Ladies and gentlemen, welcome to the Sika Half Year 2025 Results Conference Call and Live Webcast. I am Shari, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Dominik Slappnig, Head Communications and Investor Relations of Sika. Please go ahead. Yes, good afternoon, everyone, and a warm welcome to our Half Year Conference Call. I'm delighted to be joined today by Thomas Hasler, our CEO, Adrian Widmer, our CFO, and Christine Kukan, Head of Investor Relations, plus Jomi Lemmermann, IR Manager. We are excited to share with you the performance highlights and key developments for the first half of the year. Earlier today, we published our half-year results and made the supporting presentation available on our website. Thomas and Adrian will shortly walk you through the main achievements, financial results, and provide insights into our outlook. Following their remarks, we look forward to answering your questions. At this point, I will pass the floor to Thomas, who will commence with an overview of our key highlights. Good, thank you, Dominik, and welcome also from my side. I would like to start the half-year reflection with where we took off in January, February, with momentums that continued to deliver as expected in the Americas as well as in EMEA and with a softer market in China. Through the duration of the half-year, we have seen input factors that have been very challenging and unprecedented in regards to the global economy and the applicable tariffs and the relationship between the main players in our industry. I believe when we look back and consider all this uncertainty, Sika has demonstrated its resilience to all weather conditions. It has gained in difficult markets market share, and it has also been able to do this in a profit margin increasing way. Let me now go a bit into the key elements that we have seen and how that has contributed. I think when you look at the EMEA evolution, it is very nice to see that besides the strong markets in the Middle East and Africa, we also see a continuous growth momentum in Europe, here starting in Eastern Europe, but also soon moving over to the other parts of Europe. EMEA, a region that has demonstrated its consistent improvement. The Americas' strong start, a bit confused by the tariff discussion with the Canadian and Mexican countries, but then the escalation with the Chinese government, we could clearly see towards the end of the first quarter that this confusion has also confused our customers. Our customers took a bit of a sideline step and were kind of holding and waiting for how the dust is settling. This has, I think, to quite a bit of a large degree now been done. I think the China escalation has cooled down. Japan is clear. The U.K. has an agreement. Finally, also just recently, the European situation is clearing up the sky. This is probably the most relevant aspect, that clearing up the sky means the predictability for our customers is now better, and the activities that have been put on hold or have been postponed can now restart in the second half. This just as the situation in the Americas where we also have a continuation, less impacted by the tariffs, in Latin America where we have good growth momentum, similar to what we see in other parts of the world. I move over to Asia-Pacific, Southeast Asia, India have a very strong momentum. As mentioned, China with the escalation. With the U.S. government also having difficulties to regain momentum and having deflationary elements. Still impacting the recovery. Moving now over to the consolidated numbers, I think we have demonstrated that we can outpace. We have 0.6% local currency growth, which comes from price and from volume in a declining overall market condition. We have been able to safeguard our material margin on a very high level of 55.1%. We were able also to offset lower volume growth by efficiencies and synergies. Here especially also, we would like to outline the increase in our MBCC synergy targets, which we have raised by $20 million for the ongoing year as well as then for next year, which is the final year of the full integration of MBCC. At the same time, we see that these market conditions are offering great opportunity for consolidation. We have been able to close four acquisitions, bolt-on acquisition, small and mid-size in nature, in roofing, in building finishing, and also in an expansion in Qatar. This is just indicative of a market that has been in the recent six months demonstrating more opportunity and for us a great opportunity to also consolidate this fragmented industry furthermore in the coming months and years ahead of us. On the EBITDA margin, we were able to expand our margin by 20%- 18.9%. As mentioned, several elements that contributed to this. Also, our CapEx spend has been well positioned into locations where we are investing into future growth. In Singapore, Kazakhstan, Morocco, Brazil, and China, we have done substantial allocation that is also fueling future demand with most efficient and innovative products that we can produce locally in all these markets. With that, I would now hand over to Adrian to go a little bit deeper on the set of numbers. Thomas, thank you. Good afternoon, good morning to all of you on the call. As said by Thomas, I will now go into a bit more granularity here on the financial result. Starting at the top, as mentioned, in a market environment that continued to be quite challenging and volatile overall, we posted a modest sales growth of 1.6% in local currency in the first six months of the year. Organic growth was 0.6%, which means we have again outgrown the market. That That continues to be negative. Acquisitions, namely here the small residual impact from last year's transactions as well as the initial contribution of the four transactions mentioned by Thomas this year, have added 1 percentage point of additional growth in the first half of 2025. On the other hand, sales were adversely impacted by foreign exchange movements, especially in Q2, where the Swiss franc strengthened by 10% against the U.S. dollar and a number of other currencies. Overall, the adverse foreign exchange effect reduced local currency growth by 4.3 percentage points in the period under review, particularly in Q2, where the foreign exchange impact was more than 7% in isolation. Corresponding growth in Swiss francs for the first half year was - 2.7% owing to these foreign exchange effects. On a regional level, we have seen differing trends in H1. Region EMEA grew 1.9% at constant currencies. Organic growth was 1.4% with a slight recovery and improving trend