Good afternoon. This is the Chorus Call Conference operator. Welcome. Thank you for joining the Ariston Group fourth quarter and full year 2025 results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Miss Ilaria Candotti, Head of IR. Please go ahead, madam.
Thank you. Good afternoon, everyone, and welcome to Ariston Group's fourth quarter and full year 2025 results call. Joining me today are Maurizio Brusadelli, Chief Executive Officer, and Riccardo Gini, Chief Financial Officer. The presentation will take about 25 minutes, after which we will open the floor to your questions. For those joining by phone, the slide deck is available on our investor relations website. I now turn the call over to Maurizio.
Thank you, Ilaria, and hi, everyone, also from my side. Let's start. I am on slide three. 2025 has been, I would say, a very positive year for the Group. After a market slowdown in 2024, the European heating market saw a recovery, with Germany returning to value growth thanks to an increasing demand of renewable technologies. The rising demand for heat pumps more than offset the weakness of the European gas market, where the replacement rate remained at the bottom of the past 15 years. In this context, we benefit from our strong strategic position in Germany, and overall, we outperform the market, thanks to our ability to serve demand with a broad and competitive range of technologies, supported by consistent and disciplined execution.
This was also true for our water heating business, which continued to deliver solid results across geographies, despite negative currency effect in several countries like U.S., Mexico, and India, to mention the most relevant. We achieved a +3% organic growth full-year, with four consecutive quarters of consistent growth and a healthy adjusted EBIT margin at 7.1%, fully in line with the guidance we provided a year ago. Cash generation remained robust, supported by the typical seasonality of our business and by continued discipline in working capital. Cash generation was lower compared with those of previous year, which benefited from an exceptional net working capital reduction. The fourth quarter closed the year with sustained growth, double-digit profitability, and cash flow concentrated as usual in the final mass.
Let's move on to slide four, where we summarize the pillars of our equity story with a focus on 2025 achievements. We combined solid execution with meaningful strategic progress across all areas. First, we strengthened our role as a champion of thermal comfort throughout all stages of the energy transition, from gas boiler to heat pump, hybrids, and other heating system. Last year's growth in renewables helped offset the European boiler environment, which reached a 15-year low. We also achieved top quartile ESG ratings and improvement, which confirms the quality and consistency of our sustainability roadmap. Second, our balanced portfolio proved once again a real differentiator. Thanks to our broad technology offering, from traditional solution to advanced heat pumps, biofuel solution, and combustion technologies, we can adapt quickly to shifting market condition.
At the same time, the contribution to our growth from water heating remained important, while service and parts continued to grow significantly. We continued to expand and modernize our global industrial footprint. Over the year, we invested to strengthen our competitiveness and reinforce our proximity to key markets. Last December, we inaugurated a new plant in Serbia dedicated to the production of cylinders and heat pump components. Last September, our new industrial site in Cairo became fully operational, supplying water heaters to the African and Middle East markets from a country with a strong manufacturing base and a cost advantage. We also opened our first factory for electronic boards in Arcevia, in Italy's Marche region, strategically located near our existing production sites in the region.
Finally, last October, we signed an agreement to acquire a new water heating plant in India, further supporting the growth potential of our local premium brand, Racold. Fourth, we continue to push ambition to act as a consolidator in the climate comfort sector. As you know, last December, we signed the agreement to acquire Riello. This move will strengthen our leadership in climate comfort in Italy and expand our global capabilities in combustion technologies. In North America, last June, we signed a joint venture with Lennox, a strong leader in innovative HVAC solutions. This partnership will allow us to supply our portfolio of residential water heaters through Lennox distribution network, which counts more than 300 locations across the U.S. and Canada. In 2025, we also completed two bolt-on acquisition within our components division. To conclude, 2025 marked a return to growth at the upper end of our guidance.
We delivered four consecutive quarters of year-on-year expansion, improved margins, and generated cash despite significant capital investment to support future growth. Fit to Win efficiency progress as planned and our leverage improved, confirming the strength of our balance sheet. In the next slide, we want to recap the main strategic initiative announced in 2025, the partnership with Lennox and the agreement for the acquisition of Riello. The Lennox partnership is progressing as planned. It supports our expansion in North America through a long-term commercial collaboration on high efficiency water heating solutions. The products will be manufactured in our plant in Mexico, improving the facility's utilization. Consider that 2026 will mainly be devoted to learning, growth and development. The contribution will gradually increase and will be tangible from 2027 onwards.
