a continued upgrade and higher demand coming forward. Also important to see that is when it comes to what we call clean technology, air quality and pollution control, we also see a strong underlying market as such. Moving over to Data Center, an exceptional order intake in the quarter. Demands across both colocators, hyperscalers, very much driven by artificial intelligence-related investments, but really across the full type of board. We announced orders of SEK 5.7 billion, and we reached SEK 9.2 billion in total orders. The order backlog increased. And here, we talk about deliveries into 2026 and then carry into 2027. The book-to-bill in the quarter was impressive of 7%. Also, what I think is important if you take a look upon the circles there, I think that exemplify the product transition that is taking place. The 38% where we have the split system that is represented in the past, very much by cycle in the future, very much of split system based on, as an example, on chillers. Now we are building up chiller capability. And when chiller capability are then increasing that we can produce it more in an industrial way, the chiller profitability will increase in the same way as we showed with cycle. The main effect of the margins in this quarter came from tariffs. And here, we deliberately decided that it's better to take market share, establish ourselves in U.S. even before we have full-fledged production of chillers in U.S. If I would bring that back, I mean, we would be in a range of around 18%. And if I then add also the changes in the product mix, et cetera, I mean, we would be in the 19% range. But all in all, I mean, I'm very confident moving forward that we will continue over a period, over a year to be in the high teens range. But this and also next quarter will be affected by tariffs. We are filling up the order backlog, and we are building up capacity. And capacity you build up by building factories, driving efficiencies, driving the way you produce, but also how you interact with the customer, how you preplan, how you actively secure critical components and so on. And if I take all that then on the right side here on the slide, that we have now capacity to be able to take 50% more orders moving forward, and that gives me very good confidence. Of course, it varies in between the different factories. In some factories, we have not much more to gain. In other factories, substantially more to gain. This is also why I say that with this backlog, I mean, I'm extremely confident that we will have a strong invoicing year in Data Center. And what type of products are we then bringing in? I think the best way to describe it, that is across the board. Some cases, it is more dedicated CRAHs, custom-designed CRAHs that have high efficiency. In other cases, it is chillers, and yet other examples, it is more what I would call it hybrids where you combine chillers, custom-designed CDUs and CRAHs. And for me, that is the strong point of Munters today. We can cater all different type of product demands and all different types of cooling demands there is in the market. Also very pleasing that we took a sizable order in EMEA that includes Geoclima chillers and CRAHs. And this puts us in a very good position also for a strong fill rate in our EMEA factories. On and off, I and we get questions about, I mean, what is driving then the success in Data Center and how -- what about the market. You've heard me talk very much about, I mean, we have evolved from being a niche specialist to now having a comprehensive, very wide cooling portfolio that can expand into many different type of data centers. That has been driven by the innovation engine, innovation through own innovation and combining with acquisitions that we then have brought into the system. We accelerated the time to market for next-generation cooling systems. And I think that we have at current and a world-leading time to market when it comes to new systems. We have also in parallel, strengthened the service setup. I mean, with own personnel, but also contractors and partners. So gradually, we are expanding the service coverage also. Capacity. We have built up capacity, and we never take and accept orders that we cannot deliver on promise. We have been building capacity ahead of the plan, i.e., that generates some cost in the beginning, but we have also proven that when we have a scalable footprint, we can also generate the bottom line. And then the discussion about what type of cooling solutions are there and what is then affected cooling. I think you have to come from 2 perspectives. First, you have to have very dedicated type of data center cooling setups, but then you also have hybrid readiness. In the very best liquid cooling data center, there is still need for in between 20% to 25% air cooling. So you need to have the [ width ] on this. So all in all, I think we have an extremely strong platform for continued growth and profitable growth moving forward. If I go back to FoodTech, the first thing I think is important to recognize here that is we have completely shifted what FoodTech is now compared to a year ago. Now it is 100% digital and software-driven. There is when we have increased the number of controllers or the sales of controllers still a seasonal effect that the controllers are sitting in the farms, et cetera, et cetera. So in quarter 4 and quarter 1, there is a weaker controller demand. But all in all, it is a more stable business area compared to the past, a strong market outlook moving forward. Margin remains strong. What affected margins was our continued investments to support growth, a shift in products that we have more controllers this quarter than we had software. And then on the positive side, price increases and efficiency initiatives. But all in all, a strong underlying margin. I predict that we will continue to grow over years in between 20% to 30% when it comes to the ARR this quarter, slightly lower, but that is very much due to the comparables of last year. For me, this is one of the most important pictures of the future in FoodTech. It is about the full value chain, a data-driven connected supply chain. Our products and solutions are very much focused on the growth segment, where chickens, the swines, the animals, the plants are growing. But it is also handling data and help the customer manage the full value chain. And this is something that is extremely sought after. Of course, it takes some time. If you start in the middle, you have a unique offer there, combining controllers with software, it takes some time to sort of expand out in the full value chain. But what I see that is that our customers are very attracted to this. And if we talk about the software side, churn, low churn is important, and we have a very low churn, about 2% and below. And then, as I said, the ARR then expected to be in between 20% to 30% year-by-year. This quarter, a little bit lower due to very strong comparables last year. With that then, I leave it over to Katharina. Katharina Fischer: Thank you, Klas. So starting with the fourth quarter, net sales declined 8% or remained flat currency adjusted, primarily reflecting the lower volumes in AirTech. The adjusted EBITA margin declined, and this was mainly due to the temporary tariff effect in Data Center and the lower volumes and underutilization in AirTech. Net income declined, and this was due to the lower operating earnings, but also due to the increased items affecting comparability in the fourth quarter. They amounted to SEK 174 million. The driver of this was a contingent consideration of SEK 98 million due to recent acquisitions. So this was mainly related to the 20% holdback of the transaction price for the acquisition of the remaining shares in the MTech Systems, and that was closed in March. 2025. And this amount then has been paid in full now in January this year and was fully accrued at year-end then. Looking at cash flow was very strong. I will come back to that later on. Sorry, I should also say on the items affecting comparability, we also have restructuring charges of SEK 77 million. They related to AirTech. And here, we are progressing according to plan on the cost measure activities that we announced in Q3. If you recall, we announced then that we will take a charge of SEK 150 million in total over Q4 and Q1. We also had a very strong operating working capital to net sales ratio in the quarter. It improved further. So that reflects our strong discipline in this area. Looking at the full year, net sales increased 8% or 15% currency adjusted. And this was then driven by the continued strong growth in Data Center and FoodTech and partly offset by a weaker development in AirTech. And the adjusted EBITA margin declined due to lower volumes and the continued dual site cost and underutilization in AirTech as well as the tariffs then in Data Center. And also for the full year, the net income declined then for the full year due to the lower operating earnings and the increased items affecting comparability. And this continued considerations effect was then almost SEK 200 million for the year then. And also, as I said, very strong operating working capital. Then looking at the margin, the margin declined in the quarter. While this was below our ambitions then, it was due to temporary effects such as the tariff impacts and the lower volumes and utilization in AirTech. The volume then had a negative impact, but mainly due to AirTech in EMEA, partly offset then by DCT and FoodTech. I'm very glad to see that we continue to have a positive net price impact, both in DCT and FoodTech. However, the margin was negatively impacted then by the temporary tariff headwinds in DCT and also a negative product mix across all business areas and also an adverse regional mix in AirTech. From the operational excellence perspective, the under-absorption in AirTech weighed on the margin and also the transition to new products in Data Center had a negative effect on the margin. We continue to invest in our business, of course, to scale the business and also to digitalize further and automate and also do more investments in the footprint. If we compare to the Q3 margin of 13.5%, the margin then declined, and this was the -- primarily drivers for that was the increased tariff headwinds, but also lower volumes and changes in the product mix. In addition to this, we also had currency headwinds, which impacted the quarterly results then negatively. Looking at the cash flow. We had a strong cash flow from operating activities in the quarter. So even though the operating earnings were lower, we were able to offset this with positive contributions in -- from operating working capital, and this was mainly driven by advances in DCT. In the investment activities, we had an impact from business acquisitions. So these were then retention payments or holdbacks related to acquisitions of Geoclima and AEI, which were closed during 2024. So there were some remaining payments for those 2. And then we have also bought the remaining shares, 40% in the Brazilian company, InoBram. Looking at year-to-date, we have a stable cash flow from operating activities, a little bit lower, but due to the operating earnings and also a less favorable development in working capital for the full year. Looking at cash flow from investing activities, it was impacted by lower CapEx and also lower cash flow from the business acquisitions during the full year. Looking at investments then, our capital allocation principles remain disciplined and selective. So we continue to focus our investments where they create sustainable growth and also create long-term value creation. And in the quarter, the ratio was 7%. So this reflects a higher level of activity then where we continue to invest in competencies, upgrading operations, doing more digitalization and optimization in our business. For the full year, this number was 5.8%. Looking into 2026, we continue to invest in DCT footprint and the Virginia production facility, including the test lab will be up and running in the second quarter of this year. And efficiency improvements and volume ramp-up will take place gradually, of course, and with the main improvements to be seen in the second half of the year. Looking at CapEx for the full year, we expect it to be -- remain broadly in line with the full year number for 2025. Operating working capital, then as I mentioned before, very strong number if you look at the chart there, so at 7.3%, right now. If we look at leverage, the leverage ratio remained stable at 2.9 compared to Q3, slightly up, reflecting lower operating earnings. However, we had this very strong cash flow, which then enabled us to manage this acquisition-related payments during the quarter. And if you compare to the leverage at the end of Q4 last year, the increase is driven by increased lease liabilities. While we do not have a fixed leverage target, we do have an ambition to be within 1.5 and 2.5 over time. And we are not worried by temporary deviations above this level as they are then related to strategic investments that support our future growth and also increase our competitive position. Diversification of financing and strengthening our funding base is, of course, also important. During the quarter, we have issued a bond of SEK 400 million, and we have also increased our outstanding commercial papers. Also want to highlight then that during the first quarter now this year, we have then paid the remaining -- the holdback 20% for MTech, USD 18.5 million. So that payment was done in January this year. Turning to sustainability then. We continue to have a very focused agenda that we execute diligently on, that spans across climate, social aspects and responsible business practices. And if we start with climate, we -- during 2025 inaugurated our new flagship factory then in Amesbury in the U.S. And if we look at our ambitions for 2030, our Scope 1 and 2 for the year increased 3%. And if we look at Scope 3 emission intensity, it increased with 19%. And this increase in Scope 3 was related then to higher activity in regions where the emission intensity is higher and also a different product mix. But of course, this highlights that we, as many others, need to continue to focus on delivering on our decarbonization road map. And in parallel, we also continue to develop products that are more energy-efficient products and services, and we also work with our customers to find renewable energy solutions. Looking at gender equity, here, our ambition is very clear. We want to achieve the 30% of women leaders and women in workforce, and we drive many different initiatives linked to this, where we have and support inclusive employee networks. We also drive initiatives to promote interest in technology-related fields and so on. And we also aim to broaden the talent base through very focused training programs and defined goals. On the responsible business side, we are aligning with the CSRD, and we are, of course, also preparing for the upcoming CSDDD. This is then underpinned by us continuously upscaling our workforce, where we have many different trainings in human rights, anticorruption and related topics. And of course, this is very important with this training programs because we really want to make sure that we have consistent standards in our day-to-day decision-making across operations and our supply chain. And then finally, you know that we have the service and components ambition to be above 1/3 of net sales. And during the full year, this net sales grew organically, and we achieved a percentage of 25%. And with that, I would like to thank you and hand it back to you, Klas. Klas Forsström: Thank you, Katharina. Here and also take a look into the future before we open up for Q&As. The year, we ended up on a growth of 15% on an EBITA margin of 12.7%, on an operating working capital through net sales of 7.3%. In the quarter then, not much growth adjusted currency and an EBITA margin of 10%. And of course, it is the same number when it comes to operating working capital. The Board is proposing a dividend of SEK 1.6 per share moving into the general meeting then. From this quarter, we have started to give outlooks. If we start then with a status, where are we in the different business areas. First of all, I mean, the efficiency programs that has started and are driven in AirTech delivers plus SEK 100 million in this year. The second program that we announced mid this year is aimed to delivering between SEK 250 million to SEK 300 million run rate by end of this year, and both programs are operated according to the plans. We have also improved the capacity utilization step-by-step by reallocating our sales force to what I prefer to call the base business, i.e., all the business that is less project-driven, less battery driven. And here, you can see that we are gradually then increasing that type of business. When it comes to DCT then, you have heard me talk about our success in broadening our portfolio by own developed and acquired type of portfolio components. We have invested and increased our global footprint, both when it comes to production capacity, but also when it comes to sales capacity. And we have then delivered a record order intake that takes us for sure through 2026, well into 2025 and actually also are touching already now 2028. When it comes to FoodTech, we have completely transformed this. It's now a fully digital offer. It is an offer that no one else in the market has, and it generates a lot of attractions from customers. We have entered new regions, and we have been growing the share of recurring revenue step by step. If I then move to the market then, and this is how we look upon the market for the full year 2026. In AirTech, with all the different segments, it is flat to a positive market. And the positive sign that is, of course, in everything outside battery. And today, everything outside battery represents pretty much close to 90% of what we sell. So flat to positive. In Data Center Technology, we predict a continued positive market demand for the year. But of course, and I highlight this, it is extremely difficult to predict how much order intake will come quarter-by-quarter, but we see still a very, very strong underlying market. No changes there. And when it comes to FoodTech, continued a positive market outlook. Business then outlook for the year. First of all, it is clear that our net sales growth is expected to develop positively. And I said, I expect it to be a record year on invoicing. And how to substantiate that? If we take the backlog in Data Center, at least 30% more invoicing will come. With the right customer demand, it could be as high as 40% increase in invoicing. And then a slightly increase also moving into AirTech supported by a better order intake. When it comes to adjusted EBITDA margin, after Q1, we expect that it will diminish the tariff impact in Data Center and the margin improvements in AirTech will start to pay off. So you can look upon this year, a little bit reverse to last year, i.e., a substantially better H2 than H1 when it comes to adjusted EBITDA margin. All in all, I mean, this sets us up for a very, very exciting 2026. With that, Line, I hand it over to you and everyone on the call for Q&As. Line Dovarn: Thank you, Klas and Katharina, for presenting. [Operator Instructions] So we'll begin with a caller from the telephone conference. Operator: [Operator Instructions] The next question comes from Adela Dashian from Jefferies. Adela Dashian: Two questions from me then. The first one, obviously, you had very, very strong order intake in the DCT segment, and it would be great to try to understand whether or not this is timing-related lumpiness or if you expect this to be a sustainably higher run rate given all the AI deployment. We'll start there. Klas Forsström: Thank you, Adela, for the question. I think it's fair to say, as I said many times, I mean, by nature, Data Center order intake is lumpy. This quarter, I think everyone understands that this was an extraordinary quarter. With that said, what we have done over the last couple of years, that is we have expanded our product portfolio, and we have expanded our capabilities to sell in many different regions. So from that perspective, we have more opportunities to gain customers, to gain attractiveness. But I think you should look upon this as an extraordinary quarter. Don't expect this to be the new baseline, so to speak. But with that said, I see, we see a strong underlying market in data center. Adela Dashian: That's really helpful. And then if I stay on the DCT track, but move to margins, you're outlining here a path to get back to mid-teen DCT margins as the tariff headwinds ease and also volumes ramp up from the second half and onwards. But does that margin trajectory fully reflect the incremental investments that you might need given the elevated backlog? Klas Forsström: Yes, it does. I can very confidently say that we -- when it comes to production capacity, we have constantly been investing ahead of the curve, so to speak. And this we have done also this year. And we could have taken a decision not to take orders and sell and deliver, call it, chillers in North America and thereby avoided the tariff hit. We deliberately decided that it's so important that customers are exposed to our fantastic chillers and thereby then securing the orders that will be delivered after we have the production setup here. So if I take a look upon, I mean, the, call it, the margin development and just ballparking it out, I mean, we have a 4% when it comes to the tariffs. That will diminish after Q1. And then we also have the very logical setup when you start to produce something new, in this case, chillers in North America, I mean, you will gradually then move the margins up on that. So from that perspective, if I take a look on the full year, that is why I say that when it comes to DCT, it is, of course, a very strong delivery of top line and also a restored profitability in DCT for the second half of the year. And when it comes to AirTech, the easiest way to describe it is by adding some volumes that we are at current and by cutting out the costs of the SEK 250 million to SEK 300 million, we will step-by-step restore that margin as well. Adela Dashian: Just to clarify quickly, I guess the question -- I appreciate all the color on the near-term outlook or the 2026 outlook. But I guess my question is also more related to medium term or long term. Do you feel like high teens is still sustainable even as your backlog grows. Okay. Klas Forsström: Yes. And also here, I think I said it loud and clear that we have the operational footprint of handling 50% more order intake. What we need to then, of course, adjust that is man hours that is -- but that is in the larger scheme just adjustments, if I put it like that. Adela Dashian: Great. That's the number I was looking for. I'll get back in the queue. Line Dovarn: We can take another caller. Operator: The next question comes from Karl Bokvist from ABG Sundal Collier. Karl Bokvist: A follow-up here a bit on what you've already talked about. But would just like to understand the time line of events that hold back the margins here. So one thing that we've talked about, of course, were the tariffs in DCT. But the dual side factory situation. You said it was complete by year-end '25, i.e., this is something you have alluded to how much it has impacted margins. But should this be now entirely out of the margins from Q1 '26? Klas Forsström: I mean, as I said, I mean, we have completed that. And then, of course, when you start it up, it will have small impacts also in the startup process. But the majority of that has disappeared, yes. Karl Bokvist: All right. Understood. And then also on the just general industrial improvement here, is there anything in particular that you would highlight here within AirTech, I'm talking about now, whether or not it's just about hesitancy becoming -- with customers seeing a bit more clarity on their investment decisions? Or is there any particular -- any other kind of trigger that you see would really make this area start to improve again? Klas Forsström: But it's a very good question. And if I sort of then take it region by region, you can see a openness, improved, call it, market across all the different segments. In Europe, we see in, call it, the base business and improvements in the outlooks, and I give you a couple of examples there. We can talk about restoration. We can talk about defense, et cetera. There, we see a stronger order intake. Here, we talk about, of course, many smaller projects, not the large projects. And in North America, what we see there, that is still a hesitancy, but the order backlog in all 3 regions are moving up -- or sorry, not order backlog, the pipeline of orders are moving up. So normally, when you see that at a certain given time, then you start to open up. So that's the reason why I'm positive. I don't see, yes, now it is substantially better, but it's a stronger market in the non-battery market across all regions. Line Dovarn: And we will take another caller from the telephone conference. Operator: The next question comes from Carl Deijenberg from DNB Carnegie. Carl Deijenberg: So a couple of questions from my side. I just wanted to maybe start on the phasing on the invoicing. Of course, I heard your comments sort of on the full year for '26 expectation and also the ramp-up towards the latter part of H2. But when we go now into Q1 is just from a sort of revenue standpoint, is that what you're seeing now a similar level to what we saw in Q4? Because, yes, it sounds like you're going to have -- facing the sort of similar issues now very near term. So is that a... Klas Forsström: If I put it like this, I mean, we will have the chiller production fully up and running in U.S. after Q1. So the big increase of deliveries in U.S. will, of course, start to come from Q2 and forward. And then during the year, that will then quarter-by-quarter increase in progression. The first quarter, we had pretty much the same setup as now. So then it's more driven out what type of demands, when would customers like to have certain deliveries, so to speak. But the best, call it, guidance that is we will have a full-fledged production in U.S. from Q2, and then we will definitely increase the deliveries. Carl Deijenberg: Great. Then I wanted to also follow up a little bit on the large orders you have announced here in Q4 '25. I know that some of them have been announced in Swedish krona, whereas a couple of other ones have been announced in U.S. dollars. So just wanted to understand a little bit sort of currency structure you're taking on, let's say, currency risk in between those 2. I know that you have a very local cost base in the U.S. But how does that work with the orders that you've announced in Swedish krona now given the currency movements? Klas Forsström: I can start, and then I can also hand it over to Katharina. But if you take the current currency exposure is on and about depending on the different business areas in between 7% to 11% and the highest then is in Data Center. Then if you take a look upon the order intake situation, we have an extremely high then currency effect, but that is pure mathematics. I mean, you have a low comparison and then you add an humongous large order quantity on top of that, and then it becomes, I mean, 11% on a very high number becomes a large percentage on the lower number, if I put it like that then. But if I then summarize it, you can say, as long as we deliver from Europe to U.S., then we will have a currency effect. But when we start to deliver from U.S. production, I mean, U.S. dollar is the U.S. dollar. So then the exposure in U.S. dollar will disappear because then we balance it off, if that made sense. Katharina, any more favors on this then. Katharina Fischer: No, but the U.S. contracts are in U.S. dollars. And yes, we have most of our cost base in U.S. dollars as well. Carl Deijenberg: Yes. No, the reason for asking was just that I noted that some of the large orders were announced in Swedish krona. Katharina Fischer: Yes. It's just the way that we announced it in the press release, Carl, so the order is taken in U.S. dollars, but it's just the way we have chosen to announce the results. It's taken in U.S. dollars. Carl Deijenberg: Perfect. Then finally, I also wanted to ask on AirTech. I heard your comments what you're talking about sort of the mix change that you've seen this year measured in battery becoming a smaller part. And of course, you've taken quite a few sort of measures now on production and utilization and so forth. And I just wanted to understand, we've seen in the past that this battery contract that you took back in '22, in particular, were quite profitable for the division, whereas now you're sort of entering '26-'27 with a little bit of a different, let's say, end market mix. And on the back of the changes you've done here on the production and utilization side, is it still a material margin difference in battery relative to other segments? Or is that more balanced now, you would say? Klas Forsström: I have to give you a little bit lengthy answer, and then I will sum it up. Generally speaking, the non-battery side has always had a slightly better margin than the large batteries orders. With that said, when you have a very large battery orders and you take another large battery order, then you set up a production system, so you have, call it, volume effects, so you can bring out a higher margin on that side. So if I then go back to service, components and base business, in general, product margins have a higher margin than the larger projects. But then, of course, if you can fill a factory and deliver like we do in Data Center, then you have volume benefits on that then, if it makes sense. So moving forward, I see that if we have a couple of quarters in the range of the SEK 2 billion that we have now, I mean, then we will have a good load of factories and a good way forward. And that will most probably be filled more of what I referred to general base business than battery projects. Line Dovarn: And we will take another caller. Klas Forsström: Yes. Yes. Yes. Operator: The next question comes from Gustav Berneblad from Nordea. Gustav Berneblad: It's Gustav here from Nordea. Just coming back a bit to the tariff situation there of 400 bps. How much -- I mean, how much would you say that you're able to offset with the new production line of chillers in Virginia, meaning sort of looking at H2 2026, if we say sort of ballpark, is it fair to assume closer to 1 percentage point tariff headwind? Or is it less? Or if you can just comment a bit. Klas Forsström: And now I think when it comes to tariffs, let's start with a little bit of a joke and then I will come. Tariffs have a tendency to change depending on the President's mood. But if we take as an assumption, nothing is changing. If we take that as an assumption. I mean, the tariffs are built up by 2 components. One is if we deliver a full-fledged system to U.S., which we are when it comes to chillers, I mean, then what we have, that is, first of all, we have the general, the 15% tariff. Then there are other tariff components that is steel as an example. And then you have to add another tariff ingredients on that then on the steel part in what you have. When we start to produce in U.S., I mean, the first component is gone. Then the second component will be more or less gone due to the fact that if we can then supply with U.S. steel, et cetera, I mean, then we will have no effect. But if we need to supply as all other U.S. companies have to supply then steel outside U.S., I mean, then we have a tariff component. But if I sort of summarize it, everything will not disappear after Q2 because there is a little bit of residual. But if we follow our plans, the very large majority of this will disappear in H2. Am I fair to say that, Katharina? Katharina Fischer: You're exactly right. Gustav Berneblad: Perfect. That's very clear. And then coming back to the cost savings program in AirTech there. I mean, can you just give us a bit more nuance on how we should interpret this in terms of what you're actually doing? Is it mainly personnel and we will see a sort of a front heavy or more front-end loaded cost savings? Or how should we think this progressing in 2026? Klas Forsström: No, I've been talking so much. Maybe I hand this over to Katharina here. Katharina Fischer: For the program that we announced then in Q3, the one that to deliver SEK 250 million to SEK 300 million in savings, that will start to come into play already in the first quarter. So that program is progressing well to plan. Then there is a second part of that program that will come into play more in the second half. Gustav Berneblad: But is it possible to say anything if it's the weight of the cost program is more tilted towards Q1 here or H1 or? Katharina Fischer: Yes. I mean, towards the end of the year, it will be the full run rate, so to say, but it will start to build already from now. Klas Forsström: So you can put it a little bit like this. I mean, everything that has been executed by end of this year, I mean, that will month by month add up. And then you will have a second go, put it like that, that will start to add up from mid end of Q2. And then those 2 streams will then accumulate up to the total of SEK 250 million to SEK 300 million. Line Dovarn: We can take another caller. Operator: The next question comes from Anders Roslund from Pareto Securities. Anders Roslund: Yes. I have just one question regarding the margin in DCT in the fourth quarter. If adding back the 4% for tariff, is this relatively well reflecting the new product assortment? Or is it parts coming from the high-margin cycle and less? Or what sort of... Klas Forsström: I mean it's a very good question. And so the easy thing to deduct, if I call it like that, I mean, that is the 4%. That is just the way it is. Then we have other minor components, and that is, as you referred Anders, we have the shift in the product portfolio, the mix. That then brings down its slightly, let's say, 1 bp, 1% more or just to take a number there. Moving forward, if you keep the 4% then at the end of next year, that is gone basically then. Then what -- the way you should look upon this, that is when we then are ramping up the chillers, then that will gradually then improve a positive product mix by the end the second half or starting, I mean, mid-quarter 2. So you will have a little bit of cycle effect, but then let's call it the chiller effect then when that is gradually then moving up in margins. So in the beginning, now we have a negative product mix. And at the end of next year, you can sell relatively said, you have a positive product mix. Line Dovarn: But there's no cycle left in Q4 in the deliveries. Those have been completed. Anders Roslund: Okay. Excellent. And how do you see in general, you only talk about chiller production, how is the production ramping up for the other product categories? And how will that affect margins? Klas Forsström: That is -- if we take a CRAH as an example, there are some variations in between the CRAHs in margins. I mean, when you have a high density, high capacity CRAH, you have slightly higher margin. But CRAHs, as you know, look upon them as, call it, slightly lower margins, but a stable margin. A CRAH is CRAH, and we are good in producing that. So that is just adding up. And then, of course, if you produce 100 and then 200, you are a little bit better. But call it, not that much efficiency, more in between an efficient or, call it more a me-too type of CRAH. But there, I mean, there, as I referred to earlier, there you can say that has been the negative product mix at current that we are selling more CRAHs than versus cycles. Moving forward, I mean the CRAHs will be at a stable level, and then it will be a larger mix of chillers then. I hope that was -- well enough described. Anders Roslund: Excellent. No, that's okay for me. Line Dovarn: And I think we have another caller. Operator: The next question comes from Mats Liss from Kepler. Mats Liss: Well, looking at chiller production there in Italy, and I guess you will sort of move part of that sourcing to the U.S. gradually during the year. But what will happen in Italy? Will that capacity come down until you get sufficient amount of demand in the European market? Or could you sort of -- say something about... Klas Forsström: But It's a very good question, Mats. We are also gaining traction in Europe of chillers. We are actually also at current and there, we have no tariff effects. We are, to some extent, supplying Asia, from Europe. So without being -- because I cannot be too specific, but I don't see any, call it, overcapacity or worries that we will have not good enough coverage in our factories in Europe. When we have production up and running in U.S., I mean, not from day 1, but in a quarter, everything after a quarter that is sold in U.S. will be produced in U.S. if there is not a specific, call it, emergency that we need to supply it in between. So we will have a strong base capacity in Europe for Europe, but also towards Middle East and towards Asia. Mats Liss: Great. And I guess it sounds like you experience this very good demand in Data Center segment going into 2026 as well. And I just want to -- well, get a feel for, do you see customers maybe placing dual orders here to secure supply? Or is it sort of not possible for them to do that? Or could you say something in... Klas Forsström: I mean when you take a look upon the extraordinary order size we had in Q4 then and then take that into when will that be delivered, so to speak, will be delivered during 2026. I've said like this, I expect a turnover of plus 30% and maybe a turnover increase of plus 40% depending on customer preferences of deliveries in Data Center during the year. But then a large part of this SEK 9 billion order is also moved into 2027. And actually a few of those are moved into 2028. So I have never been this comfortable when it comes to the load situation in data center. '26 done. We can take some more. We have availability. But as you know, I mean, after Q1, it's not very much you can fill there. And then we have a good situation already now for '27. And there, we have at least 5, 6 quarters more to go when it comes to fill that up. And we have already started to fill 2028. We had a book-to-bill of 7x in the quarter. Is that prebooking? Or is it, call it, just customers that would like to have a relaxed situation when it comes to will they have it or not? I cannot say that. But that is how it is. We are well covered into 2027 and actually also into '28 to some extent. Line Dovarn: Thank you. I think we have Karl back on the line. We can take one question for you and then we have to finish off. Operator: The next question comes from Karl Bokvist from ABG Sundal Collier. Karl Bokvist: All right. So just a comment there on what you see ahead on the growth there. I assume this is talking about current prevailing currency rates, i.e., organic or assuming existing currencies, on the sales growth from the backlog to 30% to 40%? Klas Forsström: Yes. I mean what we reported, that is in, call it, year-end currency rate. And then currency move up and down, but you can say that the majority of what is currency neutral in a way that it is sold in U.S. and the majority after -- or pretty much all that will be produced after Q1 sort of everything that will be delivered after Q1 will also be produced in. So you may have a top line effect there, but you will not have a bottom line effect. Line Dovarn: Thank you very much. I think, we will finish off there. Thank you, Klas and Katharina for presenting today. Klas Forsström: Thank you. Thank you very much. Line Dovarn: Thank you, everyone, for listening in. And please feel free to reach out to us at Investor Relations if you have further questions or if you would like to meet up with us during the quarter. So thank you for listening and see you next time. Katharina Fischer: Thank you. Klas Forsström: Thank you.
Operator: Welcome, everyone, to Telia Company's Q4 Full Year Results Presentation. And with that, I will now hand over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours. Erik Pers Berglund: Thank you, and good morning, everyone, to our Q4 call. We will do the usual routine with the management presentation followed by a Q&A. We have CEO, Patrik Hofbauer; and CFO, Eric Hageman, in the room, and we go straight ahead. Patrik, the floor is yours. Patrik Hofbauer: Thank you, Erik, and good morning to all of you. The last quarter of 2025 confirms that we are on track to reshape Telia into a much simpler, faster and more efficient company, in line with our value creation plan set out at the investor update back in September 2024. Before I go into the quarter, let me walk you through some key highlights for the full year of 2025. Looking at the financial performance, we have, for the first time in 5 years, converted the dividend with our free cash flow without any vendor financing contribution. We delivered on our EBITDA and overdelivered on our free cash flow ambition despite a challenging year for Norway and service revenue headwind in Finland and our balance sheet has strengthened. The good financial performance has also been noted by the market and resulted in a total shareholder return of 36% for 2025. We are also through the first year with our country-led operating model and the positive result when it comes to efficiency, speed and responsibility are clearly visible. The new model is also an enabler for further efficiencies and we announced a net reduction of 450 positions earlier this month. We have also come far in terms of improving our CapEx efficiency and reshaping our portfolio with the divestment of TV and Media and bid for Bredband2 and our process to exit Latvia. Throughout the year and across most markets, we have seen NPS improving, so the customer satisfaction, which confirms that we are doing the right things for our customers. In addition, our role in society is becoming increasingly important with increased demand for secure and mission-critical communications. So a lot for the organization to be proud of and to build further on in the coming years. And with that said, let's now zoom in on Q4 highlights. We again won the best network in Sweden according to umlaut's yearly survey, achieving both the highest overall score and a win in every category. But only having top-class network is not enough. And I'm happy to see that all the other efforts we do to drive customer experience is paying off with NPS increasing across the footprint. We also continue to be very disciplined on cost in Q4, which resulted in an OpEx decline by 4%. On portfolio management, we received the necessary regulatory approvals to go ahead with the bid for Bredband2 just before Christmas. And our process to exit Latvia is moving ahead. We also agreed to acquire a small fiber customer base in Finland. We saw Sweden deliver its best quarter in modern times with revenue growth reaching almost 5%, supported by business and mission-critical services, but also strong growth in consumer and an improved trend on mobile. For 2026, we see continued good financial momentum and therefore, guide for service revenue and EBITDA growth of around 2% and around 3%, respectively, and a stable CapEx level. Combined, these core building blocks are estimated to generate a free cash flow of around SEK 9 billion, a good milestone towards delivering at least SEK 10 billion in 2027. Now let's go to the financial highlights. Service revenue growth accelerated as expected, supported by strong growth in Sweden. EBITDA growth remained rather unchanged compared to the previous quarters, somewhat held back by a weak service revenue development in Finland and our decision to invest more in our core markets to capture growth. CapEx remained stable and ended a bit below our outlook of around SEK 13 billion for the year. Free cash flow came out very strong, driven by better-than-expected Q4 working capital, which Eric will elaborate more on. This strong end to the year resulted in a full year free cash flow of SEK 9.6 billion based on normalized spectrum CapEx, significantly above our outlook of around SEK 8 billion. Finally, our balance sheet remained very healthy with leverage also this quarter at 1.93x and significantly down from a year ago. Moving now to Sweden that again won the best network in umlaut survey and that also secured further long-term access to 1,800 megahertz spectrum at attractive prices. In the quarter, we also completed the 5G rollout and the 3G sunset. Customer satisfaction improved both in B2C and B2B, and we continue our strategy to step-by-step move sales from external channels to internal channels. Financially, Sweden delivered impressive service revenue growth, driven by both mobile and fixed. The consumer business had another good quarter with over 4% growth. Mission and business-critical services were a strong growth contributor, but also other areas such as our IT business, Telia [indiscernible]. Growth was well balanced, driven 50-50 from pricing and volume. This shows that we can do both pricing and attract new customers, as you can see in the healthy KPI development on the right on the slide, with strong net intake for both broadband and TV and a growing mobile ARPU driven by price changes earlier in the year. The slight decline in mobile customers was a result of a modest decline in the mobile broadband base. EBITDA growth remained strong despite including a lower year-over-year pension refund contribution as well as increased marketing spend. So all in all, Q4 was strong delivered by the team in Sweden. Let's now move east to Finland. And let me start with the financials where we had a weak quarter with service revenue down 3%, partly driven by continued weak enterprise market environment and a ramp down of noncore businesses but mostly because of non-connectivity projects for enterprise customers, which are lumpy in nature. We had a high level of revenue from these projects in Q4 last year and a relatively low level this year. The lower service revenue was the main reason why EBITDA declined 6%, but also the higher marketing spend that we flagged already in Q3. So clearly, a weak quarter, and we are far from satisfied, but we also won some new enterprise customers and our focus remains on the strategic agenda we have communicated before, strengthen profitability, simplify the business by divesting noncore assets and reducing organizational complexity and then turning around the SME segment and stabilizing the mobile market share. Underlying cost control remains tight, and we expect service revenue and EBITDA to be more stable in the coming quarters. The mobile consumer market was very active this quarter with 2 new MVNOs and a record high number of customer changing operator. We continue to focus on network and customer service quality and avoided the lowest price points in the market, even if it resulted in a net loss of customers short term. In broadband, net adds declined by 6,000 in the quarter, but this was fully driven by a cleanup of inactive subscribers. Now moving west to Norway, where service revenue was close to flat despite lower mobile wholesale revenue since mobile end user and fixed revenue improved clearly. This was mainly driven by pricing and as can be seen to the right, resulted in significant ARPU growth across our core services. EBITDA remained in negative territory as we flagged last quarter due to the decline in service revenue as well as higher cost level. Partly this was driven by phasing and partly because we have invested more into the market to capture future growth potential. We shifted the billing cycle for a large part of our customer base, which helped working capital in the quarter, and the churn effect was well in line with our own expectations. So now let's move to Lithuania, which launched 5G SA for its consumer customer and continue to deliver truly strong financial development with service revenue growth accelerating to 7%, supported again by both mobile and fixed. The acceleration, together with another quarter of great work on generating efficiencies resulted in an EBITDA growth of 13% and an EBITDA minus CapEx that remained at a record high level of SEK 1.6 billion on a rolling 12 months basis. In addition to solid financial development, Lithuania continued expanding the mobile customer base, and as you can see, also grew ARPU across all products, predominantly on the back of pricing performed earlier this year. Moving on to Estonia that had an eventful quarter operationally, receiving a recognition for best network by Rohde & Schwarz, launching a new security service for its home broadband customers and new eSIM roaming service for customers trading -- traveling outside of EU. Financially, the quarter was, however, a bit soft on service revenue, trended stable and EBITDA growth slowed down due to an unusually low cost level in the corresponding quarter last year. But like for Lithuania, cash conversion remained close to a record level also in Q4. And with that, I hand over to Eric before I come back to summarize the full year and Q4. Thank you. Eric Hageman: Thank you, Patrik. Let me now go through the financial development of the quarter and full year, starting as usual with service revenue and EBITDA. In the last quarter of 2025, service revenue growth improved to 2.1%, driven by the strong performance of our Consumer segment, which benefited from a particularly strong development in fixed, led by TV in Sweden and broadband, which grew nicely across all our markets. Mobile service revenue returned to growth despite the continued drag from wholesale in Norway. From a country perspective, Sweden's top line accelerated as expected and growth in the Baltics remained solid at around 5%. Combined, Sweden and Baltic service revenue growth more than compensated for a somewhat negative Norway and a weak development in Finland, the latter feeling the impact of increased competition, some year-on-year phasing and the previously flagged closure of the noncore e-invoicing business. But as Patrik said, we expect the service revenue trend to improve in the coming quarters, even though the overall turnaround in Finland and Norway will take time as previously explained. As a group, we ended full year '25 with 1.5% service revenue growth, a tad shy of our around 2% outlook. Excluding the wholesale revenue loss in Norway, we would have been at a 2% top line growth for the full year, which is what we guided for 2026. Sweden is expected to enjoy continued good growth, albeit at a lower rate than seen in Q4, and we expect Norway and Finland to gradually improve. Moving to EBITDA at 3.7% growth in the quarter remained solid, yet somewhat below the Q3 level because of the increased marketing spend in Finland and Norway. EBITDA margin was up again, firmly aligned with our September 2024 Capital Markets Day margin expansion promise. For the full year, the improvement was 120 basis points and is the result of profitable growth supported by the positive impact of the Change Program. Looking into 2026, we guide for around 3% EBITDA growth, supported by service revenue growth and continued work on generating efficiencies. Moving now to OpEx and CapEx. Starting on the left, also in Q3, we kept a high level of cost discipline as the Change Program continued to drive down resource cost. As a result, OpEx declined by 4.1% compared to the same period last year. We also saw lower cost for energy and bad debt in Q4, which largely compensated for slightly higher IT costs and increased spending on sales and marketing to capture identified growth opportunities in our 3 main markets. OpEx as a percentage of service revenue continued to trend down and decreased by 200 basis points to 31.9% in 2025. Whilst it's, of course, encouraging to see that we managed to do more with less, we see many more opportunities. We will not sit idle, and we will continue to make Telia simpler, faster and more efficient. Consequently, we announced early this month that we are targeting a net reduction of at least another 450 positions across the group this year. Moving on to the graph in the middle, you can see that we also remain disciplined with our capital expenditures, ending the year with SEK 12.8 billion for the full year, ahead of the improved guidance of around SEK 13 billion that we gave you at Q3 and significantly better than the initial guidance of less than SEK 14 billion that we had at the start of the year. For 2026, we expect CapEx to be below SEK 13 billion, in line with how we currently are trending and well below the SEK 14 billion of our initial and medium-term guidance. Finally, as you see on the right-hand side, EBITDA minus CapEx as a proxy for free cash flow was SEK 19 billion on a 12-month basis, a step-up of SEK 1.5 billion or 9% versus last year. We also improved our cash conversion to 60% on a 12-month rolling basis, up from 57% a year ago. Let's now have a look at our free cash flow. Free cash flow for the fourth quarter came out stronger than expected, mainly due to working capital. This was driven partly by our own initiatives, including earlier billing and better inventory management and partly by external factors such as early payments by enterprise customers. For 2025, we delivered SEK 9.6 billion free cash flow on a normalized spectrum CapEx basis, significantly ahead of our initial free cash flow of around SEK 7.5 billion that we had upgraded to around SEK 8 billion at the Q3 results. On a reported basis, free cash flow was SEK 9.3 billion after paying SEK 800 million in a final installment for the Swedish 2023 multiband auction and with ForEx headwind of more than SEK 300 million as the Swedish krona strengthened versus the euro. This year-on-year cash flow growth was structurally driven by SEK 1 billion increase in EBITDA due to profitable growth and cost savings and circa SEK 600 million in reduced interest payments as a result of lower gross debt, lower average interest paid and strong working capital inflow. Looking ahead, we currently don't expect to have any significant net contribution from working capital in 2026. And we also don't expect paid CapEx to exceed booked CapEx like it did in 2025. Together, these 2 items contributed around SEK 1.5 billion to our cash flow last year. This is not expected to be repeated this year. That sets our free cash flow starting point back to around SEK 8 billion as we head into 2026. From there, we expect to grow our free cash flow to around SEK 9 billion, as you have seen us guide for this morning. This growth will be mainly driven by increased EBITDA, which we have guided for to grow by around 3%, which is circa SEK 1 billion in absolute terms. Overall, we currently expect free cash flow to be quite back-end loaded in 2026, even more so than it was last year. We expect relatively low cash flow in Q1 as some reversal of working capital should be penciled in considering the strong inflow we had in Q4. Interest payments are also seasonally high in the first quarter, just as a reminder. We expect cash flow generation to then strengthen quarter-by-quarter as profitable growth accelerates with the impact of continuous cost improvements taking hold. You know we are very focused on improving Telia's free cash flow generation capability. We made good progress in 2025, but we aim to make more progress in 2026. Our target remains to exceed SEK 10 billion in free cash flow by 2027. Let's now briefly look at our net debt and leverage development. As you can see on the right-hand side, in Q4, our net debt increased slightly by SEK 400 million. But with EBITDA growing in equal measure, leverage was 1.93x, the same as in the third quarter. Perhaps more importantly, looking at the bottom left bar chart, we can clearly see that leverage has come down materially over the last 2 years as we have expanded EBITDA and used the cash proceeds from selling noncore assets to actively manage and strengthen our balance sheet. The benefits of this much healthier balance sheet are threefold. One, we pay significantly less interest as debt has come down materially. Two, it enables us to actively think about increasing returns to shareholders as evidenced by our proposal to the AGM to increase the dividend per share. And we can strengthen our core business via accretive acquisitions such as Bredband2 in Sweden and fiber investments in Norway and Finland. Finally, before I hand back to Patrik, I would, as usual, like to say a few words of some of the achievements we've done in the quarter and how that resonates with our value creation agenda laid out at the investor update in September '24. Firstly, free cash flow more than covered our dividends paid in 2025 and exceeds the dividend being proposed by the Board for the fiscal year 2025. Furthermore, we delivered on our commitments for 2025 in terms of EBITDA, CapEx and free cash flow. Secondly, we continue to work diligently on our active portfolio management agenda. We received the regulatory approvals related to the Bredband2 deal and significant effort was also spent on a transaction to divest Latvia, where work continues with our counterpart to ensure that we reach an agreement this year. Thirdly, and as just mentioned, our balance sheet improved again this year, ending the year at 1.93x, just below our target range of 2 to 2.5x net debt to EBITDA. Finally, we paid another quarterly dividend of SEK 0.5 per share to our shareholders. And as you have seen today, the Board of Directors proposes a dividend increase of 