in the second quarter, which was in isolation + 2.4% in local currency. Sika recorded significant double-digit growth and increases in the Middle East and Africa. Construction markets are also showing the first signs of recovery in Eastern Europe. Acquisitions added a small additional increment, namely the Cromar acquisition in the U.K. Foreign exchange effects at - 3.4% were also negative. Sales in the Americas region, also as outlined, grew by 3.5% in local currencies. Organic growth was 1.3% for the half-year period, down from the first quarter. After a good start to the fiscal year, the mixed signals in U.S. trade policy unsettled many market participants, which also somewhat slowed the market momentum in the U.S. and in North America. While this caused Sika's growth in the U.S. and Mexico to weaken, the positive growth momentum of the previous year continued in Latin America, while investments in data centers and government-subsidized infrastructure and commercial construction projects continued to also support the U.S. construction market. The four bolt-on acquisitions done in the region last year and in the first quarter of this year added further 2.2% to local currency growth. As highlighted, adverse foreign exchange effects were particularly profound in that region and reduced local currency growth by - 6.5%. In the Americas in the first half year, particularly driven here by the weaker U.S. dollar, but also, for example, the devaluation of the Argentine peso. Sales in Asia-Pacific declined by - 4.7% in the first half of 2025, with organic growth being negative at - 2.1% for the period. This result is mainly attributable to the challenging deflationary market environment in the Chinese construction sector, for which we are focusing on protecting margins and driving efficiencies. If we were to exclude here the negative development in China, Sika would have achieved lower single-digit growth in the region in the first half year. Market development in that region was particularly dynamic in India, Southeast Asia, but also in the automotive and industry segment, where Sika was able to further expand the share of its technologies in vehicles from both local as well as international manufacturers. M&A, and here this is the acquisition of Elmitch, contributed 40 basis points of growth. Also here with adverse foreign exchange impact at - 3.2%, reduced local currency growth to - 4.9% for the first half year. Turning now to the full P&L and looking at material margin, where year on year, we have been able to maintain growth result at consistently high level in line with previous year at 55.1% of net sales here, in spite of the deflationary environment in China and the small dilution. - 10 basis points coming from M&A, where material costs were broadly flat in the first half year. On the cost side here, reported operating costs, which include both personnel costs as well as other operating expenses, decreased overproportionally in the first six months of the year versus the same period in 2024. This was driven by continued strong MBCC-related synergy development as well as increasing impact of operational efficiency measures, largely offsetting ongoing yet reducing cost inflation. In looking at personnel costs specifically, which were basically flat year on year on a reported basis, we have seen underlying wage inflation at about 3.5% per annum coming down closer towards the normal 3% increase year on year, which we typically see on a like-for-like basis. This was partially and increasingly offset by cost synergies as well as operational efficiency initiatives, which have accelerated in Q2. Other operating expenses decreased strongly overproportionally by -6.6%. This versus a top-line decline of -2.7%, also here driven by MBCC synergies and accelerated operational efficiency measures. Talking about synergies from MBCC, overall here, the integration of MBCC continues to go very well. We've realized total synergies in the amount of CHF 79 million in the first six months of 2025. This is an incremental CHF 26 million versus the same period of last year, pushing here total expected synergies for the full year beyond the CHF 160 million upper range of our previous guidance, allowing us to increase the full year guidance to CHF 160 million-CHF 180 million for this year, but also then lifting the guidance for the overall synergy target to CHF 200 million-CHF 220 million by 2026. As a result, EBITDA margin here, as highlighted by Thomas, increased by 20 basis points to 18.9%. This is up from 18.7% in the same period of last year. Absolute EBITDA decreased underproportionally by -2.1% to CHF 1,070 million due to foreign exchange translation effects, in line with the effect on the top line, here also highlighting strong natural hedge and decentralized cost base in line with our invoicing currencies. Depreciation and amortization expense was virtually flat in absolute terms, with 4.8% of net sales, as favorable translation effects were offset by purchase price accounting effects on the intangible side, as well as a slightly higher depreciation rate. As a result, EBIT ratio remained flat at 14.1%, while absolute EBIT at CHF 798 million reduced by 2.9% from last year, again here due to unfavorable currency translation effects. Turning to below EBIT items, firstly here on the interest expense side, net interest expenses decreased by CHF 10 million, down from CHF 79 million- CHF 69 million. The decrease is largely related to the scheduled repayment of the first Eurobond. In Q4 2024 taken out to finance the MBCC acquisition. In addition, other financial expenses have also showed favorable development, representing a net income of CHF 10 million, up roughly CHF 9 million compared to the same period of last year. Unfavorable hedging cost development, lower inflation accounting effects, and higher income from associated companies. On the contrary, group tax rate increased from 22.4%- 25% in the first half year, largely related to positive one-time effects in the previous year and higher withholding tax on internal dividend distribution this year. Also here, as a result, net profit ratio was largely unchanged at 9.8% of sales, while absolute net profit at CHF 554.4 million was also impacted by currency translation effects and down from last year. On the cash flow, talking about cash generation here in the first half. Cash generation was broadly in line with the multi-year average, but operating free cash flow of CHF 181.9 million was lower than the exceptionally high previous year, which was at CHF 401 million. The reduction