Good afternoon, this is the Chorus Call conference operator. Welcome, and thank you for joining the Industrie De Nora nine-month 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 Chiara Locati, Head of Investor Relations and ESG. Please go ahead, madam.
Good afternoon, everyone. Welcome to our first nine month financial results presentation, and thank you for joining us. I'm Chiara Locati, Investor Relations and ESG Executive Director at De Nora. With me on the call today are Paolo Dellachà, CEO of the group, and Luca Oglialoro, our CFO. They will guide you through the financial and business performance for the first nine months of the year. Following the presentation, there will be a Q&A session. The presentation slides can be found in the Investor Relations section of our website. With that, I would like to hand it over to Paolo. Paolo, the floor is yours.
Thank you, Chiara. Good afternoon, ladies and gentlemen, and a warm welcome from my side as well. The third quarter proved to be another very strong period, enabling us to close the first nine months of 2025 with growth across all major financial indicators, despite foreign exchange headwinds and a volatile macroeconomic environment. As shown in the slide, we delivered solid performance across revenues, Adjusted EBITDA, and net income, all of which increased. Notably, the adjusted net result rose by 22% year- on- year. These robust results were reflected across all divisions, each reporting revenue growth in line with guidance. The core business, water and electrical technologies, recorded an increase in both order intake and total backlog compared to the same period in 2024. In the energy transition segment, we successfully completed the NEOM project and continued executing other contracts, delivering over 800 MW of green hydrogen technologies.
We are also advancing the development of cutting-edge solutions and strengthening strategic partnerships to maintain a leading role in a market expected to grow significantly over the medium term. In the first nine months, the favorable revenue mix, combined with strong operational efficiency, led to profitability exceeding expectations. This enabled the second consecutive upward revision of our Adjusted EBITDA margin guidance, now projected at approximately 19% for the full year 2025. Our financial structure remained solid, allowing us to stay focused on business growth opportunities, both organically and through potential acquisitions, particularly in the water segment. To support this, we continue to optimize our treasury processes and medium-term debt structure, aiming to enhance cost efficiency and financial flexibility. Lastly, our commitment to sustainability remains unchanged as we execute our 2030 plan with a concrete and measurable approach that integrates sound financial principles and robust risk management practices.
This slide shows some key KPIs from our nine-month 2025 financial performance, which Luca will discuss in more detail later. Reviewing the performance of our business units, let's begin with our electrical technology business that achieved EUR 310 million new orders, marking a growth of over 20% compared to the same period of 2024. Order intake accelerated significantly in the third quarter, with a year-on-year increase of around 60%. Growth was well balanced between aftermarket projects and new installations. From a geographical standpoint, approximately 50% of new orders came from Asia, 26% from the EMEA region, and 22% from the Americas. Order development involved both the chlor-alkali and the electronic segments, with the latter benefiting from the positive momentum driven by artificial intelligence. By the end of September, the backlog was broadly in line with last year's level and higher than in June 2025.
Let me note once again that the backlog here isn't a solid predictor of future revenues, since project cycles turn over quickly and can be affected by a few large multi-year contracts. Overall, the business showed in the first nine months robust commercial dynamics across markets and geographies. Taking a wider view, the international macroeconomic environment remains volatile and complex, shaped by evolving trade relationships among countries, which continue to impact global economic growth. The scenario is further compounded by persistent geopolitical uncertainties. These factors may influence the timing of investment decisions by certain clients, and we are strictly monitoring the business evolution. We are now on slide number seven. The water segment continues to benefit from a supportive market environment.
The increase in order intake and the resulting growth in backlog enhances our business visibility for the coming quarters and confirms both the strength of our market position and the sector's solid growth outlook. As shown on the slide, the backlog at the end of September rose by more than 20% compared to the year-end 2024, leading to a stronger book-to-revenue ratio for 2026 than at the same time last year. Order intake continued to grow in the third quarter, bringing the nine-month total to a 16% increase. In terms of geographical distribution, North America accounted for more than 50% of new contracts, with approximately 29% linked to the pools line. Remaining orders were well balanced across Asia, particularly China, the Middle East, Europe, and South America. Looking at the water technology systems segment, we recorded an 8% increase in orders split between new equipment and aftermarket services.