For Riello, we expect that this acquisition will strengthen our position in climate comfort in Italy, adding to our portfolio two new well-known brands, Riello and Beretta, and thanks to the high complementaries across products, geographies and commercial channels. It will also allow us to reinforce our global presence in combustion technology and increase our exposure to commercial and industrial application to North America. The closing remain expected by the end of the H1 of 2026, in line with what we previously communicated. These steps advance our strategic agenda and support the group's long-term value creation. Moving to slide six, a brief reminder of our business profile before we move to the numbers. We operate in thermal comfort with a balanced exposure to water heating and climate comfort.
Water heating, on the right, is a resilient business where we are among the leaders in Europe and outside Europe. Outside Europe, this is our core business with very good prospects, thanks to demographic growth and low water heating penetration in emerging markets. Climate comfort, on the left, includes heating, services and parts, ventilation, and air handling, with a diversified technology portfolio from gas boiler to the most advanced heat pumps and hybrid systems. Service and parts continued to grow in 2025, driven by customer opting for maintenance rather than replacement in Europe. The components and burners or combustion technologies divisions complete our business lines, counting in 2025, respectively for 4% and 3% of total Group turnover. As I usually remind you, in Europe, which represents about 70% of revenue, our presence in heating and water heating is more balanced. Moving to slide seven.
As you know, Germany is our largest market, accounting for around 20% of group revenues in 2025. Between 2013 and 2022, the heating market has grown in volume around 4%, and it remains primarily a replacement market, with value growth driven by a shift toward high efficiency and renewable solution. In 2023, the volumes boomed by 34%, boosted by heat pump incentives introduced in 2022, and by fears of a potential gas boiler ban. This was followed by a sharper correction in 2024, with volume down 46% due to destocking and regulatory uncertainty. In 2025, we saw the market reaching a 15-year low in volume, declining by a further 12% year-on-year in volume.
Yet, within this backdrop, heat pumps recovered strongly, up 55% year-on-year, supported by a solid incentive scheme with application above 20,000 per month in 2025, compared with 12,500 in 2024. gas boiler, as I said, fell more, by more than 30% in volume, dropping below an already weak 2024 due to unclear legislation. The total German market grew in volume during 2025, thanks to heat pump. 2026 started with approval incentives in the month of January of about 21,000, which is 50% higher than January 2025. This confirms the positive underlying trend for heat pumps, supported by solid incentive scheme. Last week's new news on the long-awaited revision of the GEG signs a shift in the regulatory framework.
The proposals removes some constraints for boiler replacement market and embraces a more multi-technology pathway to decarbonization. Subsidies for heat pumps are confirmed to remain in place until 2029, ensuring continuity of support across both new building and replacement markets. The legislative package is expected to be further detailed and operational by mid-2026. We will continue to monitor this evolution, including possible positive impact on market demand, mainly in gas boiler. I will hand over to you, Riccardo, and he will walk you through our Q4 and full year financial performance.
Thank you, Maurizio. Let's begin with slide number nine, which illustrates the year-on-year evolution of net revenues. To ensure proper comparability of the data in line with prior quarters, the 2024 revenues shown on this slide exclude the Russia business, allowing for a like-for-like comparison with 2025. The bridge to 2025 reflects changes in perimeter, including the reconsolidation of the Russian business at the end of March, and the contribution from the acquisitions of DDR and Z.R.E. for the components business. In Q4, net revenues reached EUR 747 million, up 2.8%, of which 2.1% organic. FX impact was negative by 1.8%, while the perimeter variation accounted for an increase in net revenues of 2.6%.
This result was driven by robust heat pump momentum, particularly in Germany, supported by our solid commercial and operational performance, which more than offset the continued weakness in gas boiler demand. Water heating delivered positive organic growth, driven by a strong contribution from the Americas and selected key markets in Asia Pacific, partly offset by adverse FX from the USD and other Asia Pacific currencies. Service and parts division delivered another quarter of sustained growth in line with the performance achieved over the first nine months of the year, confirming the continuity and resilience of the underlying growth trend. For the full year, revenues reached EUR 2.7 billion, up 3% organically, while the reconsolidation of the Russian business since the end of March and the two acquisitions in the component divisions contributed for a further 2.3% of inorganic growth.