is partially due to a stronger seasonal increase in working capital, higher investment in future growth and efficiencies, and higher cash taxes, as well as an impact of unfavorable currency movements compared to last year, particularly relating to hedging of intercompany financing. For the full year, we expect operating free cash flow in line with our strategic targets to be above 10% of net sales as cash generation is heavily skewed towards the second half of the year and will additionally be supported by group-wide networking capital initiatives. In comparison to December 2023, the balance sheet saw the normal seasonal development in terms of networking capital balances, but at the same time, a shortening of the balance sheet relating to the strong appreciation of the Swiss franc, particularly versus the U.S. dollar. In March, we entered the Swiss capital market with a triple tranche straight bond issuance in the total amount of CHF 500 million at favorable rates, reducing drawdown of our revolving credit facility and partially replacing higher coupon Eurobonds that were repaid, as mentioned, in November last year. Revolving credit facility drawdown stood at CHF 1 billion and CHF 64 million out of CHF 2.2 billion at the end of June. Net debt/EBITDA leverage stood at 2.5x, slightly down compared to June last year, but up versus year-end owing to seasonality and the payment of the dividend at the end of March. With this, I conclude my remarks and hand back to Thomas for the outlook. Thank you, Adrian. As I started the year with the unpredictability on the markets, I think we have some better visibility now, but still we have to be cautious about the next six months. Therefore, Sika is clearly committed to continue its outperformance of the markets to grow in difficult markets, at the same time focusing on margins improvement, so that our market gains are turning into profitability improvements. For the top line, we are riding for modest sales increase in local currency for the full year. For the EBITDA evolution, we reconfirm our former guidance of an EBITDA margin of 19.5%-19.8%. At the same time, we are fully convinced about the implementation of our strategic midterm targets, which are demonstrated in our Strategy 2028 for sustainable and profitable growth. With this, we then move on into Q&A. We will now. Excuse me, we are now opening the line for the questions, please. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you've entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star and one at this time. The first question comes from the line of Martin Ben Rada, Goldman Sachs. Please go ahead. Hi, Thomas. Hi, Adrian. Thanks very much for the question today. I just had two, please. My first was on price over cost dynamics as we go into the second half of this year. I'd be interested in some of your updated thoughts on the pricing contribution for the last two quarters of the year and whether you're seeing any deflation when it comes to the raw materials side of your cost base. Secondly, it would just be on China. Adrian, you mentioned you're focusing in the region on protecting margins. I'd be interested in what kind of strategies you're developing to do that. What kind of cost growth or cost out are you looking for in the region? Can you give us an update on how you're seeing the China channel opportunity develop? I know that was an area where you potentially saw some revenue opportunities. Thank you. Yeah, thanks here for the questions. I'll take the first one. In terms of price over cost, as I mentioned, input costs have been, I would say, broadly flat with some volatility, I would say, and more lately, probably more s ort of d ownward pressure, at least a slight one. Going into the second half year, we do not expect sort of big movements. Potentially, a slight tailwind. In terms of pricing, we have seen really a very sort of marginal contribution in Q1, a bit more in Q2, which was partially offset also by this deflation environment in China, where there is more, I would say, price pressure. In terms of, let's say, the net impact in the first half year, it has been about 30 basis points on a net basis in terms of pricing. I think also here, going forward, we will continue to be focused here on value pricing of our solutions going forward here into the second half year. Maybe to give also a bit more granularity about the China business. Since I visited them two weeks ago, we have to see here clearly a differentiation between our, let's say, presidential retail-driven business that has the biggest challenge, as there, there is a deflationary element that we are adjusting through selective price increases and efficiency improvements. On the other hand, we have the direct construction business that is holding strong when it comes to pricing and also to efficiency, but has some volume impact from a 25% decreased foreign direct investment volume in this year. Thirdly, I think we also have to note and share that our A&I business is really going very strong. The market is strong. The electrification is in full, let's say, conversion mode, and we participate and we can almost double-digit grow in China in that segment. It is also one of the areas where we believe China is a very relevant market for us to be. Things can change quickly. 10 years ago, the auto industry was dominated by European and American players, but now the Chinese have turned this around, and we are there together with them, and we are also ready to expand with them into other geographies. In construction, we see similar tendencies that Chinese main contractor also want to go abroad into Southeast Asia and other parts of the world. For us, this market is great to be in. It is challenging. At the same time, I think we have a strong performance drive, and we will also bring that to the result as expected for the second half. Perfect. Thank you very much. The next question comes from the line of Martin Flueckiger, Kepler Cheuvreux. Please go ahead. Yeah, good afternoon, gentlemen. Thanks for taking my questions. I have got three, actually, but I will take one at a time. First one is on Thomas's statements regarding market share gains and outperforming or outgrowing construction chemicals markets in H1. Just wondering whether you could put some numbers or estimates on your part to this claim and also the regional or geographic markets where you believe you've gained market shares. That's my first question. I'll come back for the second one. Okay. Yeah. Here we have clear signs and also our own assumptions from the regional or from the