2.5% to the upcoming AGM. This would mean that for the first time in a long time, we will deliver on our commitment to a progressively growing dividend. And with that, I hand back over to you, Patrik. Patrik Hofbauer: Thank you, Eric. The past year was a year of significant progress for Telia as a company. Our customers are becoming more satisfied and our services are more relevant. It was also a year in which we delivered on our EBITDA and cash flow promises and made progress in both CapEx efficiency and portfolio management. We have taken several steps to create a simpler, faster and more efficient Telia. Also, the strong end to '25 confirms that although there are challenges still to overcome, we have a solid foundation in place that will enable us to deliver on our 2026 plans and our midterm plan targets for 2027. This comfort is also shared by the Board of Directors who will propose to the AGM in April a dividend raise from SEK 2 to SEK 2.05 per share. And with that, I will open up for questions. Operator: [Operator Instructions] Our first question comes from Andrew Lee with Goldman Sachs. Unknown Analyst: Here is actually [ Sofia ] from Goldman. Today, we have 2 questions. The first one is on Finland. What is your time line to reach stability on EBITDA there? And the second one is on cost cutting. So you guided to just 3% EBITDA growth of 2% service revenue growth for 2026, and you've already announced 450 headcount reduction this year. So is the EBITDA growth guide conservative? Or are there headwinds such as lost high-margin revenues greater than expected? Or is cost efficiency opportunity just not as high as you'd hoped initially? Patrik Hofbauer: I can take the first question. It's Patrik here. Regarding Finland. I mean, if we start with Finland on a broad perspective, first of all, we are not, of course, satisfied with the performance in this quarter. But we continue to focus on -- first of all, we continue to focus on our customer experience and the satisfaction. And I mean, we have also been credited for the best network and also the best customer experience, highest NPS in Finland, which we are, of course, are proud of. Then just to remind you what we're working on. I mean, we have 3 main activities in Finland. First of all is to stabilize the customer base that we're working on. The second one is to improve the profitability, which clearly you can see in the financials for 2025, where we improved the EBITDA by 4.4%. And then we want to increase the share for our SME customers. And on top, of course, we continue to simplify the business and clean up the portfolio and also in the organization. So then how does it look going forward? Well, we expect some improvements already now in Q1 and also towards the rest of the year. So we would expect improvements both when it comes to service revenues and EBITDA. And if you look at the takeout that we just also mentioned, which is the second question, and Eric will take that one. The major part is actually coming also from Finland or a big part is coming from Finland. So we are doing activities. We have a plan in place, and I think we will see improvements in this year now in 2026. Thank you. Eric? Eric Hageman: Yes. With regards to the guiding of 3% EBITDA growth for 2026, well, first and foremost, it's very much in line with our midterm ambitions. If you recall, that's a 4% CAGR over that period, '25 to 2027. And as a reminder, we did 5.2% in 2025. The other thing to remember is 2025 obviously enjoyed the great benefit of the Change Program, taking out 3,000 net positions. And of course, we will continue to find other cost savings. But the impact in 2026 from headcount -- lower headcount will be less because as we just said at that announcement, there's a net positions of 450. Operator: Our next question comes from Owen McGiveron with Bank of America. Owen McGiveron: It's McGiveron at Bank of America. First one also on Finland. Just maybe a bit more color on the weaker enterprise deal flow that you've seen in B2B. Would you say this is a continuation of kind of a tough market backdrop that we've seen across the year? Or are there idiosyncratic factors here for Telia? And then the second one, Norway growth remains challenged. Now with the new CEO in situ, how should we think about the phasing of the recovery over full year '26, noting that the comp is probably quite tough in Q1? Eric Hageman: Yes. Shall I start with Norway maybe first. So we still have 1 quarter of ICE impact in Norway, which as we said at the time was around SEK 400 million for that full contract, both revenue and EBITDA. So there's about SEK 100 million left impact in the first quarter. And then as we've said, with the investments we've done in sales and marketing and in general, how that market is developing and the impact that [indiscernible] will have, we feel quite confident that, that business will improve through the year. With regards to Finland and the weak enterprise, it actually -- it was a very strong, exceptionally strong Q4 in 2025. And these enterprise sales are always very, very lumpy. So we had quite a few in Q4 last year and a few less this year. I don't think there's anything structural on it. The macro economy that we see in Finland is in our portfolio, one of the weakest, but it's not particularly weaker now than it was last year or the year before. If anything, Patrik pointed out to what we are focusing on, which is making sure we stem the decline in mobile market share, but also capturing that opportunity in SME, small, medium-sized enterprise market is super important for us. And there, we had very, very good traction. The last point on Finland is EBITDA margin. So EBITDA went up -- margin went up 120 basis points, if I'm not wrong, this year, up from below 30% to above 31%. And there is more to be done there. This historically has been a business that was less efficient. And it's one of those things that we called out in the September '24 Capital Markets Day. Margin expansion is important for all our countries, apart from Norway because of the ICE contract, all countries have improved their margin. There is particularly more upside in Finland to go in 2026. Operator: Our next question comes from Erik Lindholm with SEB. Erik Lindholm-Rojestal: So 2 questions, if I may. I just wanted to start on Sweden, mission and business critical revenues, really strong, as you said. How are you thinking about the opportunity to drive continued growth here in '26? And is this something we should sort of expect to see driving growth for several quarters in a row? And then secondly, on Norway, you mentioned quite clear improvements in terms of ARPU in this quarter. What are you seeing in the market, I mean, both fixed and mobile that is allowing you to push through these quite large price increases? Patrik Hofbauer: Erik, I can start with the first question regarding Sweden. And we have good momentum in Sweden, as you saw also in Q3, which is very positive. It's obviously the biggest market for us and the most important one. When it comes to mission critical, we continue to see the demand that will not change compared to this year. But you cannot say it will continue in the same pace every quarter. It goes a bit up and down depending on the demand and also timing questions. But we expect to see a similar demand in that segment also in 2026 as we saw in 2025. So -- and this is one of the growth drivers that we have here in Sweden, but a very solid performance, and I would expect this will continue into the next year as well. Eric Hageman: Yes. Then on Norway, with regards to ARPU, absolutely, it was important for us to make sure that you have the right combination of volume and pricing. So quite a lot of price increase, both fixed and mobile towards the end of the year. Why is it possible was your question? Because it's a very healthy market. As many of you write, it is one of the best markets in Europe. And I would say, if you look at our Sweden performance, may be challenged by -- start to get challenged by Sweden. The other thing is we continue to invest there. So if you look at that 3-player market by continued investment in fixed, whether that is fiber, but also on network coverage on 5G, where we have a leading network that allows you actually to price that with customers. And I think thirdly, what defines that healthy market is good macro, clearly, a good macro economy. And on top of that, it's very, very rational, yes, acting by the incumbent as opposed to Finland, which really, really helps this market. Operator: Our next question comes from Andreas Joelsson with Carnegie. Andreas Joelsson: Two questions from me as well. You have touched upon it a little bit, but on the growth guidance, could you state the 3 most important factors that you expect to drive that growth to 2%? You have had some headwinds in 2025 that will fade but other than that, what are the key critical factors for the 2%? And secondly, on the balance sheet, you will now pay for Bredband2 soon. But I guess Bredband2 will generate positive cash flow, which is not included in the guidance. And then hopefully, you will divest Latvia. So in the event that you would return to below 2x leverage after you paid for the acquisition, what is the main priority for that sort of excess cash, if you could call it like that being below the leverage target? Patrik Hofbauer: Yes. I can start with the growth going forward. I mean the elements of what is important, what the question you asked, I mean, of course, it's important for us that Sweden continues to perform, especially we have the mission critical. We know that, that will continue. The demand will be there also for 2026. But then we have also pricing, which we have done. We are doing some pricing now in -- we have done recently in Norway, et cetera. So we are doing that all the time. So I think those in combination will then help us to reach the around 2%, which we are guiding on the outlook for 2026. And then, of course, we expect also some improvements in Finland and yes, then Baltics continue to drive. So I think that is overall, I feel quite comfortable on that outlook for 2026. Eric Hageman: Yes. Then with regards to the balance sheet. So when we do Bredband2, just to remind you, it's about SEK 3 billion, right? So that adds, what is it, 0.1x to what we have, which brings us then slightly above the 2x. And then let's see when Latvia materializes. So we will be close to the bottom of that range, and we feel quite comfortable with that. The second part of that question is related to what do we do when this excess cash? Maybe it's best to explain it as follows. We take, as we said at the investor update, capital allocation very seriously. And in that vein, you've seen us reduce OpEx. You've seen us reduce CapEx, and we will continue to do that going forward. Then we invest in growth, like, for example, mission critical, right? Sweden's strong performance is partly because of mission-critical accelerated that requires investments, both people and also CapEx. And then we have a balance sheet, a balance sheet that allows us to do, as I just said in the analyst presentation, accretive bolt-ons, which is great. And as cash flow continues to grow, then we can start to think about what are we going to do with regards to shareholder remuneration. Well, today, as you've heard, we announced to increase the dividend. And then let's start to get through 2026 when we start to deliver on the guidance of SEK 9 billion on a path to SEK 10 billion by 2027. And I think sequentially, we then can think about with a healthy balance sheet, what we can do in terms of shareholder returns. Operator: The next question comes from Fredrik Lithell with HB. Fredrik Lithell: I have 2 questions. The first one is really if you could elaborate a little bit on the net working capital in Q4. You have spelled out the phasing of billing and customer payments. But if you could sort of put some type of numbers on it would help a little bit. Second question is on the upcoming regulation in Sweden on B2C fixed fiber SDU. When that comes into effect, I mean, that's a stronghold for you, that market. How will you go about to defend your position there when it's going to be open for more competition? It would be interesting to hear. Eric Hageman: Competition, do you want to take that? Erik Pers Berglund: Yes. Fredrik, on B2C fiber SDU, I think that regulation has been in the -- it's been worked on for several years. It's still not in place. And once it gets in place, it will take time to implement it. So -- and some of the proposals that have come along has been a bit more positive and some a bit less positive from our point of view. So I think we need to sort of see where it lands before we can say exactly. But in general, we are regulated today, and we see that the -- hopefully, the regulation will create a more level playing field going forward. There might be some drawbacks for us, but there might also be opportunities for us to invest into networks where we're not present today. Sorry for a vague answer, but the regulation isn't really in place fully yet. So I don't think we can say more than that at this point. Patrik Hofbauer: And I can just add, I mean, it's a bit difficult, as Erik is saying, to judge where we'll end. But clearly, we have pushed for a more level playing field in the market given that we are regulated. So I think that is an opportunity for us, but we have to wait and see where the outcome will be because it has changed during the years a bit back and forth. So let's see where we'll end. I'm not even sure that there will be a regulation this year, given that we have thought this for many years now. So let's see. We will -- but I think for us, it's actually more an opportunity than a risk. That is our internal judgment so far. Eric Hageman: Yes. Then with regards to working capital, you're going to get an equally vague answer, I'm afraid. So as I said in my voice over doing the analyst presentation, it's partly planned, the work that we do, which is what making sure that you issue invoices early and that you do good management of your inventory, et cetera. All of those have benefited. But there also were external factors, as we said, which is people literally paying us that typically wouldn't pay us as we've seen in the last couple of years. Read into that what it is. Part of those planned initiatives, for example, is the way we're billing people in Norway, which had roughly a SEK 400 million impact. So it's part of the work that we did, and it also allowed us, obviously, during the year to do the free cash flow upgrades. But it was certainly more than what we had planned. I think maybe equally important is to talk about what it means for this year. And again, just to repeat that, what I said in the analyst presentation is we expect it to be neutral for 2026. Partly that is the reversal -- some reversal of the high inflow that we had in Q4. And on the other hand, the work that we continue to do to improve working capital. So where in the last 2 years, we were guiding for inflow; for 2026, we're guiding for neutral working capital. Fredrik Lithell: Okay. And in that neutral working capital, will you still have sort of pensions coming your way in that equation? Erik Pers Berglund: Pension, look, we pay pension to the people that have worked here in the past, and then we get the refund from the pension foundation, as you know. So that's normally a sort of a wash more or less. And that doesn't -- this shouldn't really affect working capital. So that's not really a part of that. But I think we expect -- as a starting point, we expect the normal sort of SEK 900 million per year refund that we usually get for 2026 as well. Eric Hageman: Yes. If you think about the growth, right, from where we guided for SEK 8 billion last year, and we're guiding for SEK 9 billion now, that increase, it's not driven by pension. And as I said, because working capital is neutral, it is also not driven by that. It is driven by our EBITDA growth. Operator: Our next question comes from Nick Lyall with Berenberg. Nicholas Lyall: It was a quick question about Swedish service revenue growth, please, and the improvement there. About half of it seems to have come from other. So could you maybe just tell us what the other bump up is? And then in mobile as well, the ARPUs improved quite strongly this quarter. So could you tell us -- is this the timing of price rises? I was surprised a little bit about your comment that you thought that growth would keep on coming, but at a lower rate. So could you just explain also why that lower rate for 2026? Is that just a function of other not being repeated? Or is there something that's going to be lower in maybe mobile or fixed as well? Patrik Hofbauer: I didn't hear all the questions, but I will try to take the first one because that one I could follow, but help me and colleagues here in the room here. So when it comes to other revenues, that is partly the mission-critical that is included in that one. So if we start there first. And then the next question was? Eric? Eric Hageman: I understood mobile ARPU. Erik Pers Berglund: Nick, go ahead. Nicholas Lyall: Yes, the mobile ARPU was quite strong in the quarter, so improved quite sharply. So is that the timing of price rises? Or is there something a bit more fundamental there? And the final question was just about, I think, Eric you mentioned about maybe slower continue... Eric Hageman: We lost you, Nick. We heard the beginning of the question. Is mobile ARPU up because of pricing or something more fundamental, I think, was the question. Nicholas Lyall: Yes pretty much on timing, yes. Erik Pers Berglund: And was the mobile ARPU question about Norway or Sweden? Nicholas Lyall: Sweden, please. Erik Pers Berglund: Yes, I think it is a smaller increase, and it is because of the ongoing amendments of the portfolio and price changes we are doing. So nothing really big there, I would say, on the pricing side. It's just the ongoing strategy. Nicholas Lyall: [indiscernible]. Eric Hageman: We hear you barely. Nicholas Lyall: I'm sorry, actually I'll try once more. And if it doesn't work, just cut me off. But you mentioned as well about the growth coming through but at a lower rate in Q4, Eric. So would that -- is that mobile and fixed at a slightly lower rate? Or is that just a function of that other revenue growth falling away? Why at a slower growth rate in Q4 for 2026, please? Eric Hageman: In Norway or which country? Erik Pers Berglund: Which country, Nick? Nicholas Lyall: Still Sweden. Eric Hageman: Still Sweden. The other is really strong. So I'm not sure what we're looking at and partly it is the bad connection, I think. But mission-critical is really driving other in Sweden. It sits in different buckets. But to be clear, that is, if you think about the strong growth in '25, but certainly also in Q4 for Sweden, which is driven partly by fixed, which is TV and broadband. But then on top of that, you have the strong growth in mission critical. Thinking about it in a slightly different way, very strong performance in consumer, up 4%, slightly less good in B2B because we've seen that takes a while, right? So... Erik Pers Berglund: And we haven't really guided per quarter. So if that was a misunderstanding, sorry about that. But there's no -- we haven't really got into that. As Eric says, consumer is strong over 4% growth and the mission critical is strong. So those are the main growth drivers in Sweden at the moment. Operator: Our next question comes from Abhilash Mohapatra with BNP Paribas. Abhilash Mohapatra: It was just around your sort of free cash flow and FX actually. So you mentioned in Q4, how there was a sort of FX headwind of SEK 300 million, which you managed to offset. Obviously, the Swedish krona has strengthened quite a lot over the last 2 or 3 months and since your Q3 results. But you still reiterated your 2027 free cash flow guide for sort of greater than SEK 10 billion. And today, obviously, you've sort of guided in line with consensus for 2026 on free cash flow. I was just wondering what steps are you sort of taking to offset what looks like a pretty material FX headwind? And also just related to that, if we didn't have that headwind, all else equal, would your free cash flow guidance be higher? Eric Hageman: So first and foremost, the SEK 300 million wasn't the Q4 effect. It's a full year 2025 effect because if not then, we were talking north of SEK 1 billion. Of course, you have to take that into account when you are guiding at some stage, you need to fix it and let's see how SEK trades versus the euro. So for us, delivering that SEK 9.3 billion or the SEK 9.6 billion depending if you look at our report on a normalized, it's obviously very good to see that in the context of all the headwinds that we saw, if you think about the Norway wholesale contract, if you think about Finland, in Q4 and if you think about FX not being or being upfront. So from our side, guiding for SEK 9 billion for this year is something that we feel very comfortable with that we, as a team, feel that we can deliver. And let's see how the year evolves. Operator: Our next question comes from Ajay Soni with JPMorgan. Ajay Soni: I've got 2 questions. The first is Finland. You mentioned there's much more upside on your EBITDA margin there. So you've obviously mentioned the FTE reduction mainly come from Finland. What are your other key priorities in this region to step up that margin? And my second one was just around your midterm CapEx ambitions. I see they're still below SEK 14 billion. Obviously, you've guided to below SEK 13 billion for this year. So is there anything you're expecting to change into 2027 where you expect CapEx to step up because obviously, the trend has been broadly on the way down. Patrik Hofbauer: I can take the question number 2 regarding CapEx, starting with that, first of all. No, we have guided on outlook for '26 at around SEK 13 billion, and we don't see -- I mean, the targets for 2027 we set back in September 2024. So they still remain and are there. And the most important part there is actually for us to deliver above the SEK 10 billion in free cash flow for that one. Then we changed the guidance for the CapEx in 2025 to SEK 13 billion, and we stick with that for 2026. We don't see that we will increase that in 2027 either. So this is just what we are just guiding at the moment for 2026 for the outlook, not for 2027 at the moment. Eric Hageman: Yes. And on Finland margin, in essence, it's a handful of things. First and foremost, we are a people-intensive industry. So making sure you have the right number of resources there is what is driving that. You already saw that this year in the EBITDA margin increase in Finland and more of that will come because as we said, a disproportionate amount of those net reductions, grow 600, net 450 because we're also growing in other parts of the organization will take place in Finland. So that naturally will help. It's also the market where we have the lowest salary inflation. So that helps us a little bit. And there are further initiatives that we are taking to make sure, yes, we are disciplined when it comes to cost. I think the other one is what type of products are you selling? And we've been very clear about last year selling this noncore e-invoicing business, which was about EUR 12 million of revenue, let's call it, SEK 150 million with pretty much no margin on it. We own more of those businesses. So rationalizing this portfolio in Finland, focusing on core, focusing on more profitable products will also help us to increase both gross profit margin, but also EBITDA margin. Those are the initiatives that we're taking. Operator: Our next question comes from Terence Tsui with Morgan Stanley. Terence Tsui: Just back to Finland again, I'm sorry, but focusing a bit more on consumer mobile. Are we seeing some structural changes in the market in your view now? Is it being a bit tougher to do more 5G upselling and the consumer being a bit more price sensitive? I'm just looking at your mobile churn number and Q4 is always seasonally high, but this year, it's much higher than what it was last year and the prior year. And then secondly, on free cash flow. Can you just repeat the comments again why you expect free cash flow generation to be a bit more back-end loaded this year? I've noticed in previous years, it's been a little bit back-end loaded, but not significantly. So just wondering why this year may be particularly different. Patrik Hofbauer: Yes. I can take the first one regarding Finland. Yes, we see some more intense competition in Q4 this year compared to previous years. And we see also more customers changing operator in this quarter. This is driven also by entrance of 2 new MVNOs coming into the market that will obviously want to take their share of the market. And also we, of course, because we want to try to defend the market share. But we have seen some more activity also on the lowest price levels, but we didn't compete. We didn't actually go into that war. So we stepped out a little bit on the lowest price levels. But clearly, we have seen an increased intensity in the market now in Q4, definitely. But let's see how that will develop now in Q1. Eric Hageman: Yes. With regards to free cash flow, yes, absolutely, it's more back-end loaded than last year. And just to give you a sense, last year, it was roughly around the numbers, 40%, 60% H1 versus H2. We're looking at around 30% to 70% for this year. So a bit more skewed towards the second half. Why is that? And also in the comments, we said a soft start to the year with regards to free cash flow. Partly it's the working capital reversal, right? The big inflow reverses mainly in Q1. So that is a lower starting point. And also the interest payments, they tend to be more H1 weighted. They are even a bit more this year. Why is that? It is because if you look at the big decrease in gross debt that we have had as a company, we still have the same number of hybrids. The payments for those are more skewed towards Q1. And yes, and the last point I would make is we had a really good Q4 performance in Sweden. We're saying that will be a bit softer in Q1. And the reason for that is the lumpier nature that we have of part of our enterprise business, including a very successful mission-critical and business-critical business. The combination of those 3 make it a slightly slow start to the year, which we prefer to tell you now rather than have any surprises when we report in April. Operator: Our next question comes from Ulrich Rathe with Bernstein. Ulrich Rathe: Two questions from me, please. The first one is you explained the EBITDA trends in the fourth quarter in Finland and Sweden, in particular, with reference to marketing, higher marketing and marketing phasing. The KPIs aren't obviously strong in mobile. I think excluding M2M, you're still losing customers after pretty encouraging results in Sweden in the second and third quarter. So my question is, how do you actually measure success of marketing if it's not the KPIs? Is it KPIs a quarter out then because it's a delayed effect? Or I think you referenced NPS earlier without actually giving numbers. Or what else do we sort of look at when we want to see whether -- how effective your investments in marketing really are, especially when you ramp it up in a given quarter? My second question is on the dividend, you highlighted the growth, but it was below market expectations. I think that was pretty clear. So why the free cash flow was above market expectations. I'm just wondering what thinking was behind setting the dividend at this particular level, appreciating its growth, but obviously slightly below what we all expected. Eric Hageman: Yes. No, we see different consensus numbers because it's very much in line what we saw with what the analyst expectations is. It's also -- we're not there to beat the analyst expectations. We have a stated dividend policy, and that stated dividend policy says that we will grow the dividend by mid to -- low to mid-single digit. And then the other point is I'm very happy that finally, we are in a place after a couple of years of keeping it flat that we're able to fulfill that based on the strong performance in 2025. I think the next one is we want to have a sustainable dividend growing because that's what ultimately is attractive for capital markets. So that's why we came up with this choice of increasing it by [ 5% ]. Patrik Hofbauer: Then when it comes to marketing, there are different ways here. What we have invested is more in marketing. This is not a short-term impact. It will give impact for a longer run regarding this. So if you pay more commissions, you get an immediate impact. But if you do marketing, that will take some time before it comes to be visible in the market. And we are measuring the KPIs that everyone else is measuring when it comes to performance marketing, et cetera. So there's nothing unique for us. So -- but I think we will not see an immediate impact on that one. We see a bit longer impact on increasing marketing spend. So this is actually for preparing us for 2026. Erik Pers Berglund: Yes. If I can build a little bit on it, it was Finland and Norway that we flagged for increased marketing this quarter. Finland is an unusual quarter in terms of the market situation. Norway is a bit of an unusual quarter when it comes to our actions because sales were actually very good, but we did a couple of things. We did increase prices quite a bit, which you can see in the ARPUs. And we did also do a billing shift where a lot of customers were asked to pay 2 bills in a month basically because we started to bill in advance, which many operators do, but we introduced that in Norway this quarter. So those things always have a predictable churn effect, and they did, and that was fine. That was in line with expectations. But considering that, I think we're quite happy with the sales in Norway. Operator: Our next question comes from Oba Agboola with UBS. Obaloluwa Agboola: Just to ask about Finland again. So there was a comment in the presentation or press release that said the financial impact of increased competition was limited. So I just wanted to understand, given the uptick in competition, how are you able to limit the impact on service revenue? And then also just a bit of color on potential phasing. Do you see Q4 as kind of the peak in mobile competition? And how should we think about competitive developments in Q1 and beyond? Erik Pers Berglund: I think I can answer the first one because it was probably in the e-mail we sent out with the report. We just wanted to be factual about the financial impact. Of course, there is financial impact from the market situation. It just in the short term, it is a bit limited. The major part was how the timing of B2B deals come in. So it's just to clarify that. And so let's see over time how that financial impact, it depends how the market situation develops, which is your second question. And it's not really, of course, in our hands. There are 2 new players in the market. We'll see how those act. But we focus, as Patrik says, on the customer experience and our basic strategic goals. Patrik Hofbauer: And also, we think it will be a bit -- I mean, -- we think we will have an improvement in the first quarter. And I think also the market will calm down a little bit. Q4 is always extremely intense when it comes to competition. This year, extra intense in Finland because of launch of the new 2 MVNOs coming into the market. So I think that is also pushing the market in Q4. So we think and believe it will be calmed down a little bit now in the beginning of the year. Obaloluwa Agboola: Okay. And just a quick follow-up. Have the 2 new MVNOs been particularly aggressive? And are there any differences in the behaviors between the 2 just initially from what you guys think. Erik Pers Berglund: So competition varies from week to week. There's been -- it's been already discussed, a very, very intensive quarters. The number of people changing operators have been the highest for many, many years. And -- but it is also the usually high campaign season. So it's -- we just have to monitor the situation and focus on our own customer base basically. Operator: Our final question comes from Siyi He with Citi. Siyi He: I have 2, please. The first one is just really a follow-up on your dividend policy, which you're guiding for low to mid-single-digit growth. But if we look at your free cash flow profile, I think underlying is growing more than 10% every year over the next 2 years. Just wondering if you can help us understand how to bridge the current dividend policy with your free cash flow ambition and whether you could -- you think there could be a scope to update on that policy? And the second question is a clarification really. I think, Eric, you mentioned that you see Sweden as a market is challenging Norway as one of the best markets in Europe. I'm wondering if you can talk about where you see the dynamic changes and whether that gives you more confidence on the growth profile in Sweden? Eric Hageman: Yes, Sweden has had an amazing 2025. If we look at the consumer growth, how B2B is holding its own, what is a more competitive market is -- I think it's a really massive result. And I think it's that -- again, go back to the investor update in September '24, we had this thing that we call the smiley face, which is including legacy, of course, you have service revenue declining for year after year that kind of bottomed out in '24. And since then, we have this growth, right? So pictorially, it looks like a smiley face. That has -- yes, that has been a massive success. And if you then look at what the competition is doing, if you look at their results where they also have profitable growth, yes, that bodes well for that market. At times, we have said the only part where that is not the case is sort of the no-frills mobile segment because there's so many brands there, but it's such a small part of our business and it doesn't really affect us as you have seen in the Q4 results. So the other one, I think, at the growth in mission critical, we said it's going to double. We have done more than that, and that continues to accelerate, which again bodes well for our path to SEK 10 billion. I think the last point that I would make is the price increases that we have seen. right? What typifies a rational market is where people are not lowering prices, but actually increasing prices. And what we have seen of our competitors, yes, even this year, they have started with increasing prices across the board, both fixed and mobile. For us as a market leader, that obviously is good because that allows us to continue to have that price differential given that we are the premium brand. So put all of those together, even though we are a 4-player market, as we sometimes say, yes, it's a very, very healthy market. So very happy with that. With regards to the dividend policy, yes, I think on several occasions, we have said, I think it was even at your conference that at some stage, we need to come out with sort of that final leg of this -- of a clear policy that says, basically, it could say something like what are you -- what is your payout ratio? How much of your free cash flow are you paying out? For us, it's -- we were on this value creation path of going from what was less than SEK 5 billion to SEK 10 billion by '27. During this period, I think we will decide what that ultimately looks like for the years beyond that, but it's a bit early days. But for now, we're very happy with the fact that we covered the dividend with our free cash flow and that we were able to go back to what our current stated policy is, which is this growing dividend per share. So we're very happy with that after 2 years of running the business. Patrik Hofbauer: Can I just add something also on Sweden also on the consumer side? I mean, we have a well-functional machinery there when it comes to convergence as well. So we have called that out in previous quarters as well, where we sell both broadband TV and mobile and especially when we focus on TV, and you see that we continue to grow in that kind of services. And it's a really appreciated service from our customers so the converged play that they have both broadband TV and mobile on top of. So we are very happy with the machinery we have in Sweden and the consumer side that actually takes that position. And we have a quite a unique position there in the Swedish market. So that's very valuable for us. Erik Pers Berglund: Operator, are there any more questions on the line? Operator: That was our last question. Thank you very much. Erik Pers Berglund: Thank you. Thanks, everyone. Many good questions today. We look forward to seeing you face-to-face in the next few days and weeks, and thank you, and goodbye.
Operator: Welcome, everyone, to Telia Company's Q4 Full Year Results Presentation. And with that, I will now hand over to Telia Company's Head of Investor Relations, Erik Strandin Pers. Please go ahead. The floor is yours. Erik Pers Berglund: Thank you, and good morning, everyone, to our Q4 call. We will do the usual routine with the management presentation followed by a Q&A. We have CEO, Patrik Hofbauer; and CFO, Eric Hageman, in the room, and we go straight ahead. Patrik, the floor is yours. Patrik Hofbauer: Thank you, Erik, and good morning to all of you. The last quarter of 2025 confirms that we are on track to reshape Telia into a much simpler, faster and more efficient company, in line with our value creation plan set out at the investor update back in September 2024. Before I go into the quarter, let me walk you through some key highlights for the full year of 2025. Looking at the financial performance, we have, for the first time in 5 years, converted the dividend with our free cash flow without any vendor financing contribution. We delivered on our EBITDA and overdelivered on our free cash flow ambition despite a challenging year for Norway and service revenue headwind in Finland and our balance sheet has strengthened. The good financial performance has also been noted by the market and resulted in a total shareholder return of 36% for 2025. We are also through the first year with our country-led operating model and the positive result when it comes to efficiency, speed and responsibility are clearly visible. The new model is also an enabler for further efficiencies and we announced a net reduction of 450 positions earlier this month. We have also come far in terms of improving our CapEx efficiency and reshaping our portfolio with the divestment of TV and Media and bid for Bredband2 and our process to exit Latvia. Throughout the year and across most markets, we have seen NPS improving, so the customer satisfaction, which confirms that we are doing the right things for our customers. In addition, our role in society is becoming increasingly important with increased demand for secure and mission-critical communications. So a lot for the organization to be proud of and to build further on in the coming years. And with that said, let's now zoom in on Q4 highlights. We again won the best network in Sweden according to umlaut's yearly survey, achieving both the highest overall score and a win in every category. But only having top-class network is not enough. And I'm happy to see that all the other efforts we do to drive customer experience is paying off with NPS increasing across the footprint. We also continue to be very disciplined on cost in Q4, which resulted in an OpEx decline by 4%. On portfolio management, we received the necessary regulatory approvals to go ahead with the bid for Bredband2 just before Christmas. And our process to exit Latvia is moving ahead. We also agreed to acquire a small fiber customer base in Finland. We saw Sweden deliver its best quarter in modern times with revenue growth reaching almost 5%, supported by business and mission-critical services, but also strong growth in consumer and an improved trend on mobile. For 2026, we see continued good financial momentum and therefore, guide for service revenue and EBITDA growth of around 2% and around 3%, respectively, and a stable CapEx level. Combined, these core building blocks are estimated to generate a free cash flow of around SEK 9 billion, a good milestone towards delivering at least SEK 10 billion in 2027. Now let's go to the financial highlights. Service revenue growth accelerated as expected, supported by strong growth in Sweden. EBITDA growth remained rather unchanged compared to the previous quarters, somewhat held back by a weak service revenue development in Finland and our decision to invest more in our core markets to capture growth. CapEx remained stable and ended a bit below our outlook of around SEK 13 billion for the year. Free cash flow came out very strong, driven by better-than-expected Q4 working capital, which Eric will elaborate more on. This strong end to the year resulted in a full year free cash flow of SEK 9.6 billion based on normalized spectrum CapEx, significantly above our outlook of around SEK 8 billion. Finally, our balance sheet remained very healthy with leverage also this quarter at 1.93x and significantly down from a year ago. Moving now to Sweden that again won the best network in umlaut survey and that also secured further long-term access to 1,800 megahertz spectrum at attractive prices. In the quarter, we also completed the 5G rollout and the 3G sunset. Customer satisfaction improved both in B2C and B2B, and we continue our strategy to step-by-step move sales from external channels to internal channels. Financially, Sweden delivered impressive service revenue growth, driven by both mobile and fixed. The consumer business had another good quarter with over 4% growth. Mission and business-critical services were a strong growth contributor, but also other areas such as our IT business, Telia [indiscernible]. Growth was well balanced, driven 50-50 from pricing and volume. This shows that we can do both pricing and attract new customers, as you can see in the healthy KPI development on the right on the slide, with strong net intake for both broadband and TV and a growing mobile ARPU driven by price changes earlier in the year. The slight decline in mobile customers was a result of a modest decline in the mobile broadband base. EBITDA growth remained strong despite including a lower year-over-year pension refund contribution as well as increased marketing spend. So all in all, Q4 was strong delivered by the team in Sweden. Let's now move east to Finland. And let me start with the financials where we had a weak quarter with service revenue down 3%, partly driven by continued weak enterprise market environment and a ramp down of noncore businesses but mostly because of non-connectivity projects for enterprise customers, which are lumpy in nature. We had a high level of revenue from these projects in Q4 last year and a relatively low level this year. The lower service revenue was the main reason why EBITDA declined 6%, but also the higher marketing spend that we flagged already in Q3. So clearly, a weak quarter, and we are far from satisfied, but we also won some new enterprise customers and our focus remains on the strategic agenda we have communicated before, strengthen profitability, simplify the business by divesting noncore assets and reducing organizational complexity and then turning around the SME segment and stabilizing the mobile market share. Underlying cost control remains tight, and we expect service revenue and EBITDA to be more stable in the coming quarters. The mobile consumer market was very active this quarter with 2 new MVNOs and a record high number of customer changing operator. We continue to focus on network and customer service quality and avoided the lowest price points in the market, even if it resulted in a net loss of customers short term. In broadband, net adds declined by 6,000 in the quarter, but this was fully driven by a cleanup of inactive subscribers. Now moving west to Norway, where service revenue was close to flat despite lower mobile wholesale revenue since mobile end user and fixed revenue improved clearly. This was mainly driven by pricing and as can be seen to the right, resulted in significant ARPU growth across our core services. EBITDA remained in negative territory as we flagged last quarter due to the decline in service revenue as well as higher cost level. Partly this was driven by phasing and partly because we have invested more into the market to capture future growth potential. We shifted the billing cycle for a large part of our customer base, which helped working capital in the quarter, and the churn effect was well in line with our own expectations. So now let's move to Lithuania, which launched 5G SA for its consumer customer and continue to deliver truly strong financial development with service revenue growth accelerating to 7%, supported again by both mobile and fixed. The acceleration, together with another quarter of great work on generating efficiencies resulted in an EBITDA growth of 13% and an EBITDA minus CapEx that remained at a record high level of SEK 1.6 billion on a rolling 12 months basis. In addition to solid financial development, Lithuania continued expanding the mobile customer base, and as you can see, also grew ARPU across all products, predominantly on the back of pricing performed earlier this year. Moving on to Estonia that had an eventful quarter operationally, receiving a recognition for best network by Rohde & Schwarz, launching a new security service for its home broadband customers and new eSIM roaming service for customers trading -- traveling outside of EU. Financially, the quarter was, however, a bit soft on service revenue, trended stable and EBITDA growth slowed down due to an unusually low cost level in the corresponding quarter last year. But like for Lithuania, cash conversion remained close to a record level also in Q4. And with that, I hand over to Eric before I come back to summarize the full year and Q4. Thank you. Eric Hageman: Thank you, Patrik. Let me now go through the financial development of the quarter and full year, starting as usual with service revenue and EBITDA. In the last quarter of 2025, service revenue growth improved to 2.1%, driven by the strong performance of our Consumer segment, which benefited from a particularly strong development in fixed, led by TV in Sweden and broadband, which grew nicely across all our markets. Mobile service revenue returned to growth despite the continued drag from wholesale in Norway. From a country perspective, Sweden's top line accelerated as expected and growth in the Baltics remained solid at around 5%. Combined, Sweden and Baltic service revenue growth more than compensated for a somewhat negative Norway and a weak development in Finland, the latter feeling the impact of increased competition, some year-on-year phasing and the previously flagged closure of the noncore e-invoicing business. But as Patrik said, we expect the service revenue trend to improve in the coming quarters, even though the overall turnaround in Finland and Norway will take time as previously explained. As a group, we ended full year '25 with 1.5% service revenue growth, a tad shy of our around 2% outlook. Excluding the wholesale revenue loss in Norway, we would have been at a 2% top line growth for the full year, which is what we guided for 2026. Sweden is expected to enjoy continued good growth, albeit at a lower rate than seen in Q4, and we expect Norway and Finland to gradually improve. Moving to EBITDA at 3.7% growth in the quarter remained solid, yet somewhat below the Q3 level because of the increased marketing spend in Finland and Norway. EBITDA margin was up again, firmly aligned with our September 2024 Capital Markets Day margin expansion promise. For the full year, the improvement was 120 basis points and is the result of profitable growth supported by the positive impact of the Change Program. Looking into 2026, we guide for around 3% EBITDA growth, supported by service revenue growth and continued work on generating efficiencies. Moving now to OpEx and CapEx. Starting on the left, also in Q3, we kept a high level of cost discipline as the Change Program continued to drive down resource cost. As a result, OpEx declined by 4.1% compared to the same period last year. We also saw lower cost for energy and bad debt in Q4, which largely compensated for slightly higher IT costs and increased spending on sales and marketing to capture identified growth opportunities in our 3 main markets. OpEx as a percentage of service revenue continued to trend down and decreased by 200 basis points to 31.9% in 2025. Whilst it's, of course, encouraging to see that we managed to do more with less, we see many more opportunities. We will not sit idle, and we will continue to make Telia simpler, faster and more efficient. Consequently, we announced early this month that we are targeting a net reduction of at least another 450 positions across the group this year. Moving on to the graph in the middle, you can see that we also remain disciplined with our capital expenditures, ending the year with SEK 12.8 billion for the full year, ahead of the improved guidance of around SEK 13 billion that we gave you at Q3 and significantly better than the initial guidance of less than SEK 14 billion that we had at the start of the year. For 2026, we expect CapEx to be below SEK 13 billion, in line with how we currently are trending and well below the SEK 14 billion of our initial and medium-term guidance. Finally, as you see on the right-hand side, EBITDA minus CapEx as a proxy for free cash flow was SEK 19 billion on a 12-month basis, a step-up of SEK 1.5 billion or 9% versus last year. We also improved our cash conversion to 60% on a 12-month rolling basis, up from 57% a year ago. Let's now have a look at our free cash flow. Free cash flow for the fourth quarter came out stronger than expected, mainly due to working capital. This was driven partly by our own initiatives, including earlier billing and better inventory management and partly by external factors such as early payments by enterprise customers. For 2025, we delivered SEK 9.6 billion free cash flow on a normalized spectrum CapEx basis, significantly ahead of our initial free cash flow of around SEK 7.5 billion that we had upgraded to around SEK 8 billion at the Q3 results. On a reported basis, free cash flow was SEK 9.3 billion after paying SEK 800 million in a final installment for the Swedish 2023 multiband auction and with ForEx headwind of more than SEK 300 million as the Swedish krona strengthened versus the euro. This year-on-year cash flow growth was structurally driven by SEK 1 billion increase in EBITDA due to profitable growth and cost savings and circa SEK 600 million in reduced interest payments as a result of lower gross debt, lower average interest paid and strong working capital inflow. Looking ahead, we currently don't expect to have any significant net contribution from working capital in 2026. And we also don't expect paid CapEx to exceed booked CapEx like it did in 2025. Together, these 2 items contributed around SEK 1.5 billion to our cash flow last year. This is not expected to be repeated this year. That sets our free cash flow starting point back to around SEK 8 billion as we head into 2026. From there, we expect to grow our free cash flow to around SEK 9 billion, as you have seen us guide for this morning. This growth will be mainly driven by increased EBITDA, which we have guided for to grow by around 3%, which is circa SEK 1 billion in absolute terms. Overall, we currently expect free cash flow to be quite back-end loaded in 2026, even more so than it was last year. We expect relatively low cash flow in Q1 as some reversal of working capital should be penciled in considering the strong inflow we had in Q4. Interest payments are also seasonally high in the first quarter, just as a reminder. We expect cash flow generation to then strengthen quarter-by-quarter as profitable growth accelerates with the impact of continuous cost improvements taking hold. You know we are very focused on improving Telia's free cash flow generation capability. We made good progress in 2025, but we aim to make more progress in 2026. Our target remains to exceed SEK 10 billion in free cash flow by 2027. Let's now briefly look at our net debt and leverage development. As you can see on the right-hand side, in Q4, our net debt increased slightly by SEK 400 million. But with EBITDA growing in equal measure, leverage was 1.93x, the same as in the third quarter. Perhaps more importantly, looking at the bottom left bar chart, we can clearly see that leverage has come down materially over the last 2 years as we have expanded EBITDA and used the cash proceeds from selling noncore assets to actively manage and strengthen our balance sheet. The benefits of this much healthier balance sheet are threefold. One, we pay significantly less interest as debt has come down materially. Two, it enables us to actively think about increasing returns to shareholders as evidenced by our proposal to the AGM to increase the dividend per share. And we can strengthen our core business via accretive acquisitions such as Bredband2 in Sweden and fiber investments in Norway and Finland. Finally, before I hand back to Patrik, I would, as usual, like to say a few words of some of the achievements we've done in the quarter and how that resonates with our value creation agenda laid out at the investor update in September '24. Firstly, free cash flow more than covered our dividends paid in 2025 and exceeds the dividend being proposed by the Board for the fiscal year 2025. Furthermore, we delivered on our commitments for 2025 in terms of EBITDA, CapEx and free cash flow. Secondly, we continue to work diligently on our active portfolio management agenda. We received the regulatory approvals related to the Bredband2 deal and significant effort was also spent on a transaction to divest Latvia, where work continues with our counterpart to ensure that we reach an agreement this year. Thirdly, and as just mentioned, our balance sheet improved again this year, ending the year at 1.93x, just below our target range of 2 to 2.5x net debt to EBITDA. Finally, we paid another quarterly dividend of SEK 0.5 per share to our shareholders. And as you have seen today, the Board of Directors proposes a dividend increase of 2.5% to the upcoming AGM. This would mean that for the first time in a long time, we will deliver on our commitment to a progressively growing dividend. And with that, I hand back over to you, Patrik. Patrik Hofbauer: Thank you, Eric. The past year was a year of significant progress for Telia as a company. Our customers are becoming more satisfied and our services are more relevant. It was also a year in which we delivered on our EBITDA and cash flow promises and made progress in both CapEx efficiency and portfolio management. We have taken several steps to create a simpler, faster and more efficient Telia. Also, the strong end to '25 confirms that although there are challenges still to overcome, we have a solid foundation in place that will enable us to deliver on our 2026 plans and our midterm plan targets for 2027. This comfort is also shared by the Board of Directors who will propose to the AGM in April a dividend raise from SEK 2 to SEK 2.05 per share. And with that, I will open up for questions. Operator: [Operator Instructions] Our first question comes from Andrew Lee with Goldman Sachs. Unknown Analyst: Here is actually [ Sofia ] from Goldman. Today, we have 2 questions. The first one is on Finland. What is your time line to reach stability on EBITDA there? And the second one is on cost cutting. So you guided to just 3% EBITDA growth of 2% service revenue growth for 2026, and you've already announced 450 headcount reduction this year. So is the EBITDA growth guide conservative? Or are there headwinds such as lost high-margin revenues greater than expected? Or is cost efficiency opportunity just not as high as you'd hoped initially? Patrik Hofbauer: I can take the first question. It's Patrik here. Regarding Finland. I mean, if we start with Finland on a broad perspective, first of all, we are not, of course, satisfied with the performance in this quarter. But we continue to focus on -- first of all, we continue to focus on our customer experience and the satisfaction. And I mean, we have also been credited for the best network and also the best customer experience, highest NPS in Finland, which we are, of course, are proud of. Then just to remind you what we're working on. I mean, we have 3 main activities in Finland. First of all is to stabilize the customer base that we're working on. The second one is to improve the profitability, which clearly you can see in the financials for 2025, where we improved the EBITDA by 4.4%. And then we want to increase the share for our SME customers. And on top, of course, we continue to simplify the business and clean up the portfolio and also in the organization. So then how does it look going forward? Well, we expect some improvements already now in Q1 and also towards the rest of the year. So we would expect improvements both when it comes to service revenues and EBITDA. And if you look at the takeout that we just also mentioned, which is the second question, and Eric will take that one. The major part is actually coming also from Finland or a big part is coming from Finland. So we are doing activities. We have a plan in place, and I think we will see improvements in this year now in 2026. Thank you. Eric? Eric Hageman: Yes. With regards to the