Foreign exchange effect was negative by 1.3% in the full year. Let's now turn to slide number 10 to see the geographic breakdown of our net revenues. Let me first clarify that in this slide, we are looking at the reported figures, which by definition include the contribution from perimeter changes and acquisitions. The most notable adjustment remains in our largest region, Europe, which in 2025 accounted for 72%, one point higher than in 2024. In fact, here we are comparing different perimeters across the two years. Q4 2024 did not include Russian business nor the acquisitions of Z.R.E., which in Q4 2025 contributed approximately EUR 70 million in total. Similarly, on a full year basis, perimeter effects are driven by Russia and recent acquisitions of DDR and Z.R.E..
2024, Russian business contributed only four months of revenues following the consolidation at the end of April for approximately EUR 28 million. In contrast, 2025 includes nine months of Russian business reconsolidated at the end of March, contributing around EUR 52 million. In addition, 2025 revenues include the contribution of Z.R.E. acquired in mid-June. In Europe, full year net revenues increased by 4.4% year-on-year, while organic growth was equal to +3%, driven by the performance of heat pump sales in Germany, but also by the overall performance of East and West Europe. In Q4, net revenues increased by 5.2% year-on-year, at +2.2% excluding the Russian business, supported by solid heat pump performance in Germany as well as in other key geographies.
Gas boilers remained weak, while water heating and parts and services continued to provide a positive contribution in most of the countries. In Q4, as in the previous quarters, we continued to outperform the market trend. In Asia Pacific, Middle East and Africa, net revenues were materially impacted by adverse FX movements, which emerged in the second quarter, progressively intensified over the year, and peaked in Q4. Considering that in the last three months, net revenues were substantially in line with the same period of 2024, this led to a 6.3% decline in the quarter. For the full year, the region delivered low single-digit organic growth, supported by the solid performance of water heating in our key markets such as Vietnam.
The effects, however, remain negative and more than offset organic growth, resulting in an overall 1.6% decline in net revenues. The Americas, Q4 net revenues increased by 3.9% year-on-year to EUR 89 million, reversing the negative trend of the first nine months. This was driven by the organic growth of Mexico and the U.S. in water heating, which more than offset the strong negative USD effects impact in Q4. This growth also allows the region to close the full year slightly positive at +0.3% despite the significant negative effects from both the Mexican peso and the USD in the first nine months. Moving down along the P&L, let's turn to slide number 11, which focuses on adjusted EBIT performance.
In the fourth quarter, adjusted EBIT increased by 24% year-on-year, reaching EUR 79 million. In terms of margin, this meant an adjusted EBIT margin of 10.5% on net revenues with an improvement of 180 basis points year-on-year. For the full year, adjusted EBIT reached EUR 193 million corresponding to a 7.1% margin, up 100 basis points year-on-year and in line with guidance. Reported EBIT in Q4 stood at EUR 53.4 million. The main adjustments included, footprint streamline, the purchase price allocation amortization related to past acquisitions, M&A expenses, and rightsizing actions. This performance reflects the effective combination of operating leverage in the 2025 efficiency program, highlighting strong execution and cost discipline.
These actions more than absorb the acceleration of investments in key strategic priorities, such as go-to-market initiatives, digital transformation, and R&D, while fully preserving the group long-term growth trajectory. As a reminder, our adjusted EBIT historically shows a seasonal pattern with an average distribution of approximately 30% in the H1 and 70% in the second half of the year. Turning to page number 12, Q4 performance boosted the full year free cash flow to EUR 125 million, confirming the usual seasonality of our cash generation. As expected, the Q4 result is lower than the EUR 139 million recorded in Q4 of prior year, which benefited from an extraordinary reduction in net working capital. Despite a higher CapEx and a less favorable working capital environment in the first part of the year, full year performance reflects solid organic growth and tangible efficiency gains.
Working capital discipline remained strong throughout the year. On a like-for-like basis, our working capital to sales ratio improved by 1.9 percentage points year-over-year, Q4 delivered the expected seasonal improvement of 3.7 percentage points versus the end of September. CapEx increased year-over-year from EUR 116 million - EUR 141 million, in line with our strategic roadmap and mainly related to the new plants in Serbia and Albacina in Italy, as well as the new Wolf campus in Mainburg in Germany. On slide number 13, we would like to provide an overview of our adjusted net debt evolution throughout the year.