actually geographical main centers. When we look into Europe, Europe still has, when it comes to production or construction output, a very challenging situation. We see we can overcome this, and we have a gap of about 3% between the market, as we see it, addressable for our chemicals versus our own performance. So we have this continuous 2%-3% outperformance. Also in North America, where we had a very strong start, where also the underlying market demand was moving in the positive direction, this has slowed down. We have tapped our gap towards the market also in the U.S. The same in a bit a different way is the case in China. The main competitors in China are facing 30%-40% declines in profitability, up to 90% declines. Here, also clear outperformance, but it's a bit a special situation with the challenges that the Chinese market is providing. Okay, that's helpful. Thanks. Turning to focus on the U.S. commercial market, where you've stated and Sika is not the only company saying that you've been impacted by the trade tensions. What are you seeing, judging from the leading indicators that we've seen coming from the U.S. recently? Construction confidence seems to be on the rise again. Are you seeing that on the ground, and what are the latest insights you're getting from customers in the U.S. commercial market? I mean, on the commercial market, it's very clear we have a fantastic momentum with the data centers. This is really flying. This is one of the elements that we also consider for the coming years to be on a strong growth tractionary. On the manufacturing side, this wait and see element has been impacting, started in the end of March until now. When I look at our, let's say, start into the second half, I think we can see here some comebacks. We see some activities when we look into our concrete business, when we look into our roofing business. There are signs that this may now be. A bit overcome, and we move back to where we started the year, where we had very good momentum on this. I think this reshoring has been a bit put at pause, but now the tariffs are more clear, and we expect also that we see here more momentum coming. It is not, let's say, on the commercial, it is more on the infrastructure side. That is also a business that has demonstrated very nice resilience compared to other segments and has also helped in Europe as well as in the U.S. for consistent market outperformance. Great, thanks. My final question, then I will step back in line, is regarding your new synergies. That CHF 20 million that you have identified. Just wondering whether you could provide some granularity. I mean, this is not the first upgrade. I think it is the second, if I remember correctly, of the synergy potential. What is the additional source of these synergies? In what areas, please? Yeah, maybe I can add here some granularity. I mean, on the one hand, you have clearly seen here that the traction we have been, let's say, delivering over the last 18 months to two years on here the synergy capture, and it is actually quite broad-based. On the one hand, on the cost side, we have over time also seen here more opportunities to drive here synergies and efficiencies. That is the one side, and this is really a bit across the board here, particularly also relating to, let's say, operations, if you will. Secondly, it is also the contribution from, let's say, the joint solutions we have been able to develop and deliver also here, let's say, more impact from top-line synergies translating here into profitability. So actually quite broad-based overall, highlighting here the strong also complementarity in many of the areas. Thank you so much. The next question comes from the line of Ghosh Pujarini, Bernstein. Please go ahead. Hi, thanks for taking my questions. I have two questions. One a slightly longer term. If we take your 2025 guidance of modest sales increase and have to move to the 6%-9% local currency growth by 2028, I wanted to know what kind of assumptions you are baking in in terms of market recovery, market outperformance, pricing, and so on. Could you give some color, maybe for your most important markets like U.S., China, Europe? The second question, shorter term. We have seen a very big decrease in your operating free cash flow versus H1 of 2024. Some of the elements like higher CapEx, higher taxes are well flagged and understood. Could you explain some of these other moving parts like the provisions release, some hedging outflows, and also on the working capital? On the working capital, it would be good to understand the increase versus last year. Should that unwind over the rest of the year, or should we expect higher working capital at the end of the year versus 2024? Yeah. Pujarini, thank you. I'll take the second one here on the working capital. Compared to, let's say, last year, which was actually a record for the first half year, the first half year typically is a lot smaller in terms of overall contribution compared to the second one due to seasonality. If we break down the lower cash generation into its elements, as you rightfully pointed out, on the working capital side, there is about a CHF 50 million sort of increase or higher increase compared to last year. Here I would clearly see this to unwind if we look at the drivers in the first half year. One is relating to accounts receivables where, particularly towards the end of the year and the beginning, there has been more support to our distributor clients in China with a bit extended terms which were actually very, very low. This is something we will be gradually dialing back in the second half. Also an element, and this is more broadly across the board, of inventory levels which were geared to somewhat higher volumes. It takes a bit of time to also dial that back. I think there is clear focus and opportunities on the payable side as we're driving this across the board. In terms of working capital, you can clearly assume this will be reversed out in the second half year. The other elements, CapEx, clearly this is related to growth investments, particularly also on the efficiency side, somewhat larger projects, also a bit timing on the cash flow. I do not expect this increase over last year to linearly continue. We will also see CapEx, which is probably going to be slightly above 3% of sales for the year. On the tax, this is particularly the one-timers. We will see, given the one-timers for the full year, a higher tax rate. But also here, the expectation is clearly not that we will continue, let's say, with this sort of linear increase of cash out on the