Growth was especially strong in Asia and South America. The pools line reported order growth of over 30%, with further acceleration in the third quarter. While North America remains the core market, 2025 has also seen particularly strong momentum in Europe. We are very pleased with these results. They not only reflect the positive market dynamics, but also the efforts we have made over the past few years to strengthen our commercial capabilities and reinforce our commitment to customer satisfaction through a portfolio of advanced technologies tailored to meet specific client needs. Finally, the market outlook remains positive across both the pools and the WTS segments, supporting our confidence in continued growth. On this slide, we highlight some of the key projects awarded during the third quarter, spanning multiple geographies and covering both industrial and municipal sectors. Let's start with our flagship initiative in Brazil.
This project is being developed in partnership with Chlorum Solutions, which will build, own, and operate water treatment systems for two municipalities in Brazil. De Nora will supply two chlor-alkali systems, enabling access to clean water for approximately 10 million people. The initiative eliminates the transport of liquefied chlorine gas, improving safety and cutting environmental risks. Now, moving to the bottom of the slide, we see three additional key projects. The first two are filtration initiatives using our DE NORA TETRA technologies, located in Qatar and in the United States. In Qatar, the project is owned by Qatar Electricity and Water Company and focuses on desalination. It will add 2,300 MW of power generation and produce around 16,000 m3 of potable water per day. This large-scale effort is designed with energy efficiency in mind, addressing the country's growing demand for reliable freshwater resources.
In the U.S., we are supporting a municipal upgrade in the city of Rocos Wastewater Treatment Plant in Maryland. The system will help protect the Chesapeake Bay from nutrient pollution, contributing to long-term environmental preservation. The third project is located in Guyana, where our SEACLOR electrical chlorination technology will safeguard the water systems in one of South America's most significant offshore energy developments, owned by ExxonMobil. Before we move to the energy transition business, I'd like to give you a brief update on our entry into the PFAS market, started in 2025. In 2025, we secured our first three full-scale projects in the United States, focused on PFAS removal from drinking water. These projects built on our multi-year expertise in contaminant removal. The first two are located in Pennsylvania, Massachusetts, and were presented already during our May and July conferences.
The third project was awarded only a few weeks ago in Washington State. These achievements represent an important milestone in our growth within the PFAS market, firmly establishing the De Nora position among the leading players in the sector. In parallel, we are continuing to expand our piloting activities with 12 initiatives currently underway across the U.S., Italy, and Saudi Arabia. Additionally, De Nora is actively participating in two EU-funded projects aimed at advancing PFAS treatment technologies, where we are contributing our proprietary solutions. We are also proud to highlight the expansion of our well-established SORB product line through the launch of the so-called SORB FX Pak, an affordable and compact contaminant removal system designed specifically to support small and rural communities, particularly across the U.S., in achieving their PFAS removal goals. This represents a niche market with strong potential for both development and profitability.
Looking ahead, we anticipate steady growth in this segment, driven by regulatory development, increased funding availability, including government support, and continued innovation in contaminant removal technologies. Let's now move on to the energy transition segment. We are pleased to announce the successful completion of our contribution to the NEOM Green Hydrogen Project, a global flagship initiative for green hydrogen production. As of August, De Nora has delivered the final components for this groundbreaking project. From early 2023 to today, we manufactured and supplied approximately 2.2 GW of best-in-class alkaline water electrolysis technologies, totaling around 33,000 individual cells, which form the heart of the engine of the NEOM Green Hydrogen Project. The project now continues on site, where our partners, NEOM Green Hydrogen, will install and commission around 110 electrolyzers of 20 MW each.