Starting from an adjusted net debt position of EUR 579 million at the end of 2024, the group generated a strong free cash flow of EUR 125 million over the year, underscoring the quality of earnings and effective cash conversion. Cash generation was primarily allocated to discipline capital deployment, with EUR 32 million invested in bolt-on acquisitions, supporting the group's strategic growth agenda. Financial and effects charges resulted in a EUR 30 million cash outflow, while shareholder remuneration remained consistent with our policy, with EUR 29 million distributed in Q2, and EUR 1 million related to the share buyback executed during the year. We also recorded four million positive non-cash adjustments, mainly reflecting mark-to-market movements, IFRS 16 effects, and exchange rate impacts on net financial indebtedness.
Overall, adjusted net debt decreased from EUR 579 million at year-end 2024 to EUR 542 million at year-end 2025, supported by the solid free cash flow generation. As a result, leverage improved materially, declining sorry, from 2.1 x to 1.7 x, reinforcing the strength of the balance sheet and preserving significant financial flexibility to support the future M&A opportunities. In summary, excluding the EUR 61 million of cash outflows related to capital allocation, namely acquisitions, dividends, and buyback, the underlying cash absorption from business operations and financial management remained limited, confirming the group's strong cash generation profile. Turning to slide number 14. This slide provides an overview of our financial position at year-end. Liquidity remains solid at EUR 250 million, and our capital structure continues to be well balanced.
The average duration of our non-current bank debt is three years and a half, with more than 80% of maturities now concentrated between 2028 and 2032, providing robust medium term stability. During the year, we also proactively repaid the higher cost debt, optimizing our debt structure and further strengthening the efficiency and flexibility of the balance sheet. Our exposure to inflation and interest rate swings remains limited. Today, more than 55% of our long term debt is either at a fixed rate or fully hedged. That give us a solid level of protection and stability in the current macro environment. At the same time, we maintain approximately EUR 1 billion committed, unused credit lines which give us ample financial flexibility to support both organic and inorganic growth initiatives.
Overall, our net financial position remains solid, supported by disciplined financial management, a well-structured debt profile, and significant liquidity headroom. On slide number 15, you can see the dividend proposal that the board will submit to the AGM. As a reminder, our dividend policy is based on a payout ratio equal to one-third of the net profit reported. Last year, the distribution was paid out of available reserves and based on adjusted net profit, allowing the distribution to more accurately reflect the group's recurring operating performance, despite the full year 2024 net result being significantly impacted by the impairment of the Russian affiliate.
This year it is again proposed to base the dividend on adjusted net profit as it best represents the underlying performance of the group and assures consistency with the prior year by excluding non-recurring and volatile valuation effects related to the Russian participation. These result in a proposed distribution of EUR 36.8 million or EUR 0.10 per share, compared to EUR 0.08 last year. With that, I will now hand over the call to Maurizio, who will take you through our outlook and guidance ahead of 2026.
Thank you, Riccardo. Let me introduce our outlook, with a brief comment on the market context we expect for this year. We see the European heating market gradually stabilizing after the peaks and bottom of recent years. As said before, the market has reached an unprecedented low, and in the short term it will have to recover. Whether this occurs fully in 2026 or in 2027 is still uncertain. At the same time, we expect heat pumps to continue expanding and progressively reshaping the value mix. We also expect varied trends across countries, but overall, we see a positive market transition stabilizing in volumes while steadily shifting toward more efficient and sustainable technologies.
While the legislative details in Germany, as commented before, are still being finalized, we remain confident that, with the German heating market at a 15-year low, having a diversified portfolio across technologies and application is essential. A strategic pillar that continues to support our resilience and competitiveness. Building on this, and given our ability to outperform the market, our focus for the year is on profitable growth, while continuing to invest in the strategic initiatives that will support our long-term trajectory. On top line, we expect in 2026 organic net revenue growth between +1% and +4% year-on-year on a like-for-like perimeter and at constant Forex, with a gradual increase over the quarters. Our profitability is expected to progressively improve with adjusted EBIT between 7% and 8% of revenue. Supported by cost efficiencies and operating leverage.