tax side. The last bit, and this is about CHF 60 million in terms of impact, is relating to, let's say, the currency movements. I mentioned here the intercompany hedging where, given how the currency moved, we actually had a positive cash effect last year. This year, it's negative. Also here, not a linear picture. Obviously, given the volatility in the currencies, difficult to predict, but this is also not a factor that should be linearly extrapolated. In a nutshell, clearly the expectation and the target, obviously, that we will here meet or exceed our target of 10% of net sales in terms of operating free cash flow generation. Good. On our midterm guidance, confidence, I think our strategy has a very strong base. The megatrends are valid, super valid in all regards. The urbanization is taking place. The digitalization is on the move. What we see is an artificial backlog in implementation. When I look into Europe, we see some movements to address this. I think the German infrastructure bill is a clear sign that this backlog is tackled, and it has also a reach across Europe to revitalize and put money back into the infrastructure as such. Also, Europe is going to further roll out the legislatory Green Deal implementation, which also means that solutions need to adapt. We talk here about the low-carbon solution, which are increasing. We see here also that these movements to higher-end, higher-performing materials and solutions are ongoing. Same in the Americas, we see a clear trend that with the execution of the Infrastructure Act that has been released, the projects are going to deliver in the coming years. In addition, we have all the reshoring activities, the industrialization that will further be taking place in the U.S. will drive also exceptional growth in the U.S. When I look into China, China has also very clear midterm targets. The targets are to move into more quality construction and also into leading global manufacturing abilities. These are most pronounced with the electrification, where they are clearly a forerunner on the electrification. As mentioned before, we also see that the Chinese main contractor is building the muscles to also participate in other parts of the world. In simple terms, our guideline for the midterm of 6%-9%. Has a lot which is, let's say, in our hands with the acquisition contribution of 1.5%, with the outperformance in the range of 2.5%-4%. Of course, also some, let's say, market growth is considered in there. The minus 2%-3% that we have seen last year and also this year, that's not the norm that is going to move towards zero. That is going to move into a 2% growth ratio within the midterm target timeline. All the elements are absolutely valid and reconfirmed. We should not, let's say, take these short-term disruptive elements as an underlying change in demand and in the outlook. Thank you. The next question comes from the line of Patrick Rafaisz, UBS. Please go ahead. Thanks. Good afternoon, everybody. Can I follow up firstly with the comment around the midterm? I understand all the structural trends and drivers that you described. If we stick to the explicit timeframe to 2028, and assuming that modest growth means H2 is somewhere similar to H1, let's say 2% local currency, you would need to see a massive acceleration in 2026 already to get close to that target at the lower end. Is your confidence both on the explicit financial targets or just on the, let's say, rolling midterm opportunity? That's my first question. I'm not sure if I get your question. I mean, this year, we're indicating 3%-6% as kind of a step up from, given the market condition. Now we are guiding for modest growth, which is probably in the neighborhood, as you mentioned. We expect that the underlying demand will bring us safely into the 6%-9% in the coming years. Of course, we can't predict all the market evolution, but the market demands are very clearly set. It is, as demonstrated before, it is based on the needs. It's based on the evolution of the solutions, the performance drive, the sustainability drive, the new opportunities. The 6%-9% is therefore as a growth aspiration for the years ahead, absolutely realistic. Okay. Good. Good. The second question would be on China. If we assume that the current run rate that you're seeing is maintained, what would that mean for Q3 and Q4, especially Q4, where the comps appear to be getting very easy given the prior year performance? Do you think you can get back to break-even or positive by Q4, or is it still implicitly negative at the current run rate? I think here in China, it's very clear, and I think it was also signaled by Adrian. We have some. Areas where we are focusing on. Streamlining, bringing our working capital, our pricing in line. We have seen that the Chinese market is, let's say, first time facing such a situation. And also our organization has, to some degree, let's say, compromised on some of our key metrics. And this is, let's say, on the pricing side. Yes, concessions are required, but cautious application, working capital, accounts receivable. So we are on the way. We have started this at the beginning of the year. So we expect also that this will positively contribute and change the picture quite substantially in the second half compared to the first half. Okay. Great. And then the last question, a follow-up on China. You mentioned, I think, pricing for H1, 0.3%. Would it be possible to provide some color on pricing in China and ex-China for Q2 and the first half? Yeah. I mean, the color is that, as I mentioned, that here outside of China, it was a bit above half a percentage point. And in China, your pricing was negative given the overall environment. That's the sort of overall composition. So let's say the price component was here impacted by, obviously, the deflationary, low-volume environment in China. Okay. That's helpful. Thank you very much to both of you. The next question comes from the line of Cedar Ekblom, Morgan Stanley, please go ahead. Thanks very much. I just wanted to go back to costs because I think we've debated quite a bit where the medium-term growth may or may not settle. There was a little bit of improvement on sort of personnel and other OpEx costs, which was very welcome after a couple of quarters of not great operating leverage. Can you talk a little bit about how we should think about those two buckets moving into the second half of the year? And then also more medium-term, how we think about those two buckets into next year? Can we hope for a more accelerated pathway of cost out in those two items? Thank