Once fully operational, these systems will produce up to 600 tons of green hydrogen per day, powered entirely by renewable energy, specifically 2.2 GW of solar and 1.6 GW of wind. The green hydrogen produced will be converted into green ammonia, which will be distributed globally, supporting the decarbonization of hard-to-abate sectors and enabling clean energy trade across countries and continents. This means avoiding about 5 million tons of CO2 emissions each year, a major step in advancing global decarbonization. We take great pride in contributing to this transformative initiative. Our contribution centers on producing the core elements of the electrolyzer, supported by over a century of experience in high-performance coated electrode technology. This positions De Nora as a key player in the green hydrogen industry. This project also lets us make a real difference in reducing global CO2 emissions, perfectly aligned with our sustainability values.
In the first nine months of 2025, we made significant strides in our green hydrogen portfolio, delivering over 820 MW of technologies, including 300 MW in Q3. In line with the production schedules agreed with customers and confirming our strong execution capabilities. Looking ahead to Q4, we expect to finalize the STEGRA project, completing all hydrogen-related contracts currently in our backlog. As previously shared, our backlog also includes approximately 10 million lithium recovery initiatives from end-of-life batteries, scheduled for completion in 2026, further expanding our presence in sustainable and circular technologies. From a pipeline perspective, commercial dynamics are promising, although uncertainty persists around the timing of final investment decisions. Our joint venture is actively involved in front-end engineering design projects and has been selected as the preferred supplier for multiple contracts across Europe and Australia, totaling approximately 3 GW.
We anticipate that several key European projects will materialize in the short term, reinforcing our market position and providing visibility of future revenues. As shown in the chart at the bottom left of the slide, since 2022, we have developed and delivered approximately 3.2 GW of green hydrogen technologies. This track record confirms our role as a key player in a rapidly emerging industry with strong medium and long-term growth potential. From a market standpoint, low-emissions hydrogen production is expected to grow robustly through 2030, as the sector continues to evolve and mature. Key enablers for market acceleration include regulatory certainty and balanced public financial support, but also long-term offtake agreements and demand stimulation, which are now essential to ensure bankability and build a sustainable ecosystem. In the short term, market volatility is driving a wave of consolidation, already underway since last year.
This will likely result in a new landscape dominated by a few large solid industry players, able to offer advanced technical solutions and support fair, stable pricing. De Nora is well positioned in this evolving scenario, thanks to its strong financial structure, versatile global footprint, and unparalleled cutting-edge technological offerings. With that, I'll hand over to Luca for the financial review.
Thank you, Paolo, and good afternoon, everyone. The third quarter marked another period of strong performance, building on the solid results achieved in the second quarter. As shown in the top-left chart, revenues grew year-on-year despite the negative impact of certain currencies, particularly the U.S. dollar and Japanese yen. At constant exchange rates, revenue growth would have been close to 12%. Top-line expansion was matched by an increase in EBITDA margin, which reached approximately 20%, the highest level in the last four quarters.
Looking at the individual business units, as shown in the top-right chart, the electrical technology business reported a decline in revenues, as anticipated in our production plans, and consistent with full-year guidance. The business unit revenue evolution should not be viewed as a quarterly trend, but rather assessed over the fiscal year, as quarterly fluctuations are driven by production schedules agreed with customers. Furthermore, as previously noted, the overall revenue performance in 2025 versus 2024 reflects the interruption of business with our Asian customers following the sanction packages issued in Q3 2024. From a profitability standpoint, the Adjusted EBITDA margin, while remaining solid, has experienced fluctuations primarily due to changes in volume and product mix. The water business, in the bottom-left chart, posted revenue growth above 15% and nearly 22% at constant exchange rates.