At the same time, this year, we will accelerate investments in go-to-market, new products, digitalization and R&D to fuel long-term growth across our core businesses. With regard to cash generation, it will remain concentrated in the fourth quarter, consistent with our historical seasonality, with CapEx between 5% and 5.5% of revenues, reflecting our commitment to supporting growth through capacity expansion, innovation and digital initiatives. The guidance has been prepared based on available information and does not incorporate potential disruption arising from recent geopolitical developments involving the Middle East, nor any related second or other effects on demand across our working markets. On the capital allocation side, the Riello acquisition is progressing as planned, with closing expected by the end of first half of 2026. We will also continue to assess strategic M&A and bolt-on opportunities in line with our disciplined approach.
Thank you, Maurizio. We have now completed our presentation and we are available for your questions. To make sure that everyone gets the chance to speak, I invite you to limit the number of questions to two per turn. Operator, please open the line. Thank you.
Thank you. This is the Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. We will pause for a moment as participants are joining the queue. First question is from Christian Hinderaker, Goldman Sachs.
Yes, good afternoon, and thanks for the time. I wanna start on the 2026 organic growth guidance. How do we think about your price volume expectations? Maybe also any thoughts here on the product mix, and then as we think more midterm, usually you have a midterm guidance section on the presentation. That doesn't seem to be there. I just wonder if that's a change of approach, given obviously the 2026 guide, and also recent years have been below that level.
Thank you, Christian. Let me answer first price and volume. Obviously, for 2026, we expect a continued volume evolution of our business, as I said before, in line with the market evolution. We are also planning for a pricing and mix recovery versus 2025. On product mix, I think, I mean, we are very well-placed and we just need the market to grow. I mean, obviously, we always said many times that in terms of margins, the percentage is the same. In terms of absolute, obviously, if we sell heat pump, the absolute value will be higher than a gas boiler or a water heater. These are our expectation for 2026. On the long term guidance, I mean, we speak with you very often. I mean, this is not changing our midterm ambition.
I mean, we continue to be there. I think in line with the best practices of the market, we would like to stay focused on the guidance of the year while continuing to think about what to do long term in other forums. I think we will give a strategic update by the end of this year on how we see the future of our company.
Thank you, Maurizio. Maybe secondly, can we talk about the boiler market in Germany and actually perhaps more broadly? Obviously last year, we've seen heat pumps now outsell boilers. Where are we at on inventories of boilers in Germany, in your view? Also, any comments on broader Europe as well would be helpful.
Yeah. I think the level of the inventories are clean and clear everywhere, so we don't have issues on boilers. We continue to be bullish and positive on boilers. I think we spoke about the legislation in Germany, but while, yes, there is a shift towards heating pump in the mid long term, this will not happen from night to the day after. It will be a long transition. It will be a different transition in the different countries. There are countries which are already heating the pump markets or there, like the Nordics, where, for example, we don't play. There are some other countries like Italy, where the relevance of boilers will continue to be there.
I continue to repeat, for us, having the opportunity to have a very complete range from gas boiler to hybrid to heating pump, it's a plus. I repeat, no issues in terms of stock on boilers. Positive on the long-lasting relevance of gas boiler in the heating market in Europe for the next decades.
Thank you.
Next question is from Vivek Midha, Citi.
Thank you very much, everyone, and good afternoon. I have two questions. I'll go one at a time. First one is another one around.
The German market, you highlighted that the subsidies for heat pumps have been confirmed. I am taking a step back. Do you have any concern that there could be some effect from the regulatory uncertainty until that's confirmed on the pace of growth of the heat pump market? Thank you.
Thank you, Vivek. I mean, obviously, the fact that they are confirming the subsidies until 2029, I think it's a good signal to the stability of heat and heat pump evolution, both in new building that is mandatory, but also in replacement. We see this as a very positive signal for heat and heat pump. On the other side, as I said, the fact that it seems that the law will remove some of the constraints or the issues that consumer were having in installing a gas boiler, it's another opportunity. Now, this will have to pass all the steps in terms of legislation in Germany. We are following the market, and we are checking if there is any difference. Overall, I think this will be a positive law for the total volume of Germany.
Since we are leaders and providers of both gas boiler and heat pump, we are happy and well-positioned, as I said before.