guiding of 3% EBITDA growth for 2026, well, first and foremost, it's very much in line with our midterm ambitions. If you recall, that's a 4% CAGR over that period, '25 to 2027. And as a reminder, we did 5.2% in 2025. The other thing to remember is 2025 obviously enjoyed the great benefit of the Change Program, taking out 3,000 net positions. And of course, we will continue to find other cost savings. But the impact in 2026 from headcount -- lower headcount will be less because as we just said at that announcement, there's a net positions of 450. Operator: Our next question comes from Owen McGiveron with Bank of America. Owen McGiveron: It's McGiveron at Bank of America. First one also on Finland. Just maybe a bit more color on the weaker enterprise deal flow that you've seen in B2B. Would you say this is a continuation of kind of a tough market backdrop that we've seen across the year? Or are there idiosyncratic factors here for Telia? And then the second one, Norway growth remains challenged. Now with the new CEO in situ, how should we think about the phasing of the recovery over full year '26, noting that the comp is probably quite tough in Q1? Eric Hageman: Yes. Shall I start with Norway maybe first. So we still have 1 quarter of ICE impact in Norway, which as we said at the time was around SEK 400 million for that full contract, both revenue and EBITDA. So there's about SEK 100 million left impact in the first quarter. And then as we've said, with the investments we've done in sales and marketing and in general, how that market is developing and the impact that [indiscernible] will have, we feel quite confident that, that business will improve through the year. With regards to Finland and the weak enterprise, it actually -- it was a very strong, exceptionally strong Q4 in 2025. And these enterprise sales are always very, very lumpy. So we had quite a few in Q4 last year and a few less this year. I don't think there's anything structural on it. The macro economy that we see in Finland is in our portfolio, one of the weakest, but it's not particularly weaker now than it was last year or the year before. If anything, Patrik pointed out to what we are focusing on, which is making sure we stem the decline in mobile market share, but also capturing that opportunity in SME, small, medium-sized enterprise market is super important for us. And there, we had very, very good traction. The last point on Finland is EBITDA margin. So EBITDA went up -- margin went up 120 basis points, if I'm not wrong, this year, up from below 30% to above 31%. And there is more to be done there. This historically has been a business that was less efficient. And it's one of those things that we called out in the September '24 Capital Markets Day. Margin expansion is important for all our countries, apart from Norway because of the ICE contract, all countries have improved their margin. There is particularly more upside in Finland to go in 2026. Operator: Our next question comes from Erik Lindholm with SEB. Erik Lindholm-Rojestal: So 2 questions, if I may. I just wanted to start on Sweden, mission and business critical revenues, really strong, as you said. How are you thinking about the opportunity to drive continued growth here in '26? And is this something we should sort of expect to see driving growth for several quarters in a row? And then secondly, on Norway, you mentioned quite clear improvements in terms of ARPU in this quarter. What are you seeing in the market, I mean, both fixed and mobile that is allowing you to push through these quite large price increases? Patrik Hofbauer: Erik, I can start with the first question regarding Sweden. And we have good momentum in Sweden, as you saw also in Q3, which is very positive. It's obviously the biggest market for us and the most important one. When it comes to mission critical, we continue to see the demand that will not change compared to this year. But you cannot say it will continue in the same pace every quarter. It goes a bit up and down depending on the demand and also timing questions. But we expect to see a similar demand in that segment also in 2026 as we saw in 2025. So -- and this is one of the growth drivers that we have here in Sweden, but a very solid performance, and I would expect this will continue into the next year as well. Eric Hageman: Yes. Then on Norway, with regards to ARPU, absolutely, it was important for us to make sure that you have the right combination of volume and pricing. So quite a lot of price increase, both fixed and mobile towards the end of the year. Why is it possible was your question? Because it's a very healthy market. As many of you write, it is one of the best markets in Europe. And I would say, if you look at our Sweden performance, may be challenged by -- start to get challenged by Sweden. The other thing is we continue to invest there. So if you look at that 3-player market by continued investment in fixed, whether that is fiber, but also on network coverage on 5G, where we have a leading network that allows you actually to price that with customers. And I think thirdly, what defines that healthy market is good macro, clearly, a good macro economy. And on top of that, it's very, very rational, yes, acting by the incumbent as opposed to Finland, which really, really helps this market. Operator: Our next question comes from Andreas Joelsson with Carnegie. Andreas Joelsson: Two questions from me as well. You have touched upon it a little bit, but on the growth guidance, could you state the 3 most important factors that you expect to drive that growth to 2%? You have had some headwinds in 2025 that will fade but other than that, what are the key critical factors for the 2%? And secondly, on the balance sheet, you will now pay for Bredband2 soon. But I guess Bredband2 will generate positive cash flow, which is not included in the guidance. And then hopefully, you will divest Latvia. So in the event that you would return to below 2x leverage after you paid for the acquisition, what is the main priority for that sort of excess cash, if you could call it like that being below the leverage target? Patrik Hofbauer: Yes. I can start with the growth going forward. I mean the elements of what is important, what the question you asked, I mean, of course, it's important for us that Sweden continues to perform, especially we have the mission critical. We know that, that will continue. The demand will be there also for 2026. But then we have also pricing, which we have done. We are doing some pricing now in -- we have done recently in Norway, et cetera. So we are doing that all the time. So I think those in combination will then help us to reach the around 2%, which we are guiding on the outlook for 2026. And then, of course, we expect also some improvements in Finland and yes, then Baltics continue to drive. So I think that is overall, I feel quite comfortable on that outlook for 2026. Eric Hageman: Yes. Then with regards to the balance sheet. So when we do Bredband2, just to remind you, it's about SEK 3 billion, right? So that adds, what is it, 0.1x to what we have, which brings us then slightly above the 2x. And then let's see when Latvia materializes. So we will be close to the bottom of that range, and we feel quite comfortable with that. The second part of that question is related to what do we do when this excess cash? Maybe it's best to explain it as follows. We take, as we said at the investor update, capital allocation very seriously. And in that vein, you've seen us reduce OpEx. You've seen us reduce CapEx, and we will continue to do that going forward. Then we invest in growth, like, for example, mission critical, right? Sweden's strong performance is partly because of mission-critical accelerated that requires investments, both people and also CapEx. And then we have a balance sheet, a balance sheet that allows us to do, as I just said in the analyst presentation, accretive bolt-ons, which is great. And as cash flow continues to grow, then we can start to think about what are we going to do with regards to shareholder remuneration. Well, today, as you've heard, we announced to increase the dividend. And then let's start to get through 2026 when we start to deliver on the guidance of SEK 9 billion on a path to SEK 10 billion by 2027. And I think sequentially, we then can think about with a healthy balance sheet, what we can do in terms of shareholder returns. Operator: The next question comes from Fredrik Lithell with HB. Fredrik Lithell: I have 2 questions. The first one is really if you could elaborate a little bit on the net working capital in Q4. You have spelled out the phasing of billing and customer payments. But if you could sort of put some type of numbers on it would help a little bit. Second question is on the upcoming regulation in Sweden on B2C fixed fiber SDU. When that comes into effect, I mean, that's a stronghold for you, that market. How will you go about to defend your position there when it's going to be open for more competition? It would be interesting to hear. Eric Hageman: Competition, do you want to take that? Erik Pers Berglund: Yes. Fredrik, on B2C fiber SDU, I think that regulation has been in the -- it's been worked on for several years. It's still not in place. And once it gets in place, it will take time to implement it. So -- and some of the proposals that have come along has been a bit more positive and some a bit less positive from our point of view. So I think we need to sort of see where it lands before we can say exactly. But in general, we are regulated today, and we see that the -- hopefully, the regulation will create a more level playing field going forward. There might be some drawbacks for us, but there might also be opportunities for us to invest into networks where we're not present today. Sorry for a vague answer, but the regulation isn't really in place fully yet. So I don't think we can say more than that at this point. Patrik Hofbauer: And I can just add, I mean, it's a bit difficult, as Erik is saying, to judge where we'll end. But clearly, we have pushed for a more level playing field in the market given that we are regulated. So I think that is an opportunity for us, but we have to wait and see where the outcome will be because it has changed during the years a bit back and forth. So let's see where we'll end. I'm not even sure that there will be a regulation this year, given that we have thought this for many years now. So let's see. We will -- but I think for us, it's actually more an opportunity than a risk. That is our internal judgment so far. Eric Hageman: Yes. Then with regards to working capital, you're going to get an equally vague answer, I'm afraid. So as I said in my voice over doing the analyst presentation, it's partly planned, the work that we do, which is what making sure that you issue invoices early and that you do good management of your inventory, et cetera. All of those have benefited. But there also were external factors, as we said, which is people literally paying us that typically wouldn't pay us as we've seen in the last couple of years. Read into that what it is. Part of those planned initiatives, for example, is the way we're billing people in Norway, which had roughly a SEK 400 million impact. So it's part of the work that we did, and it also allowed us, obviously, during the year to do the free cash flow upgrades. But it was certainly more than what we had planned. I think maybe equally important is to talk about what it means for this year. And again, just to repeat that, what I said in the analyst presentation is we expect it to be neutral for 2026. Partly that is the reversal -- some reversal of the high inflow that we had in Q4. And on the other hand, the work that we continue to do to improve working capital. So where in the last 2 years, we were guiding for inflow; for 2026, we're guiding for neutral working capital. Fredrik Lithell: Okay. And in that neutral working capital, will you still have sort of pensions coming your way in that equation? Erik Pers Berglund: Pension, look, we pay pension to the people that have worked here in the past, and then we get the refund from the pension foundation, as you know. So that's normally a sort of a wash more or less. And that doesn't -- this shouldn't really affect working capital. So that's not really a part of that. But I think we expect -- as a starting point, we expect the normal sort of SEK 900 million per year refund that we usually get for 2026 as well. Eric Hageman: Yes. If you think about the growth, right, from where we guided for SEK 8 billion last year, and we're guiding for SEK 9 billion now, that increase, it's not driven by pension. And as I said, because working capital is neutral, it is also not driven by that. It is driven by our EBITDA growth. Operator: Our next question comes from Nick Lyall with Berenberg. Nicholas Lyall: It was a quick question about Swedish service revenue growth, please, and the improvement there. About half of it seems to have come from other. So could you maybe just tell us what the other bump up is? And then in mobile as well, the ARPUs improved quite strongly this quarter. So could you tell us -- is this the timing of price rises? I was surprised a little bit about your comment that you thought that growth would keep on coming, but at a lower rate. So could you just explain also why that lower rate for 2026? Is that just a function of other not being repeated? Or is there something that's going to be lower in maybe mobile or fixed as well? Patrik Hofbauer: I didn't hear all the questions, but I will try to take the first one because that one I could follow, but help me and colleagues here in the room here. So when it comes to other revenues, that is partly the mission-critical that is included in that one. So if we start there first. And then the next question was? Eric? Eric Hageman: I understood mobile ARPU. Erik Pers Berglund: Nick, go ahead. Nicholas Lyall: Yes, the mobile ARPU was quite strong in the quarter, so improved quite sharply. So is that the timing of price rises? Or is there something a bit more fundamental there? And the final question was just about, I think, Eric you mentioned about maybe slower continue... Eric Hageman: We lost you, Nick. We heard the beginning of the question. Is mobile ARPU up because of pricing or something more fundamental, I think, was the question. Nicholas Lyall: Yes pretty much on timing, yes. Erik Pers Berglund: And was the mobile ARPU question about Norway or Sweden? Nicholas Lyall: Sweden, please. Erik Pers Berglund: Yes, I think it is a smaller increase, and it is because of the ongoing amendments of the portfolio and price changes we are doing. So nothing really big there, I would say, on the pricing side. It's just the ongoing strategy. Nicholas Lyall: [indiscernible]. Eric Hageman: We hear you barely. Nicholas Lyall: I'm sorry, actually I'll try once more. And if it doesn't work, just cut me off. But you mentioned as well about the growth coming through but at a lower rate in Q4, Eric. So would that -- is that mobile and fixed at a slightly lower rate? Or is that just a function of that other revenue growth falling away? Why at a slower growth rate in Q4 for 2026, please? Eric Hageman: In Norway or which country? Erik Pers Berglund: Which country, Nick? Nicholas Lyall: Still Sweden. Eric Hageman: Still Sweden. The other is really strong. So I'm not sure what we're looking at and partly it is the bad connection, I think. But mission-critical is really driving other in Sweden. It sits in different buckets. But to be clear, that is, if you think about the strong growth in '25, but certainly also in Q4 for Sweden, which is driven partly by fixed, which is TV and broadband. But then on top of that, you have the strong growth in mission critical. Thinking about it in a slightly different way, very strong performance in consumer, up 4%, slightly less good in B2B because we've seen that takes a while, right? So... Erik Pers Berglund: And we haven't really guided per quarter. So if that was a misunderstanding, sorry about that. But there's no -- we haven't really got into that. As Eric says, consumer is strong over 4% growth and the mission critical is strong. So those are the main growth drivers in Sweden at the moment. Operator: Our next question comes from Abhilash Mohapatra with BNP Paribas. Abhilash Mohapatra: It was just around your sort of free cash flow and FX actually. So you mentioned in Q4, how there was a sort of FX headwind of SEK 300 million, which you managed to offset. Obviously, the Swedish krona has strengthened quite a lot over the last 2 or 3 months and since your Q3 results. But you still reiterated your 2027 free cash flow guide for sort of greater than SEK 10 billion. And today, obviously, you've sort of guided in line with consensus for 2026 on free cash flow. I was just wondering what steps are you sort of taking to offset what looks like a pretty material FX headwind? And also just related to that, if we didn't have that headwind, all else equal, would your free cash flow guidance be higher? Eric Hageman: So first and foremost, the SEK 300 million wasn't the Q4 effect. It's a full year 2025 effect because if not then, we were talking north of SEK 1 billion. Of course, you have to take that into account when you are guiding at some stage, you need to fix it and let's see how SEK trades versus the euro. So for us, delivering that SEK 9.3 billion or the SEK 9.6 billion depending if you look at our report on a normalized, it's obviously very good to see that in the context of all the headwinds that we saw, if you think about the Norway wholesale contract, if you think about Finland, in Q4 and if you think about FX not being or being upfront. So from our side, guiding for SEK 9 billion for this year is something that we feel very comfortable with that we, as a team, feel that we can deliver. And let's see how the year evolves. Operator: Our next question comes from Ajay Soni with JPMorgan. Ajay Soni: I've got 2 questions. The first is Finland. You mentioned there's much more upside on your EBITDA margin there. So you've obviously mentioned the FTE reduction mainly come from Finland. What are your other key priorities in this region to step up that margin? And my second one was just around your midterm CapEx ambitions. I see they're still below SEK 14 billion. Obviously, you've guided to below SEK 13 billion for this year. So is there anything you're expecting to change into 2027 where you expect CapEx to step up because obviously, the trend has been broadly on the way down. Patrik Hofbauer: I can take the question number 2 regarding CapEx, starting with that, first of all. No, we have guided on outlook for '26 at around SEK 13 billion, and we don't see -- I mean, the targets for 2027 we set back in September 2024. So they still remain and are there. And the most important part there is actually for us to deliver above the SEK 10 billion in free cash flow for that one. Then we changed the guidance for the CapEx in 2025 to SEK 13 billion, and we stick with that for 2026. We don't see that we will increase that in 2027 either. So this is just what we are just guiding at the moment for 2026 for the outlook, not for 2027 at the moment. Eric Hageman: Yes. And on Finland margin, in essence, it's a handful of things. First and foremost, we are a people-intensive industry. So making sure you have the right number of resources there is what is driving that. You already saw that this year in the EBITDA margin increase in Finland and more of that will come because as we said, a disproportionate amount of those net reductions, grow 600, net 450 because we're also growing in other parts of the organization will take place in Finland. So that naturally will help. It's also the market where we have the lowest salary inflation. So that helps us a little bit. And there are further initiatives that we are taking to make sure, yes, we are disciplined when it comes to cost. I think the other one is what type of products are you selling? And we've been very clear about last year selling this noncore e-invoicing business, which was about EUR 12 million of revenue, let's call it, SEK 150 million with pretty much no margin on it. We own more of those businesses. So rationalizing this portfolio in Finland, focusing on core, focusing on more profitable products will also help us to increase both gross profit margin, but also EBITDA margin. Those are the initiatives that we're taking. Operator: Our next question comes from Terence Tsui with Morgan Stanley. Terence Tsui: Just back to Finland again, I'm sorry, but focusing a bit more on consumer mobile. Are we seeing some structural changes in the market in your view now? Is it being a bit tougher to do more 5G upselling and the consumer being a bit more price sensitive? I'm just looking at your mobile churn number and Q4 is always seasonally high, but this year, it's much higher than what it was last year and the prior year. And then secondly, on free cash flow. Can you just repeat the comments again why you expect free cash flow generation to be a bit more back-end loaded this year? I've noticed in previous years, it's been a little bit back-end loaded, but not significantly. So just wondering why this year may be particularly different. Patrik Hofbauer: Yes. I can take the first one regarding Finland. Yes, we see some more intense competition in Q4 this year compared to previous years. And we see also more customers changing operator in this quarter. This is driven also by entrance of 2 new MVNOs coming into the market that will obviously want to take their share of the market. And also we, of course, because we want to try to defend the market share. But we have seen some more activity also on the lowest price levels, but we didn't compete. We didn't actually go into that war. So we stepped out a little bit on the lowest price levels. But clearly, we have seen an increased intensity in the market now in Q4, definitely. But let's see how that will develop now in Q1. Eric Hageman: Yes. With regards to free cash flow, yes, absolutely, it's more back-end loaded than last year. And just to give you a sense, last year, it was roughly around the numbers, 40%, 60% H1 versus H2. We're looking at around 30% to 70% for this year. So a bit more skewed towards the second half. Why is that? And also in the comments, we said a soft start to the year with regards to free cash flow. Partly it's the working capital reversal, right? The big inflow reverses mainly in Q1. So that is a lower starting point. And also the interest payments, they tend to be more H1 weighted. They are even a bit more this year. Why is that? It is because if you look at the big decrease in gross debt that we have had as a company, we still have the same number of hybrids. The payments for those are more skewed towards Q1. And yes, and the last point I would make is we had a really good Q4 performance in Sweden. We're saying that will be a bit softer in Q1. And the reason for that is the lumpier nature that we have of part of our enterprise business, including a very successful mission-critical and business-critical business. The combination of those 3 make it a slightly slow start to the year, which we prefer to tell you now rather than have any surprises when we report in April. Operator: Our next question comes from Ulrich Rathe with Bernstein. Ulrich Rathe: Two questions from me, please. The first one is you explained the EBITDA trends in the fourth quarter in Finland and Sweden, in particular, with reference to marketing, higher marketing and marketing phasing. The KPIs aren't obviously strong in mobile. I think excluding M2M, you're still losing customers after pretty encouraging results in Sweden in the second and third quarter. So my question is, how do you actually measure success of marketing if it's not the KPIs? Is it KPIs a quarter out then because it's a delayed effect? Or I think you referenced NPS earlier without actually giving numbers. Or what else do we sort of look at when we want to see whether -- how effective your investments in marketing really are, especially when you ramp it up in a given quarter? My second question is on the dividend, you highlighted the growth, but it was below market expectations. I think that was pretty clear. So why the free cash flow was above market expectations. I'm just wondering what thinking was behind setting the dividend at this particular level, appreciating its growth, but obviously slightly below what we all expected. Eric Hageman: Yes. No, we see different consensus numbers because it's very much in line what we saw with what the analyst expectations is. It's also -- we're not there to beat the analyst expectations. We have a stated dividend policy, and that stated dividend policy says that we will grow the dividend by mid to -- low to mid-single digit. And then the other point is I'm very happy that finally, we are in a place after a couple of years of keeping it flat that we're able to fulfill that based on the strong performance in 2025. I think the next one is we want to have a sustainable dividend growing because that's what ultimately is attractive for capital markets. So that's why we came up with this choice of increasing it by [ 5% ]. Patrik Hofbauer: Then when it comes to marketing, there are different ways here. What we have invested is more in marketing. This is not a short-term impact. It will give impact for a longer run regarding this. So if you pay more commissions, you get an immediate impact. But if you do marketing, that will take some time before it comes to be visible in the market. And we are measuring the KPIs that everyone else is measuring when it comes to performance marketing, et cetera. So there's nothing unique for us. So -- but I think we will not see an immediate impact on that one. We see a bit longer impact on increasing marketing spend. So this is actually for preparing us for 2026. Erik Pers Berglund: Yes. If I can build a little bit on it, it was Finland and Norway that we flagged for increased marketing this quarter. Finland is an unusual quarter in terms of the market situation. Norway is a bit of an unusual quarter when it comes to our actions because sales were actually very good, but we did a couple of things. We did increase prices quite a bit, which you can see in the ARPUs. And we did also do a billing shift where a lot of customers were asked to pay 2 bills in a month basically because we started to bill in advance, which many operators do, but we introduced that in Norway this quarter. So those things always have a predictable churn effect, and they did, and that was fine. That was in line with expectations. But considering that, I think we're quite happy with the sales in Norway. Operator: Our next question comes from Oba Agboola with UBS. Obaloluwa Agboola: Just to ask about Finland again. So there was a comment in the presentation or press release that said the financial impact of increased competition was limited. So I just wanted to understand, given the uptick in competition, how are you able to limit the impact on service revenue? And then also just a bit of color on potential phasing. Do you see Q4 as kind of the peak in mobile competition? And how should we think about competitive developments in Q1 and beyond? Erik Pers Berglund: I think I can answer the first one because it was probably in the e-mail we sent out with the report. We just wanted to be factual about the financial impact. Of course, there is financial impact from the market situation. It just in the short term, it is a bit limited. The major part was how the timing of B2B deals come in. So it's just to clarify that. And so let's see over time how that financial impact, it depends how the market situation develops, which is your second question. And it's not really, of course, in our hands. There are 2 new players in the market. We'll see how those act. But we focus, as Patrik says, on the customer experience and our basic strategic goals. Patrik Hofbauer: And also, we think it will be a bit -- I mean, -- we think we will have an improvement in the first quarter. And I think also the market will calm down a little bit. Q4 is always extremely intense when it comes to competition. This year, extra intense in Finland because of launch of the new 2 MVNOs coming into the market. So I think that is also pushing the market in Q4. So we think and believe it will be calmed down a little bit now in the beginning of the year. Obaloluwa Agboola: Okay. And just a quick follow-up. Have the 2 new MVNOs been particularly aggressive? And are there any differences in the behaviors between the 2 just initially from what you guys think. Erik Pers Berglund: So competition varies from week to week. There's been -- it's been already discussed, a very, very intensive quarters. The number of people changing operators have been the highest for many, many years. And -- but it is also the usually high campaign season. So it's -- we just have to monitor the situation and focus on our own customer base basically. Operator: Our final question comes from Siyi He with Citi. Siyi He: I have 2, please. The first one is just really a follow-up on your dividend policy, which you're guiding for low to mid-single-digit growth. But if we look at your free cash flow profile, I think underlying is growing more than 10% every year over the next 2 years. Just wondering if you can help us understand how to bridge the current dividend policy with your free cash flow ambition and whether you could -- you think there could be a scope to update on that policy? And the second question is a clarification really. I think, Eric, you mentioned that you see Sweden as a market is challenging Norway as one of the best markets in Europe. I'm wondering if you can talk about where you see the dynamic changes and whether that gives you more confidence on the growth profile in Sweden? Eric Hageman: Yes, Sweden has had an amazing 2025. If we look at the consumer growth, how B2B is holding its own, what is a more competitive market is -- I think it's a really massive result. And I think it's that -- again, go back to the investor update in September '24, we had this thing that we call the smiley face, which is including legacy, of course, you have service revenue declining for year after year that kind of bottomed out in '24. And since then, we have this growth, right? So pictorially, it looks like a smiley face. That has -- yes, that has been a massive success. And if you then look at what the competition is doing, if you look at their results where they also have profitable growth, yes, that bodes well for that market. At times, we have said the only part where that is not the case is sort of the no-frills mobile segment because there's so many brands there, but it's such a small part of our business and it doesn't really affect us as you have seen in the Q4 results. So the other one, I think, at the growth in mission critical, we said it's going to double. We have done more than that, and that continues to accelerate, which again bodes well for our path to SEK 10 billion. I think the last point that I would make is the price increases that we have seen. right? What typifies a rational market is where people are not lowering prices, but actually increasing prices. And what we have seen of our competitors, yes, even this year, they have started with increasing prices across the board, both fixed and mobile. For us as a market leader, that obviously is good because that allows us to continue to have that price differential given that we are the premium brand. So put all of those together, even though we are a 4-player market, as we sometimes say, yes, it's a very, very healthy market. So very happy with that. With regards to the dividend policy, yes, I think on several occasions, we have said, I think it was even at your conference that at some stage, we need to come out with sort of that final leg of this -- of a clear policy that says, basically, it could say something like what are you -- what is your payout ratio? How much of your free cash flow are you paying out? For us, it's -- we were on this value creation path of going from what was less than SEK 5 billion to SEK 10 billion by '27. During this period, I think we will decide what that ultimately looks like for the years beyond that, but it's a bit early days. But for now, we're very happy with the fact that we covered the dividend with our free cash flow and that we were able to go back to what our current stated policy is, which is this growing dividend per share. So we're very happy with that after 2 years of running the business. Patrik Hofbauer: Can I just add something also on Sweden also on the consumer side? I mean, we have a well-functional machinery there when it comes to convergence as well. So we have called that out in previous quarters as well, where we sell both broadband TV and mobile and especially when we focus on TV, and you see that we continue to grow in that kind of services. And it's a really appreciated service from our customers so the converged play that they have both broadband TV and mobile on top of. So we are very happy with the machinery we have in Sweden and the consumer side that actually takes that position. And we have a quite a unique position there in the Swedish market. So that's very valuable for us. Erik Pers Berglund: Operator, are there any more questions on the line? Operator: That was our last question. Thank you very much. Erik Pers Berglund: Thank you. Thanks, everyone. Many good questions today. We look forward to seeing you face-to-face in the next few days and weeks, and thank you, and goodbye.
Operator: Thank you for standing by, and welcome to the IGO December 2025 Quarterly Activities Report. [Operator Instructions] I would now like to hand the conference over to Mr. Ivan Vella, Managing Director and CEO. Please go ahead. Ivan Vella: Great. Thank you. Good morning, good afternoon, everyone. Thanks for joining us. I know it's a super busy day, lots and lots of quarterlies for the market, so you're running around. So I appreciate you dialing in, taking the time to catch up with our results. I won't spend too long as usual, just trying to hit the highlights. Kath will pick up the financials as we get further through, and then we can dive into some Q&A. Just to sort of touch the headlines first before I run through a few areas in more depth. I think safety, again, continued improvement. I've talked about this since I started the role 2 years ago, and I'm really pleased that we're making steady improvement every quarter. Team is working really hard at it. They absolutely treat this as their first priority, and the results are flowing through, which we're really pleased about. Naturally, it's never done that focus on a good mature culture is something that we'll keep working at. But I think it ties back into performance in the mine as well. And obviously, these results are largely focused around Nova. And you'll see the results from -- no, really, really strong through the last quarter, production cost. The team is doing a great job, and I've reinforced obviously, a few quarterly now. How difficult it is when you get to the end of an ore body like this or you're approaching the end of mine life? It is challenging, team is dealing with that extremely well. And we start to see where focus on good safety, good productivity, good discipline in our operations all tie together, and we're also driving great cost outcomes as well. I do recognize, of course, the benefit of the byproduct credits from copper, which is nice. It's another piece of the pie. And obviously, lithium, nickel market is fantastic for the last 12 months of this mine. But as you can see, it starts with what we control and the basics are running well. For Greenbushes, look, obviously a better quarter than the first quarter of this financial year, which was impacted by rain and grades. We've seen that grade improve. That's continuing to flow through, and we'll see that lift through the second half of this financial year. But some improved production, sales of which is just a shipment, which, to be honest, is with a very rapidly rising market, not the world that we end up seeing some improved financials on the back of that. And a lot of work is happening to get CGP up and going, CGP3 at least. That's, as we've announced already, hit first ore and produced first concentrate this month a huge focus on that ramp-up, and I'll talk more to that in due course. Kwinana, look another quarter that's sort of in line with prior quarters. I think really to call out was impacted by a shutdown that took out some of the available days of production. The team did finish the last month at about 50%, which is sort of the best that we've seen from the refinery for any sustained period. And I guess we -- as much as the lithium prices up, we continue to take the view that this has got a very challenged future. So that's I think the quick highlights. Our financials, capital further as you can see that we generated positive free cash and continue to maintain a very strong balance sheet. If I drop down a little bit further into Nova, and I touched on these points, I mean a really good operational quarter, delivering cash to the business. I talked about a stope this fire in Q1, which has been addressed and mitigated. And again, that's the sort of thing that the team naturally doesn't want to happen, had to work really hard to deal with it safely. They've done that, and it's now in the revision [ mirror ] looking forward. With the mine at this point so close to closure, we don't have the ability to flex that schedule. And so we have to deal with these things very effectively. Sales is a bit lower, just in line with shipping plan. So one less shipment for the quarter that will roll through. There's nothing really material in that. And overall, tracking really well against our end-of-life mine guidance. As I said, the performance from production was really good, and they continue to live through this quarter. So we've got some strong confidence there right through to the end of this calendar year. And of course, costs are a function of that performance. All that said, the team are working really hard to manage our costs as this line ramps down. We're certainly not looking to carry anything that we don't need to as we move towards closure in 2027. Kwinana next, just to touch on it quickly because then we can talk a bit more on Greenbushes. As I said, 35% nameplate for the quarter, 2.1 kilotonnes. We're tracking pretty much in line with our guidance as we set out for the financial year. The costs are up, and that's a function of the production through the quarter, we did take a bit out with the maintenance shut that was done and some other modifications that were done to the plant. The next slide, into Greenbushes. So look, it's a good quarter, lift on Q1 in production. Costs are still running high relative, and that's obviously largely production related. As the tonnes ramp up, we'll see that come back in. The realized price lifted to $850, which I think reflects this very close connection with the PRAs or the spot price in the market, and I'll talk more to that on the next slide. I think it's something that's very favorable, particularly in this lifting market, very buoyant market now. And the big news was obviously getting first ore through CGP3 late last year, just before Christmas. The team did find some issues as they started to run it up, stopped, fix those early in January and then got back into it. As I said, we've just seen first concentrate starting to come through. So look, the asset is working. I think they took the time, and it was down to -- go and check a few more things, hopefully avoid any more surprises, and the work in front of them now is to ramp that up, hopefully smoothly. We're going to know more by our half year results in a few weeks' time or 3 weeks away. So I think that will be a place where I can give you a more substantive update at this point, it's a bit early really to say too much until we see a few more results. I have a couple of extra slides on Greenbushes and wanted to start, as we've talked about in the last quarter, to just feeding more information to the extent I can about both the life-of-mine optimization or the strategic review that we're doing and the focus on productivity. The first thing I did want to touch on first was just on the price growth, which I'm sure everybody is following closely in the market. It's certainly moving very, very quickly. I would say, relative to the expectations that I had, fine is what it is. I'm sure we're going to have some ups and downs. We saw overnight that there was a bit of downshift with FX and others. And I think we certainly expect to see some of the curtailed supply out there start to be reintroduced. And I think this morning mentioned they were looking at that. I see more of that, which might pay for it. But really, the takeaway from this slide is the way that, that translates for Greenbushes. And as you know, when we take the average of the PRAs 1 month price trails, but it's pretty much a very close connection to the spot price that's out there, does give us a very good realized price that flows through. We don't have any of that lag or impact from contracts that might carry discounts or other frictions from a lower [ end-of-life ] in the cycle. So I expect we're going to see obviously some very attractive lifts in our realized price over the coming months. The next slide then I guess brings to life how that translates into margin, which is one of the things, again, I've called out before, I think Greenbushes is one of those few mines of any point in the world that generates extremely high margins. I think we said 64% EBITDA for the last quarter. And I think the low end was just shy of 60% at the absolute bottom of the cycle. But the thing that's really unique is it also drives fantastic cash conversion and translates into returns that flow out of the business. They don't have to be reinvested to maintain production. And this chart brings to life what that looks like if you take 1.5 million tonnes, so current production level roughly at 2,000 tonnes. And then with the lift in production that's coming through CGP3, the sort of amount of cash that's generated through that step-up just help to visualize that. The next slide talks a bit to the optimization work that's ongoing. It's a slide that I have referred to before. Just to reorient everyone, we've got an overall review of the entire mine, which is, I guess, life-of-mine optimization, I'm going to talk to one example of the kind of work that's happening there in a minute. That is significant. It's got a lot of expertise -- external expertise helping us with it. It basically goes right back to the ore body, assesses the characterization, the design of the mine, how we manage waste, tailings, grades, et cetera, top to tail. And reset that [ optimum ] mine in doing so obviously unlocks a lot of value. In parallel with that, we were also focused heavily productivity. Now these things are naturally linked. Productivity work is happening now anyway, and that's focused across a number of different streams. All of that together brings us to, I guess, our goal, which is achieving the full potential of Greenbushes. And Rob, the CEO there at Talison, is doing a great job. He has got a lot to work through and as the team he's put together are working through it. They are finding a whole range of issues, challenges and changes they need to meet. And that's part of the shift. But I mean, we've seen Nova in the short space of time, make this shift in this steady focus on production stability and safety. I don't share the safety results of Talison, but there is some challenges there as well. I think these teams are linked. And Rob's got a really good set of programs and changes in place step by step to support the team to shift that culture and focus on safety, on production reliability, stability and ultimately productivity, it will drive out more tonnes and obviously less costs as well. The example I want to refer to for the overall asset review really looks at the pit wall -- steepening pit walls is something that naturally has risk or threat and opportunity both ways. On the upside, it means a lot lower strip ratio. And in this case, you can see and I'll talk to the line in a minute, it starts to expose more metal or more material -- valuable material that otherwise might not have been accessible. On the downside, if we get it wrong, you have a geotech issue or a failure in the wall that can sterilize more. So it needs a lot of careful work and thought. The team have brought in experts to help them with that. They are maturing their geotechnical management processes and activities. They're doing all the right work to make sure that we control those risks, but ultimately unlock a lot of value. And if you look through this chart, you'll see some little dotted lines that run out into the gray patch on the right-hand side. And so that sort of pit shell, the 2023 resource shell and the '21 resource shell shows what the overall resource would be. And you can imagine if you actually did all that strip, it's a huge amount of work. The other point to note though is on top of that gray-shaded area there on the left side of that slide [indiscernible] our plants. So it will require us moving a lot of infrastructure and assets, which is extremely costly. It's not to say you can't do it. I mean that's the kind of work that other mines in the world have had to go through, but it's not very desirable. So the other way to tackle this is if you take those lines that run into the gray and you draw them straight up to the edge of the gray and you steepen that wall significantly, you can start to access that high-grade core, you can lower your strip ratio significantly, so you expose more metal, lower strip, much lower cost and ultimately drive an enormous amount of extra value out of the mine. That's the kind of example of work that's happening at the moment, wanted to do this to try and just illustrate it. So when you start to see more of the results and the information coming through as we get through the decisions, finalize our plans and we can present that back to the market; you'll understand where that's come from and just helps to give you a sense of the work that's happening. Equally, the care that we're taking to make sure that this is done properly, as many of you know, this mine is 135 years old, even we're working in is quite mature. And any change to that, we need to make sure we're done with due care and attention. The last slide then on Greenbushes just speak to the productivity stream that I mentioned earlier. We put in the sort of major areas of focus, mining being naturally a big one early. And I've put a couple of little charts in there that just illustrate the lift in productivity from the mining fleet. And that takes us to what we believe is industry average. So we're not outperforming yet, but I want to give credit to the team to [ Rob, Adam ] and the mining team, they've made a lot of focus on this. The -- a lot of issues they are working through different challenges, but I think they're really starting to see some results come through now, and that will play out in our costs, obviously, our waste movement. And the second area I want to talk about was then just production and plant performance. And that's a mix of utilization through better asset management and reliability so we get that throughput, but also recovery. So more stability will drive recoveries and then work to optimize recoveries. As part of that, we're also looking at value and use, which means what is the grade that we're selling to our customers? Is that optimum for them? What level of impurities? How much are we throttling the assets to the processing plants to achieve that? And what's the cost or value trade-offs? So we're asking those kind of questions as part of this to make sure that we really optimize this, recognizing the customers' interest and their costs, but equally, what's the best we can do with the plant. The business has run, producing SC6 and a fixed grade on impurities for a very long time, and we haven't really asked the question. And so we are at least testing it, and we'll see what makes sense. No decisions yet, but it again shows you the kind of work that's happening. And the impact on productivity from these different streams is quite significant. So that's a quick round up on the operations, a bit more on Greenbushes. I turn it over to Kath and touch on the highlights on the financials, and then we can get into some Q&A. Kathleen Bozanic: Thanks, Ivan. Hi, everybody. Sales revenue was AUD 82 million. And as Ivan indicated, it was lower due to shipment timing from Nova. Nova EBITDA was up AUD 42 million, which included some value adjustments with the inventory adjustment in the month of December. The share of net profit from TLEA rounded to zero. Positive profit at Greenbush is being offset by losses at Kwinana, and this includes our share of capital expenditures we impaired that asset to zero. I also wanted to call out again that we're pricing [indiscernible] of spodumene. So next quarter, we'll see the benefit of the [indiscernible] higher. Underlying EBITDA improved to AUD 30 million, supported by [indiscernible] and some mark-to-market movements on investments that we have. We remain laser focused on cost control, but you'll note that -- or I'd like to note that this [indiscernible] had a one-off payment for our insurance in [indiscernible] quarter. Free cash flow was positive at AUD 13 million, and our balance sheet continues to strengthen with net cash increasing to AUD 299 million. I think that summarizes [ the results ]. Ivan Vella: Thanks, Kath. Well, look, we'll turn it over to Q&A. I'm throwing a different mic. Hopefully, the sound quality is better for you. But yes, we can open up and start taking some questions. Operator: [Operator Instructions] Your first question comes from Rahul Anand from Morgan Stanley. Rahul Anand: Just the first one for me is related to CGP3. Obviously, you've started commissioning and ramp up there. What is the rough time line of you achieving that nameplate, please, just so that we can test our numbers going forward on that one? And I'll come back with a second. Ivan Vella: Yes, in simple terms, 12 months, so the end of the calendar year. Rahul Anand: Got it. Okay. Perfect. And then just on the pricing, we basically had you achieved the price during this quarter for, I guess, the months of September, October and November. And even if I apply about a 5% discount, I'm still getting to a higher price. Now obviously, I acknowledge that the shipment timings might have been a key impact here. But is that the right way to think about pricing, September, October, November? And then based on when the ships basically are loaded and leave the port, basically, you're selling -- the timing is FOB basis. Is that right? Ivan Vella: Yes, it is. We can double check it and clarify. Yes, that's -- your understanding is absolutely correct. Rahul Anand: Yes, yes. Just because looking at our numbers for the price and also for consensus, the pricing was a tad bit weaker. So I just wanted to understand if we're kind of modeling that correctly. Ivan Vella: We'll double check. I mean we obviously do reconcile that, but we'll just make sure if there's something that's in there. Whether it's tied to the shipment possibly, I'm not sure, but we'll get back to you to make sure we've got the right inputs for your model. Rahul Anand: Excellent. And if I can just slip in one more, just around sort of Greenbushes going forward. Obviously, a strong lithium price environment, and you've got a downstream partner there at the mine as well. You've talked about the age of the mine and then also you're ramping up CGP3. And if I look at your sensitivity chart in terms of the sales volumes, you've obviously got about 2 million tonnes, which is what your current plans are. Have any conversations started as yet in terms of any future expansions at the mine and how they might look like in terms of underground, above ground? What type of hurdles you guys need to cross in terms of thinking about further expansions? Anything related to growth, I guess, in the Greenbushes space? Ivan Vella: Yes. Look, there's a lot going on there, but that's included in that broader life-of-mine optimization. The existing assets, so CGP1 and 2, we believe, can offer up a lot more productivity and throughput and production. So optimizing them naturally bringing CGP3 up to its full potential as well, so that's using the existing suite of capital that we've deployed. The tailings retreatment facility, we're working through that study presently. So we know what to do there as well. So there is a lot happening in that space to recognize and drive growth from the existing capital base and make sure we've got the best from it. CGP4 is in the mix. It's one of those things that sits in the schedule, and we've got to find where the optimum place for that is. We don't have that answer yet. There's a lot of moving parts in the review that we're doing. It's very significant. But as I get more detail step by step, we will feed it out. I guess I'm just as eager as you are, of course, to have that finished because it gives us a really clear new baseline to work against. And Rob and the team are working really hard. I think we'll see some of that come through in the reserve and resource update we do later in February. And you mentioned underground. So we're certainly looking at where that fits. And as we think about the overall resource, I've talked about pit wall as one lever that obviously drives a lot of value, but equally understanding which part of the resource we want to target through the open pit versus underground and then what the schedule and sequence of that is, again, work that's underway currently. Operator: Your next question comes from Levi Spry from UBS. Levi Spry: So do we have an updated expected date for the life-of-mine optimization? Ivan Vella: No. No. Sorry, Levi. I would love that, too. I'm pressing regularly. Rob's probably getting annoyed with me. But look, they're working hard. They're making progress. I think there are some areas where they dig in, they find things that they just have to do more work on technically to make sure that we're going to make the right decisions. So I will share a clear plan or at least target once we have one, but I just don't have that to offer up. Levi Spry: Okay. So in the absence of that, so can you -- maybe you need a big second half as CGP3 ramps up. Can you just remind us of its operating parameters, maybe tonnes grade recovery, so full speed by the end of the year? What does that actually mean? Ivan Vella: Yes. I mean you're talking about the whole grade curve and so on. I mean, we've given you the nominal tonnes, 0.5 million tonnes. It will run at, I guess, design feed grade is the same as CGP2, which is about 1.8%. And it will run to, I guess, test recoveries, we are targeting higher than that. So you've seen the results of CGP2 starting to rise, the team do more work on it. I guess our goal naturally from the ramp-up is that we don't have to go through that process that we actually are hitting our grade curve from the outset and then beating it. But I'm not going to promise that at this point. It's where the team is focused. I don't know -- is that what you're looking for? I mean all those numbers we've shared previously, I'm just not sure there's nothing new at this stage that's going to change things until we get further into the ramp-up. Levi Spry: Yes. Okay. So just pushing you further on that. So just confirming on Page 7 of the preso, the 2 million tonne rate. So do we take that as being the calendar year '27 run rate? Ivan Vella: No. That was an indication of margin of that volume. It's a capacity. It's not a mine plan that we've issued as guidance yet. Levi Spry: Yes. Okay. And so the next round of meetings with TLEA and the Tianqi for guidance. So when is the '26 budgets expected to be set? Ivan Vella: We've been through that now. They're getting signed off as we speak. So that's a '26 calendar year for TLEA too. And we'll then take that and build our guidance for the '27 financial year, obviously a bit closer to the time. Operator: Your next question comes from Hugo Nicolaci from Goldman Sachs. Hugo Nicolaci: First one on your comments around Greenbushes guidance, production is sort of tracking slightly below, CapEx also below. If I try and triangulate those 2 comments, is that just in terms of stripping at the mine, is that running a little bit behind, and that's why your strip ratio has sort of fallen in the last quarter and why both production and CapEx might be lower for the year? Ivan Vella: No, they're not all linked. So stripping will come down, and we talked about this example on it, I mean we'll see a material reduction we expect in our strip ratios through that, and that will trend down. Quarterly variations is more about weather impact through Q1, obviously have less of the pit access and availability. They're now fully open, so that will look different. But the team are looking at where they keep waste, how they manage waste, the grade and sweeping of those waste stockpiles. There is a lot of changes that they're working through presently. So I don't want to try and characterize these things as just one caused the change. In terms of the production, look, it's partly grade related, which was a bit better than we saw in Q1, of course, a little bit worse than we had in our plan, and that's just a normal