This performance was primarily driven by the pools line, which posted a record year-on-year increase of 40%. While the WTS line recorded low single-digit growth, partly impacted by a change in scope following the disposal of the marine business. Profitability in the water business remained particularly strong, with margins at approximately 22%. This performance was driven by the expansion of the pools division, which accounted for 44% of the business unit revenues, up from 36% in the third quarter of 2024. Lastly, the energy transition business reported strong revenue growth, in line with production plans agreed with clients. The year-on-year comparison also benefits from the temporary production slowdown recorded in Q3 2024, due to supply chain issues. From a profitability standpoint, the increase in volumes, combined with notably strong operational efficiency, resulted in an EBITDA margin of 15.7%. Let's now move on to the nine-month result.
Revenues grew by 5%, reaching EUR 631 million. The result was negatively impacted by around EUR 12 million due to the evolution of the currencies, mainly the U.S. dollar and Japanese yen. Excluding this effect, growth would have been 7%. The geographical breakdown is perfectly balanced. Compared to the same period in 2025, we recorded a 15% increase in the Americas, mainly driven by pools and core alkaline lines. Growth in EMEA and APAC was around 1%, reflecting a combination of differing dynamics across the three business units. The electrical technology business grew by 1.4% year-on-year. The performance was primarily driven by the core alkaline and electronic lines, both posting high single-digit growth. As expected, the electrolyzing line recorded a 30% decline, mainly due to the interruption of business with the Russian customer. Additionally, currency headwinds negatively impacted revenues by around EUR 6 million.
At constant exchange rates, revenue growth would have been close to 3%. After-market revenues accounted for approximately 45% of the segment's total sales. The business unit's nine-month performance is in line with guidance, which anticipates a slight revenue decrease for the full year 2025. The water business posted overall growth of more than 8%, which would rise to above 11% at constant exchange rates. This performance was led by the pools line, which grew by 30% year-on-year, driven by both volume and price increase. The WTS segment recorded a decline of around 4%. Mainly attributable to the already mentioned change in scope, following the disposal of the marine business in 2024, which impacted the comparison by approximately EUR 4 million. Adjusting for this effect and excluding the roughly EUR 3 million negative impact from the U.S. dollar exchange rate, the performance would have been positive by approximately 2%.
A particularly positive note comes from the after-market services, which represents more than 43% of the WTS revenues in the first nine months, up 9% year-on-year, with a positive impact on the business profitability. Finally, in the energy transition business. Project execution is progressing as planned, revenues accelerating in the third quarter as expected and are projected to remain strong in the final quarter of the fiscal year. Overall, the nine-month revenue dynamics confirm the full-year 2025 guidance across the business units. On page 15, you can appreciate our backlog at the end of September 2025 that Paolo has already commented on by business unit.
Let me just highlight that the core business has shown a steady, albeit moderate, growth over the past few quarters, primarily driven by the strong expansion of the water segment and the stability of the electrical technology business at the end of September 2025 compared to September 2024. We are now on slide 16, which presents an overview of our operating cost structure. Consistently with the comments previously shared during the half-year results, at the end of September, the increase in G&A and corporate costs reflects inflationary dynamics and the carryover impact of corporate structure announcement implemented in 2024. R&D expenses remain broadly stable as a percentage of revenues compared to nine months 2024, averaging around 2%. Including the R&D costs in the energy transition segment eligible for the IPCEI grant that, as from 2025, have been accounted as non-recurring.
I am pleased to highlight that we have added over 20 new researchers to our laboratories, reinforcing our investment in the development of cutting-edge technological solutions in the sector. Let's move on to slide 17. Adjusted EBITDA for the first nine months recorded a year-on-year growth of approximately 16%. Reaching 19.7% of revenues, about 200 basis points higher compared to 2024. Profitability is in line with what was already reported in the first half of the year and reflects a particularly strong performance in the pools line and the energy transition business. Looking at individual business units. The electrical technology business reported a healthy 20.9% profitability, reflecting, compared to the same period of 2024, a different mix of product lines and geographies, and especially a lower contribution from the electrolyzer revenues.
