Good morning. This is the Chorus Call conference operator. Welcome, and thank you for joining the Industrie De Nora full year 2025 and Midterm View 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 Ms. Chiara Locati, Head of Investor Relations and ESG of Industrie De Nora. Please go ahead, madam.
Good morning, ladies, and gentlemen, and welcome to our Full Year 2025 Financial Results and Midterm Outlook Presentation. My name is Chiara Locati, Investor Relations and ESG Executive Director at Industrie De Nora. With me on the call today are our Chief Executive Officer, Paolo Dellachà, and our Chief Financial Officer, Luca Oglialoro. This morning, we will start with a review of the group's key achievement for 2025, covering both financial performance and business evolution. We will then move to our midterm strategic priorities and offer an update on the execution of our sustainability plan. Following the presentation, we will open the floor for a Q&A session. I would like to remind you that the slides of today's presentation are available in the Investor Relations section of our website, and that a replay of this webcast will be published in the coming days.
With that, I'm pleased to hand the call over to our CEO, Paolo Dellachà. Paolo, the floor is yours.
Thank you, Chiara. Good morning, everyone. Thank you for joining our call of today. For us, the day started actually with very good news, t hyssenkrupp nucera, our joint venture, announced the signing of the contract with Moeve in Spain for 300 MW green hydrogen project. We are naturally very pleased with this milestone, and we are already working on the formalization of a contract and on the related production scheduling. Now it is a pleasure to open this discussion with sharing that 2025 has been another year of solid growth for De Nora. The figure shown on the right-hand side of the slide clearly confirm our progress. We delivered strong results, exceeded our EBITDA margin targets, and maintained a robust financial structure, further demonstrating the resilience of our industrial model, even against the highly complex geopolitical backdrop.
This is even more relevant today, given the increasingly challenging energy and geopolitical landscape, particularly in the Middle East, where the safety to our people remains our top priority and where no significant impacts on our operations have occurred. During the year, we entered two new markets, PFAS treatment and electrochemical lithium refining, where we are already seeing encouraging early results. In parallel, we advanced the construction of our new gigafactory in Milano, scheduled for completion in the early quarters of 2026. This facility completes the global production footprint we have strengthened in the recent years. A footprint that provides the flexible manufacturing capacity needed to support the group's medium and long-term growth ambitions. Our commitment to sustainability remains unwavering.
It is embedded not only in our technological solution, but also in the way we operate and care for our people, generating positive impacts and strengthening our approach to risk management. In 2025, we achieved all the objectives set out in our sustainability plan for the year, thanks to the essential contribution of our managers and all our colleagues across our global operations. Looking ahead, we are entering a demanding year that is already presenting new and complex challenges. Yet we face this context with confidence. The work carried out in recent years has equipped us with the structure, the capabilities, and the determination needed to navigate periods of uncertainty and volatility. Our medium and long-term strategy give us a clear direction, strengthening our core leadership, unlocking new markets through electrochemistry and water treatment, and driving growth both organically and through selected external opportunities.
These priorities will guide our actions in the months ahead, ensuring that we continue to build a stronger, more resilient De Nora. In this slide, we present the main KPIs of our full year 2025 financial performance that Luca will comment on later. Reviewing the performance of our business units, let me begin with electrode technologies. In 2025, the business recorded a stable order intake of approximately EUR 400 million, in line with 2024, supported by solid demand across both the chlor-alkali and electronics segments. Orders remain well-balanced, 58% for new applications and 42% from aftermarket, confirming the strong ability of our sizable install base to generate a recurring business. From a geographical standpoint, Asia led with 51% of total orders, followed by EMEA, 26%, and Americas, 23%.
In addition, let me also point out that, as you can see in the top left corner of the slide, if we included the large chlor-alkali project in the Middle East that we have announced today with our joint venture, thyssenkrupp nucera, total orders would exceed EUR 440 million. The backlog, including the order just mentioned in the Middle East, reached EUR 290 million. Overall, the business delivered a steady and broad-based commercial performance across regions and markets. Given its diversified geographical exposure, Electrotechnology is expected to develop in line with global GDP trends over the medium term, although with possible temporary fluctuations in specific years, such as those expected in 2026, driven by maintenance cycles across the installed base and by evolving geopolitical dynamics.
Let me now turn to Water Technologies, a business that continues to deliver strong performance and significant satisfaction across our segments. Orders rose 16% year-on-year to EUR 365 million, driven by over 30% growth in pools and 6% in water technology systems, so-called WTS. With the WTS demand well-balanced between municipal and industrial customers. Backlog increased 23% to EUR 180 million, enhancing visibility for 2026, with pools up 89% and WTS up 88% year-on-year. North America remained our largest market, accounting for 55% of orders, of which 33% came from pools, while the rest of the world also recorded healthy activity, confirming a well-diversified footprint. Overall performance was very strong, reflecting both supportive markets and continued strengthening of our commercial capabilities and technologies. The outlook for both segments remains constructive, reinforcing our confidence in sustained growth.
In 2025, we secured significant water technologies contracts across all the geographies in which we operate, with strong penetration in both municipal and industrial markets. This slide shows a selection of key projects awarded in the fourth quarter, spanning multiple regions and applications. Starting on the left, in the U.K., at the Sizewell C nuclear power station, the first new-built nuclear facility in the country, De Nora will supply SEACLOR electrochlorination technology for on-site seawater treatment, supporting renewable energy for around 6 million homes and reinforcing our role in critical infrastructures. In Port St. Lucie, Florida, we will provide the DE NORA TETRA filtration technologies to enhance wastewater treatment for a population of over 215,000, further strengthening our municipal presence in the U.S. and supporting improved water reuse.