you. Yep. Thanks, Cedar. I was kind of expecting this question as we obviously have talked about. But on a more serious note, I think overall the trajectory is positive. If you look at, let's say, the overall contribution here on, let's say, the non-material cost side, it is at least slightly positive, including here the synergies from MBCC. And as said, I mean, we continue to see good traction. We had about 40 basis points, let's say, improvement here driven by here synergies. On the other hand. Sort of the residual, let's say. Cost dilution of 30 basis points is, I would say, sort of underlying. As we need about 3% of organic growth to have, let's say, operating leverage per se, given, let's say, inflation and the residual cost we increase, we need to drive the business at that growth. Would basically be about sort of a 70 basis points-80 basis points cost dilution, which we have sort of offset by about 40 basis points-50 basis points coming from efficiencies, which going into the second half, I actually am confident that we will see sort of a further bigger impact. Also, if you look at, let's say, Q1- Q2 evolution, I mean, this minus 30 basis points in Q1, they were probably closer to sort of - 60 or so. There is a clear progression here on, let's say, the cost efficiency side. And synergies will continue also to contribute. I mean, going forward here, the buckets. We will see another impact of synergies next year, probably also in the sort of amount to 30 basis points-35 basis points on the efficiency. Also based on the measures and initiatives we're taking. Also here, confidence that we will be able to add another, let's say, 40 basis points here of improvement. Obviously, on the leverage side, requiring sort of the same level of organic growth as in the past to, let's say, be neutral. To the extent we will move back to sort of above 3% growth, we will also here actually potentially see a bit of a positive rather than a negative impact. Was that clear enough or? It was. I didn't have any other follow-ups. That's fine. Thanks very much, Adrian. Okay. Thank you. The next question comes from the line of Ephrem Ravi, Citigroup. Please go ahead. Thank you. Two questions. Just to follow up on Cedar's question on costs. The personnel costs, in particular, did go up, although the other OpEx did come down. Is there a change between sort of in-house personnel versus outsourced personnel for that kind of cost bucket to go up while other OpEx costs came down? Is there a limit of percentage of revenue in terms of personnel costs, like 20% or 21%, where you would kind of seriously think about sort of more radical measures at cost change? Second question, just on the Americas business, U.S. is clearly about, whatever, 60% of the revenue of that business. Despite kind of relatively weak U.S. market performance, at least from the commentary, the revenues there are up pretty decently. Is it a disproportionate contribution from. Other countries like Argentina, Brazil, Mexico? And if that is the case, could you quantify that a bit? Thank you. On the second one, you were asking for an exchange impact, or what was, I did not get the first part of the second question. Yeah. Why the Americas' revenues grew about 3% while U.S., it looks like it was relatively flattish within that. Is that correct? And if that is correct, what would the growth in the other U.S. markets be like? Thank you. Yeah. Maybe the first one here on the personnel or on the cost in general. I mean, there was not, let us say, a clear switch. Of course, on, let us say, the outside employees or temporary workforce, obviously, on a timeline, it is, let us say, quicker to reduce. If you look at sort of underlying personnel cost, let us say, inflation, I was mentioning 3.5%, which is sort of coming down now to, I would say, sort of more normalized level, which is sort of around 3%. I think here we have seen sort of a move towards there. We were at sort of around 4% at the end of last year. We have additional, obviously, also personnel coming from M&A. So we are at sort of a 4.5% underlying, I would say, sort of like-for-like increasing, including scope changes. We have here reduced that by about one percentage point through efficiencies. Sort of underlying, if you take currency apart, there is about a 3% increase on the personnel cost. While on the other OpEx, a stronger reduction also related to, obviously, sort of more variable cost elements. Also on the personnel cost, this will increase the, let us say, the impact in the second half year as we continue to drive here efficiency and cost effectiveness measures. Good. On the Americas' growth tractionary, I think when looking at the U.S., it started into the year with an almost mid-single-digit growth momentum. This has then slowed down to a low single-digit number. Canada, more or less, also impacted like Mexico by this tariff dispute. They have been flattish, while Mexico has been negative. Correctly spotted, we have fantastic markets that are providing us good, healthy single-digit growth rates in Brazil, in Colombia, in Ecuador. We have in Argentina a significant double-digit growth. We also have some challenging markets, like for instance, Chile. Overall, LATAM is, in this first six months, also adding to the overall, let us say, solid performance of the region, Americas. Thank you. The next question comes from the line of Elodie Rall, JPMorgan. Please go ahead. Hi. Good afternoon. Thanks very much for taking my questions. I'll have two. I will first would like to come back to your guidance, but this time on EBITDA margin. You reiterated 19.5%-19.8% this year, given despite the higher MBCC synergies. My question is, when do you expect this EBITDA margin to be above 20%? What kind of volume growth do you need to get there? I understand cost is being flexed a bit, but what reasonable volume growth do you need to get to that 20% margin target? That's my first question. My second question is, I'd like to come back to 2026 outlook a bit. I was wondering if you can reasonably return to this Strategy 2028 target as soon as next year. For example, consensus is at 6% growth for next year. Do you feel that you can catch up some of the underperformance from this year and meet that consensus further rate at 6% as soon as 2026? Thanks very much. Yep. Thanks, Elodie. I'll take the first one here, then 19.5%-19.8%. That's sort of alluded to, obviously, here. The key drivers on, let's say, the synergies, but also on the cost side where sort of efficiency will have a stronger impact in the second half. Also in combination