This trend is expected to be confirmed in the fourth quarter of this year, in line with the projected revenue evolution. The water technology business achieved a strong 50% growth in Adjusted EBITDA, with our revenue margin close to 22%. Approximately 6 percentage points higher than in the first nine months of 2024. The improvement in profitability compared to both 2024 and the guidance was primarily driven by a stronger-than-expected expansion of the pools line. Its contribution to total business unit revenues increased to 43%. Up from 36% in 2024, resulting in a significant margin uplift. It is also worth noting that the WTS line reported an improvement in operating profitability. Supported by the expansion of after-market revenues, which accounted for 45% of total sales over the nine-month period, and by operational efficiencies following the disposal of the marine business.
For the final quarter of the year, we expect the positive revenue trend in the pools to continue, with stable profitability in WTS, keeping the full-year Adjusted EBITDA margin in the region of 20%. Finally, the energy transition business reported a high single-digit margin, supported by solid volume growth and excellent operational efficiency. This result is particularly positive when considering, as previously noted in an earlier call, the impact of one-off costs related to a customer's financial difficulties, approximately EUR 2 million, as well as R&D expenses amounting to around 8% of revenues. Now, on slide 18, let's take a look at the evolution of the net financial position. In the third quarter of the fiscal year, operating cash flow exceeded EUR 45 million, supported by the typical seasonal trend in the net working capital, which tends to generate cash in the final two quarters of the year.
In the fourth quarter 2025, we expect a further strengthening of the net cash position, driven by operating cash flow, despite an anticipated increase in quarterly CapEx. We are consistently committed to optimizing treasury processes and the medium-term debt structure. In this context, the recent voluntary early partial repayment of our senior facility reflects our strategic goal to reduce the cost of debt and maximize financial flexibility. Further actions in this direction are expected to continue over the coming quarter. Additionally, we aim to continue maximizing operating cash flow through the effective management and optimization of the net working capital. Finally, in terms of capital allocation, we are carrying out an in-depth analysis of potential targets in the WTS segment while maintaining our strict economic and technological discipline. We are now on slide 19, where we will give an update on our 2025 outlook.
We confirm our revenues guidance, which points to low single-digit growth for the full year. While nine-month revenues slightly exceeded this target, there is a potential risk that a continued strengthening of the euro against the U.S. dollar could partially erode the volume gains achieved year-to-date. Regarding the adjusted EBITDA margin, given the solid and better-than-expected profitability achieved so far this year, especially in the water and energy transition businesses, we are raising our guidance for the second time in a row, now targeting approximately 19%. With that, I leave the floor to Chiara for the updates on our ESG journey. Chiara?
Thank you, Luca. I'm happy to give you a quick update on how our sustainability plan is progressing. We are consistently monitoring, measuring, and improving the environmental impact of our technologies.
At the top left, this slide showcases our contribution to three selected SEGs during the first nine months of the year: emissions avoided through the delivery of green hydrogen technologies, sustainable water management and treatment enabled by new orders in our water technology systems line, and circular economy through the reuse and recoating of electrode surfaces. On carbon footprint reduction, in 2025, we installed and activated new photovoltaic systems across all our plants worldwide, reaching an installed capacity of about 5.1 GWh. The largest systems, each above 1 GWh , are located in Brazil, Sorocaba, U.S., Mentor, and Germany, Rodenbach. This capacity covers approximately 15% of our 2024 energy needs, and we are evaluating additional solutions to meet our renewable energy targets while improving safety, cost efficiency, and sustainability of our energy sources. On the people front, initiatives to enhance well-being and engagement continue globally.
This year, we earned a Great Place to Work certification in six countries: Italy, U.S., China, India, Singapore, and Saudi Arabia. We also strengthened our affinity networks. Notable initiatives include EmpowerHer, hosted at our headquarters in Milan in collaboration with Valore Donna, which brought together women directors, managers, and emerging talents for a transformative journey in female empowerment, leadership, and collective growth. In addition, we have initiated a new partnership in the U.S. with the Society of Women Engineers. Finally, ESG supplier assessment now covers 40% of active suppliers, up from 21% at the end of 2024. In addition, in Q4, we will conduct our first ESG audits on two critical suppliers. Our sustainability journey remains focused on delivering measurable impact across the value chain with a concrete and financially sound approach to risk management.