reconciliation we're working through. Team are getting there. And the other bigger factor is, of course, just the way that CGP3 ramps up. That's really the key unknown. Hence, what we anticipated in our guidance in terms of that start-up, we're behind. Is it not recoverable? No, not at this point, but that's what we're going to need to see in the coming weeks or months, how that goes. That will give us a gauge to how the rest of this year looks and then obviously into the rest of the calendar year. So there's a few different moving parts, but certainly wouldn't tie them all together in terms of the production outcome for Q2. Hugo Nicolaci: Got it. In terms of the CapEx timing piece, then I presume those are all works that will still need to happen. So maybe that's more of a shuffling some of the CapEx into FY '27 rather than things no longer? Ivan Vella: Yes. I mean, as I've talked about in prior quarters, I mean, Rob has got a very tight handle on CapEx. He's been very prudent, and he is pushing back on it, which is good. But we're not in a place where we're ready to down Street guidance on it yet. We'll see how -- again, how that pans out now as they run up to CGP3. Obviously, some of those costs are capitalized until we get to commercial production. So there's a bit more to come, but I don't think you should read into that, that there's a major issue that's impacting production. Hugo Nicolaci: Got it. And then just sort of second one, I think dovetailing off Rahul's question earlier around the realized pricing piece. Can you just remind us what sort of volumes are going out on the technical grade piece at the moment? And if that's also a bit of a delta there in terms of that realized pricing? Ivan Vella: Look, it's very small. It wouldn't be material enough to realized pricing. And we're talking 50,000, 80,000 tonnes in a year. So it's pretty small, right. Hugo Nicolaci: Yes. Got it. Great. And then just last one if I can, sort of back on the IGO level, and you've highlighted, obviously, the step change in potential cash generation for Greenbushes at current spodumene pricing. We're 2 months through your current quarter, basically pricing setting. Does that then enable you to start thinking about dividends back out to IGO shareholders given you have that line of sight to cash flow when you're sort of at or above your threshold for excess returns already? Or is that maybe a little bit too early for February still? Ivan Vella: Yes, too early. I mean I think we've got a very clear capital framework at Windfield, which we use to manage dividends and obviously, the debt there, obviously there were some movements in the debt. We'll work through that. We'll pay dividends out of Windfield to the shareholders of TLEA in due course, and that will be done. But again, based on that framework, very well managed and controlled. And then the key discussion will be the TLEA as to what we want to maintain there in liquidity and what shareholders might then paid out. So certainly no discussions or decisions on that at this point. The first step is to see that cash really starting to flow through Windfield. Operator: Your next question comes from Kaan Peker from RBC. Kaan Peker: Ivan, just on that framework that you talked about with Windfield, $150 million of debt paid this quarter, but no cash distribution to IGO. What's the priority now further degearing versus distribution? And as CGP3 ramps up, is there a set level or cash buffer that's required before distributions resume? I'll circle back with the second. Ivan Vella: Yes, I pick up the last part first. So we've got -- I mean, there is a cash buffer we will hold. That's not tied to CGP3 or any specific part of the asset. It's just a part of our own capital framework, and that's being managed. Naturally, we'll look at then dividends versus the debt and the balance on that, and we'll take into account things like the U.S. dollar and forward views on cash generation and so on. So all those decisions go through a pretty structured process with the Board and the shareholders. And out of that, we'll let you know how that translates. Obviously, the way this market behaves is going to be relevant. Obviously, it's very buoyant right now. And certainly, all the signals are for a very strong Europe demand. But equally, we expect to see more supply come online [indiscernible] but other production as well. So I think before we get ahead of ourselves too far, we just want to sort of see how that washes through and take a view then on how best to allocate that cash to drive maximum value for the business. Kaan Peker: So just to confirm, it's degearing currently the focus? Ivan Vella: No. Yes, no, it's not a focus. That was -- this is part of CFOs managing in a day-to-day sense. We will naturally want to pay dividends and think about our debt. So they're both important priorities. Kaan Peker: Sure. Okay. Maybe secondly, on Kwinana. Conversion costs spiked materially this quarter. How much of that reverses with utilization versus how much reflects embedded cost issues? Ivan Vella: No, it's been largely impacted by the maintenance because remember, we don't capitalize anything. Everything is expensed. And obviously, the production volume is impacted through that period. So you've got a compounding set of elements there. I think the team are working to drive out cost. And as we're looking at and we're working through '26 budget for Kwinana. There is a lot of pressure on that as to depreciate and CapEx as well. So the team naturally are trying to find ways to drive better reliability and better performance, but do that with less costs as well. And I would not take Q2 as a market that says it's trending up or that's the run rate [ look out for ]. Operator: Next question comes from Matthew Frydman from MSG Financial. Matthew Frydman: Can I ask another one on the ramp-up of CGP3, which I guess you called out as the biggest factor in the softer guidance commentary you've given? Can you give us any more information on the specific issues that have been, I guess, based and dealt with so far that you mentioned earlier on the call, was there anything specific related to equipment or fee or people or anything? And then in your view, are there any sort of key risks or checkpoints now looking forward? Or is it just a sort of steady improvement over the course of the year? Ivan Vella: Yes. I'll share what I can, Matt. It's a good question. It's equipment related. So one of the mills needed some realignment. It's not an unusual problem. Australians you kind of go, well, how that not get dealt with earlier, but it happens. I've been through a few of those. We needed some resealing, again not fantastic because it's painful to do it. It's not a big issue. It's just logistically to get back in and fix some of these things just takes a bit of time. The good news was the team used some of that downtime when they were working through some of these issues to then just go back over motors, pumps, et cetera, and pump test and check and just really get confidence. I think they changed out previous pieces so that we can get a -- hopefully be more cleaner in next phase of the commissioning and ramp up. But for anyone who's been through these things before, there's plenty of unknowns. So you have to be very careful not to get too excited one way or the other. It's still pretty early in the process to sort of see how it behaves. I think the good news is you talk about the other things that could be a factor. So fee is fine. That's all good. People and capability, we've got a great team there, lined that up well. [ Paul ] who's the project director, got an integrated team for commissioning. Strong team in place. So we feel comfortable with that. We've got great support from the vendors. We've got access to all the support equipment that we need. So there's no big risk there that we're sitting here deeply worried about. But I just think it's way too early to call or to get a real sense. I think by the time we can get to our half, I'll get a better read on how things are going. at this point, I'm pleased we've got better half, they're starting to basically run the plant and actually start to see what the recoveries are, how it's behaving and obviously look at the tuning in the reagents and all of the long steps you take in that first month or so from start. Matthew Frydman: Okay. That's helpful. Then secondly, you -- as you called out, put some additional numbers in the presentation there around some of the recent productivity improvements at Greenbushes, improved truck utilization, improved material movement. And you suggested that, that will flow through into the cost line over time. Obviously, there's a lot of moving parts that go into the final cash cost number. But I guess I'm wondering, in isolation, are you able to maybe put some dollars around some of those mining productivity improvements? I mean what's the goal for where you think you can get the cost of material movement with some of this productivity improvement? Is it $10 a tonne? Is it $7 a tonne or whatever the number is from a ballpark perspective, what's the team working towards? I suspect you'll tell me that some of that will come out in the life of mine optimization piece. But yes, just wondering if there's any sort of high-level thoughts around that at the moment. Ivan Vella: Yes, it will. I mean I don't want to give you a number yet. I mean, that is a conversation, of course, when we go through budgets and we're pressing the team. They're a bit gun shy to offer up in the first year because it's still a work in progress. But we're starting to see a profile through '26, '27, which really does show some substantive improvements in unit costs on those underlying activities, and I think that will naturally flow through. We're also, as every mine does volume [ rate ] decline. So some of it is eroded indirectly through that or offset. But the goal is net-net, we're actually beating that and both through increased throughput or production and also then the just more efficient work through less stripping and so on that we're actually continuing to strengthen our position as the lowest cost lithium rock producer in the world by a long shot and just keep on consolidating. So Rob's -- I think I've mentioned before, sort of put that broader goal out there to be the lowest cost lithium units in the world, and there's still a gap to the very best brains out there, but it's intruding range. So I think it's a good target and a good challenge for the team and the team can say, how could you run this mine differently and what needs to be true for us to start the overall cost performance and that's not going to come in a quarter or 2 of course. I guess what I'm trying to do is to the extent I can share information as we do, [ beat it ] out step by step to give you a greater insight and picture on improvements and then also give you some of those underlying productivity and performance numbers so that you can update your view of the asset. Matthew Frydman: Waiting for the study outcomes with [indiscernible]. Operator: Your next question comes from Austin Yun from Macquarie. Austin Yun: Just one quick question. Yes, most of the questions have been asked already. So just one on the base metal strategies. I think previously, you were talking about outside of lithium, you are looking at other early-stage opportunities. Just conscious that given this EPS, seems like a windfall of cash coming from the strong lithium market, how does that change your thinking of the exploration of the other opportunities? Could we see some capital being allocated to that part in addition to shareholder returns and debt repayment? Ivan Vella: Look, Austin, it's a great question. No, it really doesn't change. I mean the criteria that we've applied since I started 2 years ago, a lot of discipline, has been a big part of this real clarity around kind of returns that we're looking for from any growth needs to be in that ballpark around Greenbushes, we don't want to heavily dilute our business and trying to hit Greenbushes, as you can imagine, that's a very high bar. And so we can allocate capital first there and actually that's going to be the most accretive and most sensible thing to do, which we're focused on dealing with things that are a drag on our returns, i.e., Kwinana, which we're working through, we've been clear about that. And then to add something to it. I mean, it's difficult, hence, why we've been continue to be very disciplined. If we saw something that we felt would deliver appropriate returns, sure. The lithium price, to be honest, or having said, and the translation of that into cash doesn't really change that decision. Because we have much more cash available to us, we're not going to be more eager to make a decision there. It will be on the same criteria regard. Arguably, the best time to be doing things if you saw it was 12 months ago or 8 months ago. So it comes back to our [ own ] value, and we've got a very high bar, and that's good and bad. It's an absolute privilege to be part of the custodian of Greenbushes and it just means that our growth has to be very, very focused. That's probably all I can say at this point, Austin, but it's more of the same. Operator: Your next question comes from Daniel Morgan from Barrenjoey. Daniel Morgan: Just a simple one really. Grades at Greenbushes, I think if I'm hearing correctly, they're back above 2%. And so therefore, the implication is like just putting CGP3 to the side, not stripping that out from this question. We should expect a material lift in production for the next couple of quarters from the existing business, not CGP3, correct? Ivan Vella: Yes. Well, you'll get a lift, yes. I think it's -- I mean, not a best rate clearly equally interruption. We had a pretty good quarter, weather-wise, some rain, later than expected through Q2, but Q1 is always going to be a challenge. So there's naturally some of those impacts, [ freighted ] impact. And then the productivity is the other piece, which I know Adam and his team are working very hard on. I'm pushing and expecting to see them to deliver results through all of that hard work as well. Operator: There are no further questions at this time. I'll now hand back to Mr. Vella for closing remarks. Ivan Vella: All right. Thank you. Look, it's nice to speak with you guys. Hopefully a break before the next one. I won't say too much. I mean just to recap, I think Nova was really pleased, as I said, safety, production cost is hitting the mark. This is an operation that we focus on. It's relatively small and simple, but it's a signpost of how we want to bring our capability to operating a mine. And I think all credit to the team, they've done a great job there and set this year up very well. So that's great. Unfortunately, it's only a year to go, not another 10 is what it is, so I'll manage that through. Greenbushes, a better quarter. The big focus is CGP3. Naturally, we're very pleased to be ramping that up into a lifting and buoyant market. It's fantastic, and there's a huge amount of focus to make sure that smooth. And ideally, we meet all of our plans. That's always going to be the target. But at this stage, it's early, you just need to back the team and support them as they get through that work. All that said, I mean, this is the time when Greenbushes really shines. This is the period of lifting price, a buoyant market when you see the very best hard-rock lithium asset in the world, turn it on more production and a whole lot more margin. So we're pleased to be part of that and continue to work with the team to improve this performance. Thanks for everyone's attention and support, and we look forward to talking to you soon at the half year results. Operator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
David Mulholland: Good morning, ladies and gentlemen. Welcome to Nokia's Fourth Quarter and Full Year 2025 Results Call. I'm David Mulholland, Head of Nokia Investor Relations. And today with me is Justin Hotard, our President and CEO; along with Marco Wiren, our CFO. Before we get started, a quick disclaimer. During this call, we will be making forward-looking statements regarding our future business and financial performance, and these statements are predictions that involve risks and uncertainties. Actual results may, therefore, differ materially from the results we currently expect. Factors that could cause such differences can be both external as well as internal operating factors. We have identified such risks in the Risk Factors section of our annual report on Form 20-F, which is available on our Investor Relations website. Within today's presentation, references to growth rates will mostly be on a constant currency and portfolio basis, and other financial items will be based on our comparable reporting. Please note that our Q4 report and a presentation that accompanies this call are published on our website. The report includes both reported and comparable financial results and reconciliation between the two. In terms of the agenda for today, Justin will go through our key messages from the quarter, then Marco will go through the financial performance, and then we'll move on to Q&A. With that, let me hand over to Justin. Justin Hotard: Hello, everyone, and thank you, David. Overall, our fourth quarter performance was in line with our expectations, reflecting disciplined execution across the business. Net sales grew 3% in the quarter to EUR 6.1 billion, with operating profit of EUR 1 billion and free cash flow of EUR 0.2 billion. For the full year, net sales were EUR 19.9 billion and operating profit was EUR 2 billion, slightly above the midpoint of our guidance. Free cash flow conversion of 72% was also consistent with our guidance. Stepping back, 2025 was a foundational year in repositioning Nokia for long-term value creation. We strengthened our portfolio with the acquisition of Infinera, simplified our operating model and set a clear strategy at our Capital Markets Day to focus the company on the areas where we see opportunities for differentiation, scale and sustainable market leadership. Now to give you a bit more detail, let me first turn to Network Infrastructure. In the fourth quarter, net sales grew 7%, driven by optical networks, which grew by 17%. Order intake was solid across both optical and IP networks with a book-to-bill above 1, supported by particularly strong demand from AI and cloud customers. For the full year 2025, we delivered EUR 2.4 billion in orders from AI and cloud customers. This reinforces our view that optical networking will become an even more critical part of the infrastructure to support the AI super cycle, and we are investing to capture near-term demand, while maintaining a long-term perspective on the opportunity. In Optical, our 800-gig ZR and ZR+ pluggable products are shipping with initial units performing well in the field. We now have multiple design wins and are supplying into scale deployments. Our focus is on ramping production to meet the strong demand we see in the market. In IP Networks, we made progress on our expansion into data center switching. We launched two new products in the quarter, the 7220 IXR-H6 switching platform powered by Broadcom's TH6 and our Agentic AI solution for event-driven automation management, which reduces network downtime by 96%. We also secured a design win for our next-generation data center switching platform. These are encouraging steps, and we continue to believe revenue will ramp over time as we expand our presence in this rapidly growing market. In our mission-critical enterprise customer segment, book-to-bill was well above 1 in Q4, supported by a growing pipeline from both new and existing customers. Turning to Fixed Networks. Performance was stable year-on-year in Q4. As discussed at our Capital Markets Day, we are deprioritizing certain customer premises equipment products where we do not have meaningful differentiation and which dilute margins. In Q4, our fiber OLT business grew 16% year-over-year, offset by declines in these areas, I just referenced, that we are deemphasizing. This resulted in overall flat performance for Fixed Networks. As I announced at our Capital Markets Day on January 1, we brought together core software, radio networks and technology standards to form our new Mobile Infrastructure segment. This structure is designed to sharpen accountability, improve profitability and position the business for long-term technology leadership. Core Software, formerly a part of Cloud and Network services is leveraging our differentiated cloud-native core network stack to grow faster than the market and continue improving profitability. During the quarter, we won a 5G core deal with Telia and announced the collaboration with Bharti Airtel on Nokia's Network as Code API platform. We now have more than 75 partners using the platform, including 43 telcos. Radio Networks, formerly a part of Mobile Networks, focused on disciplined execution in a largely stable market. We continue to invest to deliver 5G advanced and O-RAN solutions while innovating to establish a longer-term leadership position in 6G and AI-native networks. A key pillar of our strategy is co-innovation. And in Q4, we announced our partnership with NVIDIA. We continue to remain on track to begin trials and proofs-of-concept on AI-RAN later this year. We also announced a market share expansion deal with Telecom Italia, along with contract extensions with Telefonica Germany and SoftBank. Technology standards remains focused on securing long-term monetization of Nokia's patent assets. We signed several deals in Q4 and continue to maintain a contracted net sales run rate of approximately EUR 1.4 billion. At our Capital Markets Day, we also announced the creation of Nokia Defense, a new incubation unit that will serve as the central R&D hub and go-to-market for our defense portfolio. Our priority is to deliver defense-grade solutions based on Nokia's Mobile and Network Infrastructure technologies for Finland and other NATO countries. Nokia Defense also includes Nokia Federal Solutions in the U.S. and includes the technology we acquired from Phoenix Group in 2024. Based on feedback from customers, we see growing demand for our 4G and 5G technology in military environments, both for national security and tactical applications. This is an area where we are continuing to invest, and we will share updates as we make further progress. Finally, in Q4, we closed the transaction to take full ownership of our joint venture in China, Nokia Shanghai Bell. This gives us greater operational flexibility, and we will bring it into full alignment with Nokia's global operating model. As a part of that integration, we expect to deliver approximately EUR 200 million of run rate cost synergies with integration costs of approximately EUR 350 million to EUR 400 million over a period of 24 to 36 months. Turning to '26. Looking ahead, our focus is on disciplined execution to capture growth in AI and cloud and increase efficiency while we're building a high-performance culture across Team Nokia. We now have fewer, clearer priorities, a simplified operating model and a strategy we are executing with speed and accountability. Network Infrastructure remains our primary growth engine, particularly Optical and IP Networks, where we see strong structural demand. In Mobile Infrastructure, our focus is on gross margin and efficiency, while we continue to invest in our portfolio for competitiveness and market share in 5G and to transform the business for long-term success in areas such as AI native networks and 6G. From a financial perspective, in 2026, we are targeting an operating profit in the range of EUR 2 billion to EUR 2.5 billion. At our Capital Markets Day, we outlined a series of KPIs to illustrate how our strategic direction translates into financial outcomes. Let me revisit those and what we expect in 2026. Our first KPI is to deliver 6% to 8% compound annual growth in network infrastructure between 2025 and 2028 on a constant currency and portfolio basis and 10% to 12% in the combined Optical and IP Networks businesses. In 2026, we expect growth rates in both cases to be in line with these long-term targets. As expected, the product prioritization decisions we have taken will limit growth in Fixed Networks, while we expect growth in our fiber OLT portfolio to continue to occur due to strong underlying demand. Our second KPI is to expand Network Infrastructure operating margin to 13% to 17% by 2028. This is compared to the 9.5% achieved in 2025. In 2026, we expect measured margin expansion as we ramp new products and continuing investing in the long-term growth opportunity we see in the business. The next two KPIs relate to Mobile Infrastructure gross margin and operating profit. In 2026, we continue to expect some top line headwinds from prior contract losses, but otherwise, a stable market environment. Our focus is to continue to target at least EUR 1.5 billion in operating profit, consistent with our performance in 2025. As announced at our CMD on January 1, we have moved four businesses into a new unit called Portfolio Businesses. This includes our Fixed Wireless Access customer Premises Equipment, and Site Operations businesses, both from Fixed Networks, our Microwave Radio business from Mobile Networks and the Enterprise Campus Edge business from Cloud and Network Services. In 2025, these businesses generated net sales of EUR 850 million and an operating loss of EUR 97 million. In 2026, our target is to conclude a future direction for each of them. We currently assume a lower operating loss in 2026 versus 2025. For Group Common, we expect costs of approximately EUR 150 million in 2026 compared with EUR 190 million in 2025. Overall, we see 2026 as a year where we will make meaningful progress towards our long-term targets. With that, let me turn over to Marco to walk you through the financials in more detail. Marco? Marco Wiren: Thank you, Justin, and hello from my side as well. As Justin mentioned, we delivered a fourth quarter, which was in line with our expectations and guidance. Net sales were EUR 6.1 billion, that's up 3% on the prior year. Gross margin was 48.1%, an improvement of 90 basis points, driven by improvements in Mobile Networks and Cloud and Network Services. Operating margin was 17.3%, and this is 90 basis points below the prior year, impacted primarily by increased investments in growth areas, including the Infinera acquisition. We generated EUR 226 million of free cash flow and ended the quarter with EUR 3.4 billion of net cash. Let's turn to the business groups now and starting with Network Infrastructure, where net sales grew 7%. In quarter 4, AI & Cloud customers accounted for 16% of our net sales and 30% of Optical Networks. The book-to-bill for the overall segment was above 1 with strength in IP and Optical Networks. Gross margin declined by 80 basis points to 44.6%. Operating margin was impacted by lower gross margin, along with the increased growth-related investments in R&D and the costs associated with the acquisition of Infinera. And then, let's go to Cloud and Network Services, where we saw a decline by 4% in the quarter, and this was mainly due to a different phasing of revenue recognition this year. The business delivered 6% of net sales growth for the full year 2025. Gross margin increased 650 basis points, partly as a result of the reversal of a provision of EUR 37 million in the quarter. So even without this benefit, we would have seen an improvement in gross margin. Operating margin also increased by 470 basis points with improvement in gross margin supported by reduced operating expenses. And then Mobile Networks, net sales increased by 6%, and this was driven by growth in Middle East and Africa, Japan and Indonesia. Full year net sales were stable and consistent with our expectations. Gross margin was 40.1% due to more favorable mix and lower indirect costs. For the full year, gross margin was 37%. Operating margin was 11.3% in the quarter, reflecting the higher gross margin as well as the impact of lower operating expenses benefiting from the ongoing cost saving program. In Nokia Technologies, net sales declined by 17% in the quarter. Catch-up sales in this quarter were lower than the previous year, and we signed several new deals in quarter 4, and our annual net sales run rate remains at approximately EUR 1.4 billion. Operating profit was impacted by a EUR 20 million impairment charge, and this is related to a prior asset purchase, which we deem to have minimal future value in the context of our product portfolio. Now let's look at the net sales by region. And as you can see here, in North America, we saw strong growth in Networks Infrastructure, whilst Cloud and Network Services and Mobile Networks declined. In APAC, Japan and Indonesia grew, while we saw declines in India and Greater China. And excluding Nokia Technologies, Europe grew 4% with strength in Network Infrastructure. Middle East and Africa grew in both Mobile Networks and Network Infrastructure. And then regarding cash, we ended the quarter with a net cash position of EUR 3.4 billion and the free cash flow was positive EUR 226 million and ending the year with a conversion rate of 72%, which is within our guided range of 50% to 80%. And in the quarter, cash increased as a result of the NVIDIA equity investment, which was EUR 0.9 billion. And we also completed the acquisition of the NSB shares, which impacted cash by EUR 0.5 billion. And this equates to 50% of the net cash in the joint venture, which we paid to the other joint venture equity owner and was consistent with the liability we had already recorded on our balance sheet. We now fully own our operations in China, and that will give us a greater operational flexibility going forward to manage the business, just like Justin mentioned. And today, we have also published recast financials based on the new operating structure, we have implemented at the start of the year. And there are a couple of things that I wanted to highlight to help you understand these figures. You will see some differences in the net sales compared to our prior reporting, reflecting those units being moved into the new Portfolio Businesses segment, as Justin explained earlier. In Group Common, the recast cost base for '25 is EUR 180 million as we have reallocated approximately EUR 193 million of the cost to the primary operating segments to better reflect the nature of these costs. And as discussed at our Capital Markets Day, the operating segments are expected to drive efficiencies in the organizations to mitigate those costs over time that we have transferred to them. However, this reallocation have a short-term impact on the segment profitability in NI and MI. And finally, Justin already introduced our new 2026 financial outlook, but I just wanted to share some comments on additional modeling assumptions for this year. For quarter 1, historic seasonality would imply a 24% sequential decline in our net sales, excluding Nokia Technologies. Considering the above normal seasonality we've seen in quarter 4 2025, we currently expect quarter 1 2026 net sales to decline somewhat more than normal seasonality would imply. We also assume the operating margin to be only slightly better than the prior year. Then for the full year of '26, we expect comparable financial income and expenses of between positive EUR 50 million to EUR 150 million. And we assume a comparable income tax rate of around 26% and 27%, with a slight increase related to the regional mix of profit generation. Cash tax outflows are expected to be approximately EUR 500 million. And we are planning for CapEx of between EUR 900 million and EUR 1 billion as we invest in additional manufacturing capacity for Optical Networks, along with some real estate renewal projects. And finally, we expect free cash flow conversion of between 65% to 75%. With that, let me hand it back to David for Q&A. David Mulholland: Thank you, Marco and Justin, for the presentations. Alicia, could you please give the instructions for the Q&A session? As a reminder and as a courtesy to others in the queue, if you could please limit yourself to one question and a brief follow-up. Alicia, please go ahead with the instructions. Operator: [Operator Instructions] I will now hand the call back to Mr. Mulholland. David Mulholland: We'll take our first question today from Alex Duval from Goldman Sachs. Alexander Duval: A couple of quick questions. Firstly, on Optical, it grew 20% in the quarter, but it seems you're saying it will only grow 10% to 12% in full year '26. You referenced good order momentum as well as a solid percentage contribution from AI. So I wondered to what degree your guidance for the segment reflects conservatism? And secondly, as a brief follow-up, you're guiding to a somewhat sub-seasonal trend into the first quarter for the group. I wondered to what degree that's just normalization of a better than seasonal 4Q or whether there are other factors to take into account? Justin Hotard: Yes, sure. So Alex, good to hear from you, and let me answer your first question. You're right. We obviously grew 17% in Q4 on Optical Networking. When you look at our Optical Networking business, we are being balanced on the 10% to 12% across IP and Optical Networking, as you said. What I would also emphasize is, we are still transitioning from a base that was, was still very telco-centric in '25, so 70-30. And if you think about where we were before that, certainly before the Infinera acquisition, significantly telco-centric. So we're building off that base. We're excited about the order momentum. And then, of course, in parallel, we're working to scale production. So, I think as you and I have talked about, we want to be disciplined in our execution and our predictability. And so therefore, that's why we've guided the way we have. But I continue to be very optimistic about this business and the long-term opportunity for some of the factors like scale across networking, the demand we're seeing in overall fiber, some of the recent announcements in this area. So, I think this is a place where absolutely, it's a strategic priority for us, absolutely, it's a focus of capital allocation. And I believe it's a market that will be a significant player in for many years ahead, but balance on where we are today given the starting point that we had, which is really only three quarters deep in terms of aggressively pursuing the AI & Cloud segment. Marco Wiren: And for the second question, if you look in the past as well, when we have had a very strong and higher than normal seasonality in quarter 4, we easily see a larger decline as well. And this is a little bit based on as well how our telco customers are buying. And this is more, I would say, visible in mobile network area and also the telco customer base that when they have had a lot of purchases in quarter 4 and usually the start of the year, a little bit slower, and that's why we guide that we see a somewhat lower than what we normally see. David Mulholland: Thank you, Alex. We'll take our next question from Richard Kramer from Arete. Richard Kramer: Justin, you're pledging to grow CapEx to really record levels of EUR 900 million to EUR 1 billion. Do you have visibility in your order book of Optical or IP orders? And or is leveraging this investment require additional unannounced wins with hyperscalers? And where are you in that sales cycle? And I have my follow-up. Justin Hotard: Yes. And obviously, Richard, when you think about CapEx investments in manufacturing in Optical, particularly semiconductor manufacturing, as you're well aware, I'm sure, this is not something you invested in a year and you start generating returns. So this is something where we're looking at the long-term trends. And we've got a lot of confidence in the long-term market trend supported by the near-term demand that we see. Richard Kramer: Okay. And for Marco, we saw EUR 300 million of restructuring in '25 and you're guiding to another EUR 450 million in cash outflow. Can investors look forward into 2027 where you think these very heavy impacts on reported versus comparable earnings drop to immaterial revenue levels? Marco Wiren: Yes. I think as we announced already in '23 October that we have this cost-cutting program and efficiency program. And there, we laid out also the different years until '26 where we have this restructuring cost. And we guided by that time that we expect cost savings between EUR 800 million to EUR 1.2 billion, and we said that also the costs to generate these savings will be about the same and also the cash flow is following that. And usually, the cash flow considering that we have more footprint in the European area. And that's usually -- there's delays on acting on those different cost actions that we are doing. And this is the reason why we see that '26 is more heavier on the cash outflow side as well. And -- but we are following the plan well according to what we have laid out earlier as well. David Mulholland: Thanks, Richard. We'll take our next question from Simon Leopold from Raymond James. Simon Leopold: First thing, I wanted to ask about is particularly within the optical space scale across projects are new variant for data center interconnected. Your peers have discussed these projects. Can you elaborate on Nokia's position and how you envision this opportunity developing over the next few years? And then I've got a follow-up. Justin Hotard: Yes. Sure, Simon. Good to hear from you. Just a couple of things here. One, this is a space that we think is a part of the long-term trend on optics. I mean, if you look at the long-term demand on optics, think of the drive around scale across right now as being one of the most significant near term. But obviously, then you have speeds, right? We've gone through the 400- and 800-gig transition very quickly. We're ramping on 800-gig multiple pluggable wins, as we've talked about, a lot of active customer conversations on that space, continued momentum in the market in terms of what we see. But then we expect that 1.6 and 3.2 will come. And when you look at that scale across is the tailwind for both the technology transitions and the demand. And then, of course, over time, we see scale out increasingly be an opportunity for coherent optics. So that's the tailwind we see. The other thing I would just reference as you think about this is routing for us, in particular, scale across is a tailwind for. So switching is much more about the data center racks, the spine-leaf architecture. But when you think about routing, that's another tailwind. But key thing for us right now is spending the time doing the work, co-developing, co-innovating with our customers, making sure we're scaling production capacity to take advantage of this opportunity over the long term. And fundamentally, what I see is a much more mature and larger optical market, driven by the AI infrastructure build-out than we've seen in the past. And I think a much more mature in ecosystem as well. So there's a lot of work to do for us as an ecosystem and as an industry, but I think a much bigger market, and that's absolutely why we're investing into it and why you see us leaning in on capital both in terms of CapEx, but also R&D capital in the space. David Mulholland: Do you have a follow-up, Simon? I guess we'll move on. We'll take our next question from Sami Sarkamies from Danske Bank. Sami Sarkamies: You had 5% growth at IP Networks in '25. What needs to happen for this to step up? Are the bottlenecks related to product offering, customer logos or design wins? And then on timing, how much time do you think we need for improvements. Could it happen already this year as you have signed new customers during last year? Justin Hotard: Sami, thank you for that. Yes, I would just say a couple of things here. First of all, we've talked about the fact that while we were well positioned post the integration of Infinera to go after the Optical Networking platform, this is a space where we've been even a little further behind. So it's been a big focus for me as we started -- as I started. And obviously, for David, as he took over. And in fact, we just announced earlier this week that we have a new Head of IP Networking, Greg Dorai and Vach Kompella, who, for those of you that have been around this industry, know Vach, is an industry legend, he's retiring. But part of that in bringing in Vach's successor was looking for someone that had deep data center experience. So the net of all of that is, as I said at CMD and even in some of our recent discussions with investors, this is a space where I think it's going to take us a little bit of time to see the growth. But I'm really, really pleased with the design win we had in Q4 that I referenced. I'm pleased with the order backlog. But I think this business needs a little bit of time to ramp. Absolutely a big tailwind as a part of the AI and data center build, and encouraging progress on mission-critical where we play in select vertical markets that value scale, security and availability, obviously, things we bring from our legacy in this space in telcos. David Mulholland: Did you have a quick follow-up, Sami? Sami Sarkamies: Okay. I'm wondering on the CapEx outlook, is this going to be like a multiyear undertaking, if you think about higher CapEx or just like 1 year thing? Justin Hotard: Yes. I think what we'll continue to do, Sami, on this, and I'll let Marco comment is, we're always going to show investment against the opportunity we see in the market. So I would look at this as in line with supporting the guidance we've given you for now and really in line on Optical Networking growth as we see it. So obviously, that's -- in the future, if we saw a different growth potential in Optical, we might give you a different view on CapEx. Marco, anything to add? Marco Wiren: No, I -- just building over what you said that we definitely see opportunities, and that's why we believe that it's the right timing to invest more, to capture those opportunities and secure also that we have manufacturing facilities and capacities that are needed be able to deliver those demands that we see that especially in the optical side are increasing. But still, it's not so that there's a huge CapEx investments compared to other data center investments. So these are still quite reasonable investments, and we believe that there's a very good return on those investments as well. David Mulholland: Thanks, Sami. We'll take our next question from Artem Beletski from SEB. Artem Beletski: So I would like to pick your thoughts regarding recent news coming out from Brussels. So, what comes to this Cybersecurity Act, the Digital Network Act. So how do you see those proposals impacting your business outlook, what comes to upcoming years? Justin Hotard: Look, I think on the Cybersecurity Act, the CSA, and the Digital Networks Act, DNA, look, first of all, we're pleased with this. I mean, this is -- these are some of the things we've been calling for. Certainly, since I started, I've been very vocal about. I think the key thing on the Cybersecurity Act around trusted networks is seeing a few things. One is the clarity on replacement schedules. I also think it's important, as we've said, that there's support for network operators, this kind of replacement is a big lift. Now from a supplier perspective, this is well within our capacity. If you think about the pace at which we've deployed out -- deployed networks in India or even in North America in terms of upgrades, the network upgrades that are required in Europe are something well within our scope and capability and manufacturing capacity. But it's a complex technology project. So, we think this is something that we recognize there's complexity and support. And our view is the urgency is now that we need to continue to move. And certainly, for our customers, they need to have clarity because where we're -- the platforms we're investing in today will be all the things that need to become 6G ready in the near future. And if you think about what we talked -- we're talking about AI-RAN as an example of that, that is a great example of where if you buy an AirScale platform today, it's going to be upgradable to AI-RAN as we launch that platform. And so that's the kind of opportunity we're making the investment decision now and having clarity now as an operator. As you run that project over a 2- or 3-year period, we think is particularly important, and that's why it requires support because, obviously, it's not in anybody's budgets to run an accelerated CapEx program amongst our customers. But it's also not just radio. We tend to focus on that. This is actually a really important opportunity for fiber networks and access networks and just as important, because fixed access networks are critical for consumer, they're critical for business. And then, of course, there's the transport networks and all the underlying infrastructure. So this is a pretty significant step. We're very pleased with it. I also think when you link it to DNA and you look at some of the things around spectrum harmonization and you look at the opportunity in Europe, and this is something that I've been certainly vocal about, I was talking about last week in Davos is, this is an opportunity for Europe to reshape its long-term competitiveness, its long-term competitiveness in technology, its long-term competitiveness in infrastructure and innovation and ultimately, national security, sovereignty and economic competitiveness. So I think this is really, really important. And you can just look back at the Internet super cycle to see where the winners in the Internet Super Cycle came from as a result of significant infrastructure investment. When you think about Europe and AI, Europe is incredibly well positioned. It's well positioned because you've got a great industrial automation technologies, obviously, manufacturing industries like automotive and you've got great talent in Europe. And obviously, as being our largest talent base in our -- in the company, we want to see more investment here so we can continue to support the talent here, building technology for Europe to support Europe and see a broader ecosystem develop. David Mulholland: Did you have a quick follow-up, Artem? Artem Beletski: Yes. I would like to ask a follow-up on Optical Networks. And could you maybe comment whether you see some supply-related constraints when it comes to growth? I recall from CMD, so you have been commenting about order growth year-to-date a bit more than 40%, and we do understand that the market fundamentals are really robust on that front. Justin Hotard: Yes. Look, I think it's a great question, Artem. So first of all, obviously, if you think about this broader ecosystem, the one thing I would remind everybody is the consistent thing in the AI data center build, AI infrastructure build has been there have been constraints. There's been power constraints. There's been connectivity constraints. There's been computational silicon constraints. There's news of memory constraints right now. One of the reasons I think when we look at this, we don't see the same dynamics of the telco and Internet bubble that you saw in the late '90s is because this infrastructure build has been consistently constrained. So what we see is, we do see supply constraints that's normal with this kind of scale and build. And obviously, part of our investments is not just in our own capacity but also in supporting the ecosystem and building its capability and capacity. And again, if you look at Optical, Optical is not nearly running at the kinds of volumes that you'd see that the microelectronics industry or the traditional computational electronics industry because it doesn't have the same consumer volume off the side of it that's driven a lot of the automation and capacity that's existed. So, all of these things need to be invested in. And again, this is why we think that the market has great long-term potential given the technology, but also a lot of ongoing investment that we and the entire ecosystem need to cultivate to make sure we can deliver on the long-term success. And it's part of why we think we're favorably positioned with our indium phosphide technology and manufacturing facility. David Mulholland: Thanks, Artem. We'll take our next question from Daniel Djurberg from Handelsbanken. Daniel Djurberg: Yes, on the Mobile Networks, it was clearly better than expected, and some decrease primarily due to North America. And can you comment a bit on North America? Are we comparing apples-with-apples now with regards to AT&T loss? And also do you see any possible inroad again with AT&T with the 600 build, for example, with the FirstNet upgrades? Any comments would be grateful. Marco Wiren: Yes. Thank you, Daniel. Just like you alluded to as well, in '26, we will see some headwinds from North America in the Radio Access Network side, considering the customer losses that we had, and that will have an impact. Otherwise, I would say that in market-wise, we see quite stable market in the Radio side. It's -- where we see growth is AI & Cloud in North America is extremely positive brands there right now when it comes to that segment. Justin Hotard: Let me take AT&T. First of all, and just to remind everybody, AT&T is a very, very large, strategic and important customer for us. They are a customer for us across core networks, fiber access. So if you think about NI and MI, they're a very important customer for us and a very strategic one, given the investments that they're making today and their networks. And we've talked about a little bit of that in the past as well. Look, from my standpoint, as I think about customer opportunities and market opportunities, we want to pursue every piece of profitable market share that we can. And if we're honored to be a part of their network in the future, we'll absolutely take that opportunity. Right now, our focus is on delivering on our commitments to them and to all of our customers. And as we said in the restructuring, as you heard from Raghav at CMD, becoming an easier company to deal with from a customer perspective, particularly for our telcos where we need to do more to be working with them around collaboration, co-innovation and making sure that we help them deliver the simplification and the operating leverage they need in their networks to deliver on their strategies. David Mulholland: Thanks, Daniel, did you have a follow-up? Daniel Djurberg: Yes. Perhaps just a short one on the book-to-bill on Optical and IP Networks being positive still. Can you give some more comments on those on a separate note, i.e. comparing them, the relative magnitude or something? Justin Hotard: Each one is good. Each one is healthy on the book-to-bill. If you put them together, they're good. If you split them, they're good. We're not blending. David Mulholland: Thanks, Daniel. We'll take our next question from Terence Tsui from Morgan Stanley. Terence Tsui: I had a question around the operating guidance for the full year, please, of EUR 2 billion to EUR 2.5 billion. I would love if you can provide some color around the EUR 500 million guidance range, please. You noted that 2025 was slightly ahead of the midpoint. So I'm just interested to learn about reasons to be a bit more optimistic, and reasons to a bit cautious in your thinking. And then the quick follow-up relates to Q1 guide. What FX are you assuming there? Are you using the spot of USD 1.2? Justin Hotard: Marco, do you want to take that? Marco Wiren: Yes. When it comes to the guidance, EUR 2 billion to EUR 2.5 billion, there's a couple of things that we mentioned also at the Capital Markets Day that we will have some new product launches during this year. And always when you have new product introductions, there will be an impact on gross margin as well. And that's what we see. But of course, these product introductions are very important for our longer-term journey and we see very good market opportunities going forward. When it comes to the same opportunities, we also -- just like we have said earlier, we invest in more in our opportunities in AI & Cloud, which will have an impact on the OpEx as well. But we definitely see more opportunities going forward definitely in the AI & Cloud market side. And that's why it's important that we prepare ourselves for those opportunities. But also, this is a transformational year. We are still doing a lot of changes and securing that we are very lean and mean and efficient machine and capture those opportunities in the market. Justin Hotard: Yes. Maybe I'll just add, Terence, I think when you think about the range, right, obviously, what we want to be is disciplined around our guidance and our execution and much more predictable. And I've talked about this quite a bit. Marco has talked about it quite a bit. But that -- the recognition that we are also in two very different business cycles right now, tremendous growth in AI & Cloud, flat market in telco, emerging opportunity in defense and mission-critical enterprise. So, recognizing that the businesses are in a different cycle, the markets are in a different cycle, that's part of the balance of making sure that we're giving you visibility. And obviously, should we see something that changes our visibility, we'll update it. But we want to give you as much visibility as possible and make sure that when we lay out targets, we're consistent, we're predictable and much like we've done for two quarters, we get into a more consistent habit of that. And I'd just remind everybody that, that hasn't been our history, but it's a big part of where I would like to see us go as we go after these growth opportunities to make sure that we give you the visibility and we go do what we say we're going to do. Marco Wiren: The currency rate, we have USD 1.18 in our estimate, and this is based on what we see right now. And if there's any changes in the currency, we will update as well. But remember that we have about at least half of the U.S. revenues, for example, U.S. flows are hedged for the full year. So if we just look a little bit the sensitivity, before hedging a EUR 0.02 move on the USD versus euro would imply an operating profit of EUR 50 million change. But as I said, about half of that is hedged. David Mulholland: Thanks, Terence. We'll take our next question from Felix Henriksson from Nordea. Felix Henriksson: Yes. Partly relating to the previous question on supply shortages. Are you, sort of, expecting to encounter any headwinds from these rising memory prices on your gross margin? And can you just provide some color on your cost exposure to this trend? Justin Hotard: Yes. I would just say, overall, when you think about our bill of materials at a macro level across the company, this is not a huge part of our bill of materials. It's a portion, but it's not a material portion. Second, in terms of supply and commitments, I think our focus right now is on making sure we continue to secure the supply based on the commitments we have, and we do have -- this is a place where we have long-term agreements. And then, of course, I think as you've heard in the industry, I think we expect this to be passed through to pricing. So from our perspective, this is a market effect. It's very consistent across the market. And so we'll address that. But overall, this isn't -- certainly, if you looked at our business overall, you'd say this is not a material part of our revenue, but an important one that we manage. David Mulholland: Do you have a quick follow-up, Felix? Felix Henriksson: Yes. Just quickly on your balance sheet and net cash. I think the end of the year net cash implies around 17% of last 12-month net sales, which is slightly above the 10% to 15% range that you used to have historically. Are you sort of happy with those levers? Or do you see anything that you would want to do with that setup? Marco Wiren: Yes. Thank you. When it comes to the capital allocation, framework is very clear for us. And whenever we see that we can invest more in R&D internally, so that's always our priority #1. And just like we alluded earlier as well, that we see opportunities in -- especially in AI & Cloud customer segment. So we are investing more there. The second priority we have is seeing that how can we strengthen our deliveries and our opportunities to capture those market trends through M&A. And the third one is the dividend. So, we aim for recurring and stable and over time, growing in dividends. And then the fourth is that if we deem to have excess cash, then we can consider share buybacks. So this framework is something we follow. And if there's any news, we will inform you as well. David Mulholland: Thanks, Felix. We'll take our next question from Emil Immonen from DNB Carnegie. Emil Immonen: I just had a question on the investment in the CapEx. It's quite a big step up. And I'm just wondering if it's all about increasing your capacity, how much would you say that your capacity is already utilized? So, are you working at full capacity? Or how should we think about kind of ramping up production and how you plan for that overall? Justin Hotard: Sure, Emil, thanks for the question. So if you think about what we've shared so far, we have an existing fab in California. We've been investing in bringing a new fab online. This is something that Infinera had started before we acquired them, and we're continuing to invest. And this was also the place where we got partial funding in the CHIPS Act from the U.S. government. That indium phosphide fab is the one -- the next one is the one we expect to come online later this year. What I would say is that we're certainly well on track to consume capacity in the existing one, and we absolutely need the new fab to come online to support the demand that we're seeing and to meet our forecast. So, our longer-term forecast because, obviously, as it comes on later this year, it won't contribute as much to production this year. This is a -- this is also critical for us because at the core of our capability and our differentiation is our photonic integrated circuit. It's one of the key elements of the components of these photonic systems, and it's a place where we believe we have differentiation in the product itself. So what we can do and what's a little bit different than when you think about a traditional semiconductor fab or the higher volumes silicon fabs you might consider in computational silicon or memory or others is that our capital investment size tends to be much smaller to add additional capacity. And that's really just the nature of optical technology and also the nature of indium phosphide. So hopefully, that gives you a couple of dimensions to think about, but I would think about the investments we're making really in that new fab supporting '27 demand. They're starting to ramp during '27. We'll have some reduction this year, but mostly in '27. And then think about the ability to add capacity in that fab or in others as being much smaller chunks. So because I realized, well, first of all, while this CapEx is significant for us at an overall level, it's still pretty modest in terms of our CapEx, 5% overall for the company. Secondarily, what I would say is when you think about this CapEx in terms of the broader semi industry, it's really nominal in terms of the overall spend and the size of investments that some of the -- some of our partners in memory and computational silicon make. David Mulholland: Do you have a quick follow-up, Emil? Emil Immonen: Yes. Maybe to follow up on how aggressive do you feel you are? So is this -- it's still -- yes, it's a nominal amount. But would you say that you're aggressive? Or is this kind of you're only investing for the 100% of demand you're seeing right now and you're not wanting to overinvest at this point? Justin Hotard: I think we're -- I think this market is moving, Emil, so quickly that we're -- this is a conversation that is ongoing in terms of where we see the long-term market and where we're investing. And obviously, the other thing here is, right now, if you think about this market, we're vertically integrated. Others are vertically integrated, some are not. You can kind of look at two extremes. Computational silicon is obviously not a vertically integrated game. TSMC, Intel, GlobalFoundries are largely the leaders in that. So you've got a clear segmentation in the value chain. Memory is vertically integrated. So that's the other strategic question we'll continue to think about as we go forward. But right now, we see tremendous value in that vertical integration. And the choice that we're making is to make sure that we have sufficient capacity to meet the demand, recognizing that we're in a very fast-moving market. Scale across is an emerging opportunity, as I touched on earlier. And we also believe that over time, as speeds continue to ramp within the data center, there will be more opportunity for coherent optics within the data center. David Mulholland: Thanks, Emil. We'll take our next question from Jakob Bluestone from BNP Paribas. Jakob Bluestone: Just a quick one. Can you maybe just give us an update on the H1 versus H2 sort of margin phasing that you flagged at the CMD? I don't know if you can maybe quantify how big we should think about that? Or is it just kind of the normal seasonality of the business given it always tends to be a bit Q4 weighted anyway? Marco Wiren: Yes. Thank you. Yes, especially, as we said that this is visible in Network Infrastructure side, considering that we launched new products in the first half, and that's why we see this margin impact. We haven't guided exactly per quarter, but of course, we see that the second half, we should see improvement in the margins in this field as well. But it's just that it takes some time before we come over this ramp-up phase and second half is that why giving a little bit better margin profile than first half. David Mulholland: Thanks, Jakob. Did you have a quick follow-up? Jakob Bluestone: Just a quick one, just on the memory pricing comments. You mentioned that you have long-term contracts. I mean, given it looks like you probably have elevated pricing for at least beyond this year. Can you maybe just give us a sense of those contracts multiyear? Justin Hotard: Yes. I mean, I would think of these as multiyear contracts. And obviously, the supply agreements are multiyear and then pricing varies depending on the contract term. David Mulholland: Thanks, Jakob. We'll take our next question from Sébastien Sztabowicz from Kepler Cheuvreux. Sébastien Sztabowicz: On Mobile Infrastructure, you don't provide any guidance and notably for sales, maybe given more limited visibility. The LAN market is now stabilizing. Do you see any specific downside or upside to your market share in mobile in 2026 beyond the noncontract loss at AT&T? And the second one is on the cost savings. Where have you finally ended 2025 in terms of cost savings? And what do you expect for '26? Do you plan to accelerate a little bit further the cost-cutting actions beyond 2026? Or you will be more on a normal OpEx run rate going forward? Marco Wiren: I can start. When it comes to mobile markets, as we said earlier, we see that the market is quite stable in '26. And there's some regional variations here. We can see that we could expect some recovery in India. And then there's some other pressures in like LatAm and other areas. Of course, our aim, as we had guided in -- already in the Capital Markets Day is that in the Mobile Infrastructure side, our aim is that we will improve the profitability. So we guide gross margin and operating profit levels. So gross margin, we have said that we aim to 48% to 50% gross margins. And we've said that we will grow from the EUR 1.5 billion levels going forward towards 2028. And of course, our ambition is that whenever there's opportunities to gain market share, we will capture those opportunities in the mobile side as well. When it comes to cost savings, I don't know if... Justin Hotard: I would just add two things. I think one, obviously, there's some mix, as you said. The other thing for us, as we talked about, is we're not chasing revenue for revenue's sake. So I think what you -- what I would think about is the reason we gave you a guidance on gross margin and profit is those are really the two things we're focused on, and maximizing gross margin and profit, recognizing there's some inherent scale we need to maintain in the business. But working with those customers we value and delivering those services where they value our technology platforms and associated services. So those are the ways I would think about the dimension of the approach that Marco was talking about. Do you want to talk about cost reduction? Marco Wiren: Yes, thanks. When it comes to cost reductions, we have the program now, which is running until end of '26. And we believe that we're going to deliver according to those promises, what we have said earlier as well. So, and beyond that, we don't have any cost-cutting programs. What we've said also is that what we do continuously is to secure that we are focused on the efficiency, operational leverage, and secure that we are doing things in the most efficient way continuously. So, this is something that we are getting into everyone's DNA that is the way of working in Nokia. David Mulholland: Thank you all. And apologies to those still in the queue, but we've run out of time. So this concludes today's call. I'd like to remind you that during the call, we have made a number of forward-looking statements that involve risks and uncertainties. Actual results may, therefore, differ materially from the results we currently expect. Factors that could cause such differences can be both external as well as internal operating factors. We have identified such risks in the Risk Factors section of our annual report on Form 20-F, which is available on our Investor Relations website. Thank you all for joining us. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Arafura Rare Earths Limited December 2025 Quarterly Report Investor Call. [Operator Instructions] I would now like to hand the conference over to Mr. Darryl Cuzzubbo, Managing Director and CEO. Please go ahead. Darryl Cuzzubbo: Thank you, Kylie, and good morning, ladies and gentlemen, and thank you again for joining us for our quarterly update. I'm sure we've engaged with many of you already, but for anyone new my name is Darryl Cuzzubbo, your Managing Director. Again, with me today is Peter Sherrington, our CFO, who again, most of you would be very familiar with. But also joining us today is Tommie van der Walt. Tommie joined us about 12 months ago. He is our Chief Project Officer, and he'll become a regular attendee as we move through FID and into construction. Similar to previous updates, what I'd like to do is just talk a little bit about the macroeconomic developments that we see that are shaping the future direction of the rare earth sector. I'll then talk to how we are going in finalizing the last 10% of the funding with our cornerstone investors that will enable us to call FID. I'll then hand over to Peter, and Peter is going to take us through where we sit from an overall funding perspective. So you can see just how close we are. And then we're going to wrap up with Tommie, who will provide a brief update on our readiness to execute the project soon after calling FID. And then we'll open up to Q&A. So let me first talk about the macroeconomic dynamics that we see at play. So whilst the situation is dynamic, there are a couple of underlying fundamentals that will continue to shape that -- to shape what we see playing out. If I just take you back in time, last April, China introduced export control constraints where China could control who got what rare earths into what region and for what use. These controls remain in place today and provide China the ability to control with precision who does and does not get access to rare earths. They have set themselves up to control rare earths supply in a very targeted manner. China subsequently introduced further export constraints last October, but these will wound back to just those constraints that were introduced in April last year when a 12-month truce was agreed to between the U.S. and China. Now whilst this truce resulted in reduced speculation as to what is at stake should rare earths not be available, the reality is that nothing has structurally changed with respect to an ex-China supply of rare earths. China still controls today nearly 90% of the world supply and will use this bargaining chip as and when they need to until the world diversifies the rare earths supply chain, which is going to take a number of years. You just can't unravel quickly what took the Chinese 3 decades to establish. In this period, we have seen rare earths pricing continue to firm to where just last weekend, the NdPr pricing pushed through the $100 a kilo barrier on the Asian Metals Index. This represents greater than an 80% increase in the last 12 months. It is also worth noting that the world's first ex-China pricing by BMI is consistently higher than the Asian Metals Index, most recently by a further $10 a kilo. This shift has occurred post the announcement of the Mountain Pass deal where the U.S. government introduced a floor pricing of $110 a kilo and post the supply disruptions with Mountain Pass FEED no longer going to China to be processed. The recent event where China stopped exporting dual-use rare earths to Japan further highlights China's readiness to use this bargaining chip as they need, and you would expect China to prioritize their domestic consumption of rare earths over exports should there be a structural NdPr supply deficit, which a number of forecasters are predicting in the medium term. During all of this, we've also observed in our dealings directly with customers that they recognize the need to move away from the Asian Metals Index pricing as this has been the mechanism by which China has prevented a rest of world rare earth supply chain being developed. We note that S&P, a highly regarded global forecaster are, in addition to BMI, now looking to introduce their own ex-China rare earths pricing index. We've seen our own Australian government play a key role here through the U.S. Australia Critical Minerals Framework and the Critical Minerals Strategic Reserve, not only supporting the rare earth sector in Australia and their trading partners, but also potentially introducing a different pricing mechanism, which helped us move to a global functioning market price index. Independent forecasters anticipate that a functioning market index will be in the $140 to $160 a kilo range, reflecting the true fundamentals of medium-term supply scarcity and the strategic value of having a reliable rare earth supply chain. You can see that as time goes on, the establishment of an independent and transparent NdPr index is looking increasingly likely. Now I call these developments out because whilst exactly how geopolitics will unfold is uncertain, there are a couple of things that we can be confident of. Firstly, China will continue to use their tremendous bargaining chip of rare earth supply as and when they need to and have set themselves up to do precisely this. This is going to continue for some time, knowing that it will take years to structurally address the lack of diversification in the rare earth supply chain. As geopolitical tensions inevitably resurface, we can expect elevated investor attention to return to the rare earth sector. So in other words, there is still much to play out in the rare earth sector. Secondly, what I want to emphasize the most is that pricing dynamics are improving, and I am confident that with the right and continued geopolitical support, we will ultimately see a market functioning price index established. Critically, we believe rare earths pricing will move to a higher level that reflects the underlying fundamentals. This is something that is important to us, as you can imagine, because it really is the biggest value driver for your company and something that we are acutely conscious of as we look to lock in the remaining cornerstone offtake agreements. So let me now turn to providing you with our funding update. We have made significant progress with cornerstone investors where due diligence and documentation is in an advanced phase for EFA, the National Reconstruction Fund and the German Raw Materials Fund for an initial EUR 50 million, noting that with the German Raw Materials Fund, a potential second EUR 50 million is subject to a separate decision post locking in a further 500 tonnes of offtake. This has taken a little longer than we had anticipated, but we need to recognize that we are one of the first projects to progress through these newly established government seeded processes. You can be assured that we are progressing this as quickly as possible as demonstrated by the fact that we are either the first or the second project in a long list of projects to progress through these three newly established funding mechanisms. As we round out the funding offtakes, we want to essentially achieve two outcomes. We want to secure the remaining equity with long-term cornerstone investors as fast as possible so we can call FID and get moving into construction. The second outcome is we want to secure as favorable pricing terms as we can for the remaining offtakes, knowing that customer preparedness to move away from the Asian Metal Index is growing with time. The pricing terms that we get today is better than the pricing terms we could have got just a few months ago. And the reality is that this trend is likely to continue. What I'm saying here is that whilst calling FID will be the most significant catalyst for the company in its history. The value of the company will, to a large degree, be defined for the next decade or so by the 7-year contract pricing terms that we are negotiating now. We literally have half a dozen pathways to close out funding. With 90% funding locked in, the question is no longer about whether we will achieve FID or not, but rather are we getting the best possible terms for our offtakes in securing the remaining equity. Faced between closing out funding and offtake agreements quickly versus negotiating hard for a couple of months longer to secure best pricing terms, we will choose the latter given the long-term benefit for the company. Now with that said, we are targeting the end of this quarter to finalize the necessary agreement, which will then enable us to seek shareholder approval next quarter and call FID. I can assure you that we are doing everything we can to secure the best possible terms as quickly as we can, so we could all move on to why we joined the company, which was to build and operate what will be a truly Australian iconic project. With that, now I'll hand over to you, Peter. Thank you. Peter Sherrington: Thanks, Darryl. So Darryl has already set out that it's been a pretty significant period for the geopolitical focus and the impact on rare earths. And there's also been a lot of rare earth corporate activity. So this has been an incredibly busy period for the Arafura team. And we've been successful in making substantial progress in executing the Nolans funding strategy, which I'll cover off in this session. To frame the discussion, I'll refer back to Figure 2 in the quarterly, which is the Nolans Funding Bridge. The Figure 2 graphic sets out the funding strategy for Nolans Project. If you refer to the stacked column on the right-hand side, you can see the company has a total funding requirement of USD 1.6 billion. This cost is substantially made up of the capital cost for construction, but also includes working capital, the financing costs during ramp-up and also the equity-backed component of the cost overrun account. In addition to the total funding requirement of USD 1.6 billion, we have in place completion support facilities of USD 280 million. These remain undrawn under our base case scenario, but it does provide us with total funding sources of USD 1.9 billion. If you've followed the Nolans funding strategy from previous presentations and quarterlies, you'll see that we have now made material progress and addressed specifically the public markets component of the funding solution, which I'll touch on shortly, and have during the quarter, substantially progressed the due diligence and final documentation with our cornerstone investors as already set out by Darryl. This included the announcement by the Australian Prime Minister of conditional approval of up to USD 100 million of equity investment by equity -- by EFA. Indicatively, these sources of cornerstone funding that Darryl has set out leave approximately USD 134 million outstanding, and we're working with multiple pathways being progressed to close out the remaining equity requirement in the near term. As already set out, one pathway includes additional investment by the German Raw Materials Fund. We are seeking to capitalize on favorable magnet FEED market conditions as outlined by Darryl. We've seen an increase in our engagement with European and German partners, in particular, as we look to secure an additional 500 tonnes per annum of NdPr offtake to support a potential further investment by the German Raw Materials Fund. Noting that any further investment from the German Raw Materials Fund would be conditional on securing that 500 tonnes of offtake, it would also require approval by the Interministerial Council. With respect to the debt facilities, excluding ING, all credit approvals are current with EDC refreshing their credit approval during the December quarter. ING have provided a letter of support and are working to finalize their credit approval in conjunction with contractual close of the debt facilities and FID. Those activities are underway now with ING. We saw positive share price momentum through October for Arafura and for a number of rare earths companies in general, following a number of key announcements, including further export restrictions by China in early October and the U.S. Australian Critical Material Minerals Framework in late October as well. Against the backdrop of these activities, we successfully launched and completed a AUD 475 million two-tranche placement in October. This was followed with an associated SPP and Tranche 2 of that raising closing in December alongside the SPP. Again, we're pleased to see the strong participation from existing shareholders, including our substantial shareholder, Hancock Prospecting as well as welcoming a number of new shareholders to our register. We ended the period with cash on hand of AUD 570 million, up from AUD 90 million the previous quarter. The increase included proceeds from the October placement, including the Tranche 2 proceeds and the SPP. And this also included Tranche 2 and SPP funds from an earlier August placement with the settlement occurring in the quarter just completed. The important component here is the increased cash position significantly strengthens the balance sheet and demonstrates the company's ability to move into project execution when strategic equity is secured. Completion of the private placement has significantly derisked the project funding requirement and has provided us with the opportunity to make significant progress with cornerstone investors, offtake groups and final documentation with lenders, knowing that the private placement component of the funding has now been completed. I'll just briefly refer back to the Appendix 5B cash flow. You can see expenditure during the period included AUD 3.4 million in project development activities to support execution readiness as we ensure we can hit the ground running post FID, which is obviously a segue into handing my session over to Tommie, our Chief Projects Officer, who will provide you with a brief update for the project. Thanks, Tommie. Tommie Van der Walt: Thank you, Peter. I'll now provide a short summary of project activities and focus areas at the moment. The appointment of Hatch towards the end of last year was a major milestone in the development of the Nolans Project. Whilst this is a change to our earlier integrated project management team model, Hatch brings a significant depth of engineering and execution experience to our project, particularly in managing the delivery of complex projects, including hydrometallurgical processing infrastructure. Hatch has been involved in the early engineering and design which enables them to transition immediately into execution planning, recognizing that execution readiness is a catalyst to announcing our investment decision. Now Hatch will report directly into the Arafura owners team under the direction of Ed Matthews as the Nolan's Project Director. Ed joins us with more than 30 years of demonstrated capability in the development and delivery of major projects and capital programs, managing major greenfields and brownfields resource and infrastructure projects across Australia, Asia and Africa. We've been actively identifying and recruiting the other critical roles within the owners team with a number of these personnel due to commence in the coming months. Over the last 6 months, we've invested the time in establishing robust procurement processes and developing key relationship with potential suppliers. On the back of an FID announcement, we will launch a competitive process to ensure we deliver the best commercial outcome for the business without compromising on supply certainty, quality or schedule. So that's just a couple of updates as it stands at the moment. I'll now hand back to Darryl to close. Darryl Cuzzubbo: Thank you, Tommie. Thank you, Peter. So as you can see, we're making strong progress on rounding out the last less than 10% of funding and offtakes on the best possible commercial terms whilst making sure that we are ready to execute the project safely, on time and on budget. I'd like to thank the team for their effort to date, the extra time that they have dedicated working across multiple time zones to get us to where we are today and very grateful for their commitment and that of our partners here and abroad. It is all coming together. And on that note, I might just pause and just open up for any Q&A. Operator: [Operator Instructions] We are showing no questions from the phone. We will now move to the company for webcast questions. Penelope Stonier: Thank you, Kylie. The first question we have is from an anonymous shareholder. So the question, Darryl, Lynas has raised just over $1 billion in cash late last year and has a market cap of around $16 billion. They're a proven developer and producer of NdPr mines and has made it known to its shareholders and market that they are looking to increase their exposure and NdPr production. Arafura, one could say, has now moved to a development growth company, which offers a high-quality, long mine life of NdPr production. History shows that most major resource producers in acquisition phase look for companies with high-quality mine life opportunities. Once they target the company have completed all the hard work and derisk the project and are close to development stage, normally leaving long-suffering shareholders who have supported the company for years, not getting to see the full potential upside of the share price. If an opportunistic bid was made whilst the share price is still languishing in the high $0.20 to low $0.30 range, what is the Board doing to prevent a company like Lynas who also has Hancock Investment Group as a major shareholder, making an opportunistic takeover bid for Arafura? Darryl Cuzzubbo: Yes. So thank you, Pen, for that question. Look, I mean, Lynas has mentioned that this is something that we, as a Board, have been very mindful of, right? So we've got our defense strategy in place. We have a defense adviser. Actually, not that long ago with the subcommittee of the Board, we actually went through a number of [ MOCs ] situations. So I feel like from a defense perspective, we're very well prepared for that. As we did our most recent capital raisings, we deliberately targeted long-only investors that obviously helps getting them on our register. And also, obviously, there's things that we can control and can't control around share price. I mean share price is the ultimate defense. And I'm saying the obvious here, right? So the next catalyst is FID, which for us is just around the corner. So I think we're well prepared should there be an opportunistic bid. Penelope Stonier: Thank you, Darryl. The next question comes from Heck Middleton. Why should the shareholders believe and trust the decisions of the company and the Board on this new FID approval when we originally said it would be announced during the first quarter of 2025. Why not start it in November, get the development to production. And I'm sure the balance of funds and cornerstone investors will come in very quickly as they don't want to miss the opportunity at such a discount. And at the same time, we know the future funders and shareholder support. I assume now you've had around 90-plus percent of the total development funds that you are seeking. And if you have a 20% contingency on the total development budget, doesn't that mean you already have full funding in place with just the 10% contingency? Darryl Cuzzubbo: Yes, a good question. So just probably there's a couple of things there, right? So firstly, it has taken us a bit longer to round this out. As I mentioned in the introduction, we are at the front of the queue in a long list of projects with the new government seeded funds. So that demonstrates we're doing something right. If you look at EFA, we were the first from an equity perspective. If you look at National Reconstruction Fund, we were the second and the largest. And you look at the German Raw Materials Fund, we were the second with the first project being a German project. And there's -- as you can imagine, there are many projects that have applied. So for us to be at the front of the queue says something and gives me confidence we're doing everything we can to progress as quickly as we can. Now on your second point about should we go call FID now, we could, right? But we don't think it's prudent. We think the most prudent thing, particularly given we've got less than 10% is to secure that equity so we can go to our shareholders. So we're fully funded. Secondly, we use the tension around securing offtakes to help bring in that equity. And as I mentioned, the pricing dynamics are improving in our favor. So let's ride that wave. When we lock in offtake agreements for the lenders, they have to be essentially a 5- plus 2 or 7-year term. So think about that, you've got a 3-year construction period and then you've got a 7-year offtake. So for the next decade, sure, calling FID is an important catalyst. But the value of your company for the next decade will be determined by the pricing terms that we negotiate in the current offtake. So we think it's prudent. We think it's in the long-term interest of the company to lock in the remaining funding and the offtakes on the best pricing terms. And it's -- as you can see, we're not far from completing that. Penelope Stonier: Thanks, Darryl. I've got a question from Bernard just in regards to that remaining 10% equity on the best possible terms. Is there a risk that this will further dilute the shareholding? Darryl Cuzzubbo: So the 10% -- it's a good question, Bernard. So Peter mentioned that there's USD 134 million left to secure. As we bring those cornerstone investors in for the USD 134 million, they will come on to our register. Penelope Stonier: Okay. I'm going to touch on a couple of -- a general question here. It's just coming through a number of shareholders. Is FID imminent? And do you expect any further delays? And what confidence can you give the shareholders that FID will come within the coming months? Darryl Cuzzubbo: Yes, sure. So look, we're being as transparent as we can. So as I mentioned, we're expecting to round out the agreements by the end of March that would then allow us to call a shareholders' meeting to vote for the last cornerstones coming in. That is our best guidance. If -- but it can go either way. So for example, if there was another geopolitical event, that time frame could come forward. Also, it could be a little bit later if we're not getting the pricing terms that we think we should be getting on the offtake. So there is a level of uncertainty around the time frame. I can assure you what we're pursuing is what will drive the long-term value of the company. We're doing it as quickly as we possibly can as evidenced by our progress compared to other rare earth projects, but there is some uncertainty to the timing because we're not in control of the third parties that we're dependent on. And we're being as transparent as we can on that time line. But in any case, we think that the most plausible outcome is to get these sorts of agreements in place by the end of March. So you can see it close. Penelope Stonier: And just following on from that. So John Hebenton, apologies, John, if I've incorrectly [ pronunciated ] that. Is the German Raw Materials Fund the only thing remaining for FID to be announced? Can you please elaborate? Darryl Cuzzubbo: Yes. Thanks, John. No, it's not. So as Peter mentioned, the USD 134 million, that could include the EUR 50 million from the German Raw Materials Fund, but there are other parties that we're engaging with. There's literally half a dozen options that we're pursuing to land the remaining USD 134 million. And we're doing that, one, make sure we land as quickly as possible. But secondly, so that there's some competitive tension so we can get the best outcome. So John, there are more parties involved. I cannot -- these are commercial and confidence discussions. But as soon as we can say something more on those discussions, we will. Penelope Stonier: Thank you. And just in terms of -- I've got a question here from both Lee Burt and also from John Parkinson. Just providing an update on the joint venture. There's been little disclosure in regards to the talks in the joint venture. Can you advise if this is still something that is possible? Darryl Cuzzubbo: Yes. So thank you, Lee, and thank you, John. So on the JV, it's very much the same as what I said last time. If you go back, I think it was about 6 months ago, I said there was a two-horse race here. And we would close out with the one that was the quickest with a line of sight as to where we're going to get the best return for our shareholders. The JV pathway is not moving fast enough. So all of our attention is on securing the last 10%, so we can call FID. The JV pathway is somewhere in the future. So we're not focused on that. We're focused on landing at the last 10% and calling FID. Penelope Stonier: Thank you. This might be one best directed towards Peter. Is there any contingent on the funding or loans we have with needing the German offtake agreement getting signed? Peter Sherrington: Yes. So we have some volume requirements that we need to meet with our German lenders and Siemens Gamesa covers a substantial proportion of that. We would like some additional volume to provide us with some buffer over their requirements as well. So as we're not just reliant on the existing contracts. So that is a requirement. But probably the major focus is also tying it in with investment from the German Raw Materials Fund as well. So there's two key things that are driving our focus on those German market opportunities. Penelope Stonier: Thanks, Peter. I have a second question from John Hebenton. How do you expect to reassure shareholders that this project will succeed given constant delays? And more importantly, the shareholder value has been destroyed through massive dilution and price -- and share price that is down over 60% from its highs as well as the current price of $0.28 or slightly down today. Can you give a bit more color on that share price movement, please and reassurance from the shareholders? Darryl Cuzzubbo: No worries, John. So just a couple of things right. So the question is around whether we're going to get to FID or not. We're 90% there. So there is no question we're not going to get to FID. The question is, are we going to get to FID on the best possible offtake pricing terms. And as I said, we're close. Now in terms of share market performance, if you compare us to our peers, excluding Mountain Pass and Lynas producers, we've actually done very well. So our share price over the last 12 months is up nearly 110%. You talk about coming off lows. We've moved with the rare earth sector, right? So when there was different geopolitical events, we all -- the rare earth sector rode those waves. But if you take a 12-month view and compare us to our competitors, we've actually done pretty well. And we're going to continue to do that. Now on the dilution front, if you look at Peter talked to the total funding ask, we have maximized out on debt. We have done that deliberately to minimize dilution to our shareholders. So I feel like we're doing everything we can to pull off a capital-intensive project in a way that protects shareholders' value. And like I said, we're not just taking the short-term view here. We're taking a long-term view. We want to get to that FID catalyst, but we're also making sure that we lock in the best pricing terms that will actually more than anything else, define the value of your company for the next decade or so. Penelope Stonier: Thanks, Darryl. I'm going to group two questions together here. In hindsight, would it be a faster path to secure equity funding and offtake with the U.S. rather than relying on the AU market? And then can you provide some thoughts on the U.S.A. floor pricing, its potential to be pulled and how that political move may ripple across into Australia and what the critical minerals reserve. Darryl Cuzzubbo: Yes. It's a very good question. Sorry, who asked that question? Penelope Stonier: Bernard as well as [ Patrick Losav ]. Darryl Cuzzubbo: Okay. So Bernard, Patrick, very good question. So look, with the benefit of hindsight, there's actually nothing I would think we should be doing differently. So just remember, so the U.S. is pushing hard now with the recent administration, but that wasn't the case 18 months ago. So I think we have adapted to reflect what's happening in the different regions. I'm hoping that if you look at the global manufacturing powerhouses, a great outcome for us is to have offtake agreements in different regions on pricing terms that allows us to move to an independent index. I would say if we can pull that off, we will be better positioned than anyone else. So you look at Lynas locked in with Japan, Mountain Pass locked in with the U.S. We've actually -- if we land our intent, we will actually have the most globally diverse offtakes with end customers, and we're trying to negotiate terms where we can move to an independent date. This will position us very well. So in terms of would we do something different? I mean, at the micro level, of course. But at the macro strategic level, no. No, I think this is playing out well for us. And time will prove that. Penelope Stonier: And then just another question related to the U.S. from Thomas Morris. With the U.S. interest in Greenland rare earth supply, does this diminish the prospects for Arafura? Darryl Cuzzubbo: So -- and I just realized I didn't answer Bernard and Patrick's question around the U.S. floor price. So just with the -- let me answer that, then I'll come to the Greenland question. So on the floor price, with Mountain Pass, we actually saw that as a one-off. What's most important to us is that we can move to an independent functioning market index, where we believe the pricing will be well above that floor price. With that said, the -- as you know, the Australian government has been talking about this strategic reserve for critical minerals, including rare earths, and they're talking about a floor price. So if we can secure a floor price, we obviously will. But our priority is to get ultimately better pricing, and that will be on an independent functioning price index. Remember, the Mountain Pass deal, whilst they got a floor price, they had to share any upside with the U.S. government. We prefer to keep the full upside. Now with the Greenland, this is -- and I think I might have mentioned this previously. So the Greenland's resources on rare earths are not well defined. So it typically takes 18 years to find a resource and take it into commercial production. Greenland is probably not even at the start of that 18-year tenure. So any Greenland prospects, if they work out to be economic is many, many years away. Penelope Stonier: Okay. Thank you. Another question from Bernard. What participation will Arafura make with regards to the Australian government's $1.2 billion critical mineral strategic reserve? Darryl Cuzzubbo: Yes. So we -- I think we've taken a proactive and leading position in that. AMEC pulled together the sector, the rare earth sector and put a proposal forward to the government, and it's similar to -- as I was saying before, similar to the Mountain Pass type agreement, where there's a floor where you're sharing some upside above a certain price. And the Australian government is considering that, noting that pretty much not all, but most of the rare earth sector were behind that sort of arrangement. Minister King did make announcement earlier this month on that to progress that concept. It will be administered by the EFA, which are very -- who are very familiar with our project and looking to pass legislation sometime later this year. So we're very engaged with the government on that. We're very engaged with the broader sector on that, and we've been engaged with AMEC and the proposal that was submitted to the government just before Christmas. Penelope Stonier: I've got a question from [ Sapien Nath ]. One of my observations about mining businesses is they're inward-looking mentally, which means focusing just on their business. Technology companies try to develop the ecosystem to improve the sustainability and future prospects. What is Arafura and to make sure that we are a major player and also to make sure to establish the importance of NdPr for the world? Darryl Cuzzubbo: Yes. So it's a very good question. So there's a number of aspects to your question. So firstly, I think if you look at just the rare earths plays, I'd like to think we've been the one that's been advocating for this non-China index the most. Because we see that as the ultimate thing that will open up the rare earth sector across the globe as well as getting good returns for our shareholders. I'd like to think we're taking a bit of a leadership position on that. But we're also mindful that this project has many stakeholders. So we've got a clear pathway to net zero. The power supply, and we'll be able to say a bit more about that in coming months, enables renewables to come in. We're very focused that building up this project just north of Alice Springs. It will bring jobs and prosperity to the local community. So I'd like to think we're taking a very broad look across our stakeholder base, doing what we can to provide that support, but we also need that support in return. We're talking today about Phase 1. But as soon as we post FID, we want to start progressing approvals and engineering for Phase 2. So I'd like to think we're taking a long-term holistic view and taking a global leadership position in getting the sector to move to a non-China controlled index. Penelope Stonier: Okay. I think I've got another question here from Heath Milton. Just want to understand how the Board looks at the volume of shares currently on issue, edging to just under 5 billion shares on issue. Has the Board considered a share consolidation? Or is this something that they will look at believing that it would potentially help in reducing short traders in the stock and help prevent opportunistic takeover? Darryl Cuzzubbo: Yes. So Heath, look, just in the short term, our focus is on just closing out the last 10%, right, so we can get going. However, we are looking at the share consolidation. There's pros and cons, right? So the con is you reduce liquidity. So if we want to become the rare earths stock that's in construction, then investors need to have sufficient liquidity. So that's a bit of a downside with share consolidation. But the other big factor in all this that we're looking at and testing is it may help bring in U.S. investors, and we're actually testing that with the market. So in short, we're looking at it, and we're assessing the pros and the cons. It's not something that I see us doing in the short term as we just focus on rounding out the funding and moving into construction. Penelope Stonier: And just touching on share price movements today. Can you please -- this is from Craig Fishman. Can you please provide any thoughts on why the share price movement has moved to 6%? Darryl Cuzzubbo: Yes. Good question. So let me -- so this is obviously a very dynamic situation. Let me make a couple of comments and I might hand over to you, Peter, for anything to add. So there's probably a couple of things, right, that have been announced or been talked about in the media. So one is around the Mountain Pass floor pricing and whether that's applied to other projects or not. And as I've already said, we have not expected that. We've been pushing for something that we think is better, which is an independent pricing index. But I think that may be impacting the market. And then the second thing is just the Australian exchange rate where the Australian dollar has strengthened against the U.S. dollar given our bank -- there's a better chance of maybe increasing interest rates whilst the U.S. maintaining or reducing. Peter, do you have anything to add to that? Peter Sherrington: No, I would have said the exact same thing. I suppose the Reuters article, which has probably been picked up on today by a number of groups seems to be maybe impacting the share prices of the sector. But as Darryl mentioned, our understanding was the floor price for MP was a one-off. I thought that was pretty clear from some time ago, but perhaps that wasn't so clear to the market. And then probably the major thing, I think, which is driving the share price and the sector and other miners as well today, I think it's sort of not just a rare earth thing is uncertainty over the U.S. dollar exchange rate and how that impacts earnings moving forward and perhaps also interest rates where you've got a capital-intensive project where there's uncertainty over interest rates, that is also a potential impact on earnings. So I think they are probably the key drivers. But in markets, we don't know everything until often after the fact sometimes, but they're our best guess. Darryl Cuzzubbo: Thanks, Peter. Penelope Stonier: Thanks, Peter. So a question from Fredrick Richmond. So far, compared to other rare earth companies, the share price has reacted only slightly to increasing market momentum. Arafura is clearly not seen on the stock market as a serious project that generates sustainable shareholder value. How do you intend to change this and ensure that long-term shareholders in particular, benefit from these developments? Darryl Cuzzubbo: So Fredrick, again, like I just said earlier, like if you look at the last 12 months, we've actually -- our share price has done pretty well. And if you compare us to other projects, you'll see that, right? So our share price has risen 110% in the last 12 months. But you know what, there's always more to do. And like I've said a couple of times, what's in our control is obviously getting to FID and locking in offtake agreements on favorable pricing terms. So the two things that we can do right now that drive shareholder value. We pulled Tommie in. The next phase, construction phase will be tougher, tougher again. And the best way to make sure that we're successful there and deliver shareholder value through that phase is good people and good planning, and that's exactly what we're doing right now. Penelope Stonier: Thank you, Darryl. And in terms of -- I've got a question from Heath Milton as well. Just in terms of coverage and understanding the Arafura story, how does the company propose to be able to develop those relationships and gain greater coverage and then obviously, a greater understanding throughout the sector of where the company is at. Darryl Cuzzubbo: Yes, that's a good question. So I might make a couple of comments. So Penny here has done a lot of work in this space since joining us. So let me make a couple of comments. So the rare earth sector up until recently actually has not been that well understood. Actually isn't that well understood. It's quite a niche sector. So we have spent a lot of time educating research as well as investors on the sector. And obviously, as our profile has grown, as our market cap has grown, we've got increasing interest from researchers. And I think that will happen, that will go to another level again post FID. But we focused heavily on educating researchers on the sector and our project in preparation to encourage them to cover us. Penny? Penelope Stonier: I think you've hit the nail on the head, Darryl. What we are seeing Fredrick as well, in particular and for Heath -- we do have a lot of the investment houses, research analysts that do look to the sector, and they have openly come to us and spoken to us recently and that where part of their challenges is particularly around the price bifurcation, the dominance of China and seeing some traction in terms of having alternative suppliers of NdPr and other rare earths coming to market so then they can actually validate their assessments and their work going forward. So there is -- as Darryl said, we are engaging with the analysts. We're engaging with the research desk. We are doing a lot of work. And I think in terms of that validity of our project, the deal that's being done from EFA, from KfW, from all of our lender group is probably a really good signal that this is a genuine project. We are just that so close that 10% away from securing it, that I think in coming months, you will really see the value in terms of what is coming out of Arafura, particularly as the most advanced project pre-feasibility, preconstruction, we've done our feasibility studies. We are the most advanced and construction ready. It is just that 10%. So I think we're getting good traction in the market on that perspective. Darryl Cuzzubbo: I think as the sector understands the importance of ore to oxide and how that truly differentiates us as well, I think that's going to play in our favor. Penelope Stonier: And one last question from Fredrick. As we look to the parallel pricing systems established outside of China and further full price guarantees potentially by government, what effect will this have on any existing offtake agreements already in place? And do those need to be renegotiated? Darryl Cuzzubbo: Yes. Look, so we did anticipate a change in the pricing environment as we did different offtakes. It's happened sooner than we expected, thanks to the U.S. So we do have provisions to enable a transition. But ultimately, they still need to be negotiated. But this goes to my point earlier, now is the time to negotiate these better pricing terms. Penelope Stonier: Okay. I think another question probably turning more towards the project. Can you please from [ Aman Malik ], how much of the 10% in dollars? How much is this 10% in dollar value and the number of shares that will be added? Darryl Cuzzubbo: Yes. So as Peter mentioned, it's USD 134 million out of a total funding bracket of USD 1.9 billion. So it's actually less than -- is less than 10%. Peter, I don't know if you've got an idea of the shares for that USD 134 million. Peter Sherrington: It will depend on what deal is struck with those particular investors, Darryl. So I think our objective will be to minimize the number of shares and maximize the price that we issue those at. I mean that's always going to be the case. But I think to sort of speculate what that will be now is probably a little bit difficult. Darryl Cuzzubbo: Thanks, Peter. Penelope Stonier: Thanks, Peter. And in terms of -- just to clarify one question from Robert William. Where will the processing plant be built? And what are the processes that are being utilized? Darryl Cuzzubbo: Yes. So Robert, so the process plant will be built at the project site. So that's 135 kilometers north of Alice Springs. One of the differentiators for us is that all of the processing happens on the one site. So if you look at other projects will have the mine separate to part of the process plant and that has a couple of things. It means you've got transportation costs. But the other thing is with rare earths, when you find rare earths, it's found with radionuclides and by having the whole process plant on site, everything that leaves site is clean from a radiation perspective. So this is super important when you're looking at other rare earth projects, this is a differentiator by us going to an oxide, which removes the radionuclides and having it all done on the one site. In terms of -- you asked the question, what is the exact process? It is a complex process, right? So 90% of the CapEx, 90% of the OpEx is tied up with the process plant. But broadly, there are four components. So you've got the mine that makes up 10% of the CapEx. You've got the concentrator that really concentrates the rare earths. And that's pretty low process complexity. So you've got concentrators in copper, gold, et cetera. Then you've got a hydromet circuit, and that's a chemical process that uses different assets to start to pull the rare earths out. That is the most complicated and capital-intensive part of the project. And then the back end, you've got what's called separation. which is where you -- it's the last step where you pull the light rare earths, pull the light rare earths out into an oxide for sale. So if you look at -- you compare us to Lynas, Lynas is, those steps the mine, the content of the mine, obviously, Mt Weld, you've got the concentrator at Mt Weld. You've got the hydromet circuit, which is at Kalgoorlie and then you've got the separation process in Malaysia. We do all of that at the one site. Penelope Stonier: And talking about the CapEx there from Bernard. In terms of CapEx denomination, do you -- are you able to provide a breakdown on U.S. versus AUD on proportion? Darryl Cuzzubbo: I don't have that at hand. Most of it is Aussie dollar, by the way, but there is a U.S. denomination. I'm not sure, Peter or Tommie, you've got any more definitive insight into that. Peter Sherrington: I haven't got the exact figure on me, but the U.S. dollar and euro component of the CapEx is not significant. Our most significant FX exposure is in actual fact on converting the U.S. dollar loans back to Aussie dollars so as we can spend them on the project. So in terms of FX exposure, that's probably our most significant focus. Penelope Stonier: Okay. And one more project-related question on procurement supply. Can Arafura avoid electricity supply problems that Lynas Rare Earths has had? Thank you from [ Jeffrey Propel ] in Miami Beach. Darryl Cuzzubbo: The simple answer to that, Jeffrey, is yes. So Lynas are moving to an off-grid solution. Our solution is already off grid. So we have a gas pipeline that runs through our tenements. We will be tapping into that with an independent power supply. So we will not be reliant on the grid. Penelope Stonier: Conscious of time, I'll probably just wrap up with two more questions. Darryl, prior to the last capital raise last year, the Board said that the cash burn rate was around $1 million to $1.2 million per month. Excluding capital costs -- excluding the capital raising costs, what has been and are now the estimated cash burn rate per month, has that changed materially? Darryl Cuzzubbo: Yes. So as you said, excluding the one-off funding-related costs, our cash burn is a bit over $2 million a month. However, as we get close to FID, we are going to be ramping up our project team and execution readiness so that soon after calling FID, we can release contracts and start construction. So right now, it's a bit over $2 million a month. Penelope Stonier: Okay. All right. Scott McCullough, just thanks team doing a great job. So we appreciate that support, Scott. And just to wind up, Darryl, I'm going to collectively pull in half a dozen questions here, and I think they're all burning to know. Can you please provide updated guidance? What -- when do we anticipate FID now? And what are those key steps that will be required, the catalysts you've spoken about them in the -- at the AGM. What are those catalysts now to be able to call FID and move forward into construction? Darryl Cuzzubbo: So the main catalyst is securing the last 10% of funding but it's linked to the offtake. So we'll be basically using the remaining offtake to pull in equity. And as I mentioned, we want to get as favorable pricing terms as we can on that offtake. And it's like any negotiation, right? So if you're doing a purchase agreement or buying a house, you can always do a quick deal. A better deal always takes a bit more time. So we've been quite tough and deliberate about that. We've been very deliberate in having multiple strategies to create that competitive tension, right? So I would argue we're looking at closing that FID, but we want to get the best possible pricing terms as we can. Now the reality is with the offtakes, we don't need to have -- we want to have all the offtakes in place, but we actually don't need to have them all in place from a lender perspective until debt drawdown, which is about 12 months after we start construction. In terms of finalizing that time line, our best guidance at this point is to finalize those agreements by the end of March, which would then enable us to take that final equity piece to shareholders, which will enable FID in Q2. So we want to by the end of this quarter, get the agreements in place that then enables us to call a shareholder vote in Q2. But I need to stress, right, we're not in control of the time line. We can influence it, but we're not in control of the time line. Penelope Stonier: Thank you. There are just a couple of minor questions here that I will revert directly back to the people who posed those questions. But Darryl, there's no other questions on the phone line. So I might hand back to you to close. Darryl Cuzzubbo: Okay. No worries. Thanks, Pen. So again, thank you, everyone, for joining us today. Please always feel free to send through any questions that you have to the company. Don't need to wait for the quarterly updates. I hope you can see that the pieces are coming together. We are focused on the key items that will deliver the most value that is rounding out the funding, getting the best pricing terms for our offtakes and making sure that we're ready to execute. I look forward to providing you an update again on these activities next quarterly, and we would like to thank you for your continued support. Thank you for dialing in today. Operator: That does conclude our conference. Thank you for participating. You may now disconnect.