Moving to Finland, the National Emergency Supply Agency selected our CECHLO systems for Europe's first emergency use installation, producing sodium hypochlorite on demand to ensure supply security for essential operations. Finally, in Turkmenistan, in partnership with the Ahal Water Administration, we will deliver the region's first wastewater treatment plant using ozone and UV technologies, enabling advanced water reuse for irrigation in water-stressed areas. Together, these flagship awards underscore the strength of our technology portfolio and the growing trust customers place in De Nora to address their most critical water challenges. Before moving to the energy transition business, let me briefly update you on our entry into the PFAS treatment market, a segment in which De Nora made its debut in 2025.
Our position in this market is currently focused on PFAS capture, leveraging our advanced filtration technologies, which come with a long and proven track record in the treatment of complex contaminants. Our entry has been highly successful. During the year, we secured eight contracts, five of which in the fourth quarter, building a backlog of approximately EUR 6 million to be executed between 2026 and 2027. Six of these industrial scale projects are located in the U.S., across Pennsylvania, Massachusetts, Washington, and Virginia. Here, our strong penetration has been enabled by longstanding relationship with municipal customers, many of whom already rely on De Nora for drinking water treatment and filtration solutions. In addition, two contracts were awarded in Northern Italy, further broadening our early footprint in EMEA.
The commercial pipeline is expanding rapidly and currently includes more than 180 opportunities, confirming the momentum of this market. Piloting activities continue to play a central commercial role. They allow us to validate the optimal treatment solution for each customer and have been instrumental in securing the contracts now included in our backlog. We currently have eight pilots underway and expect this number to grow meaningfully over the course of the year. We are very pleased with the strong start. PFAS is emerging as a market with significant growth potential, and we remain fully focused on deepening our presence and capturing the opportunities ahead. Sorry, I'm repeating the same chart by mistake. Sorry. Let us now turn to energy transition business.
At our nine month results presentation, we announced the successful completion of our contribution to the NEOM Green Hydrogen project in Saudi Arabia, the world's flagship initiative for green hydrogen production. The project is now moving on-site. Where our partners, NEOM Green Hydrogen, will install and commission around 180 electrolyzers with a capacity of 20 MW each. Beyond NEOM, we are also pleased to announce the successful completion of our contribution to the Stegra project in Sweden. For this initiative, Europe's first large-scale green steel project with 740 MW of capacity, we deliver more than 11,000 electrochemical elements corresponding to 37 electrolyzers of 20 MW each. Together, these two landmark programs, along with other projects executed worldwide, bring our accumulated green hydrogen technology track record to approximately 3.6 GW, placing us among the very few players capable of executing at scale.
Finally, looking at our energy transition backlog, it currently stands at around EUR 19 million, with the majority, about EUR 11 million, linked to the lithium refining projects. At the same time, considering the contract signed by thyssenkrupp nucera for the Moeve project in Spain, our backlog will increase by approximately EUR 30 million in the next quarters. Before closing on green hydrogen, let me briefly update you on the progress of our small scale hydrogen solutions. In particular, we would like to highlight an important step forward in our technology partnership with Asahi Kasei. Asahi Kasei has begun installing a containerized 1 MW alkaline water electrolyzer based on the De Nora technology at Finland's first commercial hydrogen refueling station in Jyväskylä. The station will be operated by Kempower and is scheduled to start activities in the summer of 2026.
Once in operation, the system will produce around 400 kilos of hydrogen per day, supporting the development of hydrogen-powered mobility and serving as a reference case for applications in cold climate conditions. At the same time, our internal development activities on small scale hydrogen production continue to advance, leveraging our Dragonfly electrolyzer. Several projects are currently underway in Italy and across Europe. While the short-term revenue impacts remain limited, building flexible and integrated solution retains strong strategic relevance for the medium to long-term evolution of our hydrogen business. For this reason, we are very pleased with this latest milestone in our partnership with Asahi Kasei and remain confident about future developments. Let me now turn to another area within our energy transition segment, the lithium refining.
In 2025, we officially entered the lithium production market with an electrochemical technology that offers a reliable, efficient, and ready-to-deploy alternative to traditional chemical refining. Last year, we secured two important contracts in Japan, totaling approximately EUR 40 million. A large scale pilot to recover lithium from end-of-life batteries worth around EUR 11 million, and a smaller demonstration plant supporting circular lithium production. Progress continues this year. We have signed a binding agreement with Tuleva for what will become the largest electrochemical lithium production plant in the U.S . A contract of more than EUR 10 million, where lithium will be produced from primary brine feedstock. We also launched a partnership with Reed Advanced Materials to co-develop solutions to be tested at Rio Tinto site. This is a new market where we introduce a more efficient, sustainable, and circular electrochemical route into an industry still dominated by chemical methods.
A transformation similar to the one we led in pool disinfection with electrochlorination, where we are now the undisputed leader. We are very encouraged by these developments and firmly believe that lithium will become a strategic growth driver for the group in the mid to long term. With that, I leave the floor to Luca for a 2025 financial results review.
Thank you, Paolo. Let me also thank all of you for joining today's call. 2025 closed with revenues up 1.4%, fully in line with the guidance disclosed in March 2025. Currency headwinds, mainly from the euro-dollar and the yen, weighed on the reported figure. At constant currency, revenues would have grown 4.4% year-on-year. Regionally, the Americas grew 7.7%. EMEA was broadly stable, and APAC saw a slight decline. Turning to business lines. Electrotechnology was essentially flat at constant currency and slightly down on a reported basis. The trend reflects a stable chlor-alkali line, a double-digit increase in electronics, while electrowinning declined by about 28%, reflecting the discontinuation of activities with a Russian customer. Aftermarket revenues were broadly in line with 2024.