Before closing, I'm excited to announce that on November 20, we will host our first in-person stakeholder engagement event, gathering insights and perspectives on sustainability topics. With that, I'll hand the floor to Paolo for the closing remarks.
Thank you, Chiara. To wrap up, this slide presents our final remarks, so let's go through them. We had a solid operating and financial performance with revenues to net income and robust free cash flow generation in Q3. Core business is growing in volumes and profitability with double-digit increase in order intake. Energy transition projects are on time. NEOM project has been completed. We are ready to seize near-future opportunities and continue to advance our technologies. Financial structure is strong. The optimization of treasury and financial management activities continues to strengthen free cash flow and lower debt costs.
Focus on external growth by leveraging M&A opportunities in the water sector to strengthen vertical integration and expand into new markets. So I would like to reiterate our strong and ongoing commitment to the group growth with a particular focus on external expansion initiatives within the water segment. In this area, we are carefully assessing a number of potential targets with the aim of strengthening vertical integration and expanding our presence into new markets and industries. So we are now happy to take your questions.
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 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. The first question is from Isacco Brambilla of Mediobanca.
Hi. Good afternoon, everybody. A couple of questions on my side. The first one is on water technologies. So results specifically in pools continue to be quite impressive, exceeding again expectations in the third quarter. Looking ahead, maybe even beyond 2025, is it reasonable to take current margins as a reliable starting point for next year, or should we model a reversal towards 2024, 2023 level? I know it's a bit early for 2026 guidance, but any directional indication would be helpful. Second question is a follow-up on electric technologies. Considering your statement on international macro environment, how should we read this? Should we think about 2026 that is maybe a bit back-loaded in the second part of the year in this segment, electric technologies. Hoping that in the second half, maybe macro uncertainty may fade?
Okay. The first one. Thank you, Isacco. So, as you said, the water margins in the first three quarters of the year have been at 22% level. And as I said, we expect to have for the full year a margin more in the region of the 20%. So slightly lower due to a soft Q4 compared to the first three quarters of the year. The improved EBITDA margin compared to the past was due to the water performance that was slightly above our target. Due to higher aftermarket than the past versus original equipment, and also a good geographical mix. The pools have been higher than expected both for volumes and price. So it is too soon now to anticipate a 2026 level of profitability of water.
Because it really depends on the mix of pools versus water technologies, the geo mix, and aftermarket versus OEE. So we are assessing and we are calculating now the next plan and budget economics. So I cannot anticipate anything, but I hope I gave you some information to assess by yourself the right level of profitability.
Yeah. Isacco, on the second question, for sure we are in continuous, of course, daily contact with our customers, but this uncertainty on the geopolitical level might delay some projects, no doubt. So we are monitoring that. We have a strong backlog, as you have seen, but for sure. This situation might create some delays in the decisions of customers. So, we are collecting all the data and the numbers to be able to have enough visibility in short term.
Okay. Clear. Thanks, Paolo, for the answer.
The next question is from Chris Leonard of UBS.
Yeah. Hi, guys. Thanks for taking the questions. Could I maybe ask two, and maybe following on from the water technology side on the pools business? How much more of an opportunity do you think there is for the aftermarket replacement wave looking into 2026 and 2027? Presumably, a lot of this is growth for this year, like 40% in Q3, has been from the replacement after the adoption during COVID-19 and the staycation effect in the U.S. market refurbing pools. So, do you have any indication of how much is left to do there for the replacement cycle? That could maybe help us out modeling past 2026 and 2027? And then the second question is following on from the comments on the call on the PFAS technology and opportunities you have here.