Operator: Good morning, and welcome to the Gjensidige Q4 2025 Results Presentation Call hosted by Mitra Hagen Negard, Head of IR; and Geir Holmgren, CEO. Please note this conference is being recorded. [Operator Instructions] I will now hand you over to Mitra Hagen Negard to begin today's conference. Thank you. Mitra Negård: Thank you, operator, and good morning, everyone. Welcome to this fourth quarter and full year 2025 presentation of Gjensidige. My name is Mitra Negard, and I am Head of Investor Relations. As always, we will start with our CEO, Geir Holmgren, who will give you the highlights of the quarter and the year, followed by our CFO, Jostein Amdal, who will run through the numbers in further detail. And we have plenty of time for Q&A after that. Geir, please. Geir Holmgren: Thank you, Mitra, and good morning, everyone. We have concluded a strong year, driven by solid efforts across the organization. We moved forward with confidence, guided by a clear commitment to honoring our purpose of being there for our customers when it matters most. Over the course of the year, we processed nearly 1 million claims, including a higher volume related to Storm Amy, maintaining a strong emphasis on speed and efficiency. We always continue to introduce innovative solutions that help prevent damage and simplify everyday life, further strengthening the value we provide. Our customers continue loyalty confirms the relevance of what we do. In parallel, sustained efficiency initiatives have contributed to a return to strong profitability. So let's turn to Page 2 for comments on our fourth quarter results before moving on to the full year results. We generated a general insurance service result of NOK 1.297 billion. This result includes a total of NOK 502 million in expenses related to a reduction of the book value of the core IT system and the downsizing of our workforce in Denmark. Adjusted for this, the insurance service result was up almost 8%, reflecting continued strong revenue growth, efficient operations and continued good cost control. The combined ratio when adjusting for the expenses I just mentioned, was 83.8%, and I'm very pleased with the 0.7 percentage points improvement in the underlying frequency loss ratio. Our investments generated returns of NOK 482 million, contributing to a profit before tax of NOK 1.754 billion and a solid return on equity of 27.3%. Jostein will revert with more detailed comments on the results for the quarter. Turning to Page 3 and looking at the year as a whole. We delivered on all financial targets. Our combined ratio improved by 2. 5 percentage points to 83.4%, thanks to a strong revenue growth of 11.5%, supported by successful implementation of pricing measures and continued operational improvements. Our cost ratio at 12.7% was well within our target. Adjusted for the NOK 502 million in expenses I just mentioned, our cost ratio was 11.5%. We have a solid capital position with a solvency ratio of 188% at the end of the year after subtracting total dividends of NOK 14.5 per share. Investment returns for the year were good, which together with the results from our pension business contributed to a return on equity of 27.3%. So let's turn to page -- to the next page for further comments on the proposed dividend. The Board has proposed a total dividend of NOK 7.250 billion for the year, consisting of a regular dividend of NOK 5 billion and a special dividend of NOK 2.250 billion. The regular dividend is equivalent to NOK 10 per share, up more than 11% from 2024. The special dividend is equivalent to NOK 4.5 per share. For our Norwegian general insurance customers, this once again bodes for distribution of a solid customer dividend from the foundation, Gjensidigestiftelsen. The regular dividend corresponds to a payout ratio of 76% for the group. The proposal requires approval from the FSA since the total amount, including the special dividend, exceeds 100% of net profit in Gjensidige Forsikring. Based on very strong capital position for the group, we expect the application to be approved. We have made a small technical revision of our dividend policy to clarify our target to pay out growing regular dividends. No other amendments have been made and the revision does not change our existing practice. Moving on to Page 5. The process of replacing our core IT system in Denmark started in 2018. The system is fully implemented for our Private portfolio in Denmark, and we are currently carrying out thorough testing and quality assurance before starting full implementation for the Commercial portfolio. We are strongly convinced of the operational benefits of the new core IT system in Denmark. Due to technological advancements and the continual evolution of business requirements, it has become evident that the operational lifespan of the existing core systems in Norway and potentially also in Sweden can be extended by several years. We now have high optionality in evaluating future alternatives. We expect to make the decision regarding Sweden first based on thorough assessment of business needs, available technology and the requirements for a system that offers sufficient flexibility to adapt to changing conditions. I will now turn to the next page. Private property insurance in Norway saw lower underlying profitability this quarter, mainly due to fires. Claims frequency was high, reflecting the impact from the Storm Amy in October with a claim recognized as a large loss, primarily in the corporate center. Repair costs developed as expected with 4% increase year-on-year. We continue to raise prices, though more moderately, with average premiums up just over 14% last year. And over the next 12 to 18 months, we expect the repair cost inflation to remain in the 3% to 5% range. Our current average price increase is 9%. For private motor insurance in Norway, underlying profitability improved year-on-year, supported by targeting prices and claims frequency was flat, reflecting Storm Amy and an underlying increase estimated at 1% to 2%, offset by the impact from a mild December. Repair costs rose 4.1% and average premiums increased 16.5%. Inflationary pressures are easing, but are likely to stay in the 3% to 6% range. Our current average price increase for private motor is 10%. And finally, on this slide, following 2.5 years of targeted pricing measures following large shift in both claims frequency and average claims cost, we will adjust the level of detail presented going forward as the underlying trends are now well established. I would nevertheless like to emphasize that we will continue to price at least in line with the development in claims cost. So moving to Page 7. The strong growth momentum in Norway continued this quarter, reflecting price increases across the Private and Commercial segment as well as some volume growth in Private. The general renewals for Commercial are solid, reflecting strong competitiveness in the SME part of the Commercial market. Our consistently high retention rates represent a strong vote of confidence from our customers. Underlying profitability for Private Norway improved year-on-year, while natural inherent volatility resulted in a lower underlying profitability for Commercial Denmark. Commercial. Denmark showed improved profitability in both the Private and Commercial portfolio, reflecting positive underlying development alongside reserve adjustment and normal inherent volatility. It is also very encouraging to see high retention for the Commercial portfolio. We continue to implement measures to enhance profitability in Denmark, most recently through a reduction in the workforce. While this may have a short-term impact on growth for the Private portfolio, it is a deliberate and expected trade-off to strengthen profitability. Our Swedish operations continue to build on their positive trajectory, showing sustained progress underpinned by solid growth and strengthened profitability. We have recently concluded the renewal of the majority of our reinsurance programs. We are satisfied with the required capacity -- that the required capacity has been renewed with unchanged retention levels. Reinsurance premiums represent approximately 2% of our premium income and the renewals were completed at lower risk-adjusted premium levels. Over to Page 8. I'm pleased with the strong sustainability progress through 2025 and the recognitions highlighted here. I'm also particularly pleased to have received renewed confirmation of our AAA rating for -- from MSCI. Our focus on damage prevention continues to create customer value, business impact and support our broader sustainability ambitions. Sustainability is at the core of our business, and we firmly believe that sustainable operations are essential to long-term value creation. So with that, I will leave the word to Jostein to present the fourth quarter results in more detail. Jostein Amdal: Thank you, Geir, and good morning, everybody. I will start on Page 10. We delivered a profit before tax of NOK 1.754 billion in the fourth quarter. The insurance service result was NOK 1.798 billion when adjusting for the increase in operating expenses related to the reduction in book value of the core IT system and the expenses related to the reduction in the workforce. The result also reflected higher large losses, which included NOK 349 million in claims related to the Storm Amy, net of reinsurance and including reinstatement premium. Higher runoff gains contributed positively. Private delivered a higher result, driven by both Norway and Denmark. The improvement in Norway reflects continued strong revenue growth and the lower underlying loss ratio for motor, travel and accident and health insurance. We also achieved a further decrease in the cost ratio. The positive development in Private Denmark was driven by a combination of revenue growth, reserve adjustments for property insurance and an improved cost ratio. Commercial also delivered a higher insurance service result. In Norway, the insurance service result reflected revenue growth, partly offset by natural inherent volatility in claims for property and accident and health insurance, while motor insurance showed improved profitability. In Denmark, higher results were driven by revenue growth and improved underlying frequency loss ratio for all the main products and a lower cost ratio. In Sweden, the increase in insurance service result was due to improved underlying profitability and revenue growth. Property insurance in both portfolios, private motor and payment protection insurance showed better profitability. Higher runoff gains also contributed positively. The Pension segment reported a pretax profit of NOK 187 million, mainly driven by a higher net finance income. The net result from our investment portfolios amounted to NOK 370 million in the quarter, with positive returns for most asset classes. Other items was minus NOK 100 million this quarter, with the improvement mainly reflecting a positive year-end balance related to the transfer of profits to Natural Perils Fund. In addition, mobility services had a higher result. Following the completion of ADB Gjensidige earlier this month, this is the last quarter in which the results of the Baltic business are reported. The decrease in result was due to a lower insurance service result and net financial income. Turning over to Page 11. Our strong growth momentum continued in the fourth quarter with insurance revenues for the group increasing by 10.4% in local currency. The increase was mainly driven by pricing measures across the Private and Commercial portfolios in all geographies in addition to higher volumes in Private, Commercial in Denmark and in Sweden. The growth in the Private segment was driven by both Norway and Denmark. Private Norway showed a strong growth momentum even when excluding the home seller insurance product. This strong development was primarily driven by price increases in all main product lines. But I'm also very pleased to see that volumes increased not insignificantly for motor, property, travel and accident and health insurance. The growth in Denmark was also strong, thanks to price increases and higher volumes for all main products. Growth in Commercial was also driven by both Norway and Denmark. In Norway, the growth was driven by price increases for all products and solid renewals. As in the previous quarters last year, growth for some products within accident and insurance and for larger customers was muted due to a continued focus on profitability improvements. Growth in Commercial Denmark was driven by price increases for all main products and higher volumes for property, accident and health and liability insurance. Growth in Sweden was primarily driven by higher volumes related to leisure both and payment protection insurance in the Private portfolio and motor insurance in the Commercial portfolio. Price increases for all main product lines also contributed to the growth in insurance revenue. Turning now to Page 12. The loss ratio increased by 1.3 percentage points, reflecting an increase in large losses. Higher runoff gains contributed positively. I'm very pleased with the development in the underlying frequency loss ratio, which improved by 0.7 percentage points, reflecting improvements in all segments and geographies except Commercial in Norway. Let's turn to Page 13. Our commitment to operational efficiency remains strong. The group's cost ratio was 15.9% this quarter. Excluding the expense related to the core IT system and workforce reduction in Denmark, the cost ratio improved by 0.8 percentage points, reflecting revenue growth, targeted efficiency measures and strict cost discipline. Both geographies in Private and Commercial in Denmark showed a lower cost ratio. We continue to strengthen our competitiveness, particularly in Denmark, and we're working to optimize our cost base across the group to create greater capacity for future investments in technology and growth. Over to Slide 14 for comments on our Pension operations. We are very pleased with the performance of our Pension business, which delivered a pretax profit of NOK 124 million, including the change in CSM this quarter. The increase over the fourth quarter in 2024 was mainly driven by a higher net finance income in addition to a positive effect from discontinuation of reinsurance contracts during the quarter. Higher profitability for the disability pension product also contributed positively, whereas lower results for child pension negatively impacted the results. Net finance income was NOK 73 million, reflecting running yield return from real estate, marginal spread tightening and an increase in interest rate levels. The unit-linked business continues to grow with a number of occupational members increasing by almost 18,000 members and assets under management up more than NOK 17 billion year-on-year. This drove administration fees and management income higher. However, higher expenses due to the growth in business weighed on the result, bringing it down compared with the same quarter in 2024. Moving on to the investment portfolio on Page 15. Our investment portfolio generated positive returns from most asset classes, driven by running yields, lower credit spreads and positive equity markets. The match portfolio net of unwinding and the impact of changes in financial assumptions returned around 50 basis points, mainly reflecting lower credit spreads and the fact that the investments did not fully match the accounting-based technical provisions. The free portfolio returned around 70 basis points, driven by running yields, lower credit spreads and positive equity markets. The risk in our free portfolio remained low. A few words on the latest development of our operational targets on Slide 16. Customer satisfaction in the fourth quarter of [ 77 ] was in line with the same period last year, but remained slightly below our target. We continue to take steps to further improve our customer offering and satisfaction levels. Retention in Norway remained high and stable at 91%. Retention outside Norway was unchanged at 84%, but we're pleased to see that Commercial Denmark increased retention from 85% to 86% this quarter. The improvement in the digital distribution index this quarter reflects a significant increase in digital sales and digital service as well as a steady number of digital customers. Distribution efficiency progressing well, primarily as a result of higher sales in Private Norway. Digital claims reporting was stable during the quarter with a slight increase in Sweden and automated claims processing in Norway improved further. Turning to Page 17. We had a solvency ratio of 188% at year-end, down from 191% last quarter. Note that the completion of the sale of operations in the Baltics will have a positive impact of approximately 5 percentage points on the solvency ratio. This impact will be recognized in the first quarter of 2026 as the transaction was completed after year-end. Solvency II operating earnings and returns from the free portfolio contributed positively to eligible own funds. Note that the reduction in book value of the core IT system does not impact eligible funds. The seasonal impact from premium provisions reflecting growth and higher profitability contributed to the operating earnings. The proposed dividend for 2025 reduced eligible own funds by NOK 3.1 billion this quarter. In addition, more of the Tier 2 capital is eligible this quarter. The impact from growth on the non-life capital requirement was offset by an approval of a minor change in internal model. Capital requirement for life decreased due to annual update of the model assumptions and parameters. Capital requirement for market risk increased due to recalibration of certain parameters and higher exposure towards equities in our Pension business. And with that, I hand the word back to Geir. Geir Holmgren: Thank you, Jostein. To sum up on Page 18, I'm encouraged by the progress we made in 2025, demonstrating our strong financial and operational resilience. We will continue our effort to retain our leading and unique position in the Norwegian market, while strengthening profitability and growth both in and outside Norway. We will ensure that pricing remains ahead of claims cost development and maintain a disciplined focus on operational efficiency. I am confident that we remain on a positive trajectory toward delivering on our financial targets for 2026. So finally, on Page 19. Before we open up for questions, a reminder of our Capital Markets Day on 26th of February. Please refer to the invitation published on 15th of January for further details. And with that, we will now open up the Q&A session of this presentation. Operator: [Operator Instructions] And the first question today comes from the line of David Barma from Bank of America. David Barma: So firstly, I wanted to ask you about the Danish business in the quarter on the Private side. And you note there was a support from reserve releases during the quarter. Can you come back on that and explain what that is, please? And then secondly, on private conditions and pricing conditions in Private Norway, please, the helpful comments you show on the pricing impact in January are still really positive. You're now at record combined ratios. So can you give us some color on how long you think that can last and what the rationale is to still be pricing that much ahead of claims inflation in 2026? And then lastly, coming back on the core IT system announcement. Can you explain your decision regarding this change and whether we should expect you to make further investments on your Norwegian and Swedish systems in '26? Jostein Amdal: Thank you, David. I'll start on the first one. As we -- as I said and we wrote during the year, reserves on claims already reported will be adjusted as they are going through the claims adjustment process. So that's a very natural part of the business. And in the fourth quarter, we have seen a positive effect on claims in -- especially property, Private Denmark, which were reported earlier this year. And that's improved, of course, the results in the fourth quarter in Private Denmark. We're not disclosing exact amounts there, but there's nothing particular or special about it. It's a natural part of the process. And we see that the underlying improvement in Private Denmark is very high in this quarter. But if you look at the year -- the whole year figures, they are not affected by those kind of intra-year movements on the reserves, and they also show a very solid improvement in the underlying frequency loss ratio of 4.5 percentage points. So there is a steadily increasing improvement, I would say, in the underlying profitability of the Private business in Denmark. Geir Holmgren: Yes. Regarding the Private business in Norway, I'm very satisfied with the development -- positive development we have had in the past. I see that we have succeeded with all our profitability measures, including changing terms and conditions, high retention levels or deductibles and also pricing measures. If you -- now in January, as mentioned and as you can see in the presentation, we are still increasing prices both for motor and property, which is above the inflation levels we are seeing at the moment. I will see that we have to consider on an ongoing basis what to do during the next quarter. So I can't share any comments on future pricing, but we will always have a position where we are doing the repricing at least in line with all the inflation numbers we are seeing. If you look at the retention level, still very high. We have very loyal customers in Norway. We have been through the Storm Amy and also in -- by the end of the year, we had a storm in the northern part of Norway. We see that the customers are very happy with the way we are handling the claims, which is very positive and probably our main purpose of being relevant for customers that we are helping customers when they actually need us. So -- and your last question regarding the core IT systems and what about investments in Sweden and Norway. We are doing an assessment what to do in Sweden as Sweden is definitely a smaller portfolio. So we have to definitely be assured that -- make sure that we are doing investments in Sweden, which are in -- at a level which could be easily handled by the Swedish business alone. The reduction on the book value we are doing this quarter gives us definitely higher optionality on what to do in Sweden and in Norway on a later basis. And the positive thing here is that we see that technological development we have seen in the past and definitely, we see the next years gives us more an improved optionality to what to do and -- which also I expect to have a good impact on expenses used in relative to Norwegian core IT system going forward. David Barma: Just coming back on the first one on Denmark. Is this a step change in profitability in the market? Or is it more a function of conservativeness in the attritional and how you book your attritional loss ratio earlier in the year, that was actually unwarranted? Jostein Amdal: No, I think this is a real improvement in profits, but the magnitude of this is somewhat influenced by these reserve adjustments. But there is no doubt about that in our portfolio, there is a real improvement in the underlying profitability there. Operator: The next question comes from the line of Vash Gosalia from Goldman Sachs. Vash Gosalia: I have 2 questions. The first one on claims frequency. So here, when I talk about claims frequency, I would love to get your inputs on how do you expect that to develop ex natural catastrophe? And what I'm trying to understand is, obviously, you're growing pricing at 9%, 10% with claims inflation mid-single digits. But I guess to get a better view on combined ratios, it would be helpful to understand how you think frequency is going to develop. And the other part to this particular question is, obviously, Norway is a bit more ahead of the curve in terms of vehicle adoption or new vehicle adoption. Do you see a structural decline as a result of that in your claims frequency, especially in motor? So that's the first one. The second one is on your cost ratio. So obviously, that has -- it's pretty strong adjusted for the NOK 502 million. And even in 3Q, it was pretty strong, in my opinion. So just trying to understand, is that like the new normal level? And can we expect that to improve further? Or is that -- or would you say that's like a fair level for our models and our forecast? Jostein Amdal: I'll start, Geir. Thank you, Vash. I mean we need to distinguish between the different products if we talk about claims frequency because they will be different. And with reference to nat cats, I assume you're mostly focused on the property side here. So for private property, we have talked about for a number of years that there is a long-term increase in the claims frequency due to climate change that there will be more water-related damages affecting our private book of business, and we need, therefore, to increase prices a bit more than just the inflation figures look like. And so we have done. We don't have any specific forecast for you on the claims frequency for neither property nor motor, except from what we've shown you in this page in the presentation where we do think there is -- except for these climate-related things on property, a fairly flat development in the claim frequency for property, whereas for private cars, vehicles, we do think there's an underlying small increase in claims frequency ongoing and at the same level that we talked about in the previous quarter, which is 1% to 2%. But the important part is that we are monitoring this very tightly and are ready to adjust pricing or terms if we see any unexpected developments. Geir Holmgren: Regarding cost ratio, you know our financial targets for 2026, and we are reporting cost ratios in the last quarters, excluding the expenses related to the IT core system in the last quarter, you see that it's below 13%. We have an organization where we have a very high level of cost discipline. We are many measures to improve cost efficiency on an ongoing basis. We see that our distribution efficiency, both in Norway and gradually in Denmark is improving based on use of data and how we actually run our business in the distribution area. You see that the hit rates when having a dialogue with customers is at a very high level, around 45% to 50% of every -- of the calls coming in are converted to sales. So -- and you also see on the more operational KPIs in the presentation that we are improving when it comes to automation and digitalization, which is helpful when it comes to cost and cost efficiency. So as an organization, we have a strong focus on cost discipline and referring to our financial targets is my best comment. Operator: The next question comes from the line of Hans Rettedal from Danske Bank. Hans Rettedal Christiansen: I was just wondering if you could clarify for me the write-down in the IT system because it's not completely clear exactly what it stems from, given the fact that you're saying you're extending the lifetime of the Norwegian and Swedish systems, but at the same time, sort of looking into the Swedish system here going forward. Am I correct in thinking that it's the value of implementing the Danish system into Norway and Sweden that's being written down? That's the first one. And then the second one is just again back on pricing in Private Norway. I understand that you can't say anything about the absolute pricing levels for 2026, but just trying to get understanding of what your expectation for inflation is because the range, 3% to 5% to 3% to 6% is quite large. So are you sort of pricing at the top end of that or middle end or lower end of that also considering the frequency? That's my 2 questions. Jostein Amdal: Yes. I'll start on the write-down, Hans. It's -- I think you're on to it. It's like we have developed a core system that started out as a group project. And then we see that given the technology development since we started this, the life span of the existing core systems, especially in Norway, but potentially also in Sweden might be enhanced for many more years. And that then when part of the investments that were allocated to kind of the Norwegian future core IT system is now taken down to 0. So the remaining book value is related to the Danish core system. And with the remaining book value, which we now have disclosed at a bit more than NOK 600 million, we do think we have a fairly cost-efficient core IT system covering both claims and sales and so on in Denmark. And also note that this system is in use for private. It's working well. And we're now in the process of implementing it for commercial Denmark. It will take some time, but we're doing it in a very thorough way and testing so to make sure that there is as little operational disturbances as possible when moving from one core IT system to another. Geir Holmgren: Yes. Regarding pricing in Norway, yes, it's not easy to comment on future pricing ambitions. But our core ambition is to price at least in line with the development of claims cost, which include that we have to be on the -- more on the conservative side when looking at the inflation interval, which also -- before we know the exact numbers on the inflation, we have to be assured that we are at least pricing in line with what we see on an inflation basis and claims development. So I have to admit that our starting point on doing this assessment is at the top end of the intervals commented. Hans Rettedal Christiansen: That's helpful. I was just wondering, just a quick clarification on the IT system. Maybe just why it sort of works in Denmark, but then it doesn't work in -- or you don't think it will work in Norway and Sweden. Jostein Amdal: I'm sorry, Hans, I was probably unclear. What I meant was that it is working in Denmark, but the existing system, which we have had for a number of years, is going to work for a longer time in Norway. We're not saying that we're not going to use the Danish system also in Norway and Sweden, but especially for Norway, this will be a number of years into the future before we are moving to any other -- any new core IT system. And the one we're using in Denmark is one of the candidates for a future Norwegian system. Geir Holmgren: I would say that now we have gained higher optionality when it comes to what to do in Norway and Sweden. And it's also a measured -- message here that actually, at the moment, we are very satisfied with how the system works in Norway. It gives us using all -- if you look at all the technological development we have been seeing during the last couple of years and what we expect in the future, we don't have to use the core system in Denmark also in Norway. We do have more alternatives, which is positive. Operator: And the next question comes from the line of Youdish Chicooree from Autonomous Research. Youdish Chicooree: If I may, please, I would like to stay on the topic of your core IT system. I was just wondering, I mean look, is there not a benefit from operating a unified system across all your geographies because I know some of your peers do that. And when you talk about the life span of the Norwegian system expanding by several years, it just sounds like you're just delaying the possibility of having like one platform across all your geographies. So your thoughts on the potential savings you could have further down the line by making the investments today would be interesting. And then secondly, on -- just on pricing and the competitive environment. You're still pricing at a decent margin above your expected claims inflation. I was wondering about whether there's been a change in the competition landscape considering that some of your other peers have talked about doubling the market share from single digits. So any comments around that would be actually quite helpful. Geir Holmgren: Yes. Starting with the core IT system. I would say if you looked at Norwegian platform, and I would say that everything we do in Norway, all the processes, including claims, distribution, everything is not only dependent on the core IT system. We are using technology in all our processes across our business. And my core idea a couple of years ago was to enhance the operational benefits of having operations in both Norway and Denmark. So we are seeing synergies on the way we are doing on the distribution side, how we use data. We are facing synergies on how we run the business, both in Private and Commercial segments in Norway and Denmark. It is not only dependent on having one single IT platform across the markets. It's more how we use data, how we have a common management team across Norway, Denmark and how we run the processes -- the core processes related to our business. So I would say that we have done many measures. We are facing progress when it comes to have more on the operational benefits and synergies across Norway and Denmark. So it's not dependent alone on a common core IT platform. Jostein Amdal: Yes. On the competitive landscape, it's -- I'm not sure I know which players you're referring to that are doubling their market share or have ambition of doubling their market share. Our experience is that competition is still very rational and disciplined. We still see all the major players having fairly similar or rather similar profitability targets, especially if we adjust for the cost advantage that Gjensidige has compared to the peers. And we don't see really any shifts in the competitive landscape so far at least. And that goes for both Norway and Denmark and Sweden. Operator: [Operator Instructions] The next question comes from the line of Thomas Svendsen from SEB. Thomas Svendsen: Yes. So a question on Sweden. It seems to be a very strong also underlying results for Q4 -- to be at Q4. So how will you describe the business in Sweden? Is this sort of a highlight or sort of underlying picture in Sweden? So this is a new better level in Sweden? And also how is price increases accepted in Sweden by the clients? Geir Holmgren: Thanks, Thomas. Well, I'm very satisfied with the development we have seen in Sweden during the last year. Very good profitability. We have a stable market position even though it's a minor or a smaller position. But if you see all the development we have done in the Swedish business during the last couple of years, we are doing progress when it comes to automation. We are doing progress when it comes to use of digital solutions. We are doing progress when it comes to risk selection and our competence and capabilities on underwriting. So I think that underlying development in the Swedish business is very healthy, and it's -- so it's a very good run and business with good progress. If we look at market conditions, it has been stable. We see that we are succeeding with the risk selection we are doing. And you can also in the presentation, see the growth numbers we are having in Sweden. But having this stable position is a good asset and strategically right for Gjensidige. Thomas Svendsen: Okay. And then maybe the final question on the IT system. So you wrote it down earlier in the year as well. So what has changed or what did you discover during Q4? I guess it was not smoothing of earnings, but that something has happened during Q4? Geir Holmgren: Yes. In the third quarter, we had a termination on the core IT system in the Pension business, which is a different system. So now we are running this business with the existing system and also recognize that we had a longer life span on the existing system. What we are doing now in this quarter is to give us higher optionality to what to do in Sweden and Norway because when we started this core system project many years ago, it was stated as a group project. Now we are giving ourselves a higher optionality to look at this as a Danish project. And then we have a good time and can use the time to decide what to do in Sweden and Norway with no kind of tense situation where we had to conclude in due course. Thomas Svendsen: And I guess if you just look at Q3 and Q4 in combined, I guess there are some learning points. And how we -- do you think for future investments in AI and new technology? Would you be very strict on that? Geir Holmgren: Yes. Definitely. I would say that we have picked up learning points, not only in the last 2 quarters, but during the couple of last years. I will see that now we are running IT project in -- and we have done this assessment very -- and used competent resources to do the assessments. And now we are running IT project with high level of management attention and with high level of control and steering, of course. And all the learning points we are picking up learning points for -- regarding all kind of investments and processes we are running. So it's not only on the IT core system. We always have to improve the way we are doing our business and running our business, including core IT systems investments. Operator: Our next question comes from the line of Qian Lu from UBS. Qian Lu: This is Qian Lu from UBS. Firstly, just a quick clarification on the IT system. So you mentioned that this write-down has kind of given you optionality as to what to do in Norway and Sweden. So does that mean it's still possible for us to see like utilization of this core system in Norway and Sweden in the future? And then secondly, just some long-term questions on autonomous vehicles, which are on the heavy debate lately. I'm keen to understand what you're seeing in the Norwegian market. So to what extent is the speed of change of the car fleet in Norway different to other Nordic countries and Continental Europe? When do you expect to see advanced AVs that L2+ to become a majority of the car fleet? And are you ensuring any AVs in your book at the moment? Jostein Amdal: Yes. On the IT system, we are definitely not saying that we're not going to use the Danish system. We are saying that by expanding the horizon for when we start a core -- a change of the core IT system in Norway in some areas, that was the reasoning behind the write-down of the IT system. But the current Danish system is definitely one candidate for -- also for Norway and Sweden in the future. Geir Holmgren: When it comes to autonomous driving, this is definitely a long-term trend. It's something we have followed for many, many years. As you know, we have a separate mobility strategy, which is integrated with our business and especially our motor insurance business. So having feet on ground with the RSA company is important and an important part of our mobility strategy. When it comes to risk development, you will probably see that over time, due to autonomous driving, you will see that risk and claims frequency could be reduced. But on the other side, we also see that the OEMs, the car producers will need to increase their kind of liability due to responsibility regarding the autonomous cars. And we don't expect this to have a short-term impact. The average age of the car in the Norwegian car fleet is above 10 years. We see that even though 97%, 98% of the cars -- new cars sold today are EVs, the total share in the total car portfolio is approximately 27% of the total car fleet. So it takes a long time before actually this will have a larger impact. And then you probably see that Nordic driving conditions are very different from what you see other places. And you need a lot of data to make the autonomous cars being able to have this autonomous driving on Norwegian and Nordic roads as well. So our response to that is that we are following this development very closely, and we are having our mobility strategy to be relevant for the OEMs and car retailers forward. And yes, and there are also opportunities regarding risk and risk exposures related to the autonomous cars, which are very interesting also on a long-term basis. Operator: [Operator Instructions] The next question comes from Michele Ballatore from KBW. Michele Ballatore: So I have 3 questions. So the first question is about the message, the change in messaging the dividend. So how should we read that? Why did you -- have you decided to change it? So that's the first question. The second question is on the special dividend. I mean it's quite a sizable special. I mean it's -- can you help us understand in terms of the expectation on this particular metric? I mean how should we think about this -- its development in the future? And then the third question, I'm really sorry to come back to the IT system thing. But I think -- I mean I will phrase the question slightly different from the others. If we look at the impact that this -- in terms of benefits, depreciation or whatever, the impact that this IT system had in the previous quarters or in the previous years, have they -- I mean are they going to change? I mean it's -- if you -- were this impact more optimistic, less optimistic? I'm trying to understand what will change in terms of the future versus the past. Geir Holmgren: Thank you. Starting with the minor changes regarding the dividend policy statement. It's -- if you look at what's been happening during the last -- or over many years, the actual dividend, regular dividend has been increasing year-by-year. So it's -- so changing the statement high and stable nominal dividend seems to be relevant to actually face what's actually happening. So it's a revision, which now reflects the actual situation we have seen in the past, and it doesn't change any practice going forward, I would say. When you go to the size of the special dividend for 2025, if you look at our dividend policy and everything we -- and what we actually is our main kind of thinking in the management and in the Board is that we don't aim to have much surplus capital in the group. We have this solvency interval, 140% to 190%, which is something we have to have in mind when stating the proposed dividend. So with this in our mind, we are -- and doing this forecast on the capital situation in the group as well, it seems to be very right to propose a dividend. And in this situation, a surplus dividend of NOK 4.5, which reflects the capital situation in the group and also what we have said, not having too much surplus capital in the group as well. Jostein Amdal: On the question on the IT system, the way we book this is that it's capitalized as we develop it. And then when we start taking the system in use, it's into annual depreciations affecting the P&L. And when we started using the private -- using the system for the Private segment in Denmark, we started depreciating on the kind of the investments allocated to the private segment in Denmark, and that's been included in the accounts for the previous quarters. The write-down now doesn't change this because what's remaining on the book value is related to Denmark, and we start depreciating the cost allocated to the commercial part of this system when we start taking into use in Denmark. And then over time, of course, we do have costs related to the existing system. And then that -- those costs will be fade out as we move the portfolio from one system to the other. Operator: There are no further questions. So handing back over to you, host, to conclude. Mitra Negård: Thank you. Thank you, everyone, for good questions. We will be participating in roadshow meetings in Oslo today and in other cities abroad after our Capital Markets Day, which, as mentioned, will be held on the 26th of February. Please see our financial calendar on our website for more details. Thank you for your attention, and have a nice day.