The water business grew over 7%, 11% at constant currency. Mainly driven by the excellent performance of the pool segment, which reported a 27.5% increase. The strong growth was supported equally by volume expansion and by price increases, the latter reflecting high valuations of critical raw materials. Let me underline that increases in raw material prices do not significantly affect the absolute value of our operating margin. Thanks to our ability to index contract values to movement in noble metal prices, a mechanism embedded in the structure of our agreements with customers, where we are the market leader. Any potential impacts are mainly linked to the physical alignment of inventory values, resulting in rolling short-term effects over a few months of stock. Concerning the water technology system, revenues were up 3% year-on-year, excluding Forex effects and the marine business disposal.
Aftermarket accounted for 42% of WTS revenues, up roughly 4 percentage points versus 2024, with a positive impact on margins. Finally, energy transition grew around 7%, supported by continued execution of the backlog, particularly the NEOM and Stegra projects. On this slide, you can see our backlog by business unit at the end of December 2025, which Paolo has already commented on. Let me just highlight that our core business backlog has shown solid growth over the past few quarters and a high single-digit increase compared with the end of 2024, primarily driven by the strong expansion of the water segment. Let me also point out that the backlog shown on this slide includes the large chlor-alkali project in the Middle East that we have announced this morning and will be booked in Q1 2026. Turning now to our operating cost structure.
Consistently with the comments shared during the nine month results, the year-end increase in G&A and corporate costs reflects inflationary dynamics and the carryover impact of the corporate structure enhancements implemented in 2024. This increase in R&D expenses is primarily driven by the addition of more than 20 new researchers and reflects our commitment to continuously expand our technology suite, fully aligned with our long-term growth ambition. Let's now move to the operating profitability. In 2025, Adjusted EBITDA increased by 9% with a margin of 19.6%, above the guidance provided for the year. This performance was mainly driven by the strong contribution from water and energy transition, both showing a marked improvement compared to 2024 and more than offsetting the softer trend in electro technologies.
The profitability dynamics of electro technologies reflected the revenue mix across product lines, including the impact of the electrowinning revenue decline, as well as the effects of the geographical mix. As highlighted in our quarterly calls, the growth of the water segment was supported by the exceptionally strong expansion of the pools line, which reached 39% of water revenues, compared with 32% in 2024, and by solid expansion of the WTS, which benefited from a higher margin after market revenues. Finally, the energy transition segment posted a strong increase in margins, supported by the operational efficiency achieved in our manufacturing processes. Here we show the bridge detailing the evolution of our net financial position. 2025 closed with a net cash position of approximately EUR 87 million, reflecting an improvement of about EUR 20 million compared to the year-end 2024.
Free cash flow before dividends amounted to EUR 40 million, supported by more than EUR 116 million in operating cash generation over the year, fully covering capital expenditures of around EUR 76 million, which included the ongoing investments related to the construction of the gigafactory in Italy. Our solid financial structure and strong cash generation capabilities give us a robust foundation to support future growth initiatives, not only organically, but also, as I will comment shortly, through targeted M&A aimed at accelerating the group's expansion. Let us now move to the guidance for fiscal year 2026. With regard to the current financial year, I would like to highlight that the complexity of the geopolitical landscape, which has been heightened by the recent tensions in the Middle East, is reflected in a macroeconomic environment marked by significant volatility.
This volatility is also affecting raw material prices and exchange rates, with potential impacts on our business, both on the downside and the upside. In this context, developing reliable economic and financial projections for 2026 remains particularly challenging, including at individual business units level. Even considering these dynamics, we confirm the consolidated guidance already communicated where we released, when we released our preliminary results last February. For 2026, we expect revenues to be in the EUR 750 million-EUR 850 million range. In particular, in the electro technology business, as previously communicated, we anticipate softer revenues, mainly due to the geopolitical factors that may lead to temporary delays in customers' investment decisions, as well as transitory timing effects related to the maintenance and recording cycles of the installed base.
In water, supported by a favorable pools cycle and strong order backlog momentum in WTS, we expect revenue growth from mid-single digit to low double digit, depending on the pace of pools expansion and WTS project execution. For energy transition, the lower end of the range reflects the backlog at the end of 2025, and does not factor in potential new orders in hydrogen or lithium. That said, we see tangible opportunities in the pipeline, including the Moeve contract in Spain for hydrogen, which was signed and announced this morning by thyssenkrupp nucera, and the binding agreement with Tuleva in the lithium segment. In terms of operating profitability, the Adjusted EBITDA margin is expected to be in the 15%-18% range.
This reflects both the anticipated revenue level, which influences the utilization of our operating base, and the potential benefits of product mix combination that could enhance profitability at constant volumes. In addition, we are evaluating actions to mitigate the lower absorption of fixed cost resulting from the decline in sales volumes, with the objective of maintaining and optimized operating and overhead structure. These initiatives could start to deliver effects in the fourth quarter of 2026, and are expected to have full impact in the following years. For 2026, we expect total investments of around EUR 80 million, including EUR 40 million in maintenance in the operating CapEx, and approximately EUR 40 million dedicated to completing the gigafactory, an amount that remains fully in line with the initial plan and includes a tail of investments not executed in 2025.
Finally, with regards to the net financial position, we confirm that the ordinary course of business, together with the investments planned for 2026, would allow us to maintain a positive NFP broadly in line with the mid-double-digit levels recorded in recent years. However, raw material prices, also influenced by the geopolitical complexity, which has further intensified following the recent developments in the Middle East, continue to rise, with some critical materials reaching record levels. Should these dynamics persist in the coming months, we expect a one-off impact on the group's working capital components, bringing our expectation for the net financial position at year-end 2026 from a positive level towards a substantial break-even. We are closely monitoring the evolution of the context, and will update the market over the course of the year.