Thank you very much. My second question is following up on your comment about varied trends by country. I'm curious in terms of the organic growth guidance you've given us, are there any countries which you'd highlight as where things, the trends are likely to be slower than the average? Thank you.
Maybe back when I said that, the countries will move in a different way, I was referring to the shift from fossil to renewables. I was not talking about the mix of the country and the development of the different countries across Europe. Obviously, as you know, because you see the public data as we are doing, the different countries are positioned also differently. I think in U.K. we saw again, a positive development of heat and heat pump. In Germany, we just commented, so I wouldn't repeat.
In Netherlands, the situation is positive as well, and I think there we are well-positioned with a new product that we announced to the market, which is a very hybrid and strong machine that people can place in smaller parts and that is working like a heat and heat pump supported by gas boiler. In France, while there are obviously signals of a positive evolution, the political situation is not as firm in others.
Thank you very much.
Next question is from Alessandro Tortora, Mediobanca.
Yes, hi. Good afternoon to everybody. I have, let's say two question. Okay. The first one is, if we can, let's say, elaborate a little bit more on the assumption behind, let's say, the organic, let's say, sales guidance, in the sense, if you can confirm to us that just basically excluding, let's say, any additional perimeter, if understood well, even the, let's say, remaining contribution from the Russia reconsolidation, okay, on 2026, okay. The question relies on the fact that Bloomberg consensus, okay, was set on a number which is much higher, okay, than your organic sales guidance, also including probably some, let's say, some contributors, including already Riello, okay.
Just to have a clear picture of and comparison, okay, on your sales, organic sales guidance. Related to this, if you can also, let's say, clarify if this positive or potential regulatory development in Germany is something that is part of this guidance, or if understood well, you could reconsider, let's say, over the year, if there are some positive implication, okay, for your numbers. This is the first question. I don't know if you want to go one by one, or I go with the second one.
Yeah, maybe I start, and then I will ask, Riccardo.
Thanks. Yeah.
Thank you, Alessandro. To give you all the technicalities. When we say organic growth, it is obviously excluding the impact on Forex. As I said before, on a like, for like perimeter, what does it mean? That we include the months of Russia that we didn't have in 25 and the acquisition that we did in 25. Riccardo can explain a bit better. I want to make sure that it's clear we don't have Riello in this guidance, first of all, because we didn't close yet the deal, and as I said, we are expecting all the green light by mid of this year. On the law in Germany, our guidance is 1%-4%. As always, we want to establish credibility with all of you and deliver what we said we would do.
As always, we see how the markets will develop during the year, eventually we'll go on the upper part of this guidance if we see the, first, the legislation that will become active, secondly, that the gas boiler will change this year. I think we will update you in the next quarters. I don't know, Riccardo, if you want to do one by one what is in and out in terms of perimeter, so it's clear to everyone, again, saying that Riello is out. I think you may be right, Maurizio. The perimeter is exactly the same. We will take into account the contribution of the Russian consolidation, the two acquisitions of DDR and Z.R.E. on the components business on the same period and number of months.
We will have a comparison apple with apple and this of course, excluding any effects dynamic. That's the way we communicate organic growth.
The second question is, can you discuss about Germany? Can you comment a little bit about Italy now, okay, with the, also with the incoming acquisition of Riello consolidation will be much more important. If you can, let's say, give us an idea of, let's say the outlook, okay, of the Italian market, and maybe just, also, let's say a quick, update on the, burners performance that can, you know, will be much more relevant with Riello. Thanks.
Yeah, as you said, and as I mentioned before, with the acquisition of Riello, we will strengthen, I would say, dramatically in a positive way, our position in Italy. In HVAC, but also globally as a combustion technology player, which is a market which is much more stable, profitable, and again, there we can offer different technologies from the one that are more, I would say historical to the greener one. I mean, Italy, you know very well if we talk about heating that the market reached the bottom. We expect once again that the market will go up. It could be during 2026 or 2027, but for sure this market has to go up.
The percentage of heating with pump in Italy is around 10%, I mean, it's still another opportunity as well for the market. Remember that we have water heating as well, where we are strong leader, where we see a positive evolution, especially on heat pump water heater. We never speak about that, our position very strong and we could use brands of Riello and Beretta that didn't have the opportunity to offer this kind of products. We know as well that for what we understand from what they presented us in a management presentation, that the Riello percentage of the heating with pump is lower than ours.