with, let's say, on the material margin where we here are driving at least, let's say, a slight improvement over, let's say, full year of last year. These are the elements driving here. 19.5%-19.8% EBITDA as under these assumptions here of the top-line guidance here, the pure leverage, as mentioned, will be negative. Going forward into 2026, I mean, clearly here we stand to our guidance and commitment of 20% EBITDA. If you think about, let's say, the impacts and the respective buckets, we'll see another element or the residual impact of the synergies coming from MBCC, as mentioned also here. Continued impact on, let's say, the efficiency side. Obviously, the leverage element is on top, but being here quite confident that we will continue to be able to drive here into that margin band as guided. Then, Elodie, talking about where we will be next year, our aspiration is very clear going forward. At the same time, we are taking it quarter by quarter. Looking into what we see also this year coming, let's say, in favor is the ongoing recovery in Europe. Here we have a steady growth. I would also point your attention to the. Let's say, industrial manufacturing evolution, which has been challenged very much in recent years with the automotive industry in North America and Europe. When you look into that here, we have a clear reversal. We had a negative trend in Q1, - 1%. In Q2, it's + 1.6%. These things, they can accelerate. These things, when we talk about Europe and stimuli allocation to the decarbonization, if we have, let's say, a clear guidance not only on the infrastructure side from Germany, but also in other parts, there are good chances that the markets are going in the direction that the guidance becomes a guidance for next year. We also have, not to forget, our growth engines in every region. We talked about LATAM, which is clearly there where it needs to be in regards to the midterm guidance. We have the same in Southeast Asia. We have the same in the Middle East and Africa, even beyond. I would also point the attention towards the acquisition. I think we have a chance also on the acquisition side to bring it a notch up. There are more opportunities we see, especially small, mid-size owners, family owners that are engaged to see an exit as they see the market is not recovering at their desired pace. We are going to take advantage of that as well. It is certainly too early to provide a guidance for next year, but it does not take too much to bring us in line and also demonstrate in 2026 not only the crossing of the 20% EBITDA margin, but also to have then substantial growth from organic as well as an organic side, pushing in the right direction. I am optimistic about the second half. It is not yet perfect. If next year is perfect or not, we will see, and we will guide probably then later in the year. The underlying elements are all there. If this confusion is removed, I think we will also see more activities coming our way. Thanks very much. If I could squeeze in a follow-up, since you mentioned M&A and you did say that you closed four bolt-on acquisition, that market conditions were good for consolidation. If you could just let us know if you expect this pace to continue or accelerate in H2, what kind of contribution from acquisition you are forecasting for this year, and if you are looking at any larger transactions arising on the horizon. Thanks very much, Nelson. I think it is less that we are indicating larger transactions. It is more the bolt-ons, the small, medium-size, as outlined in the PowerPoint. These are the 50-plus-minus million top-line acquisitions, which we did four of them this year. Of course, you cannot predict the exact closing. Therefore, I'm a bit hesitant to already give an increased guidance for this year. We have increased the opportunity pipeline, and this may then materialize this year, next year. We see that. It is an attractive market opportunity. We are also considered a very attractive owner, especially for family-owned businesses that also want to see that their business is becoming a platform for growth and not the consolidation target for other purposes. We have here very good discussions. In numbers, I have to be a bit cautious, but this is giving me a clear indication that we can expect more to come. Whenever that materializes, we have to see then with the progress of the individual prospects. Okay. Thanks very much. The next question comes from the line of Yassine Touahri On Field Investment Research. Please go ahead. Thank you very much for taking my question. Two questions for me. First, CRH announced today the purchase of a company called EcoMaterials in the U.S., which I understand is the largest supplier of fly ash in the country. What do you think this could mean for the ready-mix industry in the U.S. and for Sika? Do you believe that CRH and the other cement companies could push more aggressively for blended cement, now that they control most of the U.S. fly ash? Or do you think there's still a lot of resistance against blended cement, and that this could drive the ready-mix producers to rely more on independent imports? If I understand correctly as well, the more blended cement the ready-mix concrete producer uses, the more admixture they use, and it would be good for Sika? That would be great to get your view on these developments. Yes. I mean, this is an area where the U.S. has been forever an OPC market where the cement was kind of standardized, and the concrete mix was then relatively, let's say, uniform and simplified. Absolutely, with the introduction of blended cement, as you say, L1 cement that has been introduced recently has been, from my perspective, a very good sign. Ultimately, what other markets have done for very long is now also taking place in the U.S., and it offers for us two streams of additional incremental sales. One is these blended cements, of course, also have, let's say, more variability. So we need. Let's say the cement producers need also to equalize the blended cements in their manufacturing. We have this as a value stream. Then downstream, with fly ash and blended cements, and then also with aggregates, which are becoming more, let's say, challenging, we have further increase in demands for admixtures for the concrete to be expected. These are, for us, let's say, long-overdue initiatives and momentum in North America that we believe is helping and boosting also our business in cement and cement additives as well as concrete additives. Your view would be that the acquisition of EcoMaterials by CRH could go in this direction? I