I will now hand over the floor back to Paolo, who will walk you through the mid-term view.
Thank you, Luca. Let me start with the title of today's presentation, Electrochemistry Frontiers: Pioneering Clean Solutions in Water, Circularity and Hydrogen. A concept that truly reflects who we are and where we're heading to. Electrochemistry sits at the core of everything we do. De Nora has long been a global leader in electrochemical technologies, expanding from chlor-alkali into electronics and to electrowinning, water disinfection and treatment, and more recently, green hydrogen, building a portfolio of highly differentiated industry-shaping solutions. Our innovation journey is far from over. Electrochemistry and water technologies continue to open new pathways and provide a solid foundation to address some of the world's more complex challenges. Within this context, our strategy is anchored in three major megatrends: water scarcity, circularity, and energy transition. The first megatrend is water scarcity.
Growing pressure on global water resources, together with increasingly stringent environmental regulations and rising expectations around human health and safety, is creating a structural need for treatment technologies that are efficient, robust, sustainable, and that increasingly incorporate circular solutions. Our water treatment solutions respond directly to these challenges, delivering high-quality water with lower chemical usage, a reduced environmental footprint, and greater operational resilience across municipal and industrial applications. The second megatrend is circularity. Industries are increasingly focused on extracting value from waste streams. Valorizing precious chemical compounds, refining and recovering critical raw materials, especially those that are strategic and ensure supply. At the same time, they aim to improve material efficiency and extend asset lifetimes. Electrochemistry provides highly selective, energy efficient, and industrially scalable routes to achieve all of this.
Our technologies, the result of over a century of development, are recognized for durability, performance, and their ability to support second life and low impact design. The third megatrend is energy transition. Global efforts to reinforce energy security and independence are accelerating the decarbonization of hard-to-abate sectors and the electrification of industrial processes. Within this context, hydrogen is a critical enabler, offering a scalable pathway where direct electrification is not feasible and supporting the broader integration of renewable energy sources. To sum up, these three megatrends are shaping our markets and opening long-term opportunities where we are ready to seize. Let me now turn to our medium to long-term vision. Our strategy is built around four pillars: electrode technologies, water technologies, green hydrogen, and circularity, which reflect the group's three business segments with the addition of a dedicated circularity stream.
The circularity stream, currently part of the energy transition business, will play an increasingly cross-functional role, contributing to the development of multiple business lines and expanding the application horizon to our electrochemical technologies. Let me briefly clarify what circularity means for De Nora. It's not new to our business, nor is it confined to a single business unit. The evolution of our technologies already bring circular economy benefits across all of them. In water treatment, for example, our zero liquid discharge solutions support resource recovery and more sustainable operations. In electrode technology, for example, the hydrochloric acid solution developed more than 20 years ago with our long-standing joint venture, thyssenkrupp nucera, enabled chlorine recovery from the by-products of industrial processes like hydrochloric acid, for example. Finally, our aftermarket activities, from electrode recoating to full refurbishment, are another clear and long-established example of operational circularity across all De Nora businesses.
These activities are naturally embedded within the respective business units as part of our business as usual. Today, we're also introducing new business initiative that we started developing last year, lithium refining, within our energy transition business and a broader product platform, salt splitting, which will potentially span multiple business units and which I'll come back to in a moment. Let us now turn to a brief overview of our four pillars. In electrode technologies, where we hold a clear global leadership position, our ambition is to further strengthen our market coverage through the continuous development of our technology suites and services. We are enhancing performance, broadening the range of solution we offer, and tailoring them more closely to the evolving needs of our customers.
We also aim to continue developing partnership with key global players, reinforcing the collaborative model that has supported our growth over the years. More broadly, in selected business segments, we are evaluating opportunity to vertical integration, moving toward more integrated solutions that bring us closer to our end customers. From market development perspective, we confirm a low single digit growth outlook across the main segments we lead, as shown on the right side of the slide. Electronics, in particular, is expected to grow at a mid-single digit rate over the medium term, supported by the expansion of artificial intelligence applications. In the short term, however, geopolitical uncertainties may lead to temporary soft phases in some markets, with the expectation that growth will resume thereafter, supported by the fact that these segments serve a broad set of diversified and often critical end markets.
In water technology, we aim to strengthen our penetration across the different segments of a market that is experiencing solid expansion. One of our main development levers is the reinforcement of our technology portfolio. A key area, for example, is PFAS treatment, where we are already seeing the first positive results. Today, we are active in PFAS capture through our filtration technology, which have a strong track record in removing a wide range of contaminants, for example, arsenic. Looking ahead, we intend to develop in-house electrochemical solution for PFAS destruction during the capture phase, allowing us to address a broader portion of the market and offer our customers a more complete and efficient solution.
Another growth lever in this is the strengthening of our presence in the geographies where we already operate, leveraging existing commercial channels to expand the range of product we offer. In addition, through targeted external growth, we aim to enter new geographies and high potential industries and industrial sectors, such as semiconductors, for example, while also pursuing vertical integration along the value chain, moving from a pure technology provider model to more engineered offerings. From a market development perspective, pools where we maintain absolute technological leadership are expected to grow between mid- and high-single-digit %. Across the water treatment segments, industrial electrochlorination, filtration, and municipal and industrial disinfection, growth is expected to be in the mid-single-digit % range. In these areas, we rank among top three to five global players, and we hold clearly the shipping industrial electrochlorination.