Is there any update as to how material you think this can be for the water business in 2026 and 2027 for revenue? And equally, do you still need an acquisition or similar in the U.S. to really push your commercial offering further for the PFAS market? Thank you.
Yeah. With regard to pools, we expect, so we do not have, let's say, a clear view of this growth being essentially, let's say, characterized by a replacement cycle. So, we think this is a healthy level of sales for the pools. I mean, it's too soon again to anticipate what we see for 2026, but it's not entirely due to the replacement cycle after COVID. For the PFAS, Paolo?
Yeah. On PFAS, Chris, the three orders we already received are around $2 million. And we do have a number of interesting projects in the pipeline. So, maybe not yet so material for 2026, but no doubt we are talking about a few million dollars that we foresee for 2026 and probably even better for 2027, considering the level of increasing activities we have around this business.
On the acquisition side, well, we have, for sure, in our pipeline of potential acquisitions, there is also PFAS to some extent. On the other side, we have also made some decisions to develop internally some specific technologies around PFAS. Instead of spending equity on M&A, we are going to do also some internal R&D projects. So, it's going to be a combination of organic growth, but also potentially some inorganic growth there.
And just following up on the water pool business in the U.S. in particular, I mean, do you have a view on how much new pool installations have been driving volumes for this year to date? I mean, residential markets are pretty weak in the U.S. in 2025. Would you anticipate, if we see a build-up again of residential markets if interest rates drop, that you could be in for more new build activity? Just interesting to hear how much new build you think has been present so far in 2025. Thanks.
Yeah. Well, our customers are not so generous in disclosing this kind of numbers and breakdowns because they know that we serve everybody, and we don't want to disappoint anybody in asking or to be too intrusive in this. For sure, it's well known that the real estate market in 2025 didn't perform well, particularly well, but we are also conscious that the potential decrease of interest rate might give a boost over the next years to that part.
Let's keep in mind that the biggest drivers for us in terms of growth in pools are first, one, replacement; second, one, conversion from traditional pools treated with chemicals to the automatic disinfection system that we can provide. So those are the two main drivers. We are not so much influenced by new build pools connected to the real estate.
Thank you.
The next question is from Matteo Bonizzoni of Kepler Cheuvreux.
Thank you. Good afternoon. I have two questions. The first one is on your post-2025 guidance, which you provided last March. Clearly, as you have said, you have a great guidance for this year twice, 2 percentage points, more or less, from 2017 to 2019.
So I would like to know it's a little bit early, clearly, to have the 2026 guidance, but the range, 15%-17%, if you are starting from 2019, could also seem a little bit low, even if we know that next year the energy transition business should decline pretty significantly, and this should have an impact on the consolidated margin. So do you have any commentary on this 15%-17% guidance range, which you provided last March? Is it still reasonable, or is it becoming also too low? And the second question is, as we approach the end of the year, do you have an indication of the revenue decline which we should expect in energy transition for next year? I was looking at the consensus in Visible Alpha; it's for about half. So revenues to half, I have an estimate which is slightly more prudent, around -60%.
Do you have maybe some sensitivity call or in relation also to the upcoming intake in the last part of the year? And also, as it relates to margin for this specific division for next year, what is reasonable to imagine? Thanks.
Okay. Thank you. So again, not easy to anticipate what we see for 2026 after 2025 that have been characterized by pools above expectation, clearly, both in terms of volume and in terms of margin. A positive mix from both geographical point of view and product mix, except for ET, where the mix was not favorable, and also strong discipline in industrial and corporate cost. So the 2026 will really depend on the product mix and volumes, definitely.
But I mean, also important to refer to what we said in the Q3 previous release, where we anticipated that a complex macroeconomic and geopolitical scenario could have an impact on investment decision of some of our clients in both electrode and ETR business. So we are now assessing this new scenario within the new 2026-2028 plan. Therefore, I cannot provide any additional insight now. Matteo. With regard to the energy transition, you know that the backlog at the end of the year will be, with regards to hydrogen, will be close to zero. In order to be able to invoice something in, let's say, a measurable and important amount, in 2026, we need to receive orders within the next couple of months. Otherwise, it will be almost impossible to industrialize the new business. So for the moment, the backlog is zero. As Paolo said.