mean, others have also done acquisitions. I think Heidelberg did some acquisitions. I think it is the new theme of the cement players that they are trying to secure their not only aggregates, but also, let's say, supplementary materials to be able to then also play in this field and use it for their own downstream ready-mix operation, but as well as the possibility to blend their core product, the cement, with this. This is not unique. This is just the most recent move in this direction. A very last question. Could you comment a little bit on the very latest volume that you've seen in your geographies in July, if you already have some idea? Any improvement or deterioration versus what we've seen in the second quarter? I would say July is a summer month. When you look at Europe, nobody wants to work. We compare to last year, and we can see that the second half starts a bit like the first half has ended. I think the real, let's say, signs will become more clear when we have a full month. August still will be a bit mixed. This is about Europe. I mean, in other parts of the world, people are working in August. In Europe, we have a trend that I talked about that is also continuing. In other parts of the world, we will see China, especially also with the initiatives we took, how that materializes. I'm confident for the second half. I'm absolutely convinced we are going to bring the guided profitability. On the top line, the modest growth is giving also an indication that not growth at every cost is on our radar. It is clearly also here balancing. We can offset. I think Cito's question was going in this direction. We are confident we can manage our cost in line with our guidance on the profitability. Top-line trends, I expect North America to. Demonstrate that in the coming months. More about that then when we talk about the Q3 results. Thank you very much. The next question is the last question from Harry Dow, Rothschild, and Co Redburn. Please go ahead. Yeah. Thank you. I think just three questions from me. Firstly, on the European stimulus, I wonder whether you could give any idea of when you think that might flow through to volumes for Sika. Is it something that you're having discussions with customers already on the availability of products into the end of this year and the start of next, and also whether you think it might be a benefit to pricing as well as volumes? I also wondered in relation to that, but also maybe more on the defense side of things. Obviously, there is a part of the business that's non-construction, kind of the industrial part, part of which is automotive, but also wider industry. I wasn't sure if there's any exposure to actually direct defense manufacturing in terms of adhesives or coatings. Then just finally, a follow-up on M&A. I wondered if, obviously, you talk about the pipeline being quite healthy, but I wonder whether the market is getting more competitive and whether you could give us an idea of what the multiples, the current sort of market look like relative to history, whether it's sort of higher or lower and whether the same amount of deals, sort of conversion ratio, are making it across the line today, again, relative to the last five years. Thank you. Okay. I think especially on the German stimuli in regards to infrastructure, yes, our organization is heavily preparing and engaged here. First and foremost, on the short-term activities which are related to renovation. This is going to become visible probably towards the end of this year when first money flows, but certainly next year, we will see more activities in renovation. This is, of course, also something which is steered by the Federal Agency for the rail and for the roads. Here, a key element is that this increased project activity must be done with, let's say, limited increased labor and time constraints. Here, the acceptance of new solutions is better than ever. Also, the sustainability angle that this, let's say, renovation work needs to be done with a lower carbon footprint material is helping us at this stage to get ready for the implementation of the renovation in Germany. The longer-term, let's say, new infrastructure. Activities we also support with the architects, with the engineers, in also then creating this. Longevity targets for the new construction that is planned. Also there, I mean, our discussions with them are indicating very clearly, "This is great that we can spend so much money, but we do not have, let's say, the labor to plan and execute." Therefore, they are looking for simplified solutions. They are looking for systems where they can bundle things more likely going forward than in the past where individual items were sourced and designed. Here, we see also a possibility to leverage our competence and provide these bundles to make those plannings and the execution easier because we are talking here about the massive increase in spend that is a concern for the engineers and the contractors, how to execute if we continue the same way we have built the infrastructure in the past. On the industry side, I think I indicated we have there a momentum that is very encouraging. The automotive industry outside of China is very challenged, but we can increase. This is an industry, also industrial manufacturing of home appliance and other transportation means is challenged and is seeking support to get more efficient, to use more advanced solutions. The time is actually perfect. When they are low in volume, they are investing into efficiency, upgrading their processes. We are very active, and we see first results of this in this change of momentum on the industrial manufacturing side. This takes place everywhere around the globe. This is an efficiency-driven industry. Performance must increase, but cost must come down. That is where we are engaged. We also believe that is going to drive future growth in the future. On the M&A side, I think what I mentioned before, of course, it is always a competitive market. As mentioned, the increased exit desires of private owner does not come at a higher multiple. It is rather that we have chances here also to make good deals going forward. The numbers are higher, but let's say the multiple pressure is rather less than when it is high season. Right. Thank you. Okay. Thank you very much. This brings us to the end of our call. Thank you for joining this conference call, and thank you for your sustained interest in Sika. We wish you some wonderful summer days ahead. Goodbye. Thank you. Thank you. Bye-bye. Goodbye. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.