Finally, at the bottom of the slide, you can see the size of the PFAS treatment market opportunity to 2030, including both capture and destruction, which is projected to grow at a high single-digit % rate. It is certainly a large and competitive market with many global players already active, but it also opens attractive prospect for De Nora, even assuming a limited market share. Let us now move to the green hydrogen within the energy transition business unit. Building on the large-scale execution track record we have accumulated over the past few years, we aim to pursue additional large-scale opportunities by strengthening the commercial alliances and partnership we have already developed.
We are also working to integrate and expand our offering, including through co-development with leading global players to deliver more integrated solution across the entire value chain, from electrodes to stacks, and from stacks to full small-scale electrolyzers, while continuing to innovate and strengthen our technology suite. On the R&D side, we are working on AEM, the anion exchange membranes, which we expect to generate results over the long term. Market projection indicate an addressable market for De Nora of around 20 GW cumulated by 2035, and around 3 GW by 2030, considering the geographies and technology relevant for us. However, as we have repeatedly highlighted in previous quarters, timing remain uncertain. Our pipeline today includes approximately 2 GW of large-scale projects in which our joint venture, thyssenkrupp nucera, is currently engaged in engineering activities in Europe and India.
Among this, indeed, there is the 300 MW Moeve project in Spain, already signed by our JV, thyssenkrupp nucera, and the new 260 MW project in India, announced yesterday afternoon, once again by our JV, thyssenkrupp nucera, which is currently engaged in a front-end engineering and design study. We view these developments as an encouraging signal of the gradual, albeit still slow and difficult to predict, materialization of opportunities in the pipeline. Let us now turn to the circularity pillar. Within this framework lies our lithium refining business, which De Nora entered in 2025, achieving encouraging early results. The solution we are developing build on proven, industrially validated electrochemical technologies, and are designed to produce lithium hydroxide, starting from lithium chloride, sourced either from brines or from end-of-life lithium batteries. This is not the only technological pathway we are pursuing.
We are also developing a future process to refine lithium sulfate derived from hard rocks minerals with the aim of expanding our long-term addressable market. This business line is expected to contribute progressively to our growth starting in 2026, supported by our order backlog and by partnerships currently under development. Electrochemical lithium refining is part of a broader area of activity, the so-called salt splitting, or electrochemical process that use electricity and selective membranes to separate a salt to recover viable raw materials. De Nora is building a platform targeting high growth and markets designed to enhance long-term expansion across our three business units. In electro technologies, in particular, salt splitting extends our core business by leveraging our proprietary DSA, electrodes, and electrolysis know-how beyond chlor-alkali, converting waste salts into reuse, reusable assets and bases, and creating scalable pull-through opportunities across systems and services.
The global investment in lithium market, excluding mining, are expected to double in the next 10 years, around reaching around $50 billion by 2035. The segment addressable through electrochemical technology is still emerging, but has the potential to reach approximately $1 billion by 2035 for lithium chloride-based electrochemical refining alone. A meaningful opportunity, especially given De Nora undisputed leadership in electrochemical technologies. Salt splitting, likewise, represents a high potential long-term market opportunity with an estimated addressable market of roughly $800 million by 2035 for selected salt applications. These pillars are defined we will shape the new markets and capture the opportunities ahead. Now, before ending, the floor to Luca, again, let me briefly highlight the assets that will support us along this journey.
A flexible and powerful global manufacturing footprint, unparalleled R&D capabilities, and, alongside a century-long track record of success, the more than 2,000 talented people who make up our organization, proud and deeply committed to make a difference. With that, I will now turn it over to Luca for the financial outlook and midterm guidance. Luca, the floor is yours.
Thank you, Paolo. As we turn to our midterm outlook, the persistent uncertainty surrounding the timing of development in the green hydrogen market leads us to refrain from providing consolidated revenue guidance for the 2026-2028 period. Nonetheless, we remain confident in the progressive strengthening of the energy transition segment, supported also by the contribution of our lithium business. Our business model is anchored in our core businesses, which in 2025 accounted for roughly 91% of consolidated Adjusted EBITDA, and where the underlying markets are supported by well-established long-term growth dynamics closely linked to the global macroeconomic cycles. This is why we have chosen to present a financial framework that covers a three to five year economic cycle. As Paolo has explained, we have set a clear direction for the business with the objective of creating long-term shareholder value.
Our framework is built on three key principles: positioning De Nora for long-term growth, delivering attractive profit margins, and maintaining a disciplined approach to capital allocation. In this slide and in the next one, we will outline the KPIs that translate these principles into measurable financial objectives and will shape our business over the period. For our core business, we expect average annual revenue growth of 2%-4%. In Electro Technologies, in line with the trends observed in our end markets, we anticipate a performance ranging from broadly stable to low single digit growth, with an EBITDA margin between 19%-21%, depending on how volumes and product mix evolve.
In Water Technologies, we expect mid- to high-single-digit growth driven by the continued expansion of the pools and WTS lines and by the progressive materialization of PFAS-related opportunities, with an EBITDA margin expected to range between 17% and 19%. As anticipated, we are not providing specific guidance for the energy transition segment, primarily due to the limited visibility on the timing of the green hydrogen market developments, a factor that could translate into a slower pace of activity in the earlier years of the financial framework. Nevertheless, we continue to highlight that the growth potential associated with the conversion of our large-scale project pipeline, which includes 2 GW of FEED-stage opportunities within our joint venture, along with additional upside from small-scale grid hydrogen solutions.