David Mulholland: Good morning, ladies and gentlemen. Welcome to Nokia's Fourth Quarter and Full Year 2025 Results Call. I'm David Mulholland, Head of Nokia Investor Relations. And today with me is Justin Hotard, our President and CEO; along with Marco Wiren, our CFO. Before we get started, a quick disclaimer. During this call, we will be making forward-looking statements regarding our future business and financial performance, and these statements are predictions that involve risks and uncertainties. Actual results may, therefore, differ materially from the results we currently expect. Factors that could cause such differences can be both external as well as internal operating factors. We have identified such risks in the Risk Factors section of our annual report on Form 20-F, which is available on our Investor Relations website. Within today's presentation, references to growth rates will mostly be on a constant currency and portfolio basis, and other financial items will be based on our comparable reporting. Please note that our Q4 report and a presentation that accompanies this call are published on our website. The report includes both reported and comparable financial results and reconciliation between the two. In terms of the agenda for today, Justin will go through our key messages from the quarter, then Marco will go through the financial performance, and then we'll move on to Q&A. With that, let me hand over to Justin. Justin Hotard: Hello, everyone, and thank you, David. Overall, our fourth quarter performance was in line with our expectations, reflecting disciplined execution across the business. Net sales grew 3% in the quarter to EUR 6.1 billion, with operating profit of EUR 1 billion and free cash flow of EUR 0.2 billion. For the full year, net sales were EUR 19.9 billion and operating profit was EUR 2 billion, slightly above the midpoint of our guidance. Free cash flow conversion of 72% was also consistent with our guidance. Stepping back, 2025 was a foundational year in repositioning Nokia for long-term value creation. We strengthened our portfolio with the acquisition of Infinera, simplified our operating model and set a clear strategy at our Capital Markets Day to focus the company on the areas where we see opportunities for differentiation, scale and sustainable market leadership. Now to give you a bit more detail, let me first turn to Network Infrastructure. In the fourth quarter, net sales grew 7%, driven by optical networks, which grew by 17%. Order intake was solid across both optical and IP networks with a book-to-bill above 1, supported by particularly strong demand from AI and cloud customers. For the full year 2025, we delivered EUR 2.4 billion in orders from AI and cloud customers. This reinforces our view that optical networking will become an even more critical part of the infrastructure to support the AI super cycle, and we are investing to capture near-term demand, while maintaining a long-term perspective on the opportunity. In Optical, our 800-gig ZR and ZR+ pluggable products are shipping with initial units performing well in the field. We now have multiple design wins and are supplying into scale deployments. Our focus is on ramping production to meet the strong demand we see in the market. In IP Networks, we made progress on our expansion into data center switching. We launched two new products in the quarter, the 7220 IXR-H6 switching platform powered by Broadcom's TH6 and our Agentic AI solution for event-driven automation management, which reduces network downtime by 96%. We also secured a design win for our next-generation data center switching platform. These are encouraging steps, and we continue to believe revenue will ramp over time as we expand our presence in this rapidly growing market. In our mission-critical enterprise customer segment, book-to-bill was well above 1 in Q4, supported by a growing pipeline from both new and existing customers. Turning to Fixed Networks. Performance was stable year-on-year in Q4. As discussed at our Capital Markets Day, we are deprioritizing certain customer premises equipment products where we do not have meaningful differentiation and which dilute margins. In Q4, our fiber OLT business grew 16% year-over-year, offset by declines in these areas, I just referenced, that we are deemphasizing. This resulted in overall flat performance for Fixed Networks. As I announced at our Capital Markets Day on January 1, we brought together core software, radio networks and technology standards to form our new Mobile Infrastructure segment. This structure is designed to sharpen accountability, improve profitability and position the business for long-term technology leadership. Core Software, formerly a part of Cloud and Network services is leveraging our differentiated cloud-native core network stack to grow faster than the market and continue improving profitability. During the quarter, we won a 5G core deal with Telia and announced the collaboration with Bharti Airtel on Nokia's Network as Code API platform. We now have more than 75 partners using the platform, including 43 telcos. Radio Networks, formerly a part of Mobile Networks, focused on disciplined execution in a largely stable market. We continue to invest to deliver 5G advanced and O-RAN solutions while innovating to establish a longer-term leadership position in 6G and AI-native networks. A key pillar of our strategy is co-innovation. And in Q4, we announced our partnership with NVIDIA. We continue to remain on track to begin trials and proofs-of-concept on AI-RAN later this year. We also announced a market share expansion deal with Telecom Italia, along with contract extensions with Telefonica Germany and SoftBank. Technology standards remains focused on securing long-term monetization of Nokia's patent assets. We signed several deals in Q4 and continue to maintain a contracted net sales run rate of approximately EUR 1.4 billion. At our Capital Markets Day, we also announced the creation of Nokia Defense, a new incubation unit that will serve as the central R&D hub and go-to-market for our defense portfolio. Our priority is to deliver defense-grade solutions based on Nokia's Mobile and Network Infrastructure technologies for Finland and other NATO countries. Nokia Defense also includes Nokia Federal Solutions in the U.S. and includes the technology we acquired from Phoenix Group in 2024. Based on feedback from customers, we see growing demand for our 4G and 5G technology in military environments, both for national security and tactical applications. This is an area where we are continuing to invest, and we will share updates as we make further progress. Finally, in Q4, we closed the transaction to take full ownership of our joint venture in China, Nokia Shanghai Bell. This gives us greater operational flexibility, and we will bring it into full alignment with Nokia's global operating model. As a part of that integration, we expect to deliver approximately EUR 200 million of run rate cost synergies with integration costs of approximately EUR 350 million to EUR 400 million over a period of 24 to 36 months. Turning to '26. Looking ahead, our focus is on disciplined execution to capture growth in AI and cloud and increase efficiency while we're building a high-performance culture across Team Nokia. We now have fewer, clearer priorities, a simplified operating model and a strategy we are executing with speed and accountability. Network Infrastructure remains our primary growth engine, particularly Optical and IP Networks, where we see strong structural demand. In Mobile Infrastructure, our focus is on gross margin and efficiency, while we continue to invest in our portfolio for competitiveness and market share in 5G and to transform the business for long-term success in areas such as AI native networks and 6G. From a financial perspective, in 2026, we are targeting an operating profit in the range of EUR 2 billion to EUR 2.5 billion. At our Capital Markets Day, we outlined a series of KPIs to illustrate how our strategic direction translates into financial outcomes. Let me revisit those and what we expect in 2026. Our first KPI is to deliver 6% to 8% compound annual growth in network infrastructure between 2025 and 2028 on a constant currency and portfolio basis and 10% to 12% in the combined Optical and IP Networks businesses. In 2026, we expect growth rates in both cases to be in line with these long-term targets. As expected, the product prioritization decisions we have taken will limit growth in Fixed Networks, while we expect growth in our fiber OLT portfolio to continue to occur due to strong underlying demand. Our second KPI is to expand Network Infrastructure operating margin to 13% to 17% by 2028. This is compared to the 9.5% achieved in 2025. In 2026, we expect measured margin expansion as we ramp new products and continuing investing in the long-term growth opportunity we see in the business. The next two KPIs relate to Mobile Infrastructure gross margin and operating profit. In 2026, we continue to expect some top line headwinds from prior contract losses, but otherwise, a stable market environment. Our focus is to continue to target at least EUR 1.5 billion in operating profit, consistent with our performance in 2025. As announced at our CMD on January 1, we have moved four businesses into a new unit called Portfolio Businesses. This includes our Fixed Wireless Access customer Premises Equipment, and Site Operations businesses, both from Fixed Networks, our Microwave Radio business from Mobile Networks and the Enterprise Campus Edge business from Cloud and Network Services. In 2025, these businesses generated net sales of EUR 850 million and an operating loss of EUR 97 million. In 2026, our target is to conclude a future direction for each of them. We currently assume a lower operating loss in 2026 versus 2025. For Group Common, we expect costs of approximately EUR 150 million in 2026 compared with EUR 190 million in 2025. Overall, we see 2026 as a year where we will make meaningful progress towards our long-term targets. With that, let me turn over to Marco to walk you through the financials in more detail. Marco? Marco Wiren: Thank you, Justin, and hello from my side as well. As Justin mentioned, we delivered a fourth quarter, which was in line with our expectations and guidance. Net sales were EUR 6.1 billion, that's up 3% on the prior year. Gross margin was 48.1%, an improvement of 90 basis points, driven by improvements in Mobile Networks and Cloud and Network Services. Operating margin was 17.3%, and this is 90 basis points below the prior year, impacted primarily by increased investments in growth areas, including the Infinera acquisition. We generated EUR 226 million of free cash flow and ended the quarter with EUR 3.4 billion of net cash. Let's turn to the business groups now and starting with Network Infrastructure, where net sales grew 7%. In quarter 4, AI & Cloud customers accounted for 16% of our net sales and 30% of Optical Networks. The book-to-bill for the overall segment was above 1 with strength in IP and Optical Networks. Gross margin declined by 80 basis points to 44.6%. Operating margin was impacted by lower gross margin, along with the increased growth-related investments in R&D and the costs associated with the acquisition of Infinera. And then, let's go to Cloud and Network Services, where we saw a decline by 4% in the quarter, and this was mainly due to a different phasing of revenue recognition this year. The business delivered 6% of net sales growth for the full year 2025. Gross margin increased 650 basis points, partly as a result of the reversal of a provision of EUR 37 million in the quarter. So even without this benefit, we would have seen an improvement in gross margin. Operating margin also increased by 470 basis points with improvement in gross margin supported by reduced operating expenses. And then Mobile Networks, net sales increased by 6%, and this was driven by growth in Middle East and Africa, Japan and Indonesia. Full year net sales were stable and consistent with our expectations. Gross margin was 40.1% due to more favorable mix and lower indirect costs. For the full year, gross margin was 37%. Operating margin was 11.3% in the quarter, reflecting the higher gross margin as well as the impact of lower operating expenses benefiting from the ongoing cost saving program. In Nokia Technologies, net sales declined by 17% in the quarter. Catch-up sales in this quarter were lower than the previous year, and we signed several new deals in quarter 4, and our annual net sales run rate remains at approximately EUR 1.4 billion. Operating profit was impacted by a EUR 20 million impairment charge, and this is related to a prior asset purchase, which we deem to have minimal future value in the context of our product portfolio. Now let's look at the net sales by region. And as you can see here, in North America, we saw strong growth in Networks Infrastructure, whilst Cloud and Network Services and Mobile Networks declined. In APAC, Japan and Indonesia grew, while we saw declines in India and Greater China. And excluding Nokia Technologies, Europe grew 4% with strength in Network Infrastructure. Middle East and Africa grew in both Mobile Networks and Network Infrastructure. And then regarding cash, we ended the quarter with a net cash position of EUR 3.4 billion and the free cash flow was positive EUR 226 million and ending the year with a conversion rate of 72%, which is within our guided range of 50% to 80%. And in the quarter, cash increased as a result of the NVIDIA equity investment, which was EUR 0.9 billion. And we also completed the acquisition of the NSB shares, which impacted cash by EUR 0.5 billion. And this equates to 50% of the net cash in the joint venture, which we paid to the other joint venture equity owner and was consistent with the liability we had already recorded on our balance sheet. We now fully own our operations in China, and that will give us a greater operational flexibility going forward to manage the business, just like Justin mentioned. And today, we have also published recast financials based on the new operating structure, we have implemented at the start of the year. And there are a couple of things that I wanted to highlight to help you understand these figures. You will see some differences in the net sales compared to our prior reporting, reflecting those units being moved into the new Portfolio Businesses segment, as Justin explained earlier. In Group Common, the recast cost base for '25 is EUR 180 million as we have reallocated approximately EUR 193 million of the cost to the primary operating segments to better reflect the nature of these costs. And as discussed at our Capital Markets Day, the operating segments are expected to drive efficiencies in the organizations to mitigate those costs over time that we have transferred to them. However, this reallocation have a short-term impact on the segment profitability in NI and MI. And finally, Justin already introduced our new 2026 financial outlook, but I just wanted to share some comments on additional modeling assumptions for this year. For quarter 1, historic seasonality would imply a 24% sequential decline in our net sales, excluding Nokia Technologies. Considering the above normal seasonality we've seen in quarter 4 2025, we currently expect quarter 1 2026 net sales to decline somewhat more than normal seasonality would imply. We also assume the operating margin to be only slightly better than the prior year. Then for the full year of '26, we expect comparable financial income and expenses of between positive EUR 50 million to EUR 150 million. And we assume a comparable income tax rate of around 26% and 27%, with a slight increase related to the regional mix of profit generation. Cash tax outflows are expected to be approximately EUR 500 million. And we are planning for CapEx of between EUR 900 million and EUR 1 billion as we invest in additional manufacturing capacity for Optical Networks, along with some real estate renewal projects. And finally, we expect free cash flow conversion of between 65% to 75%. With that, let me hand it back to David for Q&A. David Mulholland: Thank you, Marco and Justin, for the presentations. Alicia, could you please give the instructions for the Q&A session? As a reminder and as a courtesy to others in the queue, if you could please limit yourself to one question and a brief follow-up. Alicia, please go ahead with the instructions. Operator: [Operator Instructions] I will now hand the call back to Mr. Mulholland. David Mulholland: We'll take our first question today from Alex Duval from Goldman Sachs. Alexander Duval: A couple of quick questions. Firstly, on Optical, it grew 20% in the quarter, but it seems you're saying it will only grow 10% to 12% in full year '26. You referenced good order momentum as well as a solid percentage contribution from AI. So I wondered to what degree your guidance for the segment reflects conservatism? And secondly, as a brief follow-up, you're guiding to a somewhat sub-seasonal trend into the first quarter for the group. I wondered to what degree that's just normalization of a better than seasonal 4Q or whether there are other factors to take into account? Justin Hotard: Yes, sure. So Alex, good to hear from you, and let me answer your first question. You're right. We obviously grew 17% in Q4 on Optical Networking. When you look at our Optical Networking business, we are being balanced on the 10% to 12% across IP and Optical Networking, as you said. What I would also emphasize is, we are still transitioning from a base that was, was still very telco-centric in '25, so 70-30. And if you think about where we were before that, certainly before the Infinera acquisition, significantly telco-centric. So we're building off that base. We're excited about the order momentum. And then, of course, in parallel, we're working to scale production. So, I think as you and I have talked about, we want to be disciplined in our execution and our predictability. And so therefore, that's why we've guided the way we have. But I continue to be very optimistic about this business and the long-term opportunity for some of the factors like scale across networking, the demand we're seeing in overall fiber, some of the recent announcements in this area. So, I think this is a place where absolutely, it's a strategic priority for us, absolutely, it's a focus of capital allocation. And I believe it's a market that will be a significant player in for many years ahead, but balance on where we are today given the starting point that we had, which is really only three quarters deep in terms of aggressively pursuing the AI & Cloud segment. Marco Wiren: And for the second question, if you look in the past as well, when we have had a very strong and higher than normal seasonality in quarter 4, we easily see a larger decline as well. And this is a little bit based on as well how our telco customers are buying. And this is more, I would say, visible in mobile network area and also the telco customer base that when they have had a lot of purchases in quarter 4 and usually the start of the year, a little bit slower, and that's why we guide that we see a somewhat lower than what we normally see. David Mulholland: Thank you, Alex. We'll take our next question from Richard Kramer from Arete. Richard Kramer: Justin, you're pledging to grow CapEx to really record levels of EUR 900 million to EUR 1 billion. Do you have visibility in your order book of Optical or IP orders? And or is leveraging this investment require additional unannounced wins with hyperscalers? And where are you in that sales cycle? And I have my follow-up. Justin Hotard: Yes. And obviously, Richard, when you think about CapEx investments in manufacturing in Optical, particularly semiconductor manufacturing, as you're well aware, I'm sure, this is not something you invested in a year and you start generating returns. So this is something where we're looking at the long-term trends. And we've got a lot of confidence in the long-term market trend supported by the near-term demand that we see. Richard Kramer: Okay. And for Marco, we saw EUR 300 million of restructuring in '25 and you're guiding to another EUR 450 million in cash outflow. Can investors look forward into 2027 where you think these very heavy impacts on reported versus comparable earnings drop to immaterial revenue levels? Marco Wiren: Yes. I think as we announced already in '23 October that we have this cost-cutting program and efficiency program. And there, we laid out also the different years until '26 where we have this restructuring cost. And we guided by that time that we expect cost savings between EUR 800 million to EUR 1.2 billion, and we said that also the costs to generate these savings will be about the same and also the cash flow is following that. And usually, the cash flow considering that we have more footprint in the European area. And that's usually -- there's delays on acting on those different cost actions that we are doing. And this is the reason why we see that '26 is more heavier on the cash outflow side as well. And -- but we are following the plan well according to what we have laid out earlier as well. David Mulholland: Thanks, Richard. We'll take our next question from Simon Leopold from Raymond James. Simon Leopold: First thing, I wanted to ask about is particularly within the optical space scale across projects are new variant for data center interconnected. Your peers have discussed these projects. Can you elaborate on Nokia's position and how you envision this opportunity developing over the next few years? And then I've got a follow-up. Justin Hotard: Yes. Sure, Simon. Good to hear from you. Just a couple of things here. One, this is a space that we think is a part of the long-term trend on optics. I mean, if you look at the long-term demand on optics, think of the drive around scale across right now as being one of the most significant near term. But obviously, then you have speeds, right? We've gone through the 400- and 800-gig transition very quickly. We're ramping on 800-gig multiple pluggable wins, as we've talked about, a lot of active customer conversations on that space, continued momentum in the market in terms of what we see. But then we expect that 1.6 and 3.2 will come. And when you look at that scale across is the tailwind for both the technology transitions and the demand. And then, of course, over time, we see scale out increasingly be an opportunity for coherent optics. So that's the tailwind we see. The other thing I would just reference as you think about this is routing for us, in particular, scale across is a tailwind for. So switching is much more about the data center racks, the spine-leaf architecture. But when you think about routing, that's another tailwind. But key thing for us right now is spending the time doing the work, co-developing, co-innovating with our customers, making sure we're scaling production capacity to take advantage of this opportunity over the long term. And fundamentally, what I see is a much more mature and larger optical market, driven by the AI infrastructure build-out than we've seen in the past. And I think a much more mature in ecosystem as well. So there's a lot of work to do for us as an ecosystem and as an industry, but I think a much bigger market, and that's absolutely why we're investing into it and why you see us leaning in on capital both in terms of CapEx, but also R&D capital in the space. David Mulholland: Do you have a follow-up, Simon? I guess we'll move on. We'll take our next question from Sami Sarkamies from Danske Bank. Sami Sarkamies: You had 5% growth at IP Networks in '25. What needs to happen for this to step up? Are the bottlenecks related to product offering, customer logos or design wins? And then on timing, how much time do you think we need for improvements. Could it happen already this year as you have signed new customers during last year? Justin Hotard: Sami, thank you for that. Yes, I would just say a couple of things here. First of all, we've talked about the fact that while we were well positioned post the integration of Infinera to go after the Optical Networking platform, this is a space where we've been even a little further behind. So it's been a big focus for me as we started -- as I started. And obviously, for David, as he took over. And in fact, we just announced earlier this week that we have a new Head of IP Networking, Greg Dorai and Vach Kompella, who, for those of you that have been around this industry, know Vach, is an industry legend, he's retiring. But part of that in bringing in Vach's successor was looking for someone that had deep data center experience. So the net of all of that is, as I said at CMD and even in some of our recent discussions with investors, this is a space where I think it's going to take us a little bit of time to see the growth. But I'm really, really pleased with the design win we had in Q4 that I referenced. I'm pleased with the order backlog. But I think this business needs a little bit of time to ramp. Absolutely a big tailwind as a part of the AI and data center build, and encouraging progress on mission-critical where we play in select vertical markets that value scale, security and availability, obviously, things we bring from our legacy in this space in telcos. David Mulholland: Did you have a quick follow-up, Sami? Sami Sarkamies: Okay. I'm wondering on the CapEx outlook, is this going to be like a multiyear undertaking, if you think about higher CapEx or just like 1 year thing? Justin Hotard: Yes. I think what we'll continue to do, Sami, on this, and I'll let Marco comment is, we're always going to show investment against the opportunity we see in the market. So I would look at this as in line with supporting the guidance we've given you for now and really in line on Optical Networking growth as we see it. So obviously, that's -- in the future, if we saw a different growth potential in Optical, we might give you a different view on CapEx. Marco, anything to add? Marco Wiren: No, I -- just building over what you said that we definitely see opportunities, and that's why we believe that it's the right timing to invest more, to capture those opportunities and secure also that we have manufacturing facilities and capacities that are needed be able to deliver those demands that we see that especially in the optical side are increasing. But still, it's not so that there's a huge CapEx investments compared to other data center investments. So these are still quite reasonable investments, and we believe that there's a very good return on those investments as well. David Mulholland: Thanks, Sami. We'll take our next question from Artem Beletski from SEB. Artem Beletski: So I would like to pick your thoughts regarding recent news coming out from Brussels. So, what comes to this Cybersecurity Act, the Digital Network Act. So how do you see those proposals impacting your business outlook, what comes to upcoming years? Justin Hotard: Look, I think on the Cybersecurity Act, the CSA, and the Digital Networks Act, DNA, look, first of all, we're pleased with this. I mean, this is -- these are some of the things we've been calling for. Certainly, since I started, I've been very vocal about. I think the key thing on the Cybersecurity Act around trusted networks is seeing a few things. One is the clarity on replacement schedules. I also think it's important, as we've said, that there's support for network operators, this kind of replacement is a big lift. Now from a supplier perspective, this is well within our capacity. If you think about the pace at which we've deployed out -- deployed networks in India or even in North America in terms of upgrades, the network upgrades that are required in Europe are something well within our scope and capability and manufacturing capacity. But it's a complex technology project. So, we think this is something that we recognize there's complexity and support. And our view is the urgency is now that we need to continue to move. And certainly, for our customers, they need to have clarity because where we're -- the platforms we're investing in today will be all the things that need to become 6G ready in the near future. And if you think about what we talked -- we're talking about AI-RAN as an example of that, that is a great example of where if you buy an AirScale platform today, it's going to be upgradable to AI-RAN as we launch that platform. And so that's the kind of opportunity we're making the investment decision now and having clarity now as an operator. As you run that project over a 2- or 3-year period, we think is particularly important, and that's why it requires support because, obviously, it's not in anybody's budgets to run an accelerated CapEx program amongst our customers. But it's also not just radio. We tend to focus on that. This is actually a really important opportunity for fiber networks and access networks and just as important, because fixed access networks are critical for consumer, they're critical for business. And then, of course, there's the transport networks and all the underlying infrastructure. So this is a pretty significant step. We're very pleased with it. I also think when you link it to DNA and you look at some of the things around spectrum harmonization and you look at the opportunity in Europe, and this is something that I've been certainly vocal about, I was talking about last week in Davos is, this is an opportunity for Europe to reshape its long-term competitiveness, its long-term competitiveness in technology, its long-term competitiveness in infrastructure and innovation and ultimately, national security, sovereignty and economic competitiveness. So I think this is really, really important. And you can just look back at the Internet super cycle to see where the winners in the Internet Super Cycle came from as a result of significant infrastructure investment. When you think about Europe and AI, Europe is incredibly well positioned. It's well positioned because you've got a great industrial automation technologies, obviously, manufacturing industries like automotive and you've got great talent in Europe. And obviously, as being our largest talent base in our -- in the company, we want to see more investment here so we can continue to support the talent here, building technology for Europe to support Europe and see a broader ecosystem develop. David Mulholland: Did you have a quick follow-up, Artem? Artem Beletski: Yes. I would like to ask a follow-up on Optical Networks. And could you maybe comment whether you see some supply-related constraints when it comes to growth? I recall from CMD, so you have been commenting about order growth year-to-date a bit more than 40%, and we do understand that the market fundamentals are really robust on that front. Justin Hotard: Yes. Look, I think it's a great question, Artem. So first of all, obviously, if you think about this broader ecosystem, the one thing I would remind everybody is the consistent thing in the AI data center build, AI infrastructure build has been there have been constraints. There's been power constraints. There's been connectivity constraints. There's been computational silicon constraints. There's news of memory constraints right now. One of the reasons I think when we look at this, we don't see the same dynamics of the telco and Internet bubble that you saw in the late '90s is because this infrastructure build has been consistently constrained. So what we see is, we do see supply constraints that's normal with this kind of scale and build. And obviously, part of our investments is not just in our own capacity but also in supporting the ecosystem and building its capability and capacity. And again, if you look at Optical, Optical is not nearly running at the kinds of volumes that you'd see that the microelectronics industry or the traditional computational electronics industry because it doesn't have the same consumer volume off the side of it that's driven a lot of the automation and capacity that's existed. So, all of these things need to be invested in. And again, this is why we think that the market has great long-term potential given the technology, but also a lot of ongoing investment that we and the entire ecosystem need to cultivate to make sure we can deliver on the long-term success. And it's part of why we think we're favorably positioned with our indium phosphide technology and manufacturing facility. David Mulholland: Thanks, Artem. We'll take our next question from Daniel Djurberg from Handelsbanken. Daniel Djurberg: Yes, on the Mobile Networks, it was clearly better than expected, and some decrease primarily due to North America. And can you comment a bit on North America? Are we comparing apples-with-apples now with regards to AT&T loss? And also do you see any possible inroad again with AT&T with the 600 build, for example, with the FirstNet upgrades? Any comments would be grateful. Marco Wiren: Yes. Thank you, Daniel. Just like you alluded to as well, in '26, we will see some headwinds from North America in the Radio Access Network side, considering the customer losses that we had, and that will have an impact. Otherwise, I would say that in market-wise, we see quite stable market in the Radio side. It's -- where we see growth is AI & Cloud in North America is extremely positive brands there right now when it comes to that segment. Justin Hotard: Let me take AT&T. First of all, and just to remind everybody, AT&T is a very, very large, strategic and important customer for us. They are a customer for us across core networks, fiber access. So if you think about NI and MI, they're a very important customer for us and a very strategic one, given the investments that they're making today and their networks. And we've talked about a little bit of that in the past as well. Look, from my standpoint, as I think about customer opportunities and market opportunities, we want to pursue every piece of profitable market share that we can. And if we're honored to be a part of their network in the future, we'll absolutely take that opportunity. Right now, our focus is on delivering on our commitments to them and to all of our customers. And as we said in the restructuring, as you heard from Raghav at CMD, becoming an easier company to deal with from a customer perspective, particularly for our telcos where we need to do more to be working with them around collaboration, co-innovation and making sure that we help them deliver the simplification and the operating leverage they need in their networks to deliver on their strategies. David Mulholland: Thanks, Daniel, did you have a follow-up? Daniel Djurberg: Yes. Perhaps just a short one on the book-to-bill on Optical and IP Networks being positive still. Can you give some more comments on those on a separate note, i.e. comparing them, the relative magnitude or something? Justin Hotard: Each one is good. Each one is healthy on the book-to-bill. If you put them together, they're good. If you split them, they're good. We're not blending. David Mulholland: Thanks, Daniel. We'll take our next question from Terence Tsui from Morgan Stanley. Terence Tsui: I had a question around the operating guidance for the full year, please, of EUR 2 billion to EUR 2.5 billion. I would love if you can provide some color around the EUR 500 million guidance range, please. You noted that 2025 was slightly ahead of the midpoint. So I'm just interested to learn about reasons to be a bit more optimistic, and reasons to a bit cautious in your thinking. And then the quick follow-up relates to Q1 guide. What FX are you assuming there? Are you using the spot of USD 1.2? Justin Hotard: Marco, do you want to take that? Marco Wiren: Yes. When it comes to the guidance, EUR 2 billion to EUR 2.5 billion, there's a couple of things that we mentioned also at the Capital Markets Day that we will have some new product launches during this year. And always when you have new product introductions, there will be an impact on gross margin as well. And that's what we see. But of course, these product introductions are very important for our longer-term journey and we see very good market opportunities going forward. When it comes to the same opportunities, we also -- just like we have said earlier, we invest in more in our opportunities in AI & Cloud, which will have an impact on the OpEx as well. But we definitely see more opportunities going forward definitely in the AI & Cloud market side. And that's why it's important that we prepare ourselves for those opportunities. But also, this is a transformational year. We are still doing a lot of changes and securing that we are very lean and mean and efficient machine and capture those opportunities in the market. Justin Hotard: Yes. Maybe I'll just add, Terence, I think when you think about the range, right, obviously, what we want to be is disciplined around our guidance and our execution and much more predictable. And I've talked about this quite a bit. Marco has talked about it quite a bit. But that -- the recognition that we are also in two very different business cycles right now, tremendous growth in AI & Cloud, flat market in telco, emerging opportunity in defense and mission-critical enterprise. So, recognizing that the businesses are in a different cycle, the markets are in a different cycle, that's part of the balance of making sure that we're giving you visibility. And obviously, should we see something that changes our visibility, we'll update it. But we want to give you as much visibility as possible and make sure that when we lay out targets, we're consistent, we're predictable and much like we've done for two quarters, we get into a more consistent habit of that. And I'd just remind everybody that, that hasn't been our history, but it's a big part of where I would like to see us go as we go after these growth opportunities to make sure that we give you the visibility and we go do what we say we're going to do. Marco Wiren: The currency rate, we have USD 1.18 in our estimate, and this is based on what we see right now. And if there's any changes in the currency, we will update as well. But remember that we have about at least half of the U.S. revenues, for example, U.S. flows are hedged for the full year. So if we just look a little bit the sensitivity, before hedging a EUR 0.02 move on the USD versus euro would imply an operating profit of EUR 50 million change. But as I said, about half of that is hedged. David Mulholland: Thanks, Terence. We'll take our next question from Felix Henriksson from Nordea. Felix Henriksson: Yes. Partly relating to the previous question on supply shortages. Are you, sort of, expecting to encounter any headwinds from these rising memory prices on your gross margin? And can you just provide some color on your cost exposure to this trend? Justin Hotard: Yes. I would just say, overall, when you think about our bill of materials at a macro level across the company, this is not a huge part of our bill of materials. It's a portion, but it's not a material portion. Second, in terms of supply and commitments, I think our focus right now is on making sure we continue to secure the supply based on the commitments we have, and we do have -- this is a place where we have long-term agreements. And then, of course, I think as you've heard in the industry, I think we expect this to be passed through to pricing. So from our perspective, this is a market effect. It's very consistent across the market. And so we'll address that. But overall, this isn't -- certainly, if you looked at our business overall, you'd say this is not a material part of our revenue, but an important one that we manage. David Mulholland: Do you have a quick follow-up, Felix? Felix Henriksson: Yes. Just quickly on your balance sheet and net cash. I think the end of the year net cash implies around 17% of last 12-month net sales, which is slightly above the 10% to 15% range that you used to have historically. Are you sort of happy with those levers? Or do you see anything that you would want to do with that setup? Marco Wiren: Yes. Thank you. When it comes to the capital allocation, framework is very clear for us. And whenever we see that we can invest more in R&D internally, so that's always our priority #1. And just like we alluded earlier as well, that we see opportunities in -- especially in AI & Cloud customer segment. So we are investing more there. The second priority we have is seeing that how can we strengthen our deliveries and our opportunities to capture those market trends through M&A. And the third one is the dividend. So, we aim for recurring and stable and over time, growing in dividends. And then the fourth is that if we deem to have excess cash, then we can consider share buybacks. So this framework is something we follow. And if there's any news, we will inform you as well. David Mulholland: Thanks, Felix. We'll take our next question from Emil Immonen from DNB Carnegie. Emil Immonen: I just had a question on the investment in the CapEx. It's quite a big step up. And I'm just wondering if it's all about increasing your capacity, how much would you say that your capacity is already utilized? So, are you working at full capacity? Or how should we think about kind of ramping up production and how you plan for that overall? Justin Hotard: Sure, Emil, thanks for the question. So if you think about what we've shared so far, we have an existing fab in California. We've been investing in bringing a new fab online. This is something that Infinera had started before we acquired them, and we're continuing to invest. And this was also the place where we got partial funding in the CHIPS Act from the U.S. government. That indium phosphide fab is the one -- the next one is the one we expect to come online later this year. What I would say is that we're certainly well on track to consume capacity in the existing one, and we absolutely need the new fab to come online to support the demand that we're seeing and to meet our forecast. So, our longer-term forecast because, obviously, as it comes on later this year, it won't contribute as much to production this year. This is a -- this is also critical for us because at the core of our capability and our differentiation is our photonic integrated circuit. It's one of the key elements of the components of these photonic systems, and it's a place where we believe we have differentiation in the product itself. So what we can do and what's a little bit different than when you think about a traditional semiconductor fab or the higher volumes silicon fabs you might consider in computational silicon or memory or others is that our capital investment size tends to be much smaller to add additional capacity. And that's really just the nature of optical technology and also the nature of indium phosphide. So hopefully, that gives you a couple of dimensions to think about, but I would think about the investments we're making really in that new fab supporting '27 demand. They're starting to ramp during '27. We'll have some reduction this year, but mostly in '27. And then think about the ability to add capacity in that fab or in others as being much smaller chunks. So because I realized, well, first of all, while this CapEx is significant for us at an overall level, it's still pretty modest in terms of our CapEx, 5% overall for the company. Secondarily, what I would say is when you think about this CapEx in terms of the broader semi industry, it's really nominal in terms of the overall spend and the size of investments that some of the -- some of our partners in memory and computational silicon make. David Mulholland: Do you have a quick follow-up, Emil? Emil Immonen: Yes. Maybe to follow up on how aggressive do you feel you are? So is this -- it's still -- yes, it's a nominal amount. But would you say that you're aggressive? Or is this kind of you're only investing for the 100% of demand you're seeing right now and you're not wanting to overinvest at this point? Justin Hotard: I think we're -- I think this market is moving, Emil, so quickly that we're -- this is a conversation that is ongoing in terms of where we see the long-term market and where we're investing. And obviously, the other thing here is, right now, if you think about this market, we're vertically integrated. Others are vertically integrated, some are not. You can kind of look at two extremes. Computational silicon is obviously not a vertically integrated game. TSMC, Intel, GlobalFoundries are largely the leaders in that. So you've got a clear segmentation in the value chain. Memory is vertically integrated. So that's the other strategic question we'll continue to think about as we go forward. But right now, we see tremendous value in that vertical integration. And the choice that we're making is to make sure that we have sufficient capacity to meet the demand, recognizing that we're in a very fast-moving market. Scale across is an emerging opportunity, as I touched on earlier. And we also believe that over time, as speeds continue to ramp within the data center, there will be more opportunity for coherent optics within the data center. David Mulholland: Thanks, Emil. We'll take our next question from Jakob Bluestone from BNP Paribas. Jakob Bluestone: Just a quick one. Can you maybe just give us an update on the H1 versus H2 sort of margin phasing that you flagged at the CMD? I don't know if you can maybe quantify how big we should think about that? Or is it just kind of the normal seasonality of the business given it always tends to be a bit Q4 weighted anyway? Marco Wiren: Yes. Thank you. Yes, especially, as we said that this is visible in Network Infrastructure side, considering that we launched new products in the first half, and that's why we see this margin impact. We haven't guided exactly per quarter, but of course, we see that the second half, we should see improvement in the margins in this field as well. But it's just that it takes some time before we come over this ramp-up phase and second half is that why giving a little bit better margin profile than first half. David Mulholland: Thanks, Jakob. Did you have a quick follow-up? Jakob Bluestone: Just a quick one, just on the memory pricing comments. You mentioned that you have long-term contracts. I mean, given it looks like you probably have elevated pricing for at least beyond this year. Can you maybe just give us a sense of those contracts multiyear? Justin Hotard: Yes. I mean, I would think of these as multiyear contracts. And obviously, the supply agreements are multiyear and then pricing varies depending on the contract term. David Mulholland: Thanks, Jakob. We'll take our next question from Sébastien Sztabowicz from Kepler Cheuvreux. Sébastien Sztabowicz: On Mobile Infrastructure, you don't provide any guidance and notably for sales, maybe given more limited visibility. The LAN market is now stabilizing. Do you see any specific downside or upside to your market share in mobile in 2026 beyond the noncontract loss at AT&T? And the second one is on the cost savings. Where have you finally ended 2025 in terms of cost savings? And what do you expect for '26? Do you plan to accelerate a little bit further the cost-cutting actions beyond 2026? Or you will be more on a normal OpEx run rate going forward? Marco Wiren: I can start. When it comes to mobile markets, as we said earlier, we see that the market is quite stable in '26. And there's some regional variations here. We can see that we could expect some recovery in India. And then there's some other pressures in like LatAm and other areas. Of course, our aim, as we had guided in -- already in the Capital Markets Day is that in the Mobile Infrastructure side, our aim is that we will improve the profitability. So we guide gross margin and operating profit levels. So gross margin, we have said that we aim to 48% to 50% gross margins. And we've said that we will grow from the EUR 1.5 billion levels going forward towards 2028. And of course, our ambition is that whenever there's opportunities to gain market share, we will capture those opportunities in the mobile side as well. When it comes to cost savings, I don't know if... Justin Hotard: I would just add two things. I think one, obviously, there's some mix, as you said. The other thing for us, as we talked about, is we're not chasing revenue for revenue's sake. So I think what you -- what I would think about is the reason we gave you a guidance on gross margin and profit is those are really the two things we're focused on, and maximizing gross margin and profit, recognizing there's some inherent scale we need to maintain in the business. But working with those customers we value and delivering those services where they value our technology platforms and associated services. So those are the ways I would think about the dimension of the approach that Marco was talking about. Do you want to talk about cost reduction? Marco Wiren: Yes, thanks. When it comes to cost reductions, we have the program now, which is running until end of '26. And we believe that we're going to deliver according to those promises, what we have said earlier as well. So, and beyond that, we don't have any cost-cutting programs. What we've said also is that what we do continuously is to secure that we are focused on the efficiency, operational leverage, and secure that we are doing things in the most efficient way continuously. So, this is something that we are getting into everyone's DNA that is the way of working in Nokia. David Mulholland: Thank you all. And apologies to those still in the queue, but we've run out of time. So this concludes today's call. I'd like to remind you that during the call, we have made a number of forward-looking statements that involve risks and uncertainties. Actual results may, therefore, differ materially from the results we currently expect. Factors that could cause such differences can be both external as well as internal operating factors. We have identified such risks in the Risk Factors section of our annual report on Form 20-F, which is available on our Investor Relations website. Thank you all for joining us. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Ilkka Ottoila: Good morning, and welcome to Nordea's Fourth Quarter and Full Year 2025 Results. I'm Ilkka Ottoila, Head of Investor Relations. As usual, we'll start with the presentation by Group CEO, Frank Vang-Jensen, followed by a Q&A session with Frank and Group CFO, Ian Smith. Please remember to dial in to the teleconference to ask questions. With that, Frank, please go ahead. Frank Vang-Jensen: Good morning. Today, we have published our results for the fourth quarter of 2025. We finished the year well with high fourth quarter profitability, higher business volumes and lower costs. It was a strong result, despite the uncertain environment and despite consumer confidence in our Nordic home markets remained muted. For the full year, we delivered a return on equity of 15.5%, in line with the commitment we made 3 years ago. Our performance reflects the momentum we have built since we set out to reshape Nordea in the autumn of 2019. We have grown our business with existing and new customers and improved our customer experience. We are much more efficient today. Back in 2019, we spent EUR 0.57 to generate EUR 1 of income. Now it takes EUR 0.45. We are much more profitable. In 2019, we ranked near the bottom of the world's 100 largest banks based on return on equity. Now we are firmly in the top 20 and among the best in Europe. And we are creating sustainable value for shareholders. Total shareholder return over this period amount to 322% or 26% per annum. I was especially pleased to see us end 2025 on a high note on one other very important metric, customer satisfaction. Our scores are now 4 to 10 index points higher in all 4 business areas and performance has improved relatively to peers. Our results show that Nordea is performing well. By most measures, Nordea is stronger than it has ever been. We carry that strength into our new strategy period for which we have high ambitions as reflected in our new priorities and financial targets. I'll briefly return to those later. Being a strong and resilient financial services group, we also have the capacity to support our customers effectively in the current unsettled global environment. While the geopolitical backdrop remains uncertain, our focus is on ensuring we are consistently there for our customers with advice, with our capital and with a broad range of financial service and a very strong balance sheet. We're well equipped if conditions shift, no matter which direction they will go in. Our diversification is a key advantage among. Our Nordic peers, we are the most diversified financial services group. Income, lending and profits are well balanced across sectors and across our 4 home markets. We also benefit from operating in our home region with strong economies and fiscal positions and stable political systems. These features help us to navigate through volatility and adjust to external shocks. The largest Nordic businesses are export-driven and will feel some impacts. Still, they distinguish themselves by their quality, innovation and deep tech and engineering know-how and very importantly, by the agility and ability to adapt. That formula has enabled them to establish competitive positions in global market positions that are durable over time. For all these reasons, even while risks to the global outlook remain and impacts are difficult to assess, I'm confident that our region is well positioned to continue performing strongly. With that, let's return to the fourth quarter and look at some of the highlights. Our return on equity was strong at 14.4% compared with 14.3% a year earlier. Earnings per share were EUR 0.34, up from EUR 0.32. Corporate lending grew by 8% year-on-year and deposits were up 1%. Mortgage lending increased by 1% and retail deposits were up 6%. Assets under management increased by 13% to a record high of EUR 478 billion partly driven by higher asset values. Net inflows were strong at EUR 6.5 billion. Total income was flat against the previous year. Our net interest income continues to hold up well, supported by higher volumes and our deposit hedge. As expected, in the declining rate environment, it decreased by 5% year-on-year and by 1% quarter-on-quarter. Some of that due to the policy rate reductions in Sweden and Norway in Q3, which has a full quarter effect in Q4. Net fee and commission income was up 3% with solid growth in savings fee income. Net fair value result was up 28% for the quarter. This was driven by higher customer activity and a stronger result in treasury and our markets operations. Costs decreased by 3% year-on-year, reflecting continued active cost management and stable strategic investment levels. Full year operating expenses were EUR 5.4 billion, fully consistent with our guidance. The Q4 cost-to-income ratio was 46.2%, excluding regulatory fees. Operating profit increased by 3% year-on-year to EUR 1.5 billion. Our credit and asset quality remain very strong. Net loan losses and similar net result amounted to EUR 49 million or 5 basis points, once again, well below Nordea's long-term expectation. Due to continued strong credit quality, we were able to reduce our management judgment buffer by a further EUR 17 million in the quarter. Our strong capital generation continued and our CET1 ratio was 15.7% at the end of the quarter. That puts us 1.9 percentage points above the current regulatory requirements. Given our strong 2025 performance, our Board of Directors has proposed a dividend of EUR 0.96 per share for 2025, up from EUR 0.94 per share for 2024. Today, we have published our outlook for 2026, which is the first year of our new strategy period running to 2030. For the full year 2026, we expect a return on equity of greater than 15% and a cost-to-income ratio, excluding regulatory fees of around 45%. Following our strong Q4, we were able to close our strategy period having met or exceeded all of our targets. Our initial return on equity target was greater than 13%. As the environment shifted, we lifted it to greater than 15% and ultimately achieved 15.5% in 2025. We delivered on our guided cost-to-income ratio, even with a significant step-up in strategic investments and maintained strong credit quality and capital generation. All of this enabled strong shareholder distributions, distributions over the 4 years exceeds EUR 17 billion. This clearly surpassed our initial expectation and was right in the middle of the updated target level. Let's now return to Q4, starting with a look at our main income lines. During the quarter, net interest income continued to hold up well in the lower interest rate environment. Our NII was supported by both higher business volumes and our deposit hedge. The deposit has contributed positively to our income year-on-year, increasing NII by EUR 99 million. As expected, the policy rate reductions affected deposit and equity margins. Our net interest margin for the quarter was 1.57%, quite stable following 1.59% last quarter. We saw an encouraging trend in business activity on the corporate side with lending up 8% year-on-year. Mortgage lending also increased but at a slower rate. The 1% year-on-year increase was driven by Sweden and Norway as housing market activity continued to slowly pick up. Retail deposits were up 6%, while corporate deposits were up 1%. Net fee and commission income was up 3% year-on-year, driven by savings and higher customer activity levels. The higher savings fee income was driven by higher assets under management with positive net flows in all channels and higher asset values. The good momentum continued in our Nordic channels with net inflows at EUR 4.8 billion, roughly equally split between retail funds, private banking and Life & Pension. Net flows from international channels were EUR 1.7 billion with positive net flows in both wholesale distribution and international institutions. Brokerage and advisory income was lower, resulting from lower debt capital market income. The clear positive in the quarter was a very strong income growth from our secondary equities business. Net fair value result was strong in the quarter, increasing by 28% year-on-year. That increase was driven by higher customer activity in foreign exchange and interest rate hedging. We also benefited from good performance in treasury and market making. Costs decreased by 3% year-on-year as planned and in line with our guidance. This reflected stable strategic investment levels and continued active cost management including a reduction in the number of employees. During the quarter, we continued with our strategic investments in several areas, including technology, data and AI. At the same time, we are driving operational efficiency and increased productivity. This is our continued focus, and it is leading to more efficient ways of working and a leaner organization. For the full year, costs were EUR 5.4 billion, representing a modest 1% increase despite the inflationary pressures. The fourth quarter cost-to-income ratio was 46.2%, excluding regulatory fees compared to 47.9% a year earlier. For the full year, it was 45%, and we are targeting to take this down to 40% to 42% by 2030. Our credit quality continues to be very strong. Net loan losses and similar net result for Q4 was EUR 49 million or 5 basis points, well below our long-term expectation of approximately 10 basis points. The provisions in the quarter, were driven by corporates with no industry concentration or specific trends. Due to continued strong credit quality, we reduced our management adjustment buffer by 1/3 of EUR 17 million and it now stands at EUR 276 million. We continue to deliver strong capital generation and maintain our robust capital position. At the end of the quarter, our CET1 ratio was 15.7%, 1.9 percentage points above the current regulatory requirements. We continued to deploy capital to support business growth and we also continue to use share buybacks as a way to return excess capital to our shareholders, where we do not find profitable uses for it. During the quarter, we launched and completed a EUR 250 million share buyback program, our fourth of the year. After that, in December, we launched a new EUR 500 million program which is expected to be completed by no later than the 8th of May. Given our strong 2025 performance, our Board of Directors will propose to shareholders at the AGM a dividend of EUR 0.96 per share for 2025 compared with EUR 0.94 per share for 2024. Additionally, the Board has proposed a distribution of the midyear dividend in 2026, corresponding to approximately 50% of the net profit for the