There is an opportunity for us to give them a state-of-the-art and the most developed in terms of heating with pump technology, and I think this will be another opportunity, for sure to gain market share, but as I said, expecting a market of heating that sooner or later will rebound from a very low level, which is obviously, the level of the late, I mean, not even in 2010 it was so low.
I'll come back to, let's say, in case I have any other follow-up. Thanks.
Next question is from Alessandro Cecchini, EQUITA.
Hello, everybody, and thank you for taking my questions. The first one is, actually on input costs, I mean, the cost base 2026 at constant volumes. If you can elaborate a little bit more, what are the main drivers? What are you seeing? What are you assuming, I mean, for 2026 in term of cost base, in particular input costs, of course, at constant volumes? This is my first question.
Thanks for the question, Alessandro. First of all, I think it's worth to remind everyone that we run our purchasing policy with a hedging coverage that give us, I mean, good level of certainty when we forecast the following 12, 18 months ahead of us. As we look into it, we feel confident that the cost assumptions on input basis have been taken into consideration.
In the meantime, we are conscious that inflationary items are on the market, such as on steel, copper, for instance, are quite heavy, so we have to continue monitoring what's going on on an input basis, continue to manage our procurement strategy and continue to be able also to price into the market if conditions allow to charge whatever it comes as additional inflation from raw materials. All in all, cost assumptions as we speak and as we read from the most recent dynamics on steel, copper, aluminum are taken into consideration of our guidance for 2026.
Thank you very much. My second question is instead on Fit to Win project. If understood correctly, in 2025 you cashed in EUR 25 million of additional savings. Your target is EUR 50 million, if I am not wrong, in 2027. I would like to better understand.
I would say the ramp up that you expect, the additional savings that you expect in 2026, if it is gradual between 2025 and 2027.
Yeah, I think we gained more traction than expected in 2025. I would say we are more on the upper part of the 25 million you were talking about. We also made a conscious decision to reinvest good part of these savings into our growth initiatives. We spoke earlier about R&D. We spoke about go-to-market strategies and programs as well as on digitalization. These are the three key initiatives where I mean, as a result of the good results achieved, we decided to reallocate part of the savings into I mean, into the actual results. Going forward, the 50 million EUR Fit to Win program is confirmed.
We maintain our commitment with the saving that we will achieve, are gonna be reinvested, into these programs, to continue to fuel our growth. That's the plan, we agreed upon, and we are currently executing.
Okay. Finally, if I may just, your sense on the start to the year of the company. Just to have some brief overview of what you are seeing in the market. Thank you.
Yeah, maybe I answer this one. I think on the market, I mean, I would say continuity versus what we saw in Q4 until obviously what happened last weekend. We were expecting a gradual recovery, as I said, during 2026. We have to see, unfortunately, how the situation that you all know is happening will impact us during March. That's what I would say. Before last week, I mean, we were cautiously optimistic, seeing the markets recovering and doing fine, and now it is what it is.
I think we proved in the past to manage with resilience all the external factors, geopolitical challenges, tariffs, and I think we are well-positioned and diversified as a company, both in terms of portfolio and sourcing, to overcome those challenges. I'm sure the team will continue to do this in the future.
Okay. Thank you.
Next question is from Davide Rimini, Intesa Sanpaolo.
Good afternoon, and thank you for taking my questions. I have two questions. The first is a clarification again sort of on organic growth guidance that you've given for this year. If I'm not mistaken, you signaled that that growth should be progressively improving over the course of the year. I was just wondering, since we noticed instead sort of the deceleration quarter by quarter of the growth of 2025, whether sort of there should be any element to assume instead sort of this year should be an acceleration.
Again, attached to that, just a clarification, where sort of, within this organic guidance, there is anything that you might add in terms of the contribution from the Lennox JV that will start this year. Thank you.
Thank you, Davide. First of all, I think Q4, you might see or you optically deceleration, but I want to remind you that in 2024 the situation was different. 2024 Q4 was already better than the previous quarter. Every time we compare year-on-year on different quarters, and I think we said and we commented that this year, until the recent development, we were seeing a continuation of the trend and positive development of the markets. In terms of Lennox, I think that, you know, we always said that they would launch their brands in quarter two. Everything is progressing very well. Everything is on track. We said as well that 2026 will be a year of building, knowing the business, training the people, expanding distribution.