In addition, a further growth driver is expected to come from the gradual expansion of our lithium refining process business. However, this remains an early stage activity, and visibility on timing and scale is still limited. At a consolidated profitability level, depending on the performance of the energy transition business and its ability to absorb shared operating costs, we expect an Adjusted EBITDA margin in the 15%-19% range. Consolidated profitability also reflects the investments and initiatives undertaken to develop new business areas and technologies aimed at accelerating the group's long-term growth. Let me now move to our priorities for capital allocation. We will allocate capital to support the company's transformation. We are proud of the foundations we have built, and we are very excited about the next cycle. Our capital allocation rests on three fundamentals, organic investment, shareholder returns, and M&A.
Cash generation remains a top priority, and we expect, excluding M&A, to continue achieve positive free cash flow. With regards to our organic investments, we expect this decline in the near term due to the completion of the gigafactory this year. Within our financial framework, we expect maintenance and operating capital, excluding the real estate investments currently being finalized, to be in the range of EUR 35 million-EUR 40 million. We also confirm our dividend policy with a payout of up to 25% of the period's net results. To accelerate and complete our growth strategy, we aim to pursue targeted acquisitions based on three pillars. The first focuses on downstream integration along the value chain, enabling us to offer engineered and high value added end-to-end solutions that bring us closer to the final customer.
The second pillar relates to expanding into new strategic high growth markets, such as semiconductors and critical raw materials, and strengthening our geographical footprint. The third aims at acquiring technologies and references that reinforce our positioning across the value chain. Finally, from the free cash flow standpoint, and excluding potential M&A transaction, we expect positive and growing organic cash generation starting from 2027. Despite the challenging macroeconomic environment, the profitability of our core businesses and the strength of our financial position continue to provide us with ample firepower to invest, develop and accelerate the group's long-term growth. With that, I leave the floor to Chiara for a quick update on our ESG journey.
Thank you, Luca. To update you on the progress of our sustainability initiatives, we have prepared a short video. Let's take a look. I hope you enjoyed the video. As you have seen, it provided some details on how our technologies contribute to several SDGs, especially in terms of potential emission avoided, liters of water treated, and square meters of electrodes reused. As you know, our technologies are true enablers and lie at the heart of critical industrial processes. We speak about potential emission avoided and potential liters of water treated because these impacts will materialize once our customer plants are fully operational. As you can see in the slide, all our R&D activities include initiatives aimed at improving the environmental performance of our solution.
Let me add that, with regard to the EU Taxonomy, the share of aligned revenues was in 2025, 26% compared to 19% in 2024. Mainly related to our green hydrogen technologies and circularity in our recoating activities. While EU Taxonomy aligned CapEx accounted for 60%, up from 40% in 2024. The video also provided an update on progress of our ESG plan targets. You have seen that our commitment to sustainability remains unchanged, is measurable, and continues to involve all our plants worldwide, supported by the dedication of all the people working at De Nora. As part of this commitment, we are proud to share that this year we have completed the first 11 ESG product scorecards.
These scorecards allow us to clearly communicate to our customers and stakeholders the environmental impact of our technologies, especially in terms of carbon footprint. In addition, we made progress across our environmental KPIs, as you can see, reaching in advance some targets for the following years. We continue to invest in people development, strengthening our support to local communities, and advanced our effort to build a sustainable supply chain. As always, we say our journey is continuing. With that, I would leave the floor back to Paolo for the final remarks.
Thank you, Chiara. Here are our final remarks. 2025 delivered the results above guidance, supported by solid operating profitability and strong cash generation, demonstrating De Nora's resilience even in a challenging geopolitical environment. De Nora's technological leadership in electrochemistry, combined with the development of advanced water treatment solutions, has unlocked access to markets such as PFAS and lithium hydroxide production, where technology innovation is a critical success factors. The group's strategic vision is built on four pillars, electrochemical technologies, water treatment, hydrogen, and circularity initiatives, where electrochemical solutions offer a more efficient and sustainable alternative to traditional processes in high potential mission-critical markets. De Nora remains committed to targeted inorganic growth, focusing on acquisitions that support integration toward turnkey solutions, expansion into fast-growing industries, and entry into new geographies.
This is the path that will guide our future, a journey we will pursue together with our people, our customers, and our partners at the center of everything we do. As we outlined today, we are exposed to powerful megatrends. We operate with a strong business model, and we have the right technologies and people, and we believe we are well-positioned to deliver attractive shareholder returns despite the near-term challenging macro and geopolitical situation. Our markets are diversified, and we have multiple avenues for growth. Now, before opening to Q&A session, let me share with you our ambition to pioneer clean solutions in water, circularity, hydrogen, and electrochemical processes, enabling customers transition towards sustainable operations. It's a clear and focused statement that defines our strategic direction for the long term.
It reflects how we intend to pursue growth and create long-term value for our stakeholders, built on a disciplined and collaborative process. Our ambition is anchored in four fundamentals, a pioneering leadership in electrochemical technologies, the delivery of clean, integrated solutions addressing complex customers' needs, a strong role as an enabler of our customer performance and sustainability goals, a highly sustainable operation with electrochemistry at our core. We're now available for the Q&A session. Thank you very much, everybody, for listening.
Thank you, sir. 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 your question, please press star and two. Please pick up the receiver when asking questions. The first question comes from Matteo Bonizzoni of Kepler Cheuvreux.
Thank you. Good morning. I have three questions. The first one relates to what you have written in your press release regarding 2026, let's say, challenge or evolution on the raw material. This is true, I think, in respect mostly to availability, but also working capital evolution, and this can affect the net financial position. My question is, can you elaborate a little bit more on what you are observing in the market over the last few weeks? Are you experiencing particular shortage in some of your noble metal raw material or other raw materials? A little bit of color on this topic. Second question is on the indication we should provide for the energy transition revenues in 2026. Wide range, EUR 50 million-EUR 60 million.