We are positive on certain possible orders to come in the next quarters, but for the moment, we do not have anything signed. And therefore, I mean, it's very difficult for the moment to predict what will be the 2026 evolution of this business, while we remain, obviously, positive for the medium term.
Thank you.
The Qatar, as you know, is the most important and probable order that could come in the next couple of weeks or months. So it's the most concrete, let's say, possibility to have something to invoice in 2026.
The next question is from Daniele De Florentis of EQUITA SIM . Please go ahead.
Hi. Thanks for taking my question. The first one is about electrode technologies. And one question is.
Sorry, we didn't hear you properly. Can you say it again? Sorry.
Yeah. Sorry. Can you hear me?
Yes.
Yeah. Not very well, but please talk close to the mic.
Sorry. The first one is about electrode technologies. And my question is about the order intake because you showed a 61% increase of order intake. So my question is, what is the driver of order intake? And if you could share with us, the second is if you could share with us a target NFP for the end of the year, and if you have any idea of improvement for the dividend per share for the next year. Thanks.
So you know that the order intake for the electrodes in such a market characterized by big projects is not linear. So there might be quarters where we have an increase or reduction of the backlog and the order intake. Therefore, I mean, these orders were expected.
And thanks to this order, we are now at a level which is close to the one of last year. That is positive. So nothing strange. It's just how the business works.
With regard to the net financial position, we are working on the fact that the first half is characterized typically by an absorption of cash. The third quarter has been very good. In the first half, we have absorbed EUR 60 million of cash. Sorry. In the third quarter, we have generated EUR 40 million of cash. Sorry. In the fourth quarter, we expect a further generation of cash to bring the level of the liquidity, so net financial position of the group at least in line with the one of last year after the payment of dividends. So we expect to have a net financial position that will be close to the one of last year.
We are working on net working capital and also on treasury and debt optimization in order to extract value from every line of the cash generation.
Okay. Thanks.
Thank you.
The next question is a follow-up from Isacco Brambilla of Mediobanca.
Yes. I follow up on energy transition to your comments on the pipeline. So there are a number of projects mentioned in slide 11. Some of them have been in your presentation for a while now. Is there any additional insight you can share with us from your conversation with clients or with our sales on how, say, mood is evolving on green hydrogen and these projects specifically?
Roughly half of those projects are in Europe, and they are advancing. The closest one is the one that, after many months of waiting, and you know there was this issue with the government in Spain about the big blackout of this summer in Spain. There were some delays in defining how to feed this project with the current grid and renewables and batteries. So according to our colleagues in sales, we should be quite close to the final investment decision. So that should be the closest one. And the others, according to them, should be finalized within the next 12 months. So things are moving, no doubt, and half of them are in Europe, which is another good sign that Europe is still moving ahead with the number of projects and initiatives from every government and the EU Commission.
The next question is a follow-up from Chris Leonard of UBS.
Yeah. Hi. It's another question on energy transition, please. And we know that you're waiting and keeping capacity ready for the wave of orders that could potentially come in green hydrogen. But how long will you be willing to wait would be the question. And what sort of further actions could you have to mitigate if we see that no orders, hypothetically no orders come in the next 12 months, and you look at 2027 and there's still a lack of revenue growth? How would you proceed from that vantage point? Thank you.
The capacity has been established, and as you well remember, it's pretty versatile. So we can adjust the capacity to different products within our factories. And of course, right now, we are working on three shifts, seven days a week, that, of course, we can reduce accordingly to the volumes. So. We are pretty flexible.
No doubt that if volumes will be lacking, we will have actions to be taken inside our factories. But again, we have a very high versatility and together with a very high flexibility in terms of hours of work to be dedicated to that segment.
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