The majority of, or the meaningful part will gradually increase. I think we will speak more on 2027 about numbers and if this is a success as we think or maybe we can do better. Let's use 2026 as a build-up and then 2027 as the first real year where Lennox is competing in the new water heating market. So far so good. Very positive. I don't know if someone went to the exhibitions in U.S., but this has been presented publicly as well with very good and positive returns from installers and builders in both U.S. and Canada.
Thank you. My second question is, again sort of a clarification, is a sort of a point that has been touched already before, is on sort of the long-term guidance. If I'm not mistaken, you pointed out at, that you will come out at the end of this year, sort of, with a more sort of strategic update.
I just wonder whether sort of, this will be, again, on long-term organic and margin, that is the 10% that we had in the past, and along with that, if there would be anything, said, regarding the CapEx, the CapEx on sales that you guide, that have been introduced for this year, but whether or not, I mean, will be sort of subject to the next strategic update?
Yes. First of all, we confirm that our aim is to grow organically at mid-single digit and to continue to progress in terms of profitability to reach the double digit. I mean, this is there and will not change.
On the strategic update, that I mentioned, obviously, we will give you a, I would say clearer view on the long term also because, we plan to do this by year-end. We will have the closing of the Riello acquisition. We will talk about how we plan to grow to aim to the mid-single digit rate topline, and to continue to improve profitability, including the fact that, as we said, I mean, we are having a strong investment this year and last year to position the company stronger for the future. Also on CapEx there will be obviously, or a reduction in the mid-term, because I think we will finish what we planned, we would have done. Then we will be in a much better position also to fuel our cash generation.
Thank you.
Next question is from Daniel Khajenouri, Morgan Stanley.
Thank you for taking my question. As a follow-up to your comments on the thermal comfort segment, would it be possible to comment on pricing trends in heat pumps specifically? The market utilization and pricing risks are something you called out in your last annual report. Thank you.
Yeah. On on heating heat pump and pricing, we always say that, I mean, we don't play in the lower and entry part of the market. We are playing in the upper part of the market with our brands of Wolf and Elco in the upper mainstream of Ariston. As always, I think, and I wouldn't comment maybe the last quarter or the next two, an evolution of the future will be that competitors like us and others will continue to work on the cost competitiveness of this product. More importantly, as you know, anything that you win, if you can strengthen the relationship that you have to have with installers, and this relationship is very linked to the pre-service and after-sales service and the quality that we are giving to all these installers.
I would say nothing strange, nothing different than what we saw during 2025. You saw the results on 2025 that we posted. There is always competition. There are things happening, but nothing extraordinary. This is what I would say. As Riccardo said, since all raw materials are increasing, you might see a better pricing mix in the future because everyone will have to absorb this kind of cost increase.
Okay. That's useful. Thank you.
Next question is from Michele Baldelli, BNP Paribas.
Hi. Good afternoon to everybody. I have a couple of questions. The first one relates to the cost line because my point is not only on raw materials. Do you see also inflation for what concerns the semiconductors and hardware? Basically the control devices for your equipment. The second question relates to the fourth quarter of 2025. I saw that the Asia Pacific mere region declined by 6% in Q4. If you could provide us some color on the reasons behind it. Thank you.
Yeah. Maybe I start with the first one and then the second. I don't know if, Riccardo, you want to elaborate more on what you said before. on semiconductor, I mean, as you know, there are tension. I don't think we are seeing different problematic than in the past. What we use is different than what other companies are using. I think we are well positioned. As you saw, we started as well to produce our electronics in Italy, which is giving us an opportunity to manage the most strategic e-electronics platform that we have and as well as the cost inflation. On Asia Pacific, I'm sure Riccardo will explain, but we had a huge Forex impact in the year. Riccardo, if you want to reiterate a bit the performance of the region.
Yeah. you may be right. I mean, there is a huge effects impact across the majority of the currencies of the countries we operate in. The Q4 of prior year was represented a solid base as a comparison. We do not foresee any significant issues, so to speak. I think we should look at the region more on a full-year basis, other than on the Q4 standalone.
Full year was a positive number of more than 3%, correct? Excluding Forex, which is good.
Okay. Thank you.
If there are no further question, we will close today's session here. Thank you all for your time and participation. Bye.