Also in this case, can you provide a little bit more sensitivity between EUR 15 million and EUR 60 million? Also, can you elaborate a little bit more on the action on cost and EBITDA expected at EUR 50 million or EUR 60 million, respectively. Lastly is more mid-term view. There are clearly two very promising lines in your business, PFAS and lithium refining. The backlog is still small because PFAS is EUR 6 million and lithium is EUR 11 million, but you have a very attractive projection for growth with a EUR 3 billion market in PFAS in 2030 and EUR 1 billion in lithium. The question is, where are your ambition in terms of market share? I think that you are targeting significantly higher market share in lithium refining compared to PFAS.
Can you elaborate a little bit more on the competitive situation and also your ambition for market share? Thanks.
Thank you, Matteo. With regards to the raw material, it's not a matter of availability or potential shortage. We do not see any potential risk from this point of view. It's just a matter of pricing. That has two effects. One is on the economic effect, where, as we said, we are able definitely to, I mean, transfer to the final products and on the pricing side, the effect of this price increase. We do not see tension on profitability. While on the financial side, having a, let's say, a stock of these raw materials that has a considerable amount within our balance sheet.
The adjusted value of this stock will have a step up in terms of financial need for the company that will stay as long as the raw material will remain at this price.
I mean, it's just an adjustment to step up in terms of the value that will have a financial impact this year. Once it is completed, it will happen in three months, three, four months, because we have more or less three, four months of stock of these raw materials, then the cash generation of the company will go back to the normal level. With regards to the ETR revenues, we have a wide range. The low base of the range is based on the backlog, which is more or less 50/50 in terms of lithium and hydrogen, as you know. The upper side is related to our capability to transfer the, let's say, projects that we have in the back.
In the pipeline and in the backlog, let's say, into production, in 2026. Paolo, PFAS and lithium.
Yeah. On PFAS, Matteo, we have a very long track record of success in capturing contaminants in water: arsenic, manganese, nitrates. We have been utilizing this know-how, adapting it to very efficient solution that gave us already eight contracts in a very limited short period of time. No doubt that as long as we remain with the treatment with the capturing, it's a competitive market. There are other players that are operating or will operate in this market, so it's quite difficult for the time being to measure a market share. For sure it's gonna be competitive, and we are gonna utilize the best our very important know-how in this kind of treatments. Different will be when we will go into destruction also.
Not only capturing these molecules, but also being able to destroy them directly into the water. We have launched an R&D program within the company, so we decided to develop our own because it's gonna be based on electrochemistry combined with the water treatment process. In that case, we believe we will be quite unique. Once we'll be ready, it will take some years of research and development, but in that case, the market shares we expect will be definitely higher because we don't expect others to be able to compete with us. On the lithium side is very different because lithium is a widely used already process, but utilizing mainly chemical steps to move these natural sources into a molecule that can enter into the production process of a lithium battery.
By replacing some of these chemical processes with our electrochemical systems, we have a pretty unique solution already now that has been progressively appreciated by the partners that we have, and we are developing. That means to offer the customer a much lower impact on chemical processes, a much lower usage of water and a much lower power consumption. There are three very successful combined elements that give a very high chance to conquer very high market shares in the lithium refining.
Sorry, Matteo, I forgot one question, which is the cost and EBITDA of ETR. Considering that we have a considerable pipeline and I mean, we have now little bit more visibility on the potential backlog of the ETR, we are not able, as we said in the recent past, to make the ETR cost, especially manufacturing, variable, because we need to keep the people and the know-how in manufacturing ready to deliver the products that are in the backlog. Therefore, for 2026, as you can imagine, this level of revenues, the EBITDA of ETR is negative. All these things are already embedded in the guidance and financial framework that we provided.
Thank you.
The next question is from Isacco Brambilla of Mediobanca.
Hi, good morning, everybody. Thanks for taking my questions. I have three. I will go one by one, if you don't mind. The first one is on the very short term. Yesterday evening, we saw a profit warning by your joint venture, thyssenkrupp nucera. Looks certainly driven by company specific items, but would like to hear your thought on potential.
No impacts on De Nora. It's coming from their execution on specific jobs. No impacts on De Nora. De Nora has been already delivering what they are in need for the jobs they are managing. No impact from us.
Okay, thanks, Paolo. Second question is a follow-up on 2026 guidance. Considering the different top-line trends, how should we think about margin development for electrode and water technologies? Question is if 2025 margins are sustainable for electrode also in light of the soft volumes, and if you see room for further margin expansion in water versus the already remarkable level achieved last year?
For this exactly you should refer to the financial framework, where we have provided a, let's say, a range of profitability. Let's say that for 2026, given the short level of revenues of ETR, there are costs that will not be absorbed by ETR anymore and will impact slightly the profitability of water and ET business. Therefore, for 2026, I suggest you position yourself on the low part of the range provided in the financial framework.
Okay. Thanks, Luca. Final question is more on the medium term. We have seen, let's say, signs of life from the sales on green hydrogen recently with Moeve moving to FID, some engineering studies across Europe and yesterday, India. Can you give us a sense of the overall number of projects that you are pursuing, either through thyssenkrupp nucera or not, that may materialize over the horizon time of the financial framework? Just having an idea of whether it is three, five, 10, 20 projects.
Isacco, thank you. The pipeline right now is around 2 GW, and considering that we keep somehow our JV venture, especially updating on the average size of their pipeline, which is between 200 MW and 300 MW as average, we are talking about a numerosity that is below 10, mainly in Europe, and now there is this new project in India where they won the front-end engineering and design.
Okay. Thanks.
The next question is from Chris Leonard of UBS.