first half of 2026. Let's now turn to our business areas. In Personal Banking, we continued to deliver business volume growth with customer activity, again, highest in savings and investments. Households continue to prioritize strengthening their financial positions, increasing their deposits by 5% year-on-year during the quarter. Many customers are also increased their recurring savings amount and they put more money into investment funds. Q4 net flows in our Nordic retail funds were strong at EUR 1.7 billion, up from EUR 0.7 billion we had in Q3. With lower interest rates supporting confidence, housing markets continue to improve gradually, but the pace remained muted. We increased our mortgage lending by 1% year-on-year. In Sweden, we continued to grow, our mortgage market share capturing 27% of the market growth in the period from October to November compared to a back book market share of 14%. Digital activity continued to grow with app users and log-ins up 3% and 5%, respectively. In our previous strategy period, we set a target to ensure all every day banking needs could be met digitally by the end of 2025. We have now achieved this goal, and it has contributed to a stronger overall experience and that record high customer satisfaction level for personal banking. Total income decreased by 3%, driven by lower policy rates. The lower interest income was partly offset by continued net fee and commission momentum, especially in savings, payments and cards. Return on allocated equity with amortized resolution fees was 15%. The cost-to-income ratio was 51%, improving from 53%. In Business Banking, we performed well, driving strong volume growth with the support of our strong digital offering. Nordic SMEs continued to adapt well to the operating environment with stable interest rates supporting higher demand for lending. I'm quite pleased with the increased business activity. Lending volumes increased by 6% year-on-year, led by Sweden, but with growth across all Nordic countries. Deposits were up 5%. During the quarter, we improved customer experience by simplifying onboarding and introducing a new digital tool to enable customers to get started faster. We want to be the leading digital bank for SMEs and a big part of that effort has involved making sure our customers' everyday banking needs are met by our digital offering. In 2022, around 40% of our customers' daily banking needs were covered by self-service functionalities. By the end of the 2025, we stood at 80% in line with our target. Total income for Q3 was down 3% year-on-year with higher volumes and higher net fee and commission income partly offsetting lower deposit income. Return on allocated equity with amortized resolution fees was 15%. The cost-to-income ratio was 45%. In large corporates and institutions, we had a strong quarter, driving double-digit lending growth and higher overall income. Lending volumes were up 10% year-on-year, with particularly strong growth, 20% in Sweden. Deposit volumes decreased by 3% year-on-year. We interpret lower deposit volumes as a sign of increased risk appetite and greater willingness to invest. Debt capital markets activity remained high, if a little lower than in previous quarters, helping us maintain our leading positions for Nordic bonds and Nordic loans overall in '25. During the quarter, we arranged close to 140 transactions for a broad range of issuers that brought the total for the full year to over 600. Our secondary equities business performed strongly and income grew by 26% year-on-year. Nordea markets delivered strong results driven by solid trading performance and increased client activity compared with a year ago. Total income was up 4% year-on-year, mainly driven by higher ancillary income. Net fee and commission income increased by 10%, driven by equities, asset management, products and lending fee income. Return on adequate equity was 15% the cost-to-income ratio improved from 42% to 40%. In Asset & Wealth Management, we drove further strong momentum with growth in all our Nordic channels and strong investment performance. Net inflows in our Nordic channels were EUR 4.8 billion, with private banking contributing EUR 1.6 billion of that. In private banking, we finished the year as we began, with solid momentum and customer acquisition and high levels of customer activity. Overall, customer satisfaction remained at a record high level. In our International channels, we had net flows of EUR 1.7 billion, which was an improvement quarter-on-quarter. About half of that was from international institutions and half from the wholesale distribution channel. Net flows in Life & Pension were EUR 1.3 billion. The performance was again strong across our 4 markets, and we further reinforced our position as Nordics second largest player. Gross written premiums in the quarter amounted to EUR 3.3 billion, up from EUR 3.1 billion a year ago. That took premiums for the full year to an all-time high of EUR 12.9 billion. Assets under management increased by 13% year-on-year to EUR 478 billion, driven by market performance and the positive flows in all channels. Our Empower Europe fund launched in June continued to attract interest during the quarter. It has now secured a net flow of more than EUR 500 million. The fund invests in Europe's energy independence, industrial revitalization and defense. We also saw renewed strong interest in our sustainable investment approach. One of our new BetaPlus funds launched in the summer is already the largest actively managed sustainable ETF in Europe. Total income was down 2% year-on-year driven by lower net interest income. Net fee and commission income was down 1%, driven by customer preferences from lower risk and lower margin products. Return on allocated equity was 30%, that cost-to-income ratio was 48%. All in all, this was a good quarter and a year of success for Nordea. We now have two very successful strategy periods behind us, and we are aiming high for our third. Looking across to 2030, our priorities are clear: To grow strongly in several attractive areas and drive faster than market income growth. To further strengthen our customer offering and to unlock the full potential of our unique Nordic scale. Our Nordic scale is a key source of competitive advantage for Nordea. We have already realized a lot of scale benefits. However, most of the gains still lie ahead. In this next phase, we will take a decisive step to unlock these benefits across Nordea. The priorities and targets we have set are ambitious, and we are fully committed to achieving them. We are targeting a return on equity of greater than 15% each year through to 2030 and significantly higher in 2030 itself. We are also targeting a cost-to-income ratio, excluding regulatory fees, of 40% to 42% in 2030. We are at 45% today and coming down to our target level will be a gradual process. Accordingly, we expect to deliver a return on equity of greater than 15% for the full year 2026 and expect a cost-to-income ratio, excluding regulatory fees, of around 45%. Rest assured that our plan will be executed with the same rigor and focus we have applied over the past 2 strategy periods. We do what we say. We look forward to building on our progress and realizing our ambition to become the undisputed best performing financial services group in the Nordics. Thank you. Ilkka Ottoila: Operator, we are now ready to take the questions. And as usual, please as a courtesy to others, could you please limit yourself to 2 questions max. Thank you. Operator: [Operator Instructions] The next question comes from Martin Ekstedt from Handelsbanken. Martin Ekstedt: So I wanted to first ask about the management judgment allowance. It decreased by only EUR 70 million this quarter against roughly EUR 50 million each over the previous 2 quarters, right? And additionally, only EUR 10 million of that decrease was an actual release. So given I believe you've said at the CMD that you will either use or release the around EUR 300 million buffer that you had when entering '26, over the course of this year. I just wanted to check, should we now see this smaller release in this quarter meaning it's going to be more back-end loaded, the full release in the year 2026 or are you simply seeing a different credit risk environment currently causing you to take a more conservative stance overall? Ian Smith: Martin, thanks for the question. You shouldn't read anything different in terms of our intention on the release of the management judgment buffer. We did, as you pointed out, release more earlier in the year. Actually, Q3 saw quite a big release simply because of a different change in credit conditions, sort of macro related, but no, the portfolio continues to perform well. And as you see with the -- again, a net release of collective over the period, generally, conditions are improving. So there's nothing to read into that. It's simply that we tweaked it in Q4. Our intent remains the same that over time, we will either utilize or release. And as we've said so often, in calls like this, but also in other [indiscernible] that the strength of the portfolio and also the strength of conditions in our home markets means that it's harder and harder to hold on to it. So what we set out at Capital Markets Day remains the case. Martin Ekstedt: Okay. But just to clarify, I think you said that over time, you will either utilize the release, right? But I think at the CMD, you said over '26. Is that correct? Ian Smith: Yes. So that's what we said at CMD, no change. Martin Ekstedt: Okay. Okay. And then just secondly, if I could focus on M&A for a bit. I just wanted to see when we should expect to see some new acquisitions from you. And it is still the base case that you'll be turning your M&A machinery towards Sweden now, as you've said in the past, after your couple of deals in Norway, right? So the Danske piece in Norway deal, I think it was announced in July '23, i.e., it was more than 2 years ago now. In the past, you said that you're aiming for roughly 1 deal per year, considering, was it 25, 30 bps of capital deal, does this also mean that we should see something larger perhaps from you on the M&A front given some time has passed now since the Danske [indiscernible] the Norway deal? Frank Vang-Jensen: Thank you for the question, Martin, it's Frank speaking. We would like to do M&A as long as it's accretive to our business and helpful for our shareholders, but then we need a target -- available target. And it's -- you mentioned Sweden and it's right that we have -- in the new strategy of ours, we have a special strategic focus on Sweden and Norway but we want to grow in all 4 countries. So actually, we are, of course, interested in opportunities across the board as long as it fits well to our strategy. That's what we can say. And then these comes when they come, and you need two to do a tango. And right now, we have really not much to say more than unchanged ambition and we would like to use inorganic as a lever to grow Nordea as well. Martin Ekstedt: Okay. So it's availability on target more than anything else. But does this mean also that you've now saved up some dry powder perhaps? Frank Vang-Jensen: Yes, it's nothing to do with appetite. It's nothing to do with capital. It's nothing to do with us not having a clear view on where that we want to grow and who would we really like to team up with. It's basically about availability. Operator: The next question comes from Gulnara Saitkulova from Morgan Stanley. Gulnara Saitkulova: So the first question is on asset margins. At your CMD, you mentioned that you're not assuming any meaningful margin expansion. Is it reasonable to expect that asset margins will remain broadly stable in 2026? And how does your outlook on margins differ across your key geographies? And across the Nordic margins -- Nordic markets, where do you see the most margin pressure? And where do you believe margins can hold up or even improve? Ian Smith: Thanks, Gulnara. So yes, our base case assumption was that we're not relying on margin expansion. Obviously, very happy to see that come back. But I guess, conditions at the moment are as we've seen throughout 2025, still very thin volumes in the mortgage market and in those circumstances, we do see some of our competitors reducing pricing to try and chase business and things like that. So inevitably, that puts a bit of pressure on mortgage margins. Another feature we've seen, particularly in the second half of 2025 is we grew really, really strongly in corporate lending and particularly in our LC&I business, where our lending is at very much the sort of blue chip and it's been pretty competitive there. So those 2 dynamics have made margin expansion pretty difficult to deliver. So we continue to assume that we won't see margin expansion. History has shown us that when conditions ease and when demand increases as consumer confidence returns, we've seen an improvement in lending margins. And no reason not to expect that, but we do need to see that consumer sentiment improve and the market start moving again on the household side. I mean in terms of just different markets, there really isn't anything to choose between the markets in terms of what we're seeing on margins, particularly. Our competitors are active in most of those markets and where we're seeing them acting aggressively on margins, that's right across the board. But we do, I suppose, have good sort of -- if we split between where things are growing a little bit better, Sweden and Norway versus things being a little bit more flat in -- from a market perspective in Finland and Denmark. So I think that watching Sweden and Norway from a margin perspective is important. But I don't know, Frank, whether you want to add anything to that sort of perspective? Frank Vang-Jensen: No, I think you expressed it very well. So no further comments to that one. Gulnara Saitkulova: And another question on Sweden market share. In Sweden, you have been gaining front book market share. Can you remind us what is driving your ability to stay competitive and grow the front book ahead of the back book? And what do you see as the key levers and competitive advantages that Nordea has in Sweden? And looking ahead, how do you plan to sustain that momentum? And what are the targets that you are setting for the Swedish market? Frank Vang-Jensen: So we are gaining market share, and that's across the board, I would say, in Sweden. And as you know, we have had a special focus on Sweden and Norway for quite long as we have relatively smaller market share than in Finland and Denmark. And back -- I think it's 7 years ago, we decided that there -- now we want to grow our Sweden on mortgages, and we want to grow slightly above our back book market share. And I think we have done that probably each quarter for the last 6.5 years, something like that. So it's nothing new. What is probably a little bit new is that we are growing quite much faster than the back book this year. So 22-ish percentage points of the front book on the mortgage market is where at least the last days that I have and that should compare that with the back book of 14.03% something. So the momentum is strong and -- but it's nothing new. And yes, mortgage is not rocket science. It's about getting many -- retail is about detail. So getting many things right, the customer interface, digital tools, the self-service, getting the entire organization teamed up around what is it that we aim for, how do we do it, ensure that the value chain is effective that we respond well, fast and so on. And then you need to get the pricing right. So we are -- I would say we are slightly above average. So we are not using the tools to buy. We try to position us price-wise where we should in the corridor, but a bit above the average. And that works very effectively. So I'm very happy with the progress the team has made, but that's not really anything new. And when it comes to the auto businesses, they had actually a very nice growth, so SMEs. And within SMEs, we have grown above market for long and continue to do so. In LC&I. In Q4, we had a growth within lending of 20% quarter-over-quarter or quarter -- Q4-over-Q4 last year or '24. So it's -- it's just -- and then corporate banking, by the way, is on fire as well. So it's -- we are just in good shape, and the momentum is great. I don't know if that answered your question, but that's probably the most I can say. Operator: The next question comes from Magnus Andersson from Nordea. Magnus Andersson: It's Magnus Andersson from ABG. You haven't bought us yet as far as I know. Just beginning with a specific one, NII in Norway in Personal Banking was down 11% quarter-on-quarter in local currencies. If you could please shed some light on that? And also related to that comment on the competitive situation in Norway. I think we're getting quite negative signals. Secondly, just on your cost income ratio target, if you could say something about what kind of headcount outlook you have for 2026? And related to costs, anything on the restructuring charge you're supposed to book this year? Frank Vang-Jensen: All right. Thank you, Magnus. Ian, should I start with the competitive situation and then you take all the difficult stuff on the details. Yes, so Magnus, I think Norway is a very competitive country. And it's -- that has almost always been the case. And it's just sometimes it goes even further. Right now, there is a very intense competition and that goes across the board. I think we're doing very well, honestly. But there is a consolidation going on now in the Norwegian market, where the savings banks are becoming fewer and bigger. And then we have the 2 large players, DNB and us basically taking the rest, and then you have a lot of boutiques especially within wealth and investment banking. So it is a very competitive market, but it's also a very interesting market as it's growing. And it's -- as we know, the economy in the country is super strong due to the stronger oil foundation. We're well positioned. We grow across the board. Wealth looks really good. SME, really good. Personal banking looks good on lending and really good on doing more business with the current customers, ours, which has been a strategic initiative, basically race up the customers and cover much more than of the needs than just lending. And that goes very well. They're doing a great job over there. And then we have large corporates and institutions are doing a great job, but it's a tough competition for sure. And that also explains a little bit why the lending is down. But it is -- remember, in Norway, we have our shipping portfolio for the group and shipping has been consolidating itself heavily, which have impacted and then it's a very dollar-based business, which, of course, also impact us. It's -- the dollar has weakened. But I would say, in general, we are very well positioned, I would say. But Ian, do you have anything to add to this more like the strategic assessment or the market assessment before you go into the details? Ian Smith: No. I think you've captured it, Frank. Magnus, so in terms of the detail, yes, we did see a step down in net interest income in PEB Norway in the quarter. I guess a few things are going on in there. I mean, the rate cut in September further reduced deposit margins and where we saw a full quarter impact of that in Q4. Then we've also seen, I guess, in response to the rate cuts, which have been a little longer coming in Norway, a lot of customers have been actively renegotiating mortgage rates, and that really started with the first rate cut and we saw the full effect come through together with a little bit of impact of the September cut in Q4 because we have the usual sort of 2-month lag. And then we only got a partial offset from Nibor because 3-month Nibor didn't move to the same extent. So just a bit of margin pressure in Norway that I think will be felt across the market. I'd be surprised if we didn't see the same things in our competitors there. But look, as Frank says, firing on full cylinders in Norway and really, really pleased with both what we're doing, being able to provide customers with other products and also working with our new customer base that came across from Danske. So I guess those are the moving parts in Norway. In terms of cost, that kind of thing, so yes, we did I guess, through good sort of active management, see the headcount come down during 2025. And as we see us continue to implement our Nordic scale initiative with process improvements, consistency, and indeed, as we start to see some of the early impacts of AI, we would expect to see FTE continue to come down. So I think that trend is set to continue. And then in terms of restructuring, no news to report there. We're still going through our necessary processes, consultation and other things like that. So I guess, to repeat what we said at Capital Markets Day, we don't expect it to be material on a full year basis, certainly lower than the provision we took back in 2019. And we would expect to book that in full in '26. But I guess my advice for now is, because I know some people have made a bit of a guess of what it could be, is I'd say leave it out of estimates for now. We intend to treat it separately from our regular performance KPIs. And when we give our detail, we can talk through it fully then. Operator: The next question comes from Andreas Hakansson from SEB. Andreas Hakansson: So let's start with a quick one, I think. It's following up basically on Magnus' questions on costs. The 45% cost-to-income ratio is all good. Could you just help us a bit? You talked about the 2% cost CAGR over time, but it might be a little bit forward loaded -- or front loaded, so should we think about a 3% cost growth to reach that 45% cost-to-income? Ian Smith: So Andreas, I mean I think the sort of broad consensus is in not a bad place. So somewhere between 2% and 3%, I guess. The things people should bear in mind when thinking about cost-to-income, first of all, do exclude restructuring from that. And then the other is that regulatory fees makes a bit of an impact on cost growth. I mean we've seen really good growth in deposits over the year. Our expectations is that might feed through into slightly higher resolution fee for this year, but we don't have any information on that yet. But otherwise, broadly speaking, I think estimates for cost growth for next year are broadly in the right place. Andreas Hakansson: That's helpful. And then a bit country by country from me as well. And we covered the NII in Norway. But can we just talk a little bit about asset quality in Finland? I mean retail, I think, was at 20 bps, which is some level we haven't seen a retail banking for some time in the region and a business banking 35, so that's on that side. And then on the large corporate side, we saw quite an increase in impaired loans in large corporate in Sweden and Denmark, which was also, I thought, surprising. So could you tell us a bit about what's happening in those markets and in those areas, please? Ian Smith: Yes. So I mean, in terms of the large corporates first, these things are all relative, right? There is a fairly sort of low level of impaired assets across the book. And so where you see a particular situation arise that can have a sort of magnified short-term impact on the metrics. So there's nothing untoward or systemic going on with those movements that you've seen in Sweden and Denmark. In Finland, on both our SME book and on the retail side, we've got a slightly broader base book, a bit more consumer finance in there as a proportion than you see elsewhere in our business. And that tends to mean we have a slightly heavier burden in Finland from credit charges. And then we always have a bit of, I guess, a catch-up on write-off of impairs and other things towards the end of the year. So again, I wouldn't want you to take anything by a concern from that. But we do have a slightly different shape of the book in Finland compared to other countries. Andreas Hakansson: Okay. Fair enough. And then on -- just on the countries as well. If we think about net interest income outlook for 2026, I mean, ECB/Denmark, hasn't cut since June and Sweden cut in September and Norway, we at least believe it will continue to cut a bit further. And with the competitive pressure you talk about, should we see that the NII in Sweden, Finland and Denmark is stabilizing relatively soon, and it will continue to go down in Norway, is that the best way of looking at things? Ian Smith: I think that's a good summary, Andreas. Our expectation, as you say, is for rate stability or sort of rate flat in all countries apart from Norway and then 1 or possibly 2 cuts in Norway. So exactly, as you set out. And what that does is provide a little bit of stability. Into Q1, we've got a lower day count. So arithmetically, that means that we'd see slightly lower net interest income for the group in Q1 this year than the quarter just passed. And then from there, provided that rate picture plays out as both you and I have described then it's about volumes and some impact from margins. And so we're confident that we'll be able to grow as the market grows. And so Q1, probably the trough for NII on a quarterly basis. And then with rate stability, volume should help drive from there. Operator: The next question comes from Namita Samtani from Barclays. Namita Samtani: I just had one. The margin on the asset management business. If I just simply take the asset management revenues divided by the average AUM in '25, it was around 42 bps versus 47 to 48 bps in '22 to '24. So I was just wondering why you think that's the case as flows have been in the higher-margin businesses like private banking and how do you think your asset management franchise stacks up versus peers? Ian Smith: Thanks for the question. So yes, we've talked throughout the year of some of those margin dynamics in asset management and also what we've been able to achieve in terms of flows. So I think to start with, really pleased with the flows, EUR 4.8 billion in our Nordic channels in Q4 and then 1.7% in international. So I think that continued sort of good performance in flows that we saw in Q4 is really encouraging. There's 2 things playing into the -- your arithmetic there on what's happening with margins. The first is, yes, we have seen a bit of a sort of move in preference in the market towards lower-margin product that continues to be plenty of pressure and competition from passive versus active. Our own response to that has been to I guess, plan for it and understand that that's what's happening. And to respond with new product launches and others. And as we said in our report today, some of our sort of BetaPlus products that has a bit of active within them, but also designed to compete with that passive threat, they've performed really well in terms of attracting new money. So a bit of overall margin per share that we see right across the industry. And then something that we saw quite specifically in 2025 is a bit of a preference amongst our customers for lower risk, but then also lower margin products. So if we look at our Life & Pensions business, for example, a strong customer preference for our fixed income products, which we're really good at. So there's a margin and a mix impact going on in there that has driven the effect that you've seen. We're really proud of our asset management business. It's performance, it's a range of products. It's customer preference, all of those kinds of things. So in terms of your question of how we think it stacks up, I think we're in good shape. We recognize that it's a very competitive world out there. And the best response to that is to have the best products and the best performance, and we think we stack up pretty well there. Ilkka Ottoila: And operator, I think we have time for one more question. Thanks. Operator: The next question comes from Nicolas McBeath from DNB Carnegie. Nicolas McBeath: So I had a question on the cost to income outlook for 2026. So you're expecting 45%, which is flat from 2025. While at the CMD, you talked about fall in cost to income every year until 2030. So has anything made you a bit more cautious about the near-term cost to income trend? Yes, so that's my question. Frank Vang-Jensen: Should I take it in. Nicolas, it's Frank speaking. Our ambition has not changed. And what we are saying is around 45%. And of course, we are just recognizing that there is a lot of uncertainty and exactly how the year would play out, we need to be a little bit humble about but there's nothing negative that has happened, and our aspirations are not different to what they have been previously. So we just tried to reflect the start to the year and what is happening in the world, of course, can impact the momentum, but let's see. So don't put too much in that. Ian, I don't know, have you anything that you want to add to this specific question? Ian Smith: No, I think you covered it, Frank. Nicolas McBeath: Do I have room for another question or do you have to wrap up? Frank Vang-Jensen: Yes, you have -- so an extra one is fine. You did only one, so that's fine, so please go ahead. Nicolas McBeath: Okay. So then if may I ask also what explains the strong growth and increase in market share that we see in the large corporate segment in Sweden and Finland? Are you competing with lower margins, taking up the risk appetite or what is the recipe here? Any particular segments that account for much of the growth we're seeing here? Frank Vang-Jensen: So the risk appetite, no. So we are not changing our risk appetite. We are -- we have been there for so many years. So we do know that these things you shouldn't do, that's dangerous. Some will do. Some are doing it, but we are not. But of course, it's a very competitive market for sure. So you would like higher margins, but the market is as it is right now. So then it's about getting more of the customer's business, which we are. Sweden is simply -- we have changed a bit in the organization, leadership and also gotten agreed on the ambition level. And they are -- it's very visible, honestly. They are super ambitious. They're active. They are passionate. They're leaning in and that's what you see in the quarter. Then I -- we cannot deliver a 20% increase year-over-year for all years, but at least we can take a fair share of the market. So that's one. And the other one was about Finland. Now I think it's just about -- Finland has been a bit quiet. And we want Finland to be less quiet in LC&I. And I think that what we see now is a response to that. So no magic, it's just hard work, staying close to our customers and being on the beat. Nicolas McBeath: Any particular segments? Frank Vang-Jensen: In -- within LC&I? Nicolas McBeath: Yes. Frank Vang-Jensen: No. I think no, we are broad. So -- but of course, you cannot -- that will -- yes, we are broad. I would say, we are broadly focused. So there will always be -- in each country, there is always an industry composition that you have to understand, and you will be exposed to these industries then. But nothing really here that sticks out, I would say, not to my information at least. Ian, before we close, is there anything that you would like to highlight before we close the call? Anything we have talked -- not talked about or anything that you want to say? Ian Smith: I think we covered most of the key things, Frank. Maybe just a quick recap of the dynamics that we see going into 2026. So I talked about, we expect NII to come down quarter-on-quarter into Q1, mainly because of lower day count. And if we get that sort of fairly stable rate picture that we've been talking about, then I think Q1 '26 should be the quarterly trough. And after that, NII should grow in line with volumes and margin development. So -- and I think, again, with stable rates, a fairly stable contribution from the deposit hedge. I think as we look at the full year for 2026 on NII kind of expectations at the moment because of what we're seeing with margins and other things is maybe flat to slightly down for the full year. And I guess consensus is maybe a little bit on the high side there. But -- so that's NII. Fees and commissions, we ended the year quite strongly. We'd like to see those activity levels sustained and confidence is going to be key there with everything that's going on in the world. So I think '26, all being well in terms of activity levels, I guess, we expect NCI to increase. But estimating the pace of growth is probably a bit difficult at the moment. And then just a watch out for Q1. Q4, we had annual and semiannual fees of around EUR 26 million that won't be repeated in Q1. And so that was sort of lower day count, probably says that quarter-on-quarter, we might see NCI a little bit down. But look, I think a positive outlook for the year. And lastly, on costs, as I said on one of the questions, I think, broadly speaking, expectations for the full year in a decent place. For Q1, we might see a slightly higher resolution fee than the EUR 35 million we took last year, and we booked all of that in Q1, obviously, so makes it a slightly higher cost quarter than the average. And then we covered restructuring. As I said, I suggest people leave it out of estimates for now, and we'll get back to you when we have something to report, we'll exclude it from our KPIs for the year and as a guidance on size, just repeating what we said at the Capital Markets Day, lower than the provision that we took in 2019. So I think we've covered the key topics, Frank, and I'll hand back to you. Frank Vang-Jensen: Great. Thank you so much. And all, thank you so much for participating. We are here for you. If you have any questions, please revert, but else, thank you for today.
Operator: Thank you for standing by, and welcome to the Genesis Minerals Limited Quarterly Activities Report December 2025 Conference Call. [Operator Instructions] I would now like to hand the conference over to Troy Irvin, Corporate Development Officer. Please go ahead. William T. Irvin: Good morning, and thanks for dialing in to Genesis teleconference. In Perth, presenting today, we have Raleigh Finlayson, Executive Chair; Matt Nixon, CEO; and Morgan Ball, CFO. Fair to say, these are unprecedented times in gold. At the current gold price, gold companies from every corner are generating soaring cash flows and have soaring share prices. So how to stand out? The team will cover all the key numbers shortly, but the pulse of these 2 attributes Genesis will continue to strive for in 2026. Firstly, reliability, that is consistently hitting production guidance; and secondly, growth, that is selling more gold into a buoyant gold price. From the investor engagement perspective, today's ASX announcements mark the start of a busy period. In the coming weeks, we will release an updated corporate presentation plus half year financials with 1 or even 2 drilling updates also brewing. I will now hand over to our Executive Chair. When it comes to the Q&A session, can all questions please be directed to Raleigh in the first instance. Thanks again. Raleigh Finlayson: Thanks, Troy. I'd like to start with providing some additional color on the important announcement we made today, namely the promotion of Matt Nixon into the role of CEO and me stepping into Executive Chair role. Now is a perfect time for this realignment of roles and responsibilities for the following reasons. We recently completed the underground mining tender and contract award to Byrnecut, a 6-month process that Duncan Coutt has diligently led. With that body of work behind us, Duncan now has capacity to take on operational oversight in his role of Executive Director of Operations. Duncan is a mining engineer with over 30 years' experience, providing invaluable leadership and mentoring to the high-caliber leadership team we have assembled at Genesis, many of whom I'm confident will become future industry leaders. Duncan was previously COO at Ramelius Resources for 9 years, managing Ramelius' operating mines during a period of significant growth. With Duncan taking on operational oversight of Genesis, not only will our results' core value remain in very good hands. But importantly, this provides Matt capacity to take on a broader role in the organization by expanding to the running of the company on a day-to-day basis and delivering our strategic plan, which is due to be published to the market in the current half. Personally, with the rail tripartite agreement, Tower Hill approvals and native tile agreements now all in place, this affords me the opportunity to look to the future and proactively focus on strategy and kickstart important strategic initiatives like a strategic review on our Bardoc project, and unlocking the potential of the recently acquired focus assets within the Laverton operations, but at the same time, retaining ultimate executive oversight. Importantly, our previous Chair, Tony Kiernan, will assume the role of Lead Independent Director, which will ensure the high standards of corporate governance are maintained. This is very much a case of business as usual, Same people, same strategy with a clear delineation of roles and responsibilities. The priorities and key objectives remain the same. And very importantly, the culture is completely maintained, noting Matt's key role in development of our 5-year strategic plan and core values in March 2024. Matt's promotion aligns strongly with our strategic plan, which includes people first as one of our core values. In that plan, we promised to empower key talents with development pathways and provide a one-stop shop for our people. This is recognition and reward for Matt's performance, meeting or exceeding guidance since Matt started with us in August 2023. Our team is totally fit for purpose with the right people in the right roles. This will ensure we fully capitalize on the outstanding growth pipeline we have established while maintaining our track record of meeting or exceeding our commitments to the market. Personally, I remain heavily invested and committed to Genesis and its ongoing success. This transition will facilitate further outperformance and aligns us with our commitments to develop our people from within. This in turn, ideally attracts similar like-minded people that are seeking career development and progression to join Genesis. Troy and I will be conducting a global roadshow starting in Sydney and Melbourne next week and then on to the BMO conference in late February, where we'll be happy to discuss Genesis' exciting future. With regards to the quarter report, it was another one where we met or exceeded all operational targets whilst making strong progress on our growth agenda. Importantly, our record production was accompanied by tight cost control, which was a significant achievement given the cost pressures faced across the industry. This led to an underlying cash build of more than $200 million, ending the quarter with cash and equivalents of more than $400 million and nil bank debt, with $100 million of debt drawn to fund the Focus acquisition now fully repaid only 7 months post acquisition. Pleasing living results has us at the upper end of production guidance, the lower end of all-in sustaining cost guidance at the halfway mark with our FY '26 full year guidance maintained at 260,000 to 290,000 ounces at between $2,500 and $2,700 all-in sustaining cost range. We will continue to lay the foundation to deliver our ASPIRE 400's accelerated growth strategy, including a milestone December quarter at Tower Hill. Matt will provide an update on this outstanding progress on this flagship asset in a second. We look forward to unveiling details of our longer-term plan later in the current half, including the mill expansion strategy and a refresh of our strategic pillars following significant growth since our inaugural plan was published in March 2024. I'll now pass you on to Matt to run you through the operations. Matthew Nixon: Thanks, Raleigh, and good morning, all. I'm pleased to highlight another consecutive quarter of record gold production for Genesis with just over 74,000 ounces produced at an all-in sustaining cost of $2,635 an ounce, generating $231 million of mine operating cash flow and net mine cash flow of $167 million after investing $64 million into our growth assets, including Tower Hill, Ulysses Underground and Jupiter open pit. Importantly, this was underpinned by strong safety performance with 0 LTIs sustained during the quarter and an improved serious injury frequency rate to 4.2. This consistent delivery has the company well placed to meet our FY '26 guidance, as Rael reiterated, with just over 147,000 ounces at an all-in sustaining cost of $2,578 an ounce produced during the first half. In parallel with the strong production performance across the Leonora and Laverton operations, multiple significant development milestones for the Tower Hill project were achieved during the December quarter, which paved the way for operational readiness activities to be advancing ahead of schedule and site establishment works to be able to commence in the current March quarter. These milestones included receipt of Stage 1 mine development and closure plan approval and native vegetation clearing permit, agreement reached with the PTA, Arc Infrastructure and Aurizon to enable shortening of the Leonora rail line and execution of a mining agreement with the Darlot people. Also noting, we're very pleased to execute a second mining agreement late in the quarter with the [ Nyalpa Pirniku ] people, ensuring that development pathways for all Genesis tenure in the Leonora and Laverton operational centers is now formalized through these mining agreements. To facilitate acceleration of this world-class asset, capital investment into Tower Hill has been brought forward into FY '26, resulting in a revised full year Genesis growth capital outlook of $220 million to $240 million, previously $150 million to $170 million. I look forward to articulating further details in our updated long-term plan later in the June half. The Leonora underground mines delivered 289,000 tonnes of ore at a grade of 4.6 grams per tonne for 42,783 ounces, a 24% improvement in tonnes and 34% improvement in ounces quarter-on-quarter. Gwalia mine's just over 32,000 ounces at a grade of 5.6 grams per tonne from 178,000 tonnes as stoping continues through the Heart of Gold. As development and ramp-up continued positively with a record 1.6 kilometers of lateral advance and 10,500 ounces mined at 2.9 grams per tonne from 111,000 ore tonnes, which was a 46% improvement on the September quarter. As announced earlier this month, we completed a competitive tender process for provision of underground mining services at our Leonora operations that attracted several Tier 1 contractors and culminated in issuance of a letter of intent to Byrnecut Australia, who plan to mobilize in early May following completion of the current contract term by Macmahon, to whom I would like to express our appreciation for the dedication and contribution of their people to Gwalia, Ulysses and the Genesis business. The Leonora open pit mines delivered 330,000 tonnes of ore at a grade of 1 gram per tonne for 11,000 ounces as focus continued on cutback activities for recently identified shallow lateral extensions at Admiral and pre-stripping works for Stage 2 at Hub, with ore volumes to increase significantly during H2, particularly in the June quarter. Impressive total material movement was achieved at both open pits for a total of just over 6 million tonnes hauled during the quarter. Over at Laverton operations, the Jupiter open pit continued to ramp up well following commencement earlier in FY '26, with mining productivities across our new Genesis Mining Services fleet improving as more floor space was opened up in the central subtle section of the pit. And just shy of 3,000 ounces were mined at a grade of 0.7 grams per tonne from 133,000 tonnes of ore and total material movement of 3.5 million tonnes. At both the Leonora and Laverton mills, throughput performance was excellent, with 365,000 tonnes processed at Leonora at 4 grams per tonne and 92.8% recovery for just over 43,000 ounces recovered and 759,000 tonnes processed at Laverton at 1.5 grams per tonne and 83.8% recovery for just over 31,000 ounces. 38% of that Laverton mill feed during the quarter was third-party ore at a recovery of 79.2%, noting Genesis ore recovery remained consistent at 91.2% as we close out the FY '26 ore purchase agreements with one final campaign to complete during the March quarter. Pleasingly, and aligned with our consistent future-proofing strategy as well as supporting current mill expansion studies at both Leonora and Laverton, we closed the quarter with group stockpiles of 1.4 million tonnes at 1.2 grams per tonne for 53,000 ounces. To round out the excellent quarter, $11.9 million invested into exploration activities continue to yield encouraging opportunities across the portfolio, including testing the upper 1,000 meters of Gwalia that hosts the historic workings and commencing the maiden Genesis drilling program at Beasley Creek, testing for ore body extensions as well as infill for inferred resource conversion. We look forward to providing a geological results update in the coming months. I'll now hand over to Morgan to talk through financial performance. Morgan Ball: Thanks, Matt, and morning all. Further to this morning's release, I'm pleased to comment on some of the key financial outcomes for the quarter. As you heard from Matt, we maintained our run of increasing gold production quarter-on-quarter. And in the December quarter, we sold 71,000 ounces at an average gold price of AUD 6,057 an ounce, up 20% Q-on-Q, generating $430 million in sales. Cash and investments increased by $41 million to $404 million. This is after the company fully repaid the $100 million in corporate debt that we drew down just 7 months ago as part of the Focus laverton acquisition funding. It's really pleasing to have had the liquidity and balance sheet flexibility to optimize our capital management approach this way. Matt and Raleigh have referenced our cost performance, tracking to the lower half of guidance year-to-date. Despite ongoing cost pressures, it has been very encouraging to see the way that the whole Genesis workforce has embraced and contributed to our internal cost reduction initiatives under the Project TALO banner, TALO being an acronym for Think and Act Like Owners. Support for the TALO Project has been across the entire business from the shop floor upwards, and this is particularly pleasing given the strong macro backdrop and rhetoric, potentially resulting in people not chasing those centers. Despite this backdrop, our view is that now is the exact time that we should be focusing on these initiatives, and we are practicing what we preach. We set an ambitious internal cost-out target under Project TALO, and we are on track to achieve this. A few additional corporate matters. We have finalized the stamp duty position in relation to the Focus Laverton acquisition, and we will make this $13 million payment in the June quarter. Given the company's growth performance and profit generation, we will utilize our remaining tax losses during FY '26. And therefore, it is likely that we will start paying income tax installments in the coming months. You will note that we have estimated our unaudited NPAT for the half year at $235 million to $245 million. Not surprisingly, given our growth and with some help from the gold price, this compares favorably to the corresponding period last year, up 300% and in fact, is above our full year FY '25 NPAT of $221 million. We anticipate releasing our half year accounts on the 19th of February. I'll now pass you back to Travis for Q&A. Operator: [Operator Instructions] The first question today comes from David Radclyffe from Global Mining Research. David Radclyffe: A couple of questions from me. First off, I appreciate the long-term plan is still in the works, but maybe could you talk to what, if any, the potential impact is on the Tower Hill timetable from bringing forward the capital that you announced today, especially if we think about the Stage 1 pit and the opportunities here. Raleigh Finlayson: Yes. Thanks, David. Yes, look, as you articulated, 5-year plan in this current half. Obviously, all the final details coming together. You would have read in the quarterly activities underway there. Obviously, the original plan was first ore in FY '28, there is scope to bring that forward, but that will be fully articulated in the plan, which is just around the corner. So long to wait now. David Radclyffe: All right. And again, maybe pushing that a little bit, too. In terms of the potential expansion studies that are going through now, have you started to think about the long lead items there and maybe committing to some of them given that the market could tighten again? Just coming from the thought here that hopefully, that doesn't become a bottleneck to actually delivering the expansion plans when you announce them? Raleigh Finlayson: Yes, 100%. Look, we're obviously in the final throes of the expansion works at Leonora as well. So that's a couple of items on the radar. We're very good tabs about what those long lead time items are. So again, that will be updated in the full plan, but there's a couple of things that we will move on reasonably quickly. So again, watch out for that in due course. David Radclyffe: All right. And look, if I could squeeze just one last one in. In terms of the Ulysses underground, it's still ramping up, but I noticed that the grade is still running reasonably below reserve grade. So any color you could provide here maybe on the current thoughts about the volume and grade profile for the US' underground? Matthew Nixon: Yes, David, Matthew, just to, I guess, summarize where U is at as we ramp up, as you highlighted, when I look at the split between development ore and stoping ore, particularly underpinned by the 1.6 kilometers through the quarter, development ore is still a heavy percentage of that feed. As more levels open up and stoping starts to become the dominant production feed, that's where we see the grade increase towards that reserve grade. David Radclyffe: Okay. Cool. And then so the ramp-up is still effectively a 12-month process from here or less? Matthew Nixon: Improving quarter-on-quarter, David. Obviously, we want to be pretty aggressive with this piece, 111,000 ore tonnes for the quarter. Ulysses, in the longer-term, Leonora strategy looks to provide 500,000 to 600,000 tonnes per annum. So you can see we're well on track for that 150,000 tonne run rate. Operator: The next question comes from Levi Spry from UBS. Levi Spry: I know it's cheeky, but the milling strategy, as you get closer, maybe you can just help us talk about how maybe some of the inputs have been refined on the Tower Hill tying on gold price, on Laverton on the focus ground, just as we get closer to the unveiling of it, is there anything you want to point out in terms of refining the goalpost? Raleigh Finlayson: Yes. Thanks, Levi, and noted cheeky. Yes, look, at the end of the day, we've got plan around the horizon. If I think about Tower Hill, as far as the plan that we're going in with as far as the cutback, million ounces at 2 grams, there's no change there. We're not chasing a gold price changing cutoff grade, any of those sorts of things. It's purely the potential timing. Obviously, we're lining up the rail agreements and obviously getting the approvals to Stage 1 in the last quarter has enabled us to potentially fast track some of that. So that's obviously the one change. As far as across the portfolio, drilling has commenced at Beasley Creek. So obviously, very early days on the Focus ground, which we acquired in June, but really only upside to the plan on that front. So you'll see parts of that feed into the plan when we unveil it this half, but there's still a lot more scope ahead. And as around the mill goes, I think as we've articulated in the corporate presentation, if you have a good look at the reserve ounces and ore tonnes by area. So overlay button and Leonora gives you a bit of a guide to what type of sizing of milling we're chasing, which heavily ends up that sort of 400,000 ounce run rate, which is not a massive surprise considering our ASPIRE 400 target we've had in the market for a while. So all very close. I appreciate people very keen to know what that looks like, but we're in the final throes of getting that pulled together and obviously articulating to the market. Operator: The next question comes from Daniel Morgan from Barrenjoey. Daniel Morgan: Just looking at Gwalia and the contractor change to Byrnecut. I'm just wondering if you can articulate what are the key benefits from making this change that you are seeking or expecting to get? And just what are the expectations of managing disruption from this change? Raleigh Finlayson: Yes. Look, I'll kick start, and I'll throw it to Matt to add some more color to that. But this has been a process. I'll just go back a step. Obviously, when we made the Focus announcement, we also announced Duncan Coutt's appointment to the Board as Director at that time. Obviously, this was with the planned announcement we did today on the succession of Matt as CEO in mind. Over that period of time, since then to now, Duncan has been solely focused on the tender process. It's a competitive process with a range of Tier 1 contractors. That's run its course all the way through to announcement which we made a couple of weeks ago. Byrnecut is certainly familiar to myself, familiar to Matt, familiar to Duncan in previous mines and previous companies, certainly a Tier 1 contractor moving forward. So we won't dive into much more detail about the final outputs of that tender. But as I said, we're talking about a sort of early May transition. So I'll throw it to Matt to give you a bit more color on the tender and the outcome with Byrnecut Matthew Nixon: Yes. Thanks, Raleigh. Thanks, Dan. Ultimately, yes, just to emphasize, really strong proposals from all Tier 1 contractors received. And ultimately, the proposal from Bernhart received through that competitive tender process highlighted Byrnecut as the optimal selection for Gwalia and Ulysses ore bodies ultimately to take us forward following completion of the existing contract term. We maintain our production and cost guidance for FY '26, as we've highlighted as we work through that transition in the June quarter. From an opportunity point of view, I look at productivity, both at Ulysses as a new shallow unconstrained mine and also at Gwalia with Genesis' rightsized schedule approach versus previous strategy, particularly late in the piece for Byrnecut operated at Gwalia in the 10 years prior. So for high fixed cost type operations, productivity is a game changer both on output and cost profile. Daniel Morgan: And then maybe just a question to the team just on the broader months ahead on the fresh ore outlook and grade across the various operations, maybe trying to put together all the levers from the various sites and big changes coming ahead, tonnes and grades? Raleigh Finlayson: Yes. So obviously, some disclosure just around the corner, as I've mentioned. Just a couple of, I suppose, things that you can look out for. Obviously, Tower Hill timing I've talked about on previous questions. So to look out for the timing around that one. Some other ones that have been pleasing, just on the Admiral area, that should have been completed by now. We're having ongoing drill success, drill being operative word, not gold price. So we're not changing our assumptions on gold price. It's purely the drilling success we're having there, which is extending the life there. Bruno Lewis sits in the wings. There will most likely be some drilling that will come out in due course on that, had a very successful campaign of drilling over there over the last 12 months. So that's continued to get bigger. So we're excited about Bruno coming into the production profile. And the obvious other one is Jupiter just ramping up early days at the moment, but team doing an outstanding job there on production rates and the grade continues to climb. Strip ratio continues to fall on that asset as we go forward. So there are a couple of sort of important levers. Obviously, Ulysses ramping up, as Matt alluded to before. And even at Gwalia, obviously, contract change out short term, but a bit of a sneak peek on some of the -- talking about some of the upper drilling that we're doing at Gwalia, potential step change there with some more ounces higher up in the mining sequence. So they're all little snippets. I might give much more detail there because we are so close to unveiling that 10-year plan shortly. Operator: [Operator Instructions] The next question comes from Hugo Nicolaci from Goldman Sachs. Hugo Nicolaci: Congrats, Matt and Raleigh on the role transitions. Apologies if I missed this earlier in the discussion. Just first one, looking at the recovery piece at Laverton. Are you able to just elaborate a little bit more on some of the third-party ore impacts around the recovery? And then just give us an update in terms of the expected timing and volume of third-party ore purchases into the second half? Matthew Nixon: Yes, absolutely, Hugo, Matt here. Ultimately, the recovery piece, different ore types from the 2 OPA partners coming through in the December quarter campaigns, where that's some refractory element or some of the gold locked up in, I guess, their rock types. Summary would be no impact either during the December quarter or moving forward on Genesis ore recovery, highlighted by that 91%. And to your point on the second question. Sorry, just remind me, Hugo, on the second question. Yes. Hugo, thank you. Just to close out in the March quarter, forecasting one final campaign from Brightstar, looking at 130,000 to 140,000 tonnes to complete at the end of March quarter, which closes out both OPA third-party ore commitments. Hugo Nicolaci: Great. That's helpful. And then touched on a little bit to maybe picking up on the refractory ore piece. Just if I look at the resource base, you had about 4 million ounces or close to 20% of the resource is that refractory ore type. Just want to get an update whether we should think about that starting to factor into that sort of next 5-, 10-year outlook? Or maybe are there opportunities to monetize deposits like Aphrodite and some of those others if that's not in the sort of medium to longer-term thinking? Raleigh Finlayson: Yes. Thanks, Hugo. Perfect segue. Thank you. And really, I'm going to sort of use that question to partly answer the timing around the succession today. Obviously, Matt being promoted to CEO, gives me absolute scope to start thinking, forward-looking, thinking about the strategy and a couple of strategic initiatives that I talked about in the opening around obviously reviewing the Focus acquisition ground and how that dovetails into Laverton. It's obviously a fresh in the portfolio only acquired in June. The other part of that is a strategic review of the Bardoc project. And all options are on the table. The first thing, obviously, is refreshing the DFS numbers, which haven't looked at for a couple of years. It hasn't been obviously a core focus for us to date, but a refresh of that plan and obviously look at all the options, some of which you tabled will be something that I'll be starting to focus on, obviously, with Matt stepping up and Duncan taking on an operational oversight role. So yes, more to come, and there'll be more color provided on that in the strategic plan when we release it. Hugo Nicolaci: That's helpful. And then one more, if I can. Just in terms of just clarifying the timing of that updated outlook, it sounds like you're in the final throes here. Is that something we should expect sort of by the April quarterly or possibly a little bit earlier than if you're in that final process? Raleigh Finlayson: I love your work. Current half, I think is what we've said. So it will be around there, somewhere in that period, but we've obviously got resource reserves update, finalizing of the milling strategy, which is obviously a key component of that and obviously dovetailing in some of the work we're doing on the Focus grant plus the timing of Tower Hill, other key components, but current half is what we'll stick to for now. Operator: At this time, we're showing no further questions. I'll hand the conference back to Raleigh Finlayson for closing remarks. Raleigh Finlayson: Thanks for joining us on the December quarterly call. A quarter highlighted with safe record production and free cash flow generation. I appreciate a very busy morning, so we'll leave it there, and thank you very much.