Yeah. Hi. Morning, guys. Thanks for taking the questions. It's three. I wish it was three on my side, if that's okay. I'm thinking about the midterm guidance as the first one and looking at the water business and particularly on the EBITDA guidance for margins at 17%-19% in the midterm. Can you just give us our expectation for what you're expecting in the pool segment within the division? Obviously, it was a very healthy margin in 2025, and probably driven due to the mix of pools. Just to get your view, do you believe that is now reducing, looking out to 2028 as to why that EBITDA guidance is lower on the margin versus 2025? Thank you.
Yeah. As I said, thank you, Chris. The profitability level of water is expected to remain in that range, 17%-19%, where we do not see a reduction of the profitability of the pools. We see a healthy market that will continue to grow in the range that we provided. The level of profitability is slightly lower than what we have done in this year because mainly of the lower absorption of the cost from ETR that will impact the other business units. Therefore, I mean, there is a higher level of cost allocated to the water segment. We see definitely a good level of profitability in pools.
As a follow-up to that, why aren't you just leaving that cost within the ETR business? Why are you deciding to spread it across water and electrode? Because it maybe doesn't give us a fair reflection of the underlying business performance in those core units, which you guys will continue to be, you know, working to drive growth. Would it not make more sense just to leave the costs within the ETR business?
I'm not sure I captured the question.
I'm just saying, why aren't you leaving the fixed costs within the energy transition business? Why are you taking it across into water and electrodes?
Yeah.
You know, clearer.
We provide a guidance to the market, which is based on the final EBITDA, and we have also internally an EBITDA, which is only with the allocation of costs. We have certain costs that are in, let's say, some unshared costs, like my cost or the cost of Paolo, that have certain drivers, for instance, the turnover and allocated from an accounting point of view this way. I mean, if there is a lower level of revenues in the TR segment, the rest of the cost of the structure of the company has to be paid by the remaining business.
That's why we need to allocate, unfortunately, higher cost on the other business lines, which is a, let's say, a normal way of typical allocation of costs in, when we have different business lines.
Sure. Okay, that makes sense. Thanks. Going to the other question is just looking at the 300 MW order for green hydrogen from thyssenkrupp nucera today with Moeve and just questioning, I think, Paolo on the call just now, you said that that could be worth EUR 30 million of backlog. Is that correct? Then secondly, do you think in terms of timeframe, what is your delivery view here? I mean, presumably this can contribute, given you have capacity, this can contribute into 2026 revenue. Thanks.
Yeah. The value is not fully defined, so it's within a range, so it could be around EUR 30 million or maybe something more. In general, we do have the capacity, as you imagine. We could start tomorrow, potentially. As usual, our scope of supply has to fit within a very precise schedule that now our joint venture will define with the customer. It's still unknown to us how much of this job we can execute in the course of 2026, and consequently, how much will be left for 2027. I think this is gonna be defined over the next weeks, potentially. We can be more precise at the next call.
That's great. Thank you. Just the last one from me. You spoke about M&A and bolt-ons, and we've, you know, spoken about this before, but could you maybe talk to if you would decide to take leverage on board for the right type of acquisition, what type of net debt would you be comfortable with? Then, as an extension to that, could you just update us as to like the end markets that you're concentrating on for these bolt-ons and where you think your offer needs to be, you know, bolstered by further acquisitions? Thanks.
In terms of balance sheet and let's say leverage, considering the balance sheet that we have today, the dimension of the acquisition, which is a potential acquisition that we are studying based on a bolt-on strategy, not a transformational deal at this moment, will leave us with let's say a low level of leverage. It's definitely a low impact on the financial structure of the company. Paolo, do you want to add anything?
No, nothing in particular. I mean, we hope to be able to disclose something over the next months. We've been very actively working on M&A in the last months, so hopefully we will have something interesting to announce over the next months.
Thanks. Just a recap of where that would be, please. Like, as in what markets you're looking at for bolt-ons generally.
Mainly water.
Brilliant. Thank you, guys. Best of luck.
Thank you.
Thank you, Chris.
As a reminder, if you wish to register for a question, please press star and one on your touch-tone telephone. For any further questions, please press star and one on your telephone. We have a follow-up question from Mr. Isacco Brambilla of Mediobanca.
Yes. I just a follow-up on my side. This is a clarification on the low-end range of your midterm view. Doing some rough math on top line and margin projections by division for electrode and water looks like at the low end of your margin guidance of like 15% in group level still the implied EBITDA of energy transition is somewhere in the negative territory. Is it fair to say that this 15% midterm EBITDA margin assumes no benefit from cost containment action, neither a pickup in green hydrogen? Otherwise, can you elaborate a bit more on the say building blocks at the low end?
Yes. The low range of the guidance assumes a negative ETR business, as we said. Let's say we have a containment of cost, which is sound control of costs internally within the company, for the three-year plan. On top of this, we are analyzing additional possible opportunities both on the manufacturing and on the G&A and R&D. On the manufacturing, obviously, as we said, and this is not embedded within the guidance provided in the financial framework.
On the manufacturing side, as we said, we are keeping an additional flexibility in terms of capability and because we need to strongly retain the know-how even if we have today lower than expected level of revenues on ETR. While on the G&A, we are launching certain initiatives that will require some time in order to automate and make more efficient certain activities within G&A and R&D activities. This will require time in order to study and implement also from the IT perspective, this initiative.
It's something that we do not see as a potential benefit for 2026, probably in the last quarter, but probably this will produce some positive effect starting from 2027 onwards, which is not embedded in the financial framework yet.
Okay. Thank you.
Ms. Locati, gentlemen, there are no more questions registered at this time.
Thank you very much. Thank you for attending this call. As Investor Relations team, of course, we are available to be in contact with you for any kind of further information or questions. Thank you.
Thank you, everybody, for listening.
Ladies, and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.