Ladies and gentlemen, welcome to the Heidelberg Materials third quarter 2025 trading update conference call. I'm Lorenzo, the COTUS call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christoph Beumelburg. Please go ahead.
Thank you, Operator. Good morning. Good afternoon, everyone listening in to our Q3 earnings call. Pleased to report the numbers that we published this morning. As always, we have in the room Dominik, our CEO, René, our CFO, and from the IR team, Robert and Ozan, myself. Happy to receive your questions after the prepared remarks. For those, I hand over to Dominik.
Yeah, Chris, thanks a lot. Welcome, everybody. From our side, great to hear you and have you on the call. Let me just go through the presentation quickly and then we get to your numbers. Good quarter for us. I think revenue up 1%, RCO up 5% after currency impact even 7%. I think that that's good. Also, operating EBITDA margin up by 65 basis points. I think that's a good quarter. Driven also by the transformation accelerator, savings around $250 million. We are basically halfway to where we need to go and want to go, although we've still got 15 months to go. I think that's well on track from our perspective, if not even better. The share back is on track to be finished by December at the latest. I think that should be good. The second tranche, obviously, of the $1.2 billion.
Fully on track to what we have communicated. Good news on the decarbonization side. We expand our leadership in that respect. I'm sure we get into your questions on this one, but we took the FID final investment decision for Porthos. CCS project construction will start this year. That is good news. On the back of that, and on the back of Breivik performing well in terms of capturing the carbon and also putting it under the Norwegian sea, we are able now to sell the first evoZero products to the market, and we have already the first projects that are up for delivery. In that respect, things are moving well. On the back of all of that, we are confident to give you a positive outlook for the remainder of the year to end up at a narrowed range for the.
Outcome of the ROIC this year, which will now be 3.3-3.5 instead of 3.25-3.55. I think that's also good news. ROIC will be around 10%, and the CO2 emission will come slightly down. Overall, I think fully on track. If you go to page three, you see again the numbers. I think that's all going in the right direction. Revenues up, EBITDA up, EBITDA margin up, and EBIT up. I think in difficult market environments, a very convincing performance. That same is true for the full year. Everything green in terms of revenue, EBITDA margin, and EBIT. I think we do not need to go through the details. You can read them yourself. If you go to the Q3 bridge, page five, $55 million, almost $55 million up. 5% on ROIC. You see, yes, there is still volume decline.
The net volume figure is still down. The good news is price over cost is positive, and that's a very important measure for us. We told you all along that our clear target is to keep price over cost well in the positives throughout the year. This is what we again delivered in Q3. You see also on the left side currency impact. There is a significant currency impact to my earlier remark. Also in the quarter, almost $30 million. On the flip side, there is positive scope effect where the acquisitions start contributing. In this case, $30 million up. If you look at the same picture on the nine months figures, page six, you see that the net volume is - 91, and the price over cost is 202.
If you want to read something positive into this, you see that the volume decline is slowing down because it is a big quarter, - 24 million on the volume side compared to nine months, 91. You can do the math yourself. I think there is a little bit of a stabilization effect on the volume side coming. If you go to the scope effect, let's start with currency. If you see the currency, I think the currency impact is significant. You see for the full nine year, 29 million, while for the quarter alone, 28 million. You see the currency impact is significant. It is the scope effect. Again, 29 million for the full quarter, but 48 million for the first nine months. Do the math. I think it is moving in the right.
It's moving in the right direction also on getting the effects from the acquisitions. If you turn to the transformation accelerator on page seven, we are absolutely confident that we will hit $500 million, if not more, on the transformation accelerator. We have $250 million in the books on the three pillars that we are chasing. It's really showing now also in terms of how we execute this internally, the advantage we have globally and to really push the global advantage of being very focused, a pure play in our industry to really drive efficiencies along the platforms that we have described: decarbonization, digitalization, but also technical excellence. The transformation accelerator is a fantastic tool to show also the contribution of that. Now, when we get to Europe. From our perspective, not a great quarter in Europe. We say that very clearly.
There were a couple of one-offs in there. René will maybe go through the details in a minute, but I think okay on a fairly high level. We are an ambitious team. I would say as good as Q2 was in Europe, I think Q3 was also driven by those one-offs. Not a fantastic exercise, but I think everything that we can see. What we can manage internally, both in terms of pricing, but also in terms of costs, I think that goes in the right direction. The market is the market to some extent. Obviously, we are heavy weighted to some markets that are still under pressure, which is great news because if we do our homework right, then the upside potential out of this is substantial, if not substantially better than with any comparison.
In that respect, it moves in the right direction in general. Q3 is nothing to overcelebrate. On Europe, we are very honest about this. For me, the more important message here is this is a quarterly impact. We do not see a change in any positive trend from the bottom up in Europe. We are doing consistently our homework. I am very confident that Europe will show its strength down the road. We go to the next page. We move to North America. Other than Europe, I think strong quarter from North America. Also the comms we can see. I think overall, there was a good development in North America. Overall, I would say revenues up, EBITDA up, RCO up, like for like, in the higher single-digit numbers. I think that is good. Also, margins up, especially in aggregates. Good performance.
Also in cement, stable on a good level. Overall, I think a good quarter from North America. Asia-Pacific, I think, splits into a couple of different messages. I think Asia, to be honest, is still in difficult territories. I think the hopes were higher. I'm being very honest with you on the Asian performance. I think they're doing good homework again. I think there are markets and countries that are really performing above our expectations. There are clearly also countries like China, Hong Kong, to some extent also Indonesia, that are clearly under our expectation. Again, upside for the time to come. I think that's not where we wanted it to be. Maybe on Australia, René, you want to comment?
Australia had a very strong quarter for us. August, September was very good. Also, October was very good. So Australia is slightly coming back, which was very good cost base. Now the volumes can be deliver good margins. So Australia is in very good shape. Was very good shape in Q3.
Yep. Okay. I think in a global portfolio, you have always movements. I think the good news is that AMBA is continuing to clogging along on a very high level, I would say. Revenues up 6% like for like, reported even 13% because of the Yasmin acquisition. Then we have the EBITDA up 23% reported. I would say that is a very strong growth. Unparalleled. Like for like, even up 15%. Underlying performance and acquisition works very well in Africa. The same is true on RCO. Look at the EBITDA margin development, 250 basis points up, guys, in cement. I have to say, kudos to our team in AMBA that is really doing a fantastic job in difficult circumstances. I think let's not assume that this is all easy, but it is our duty as a global company to manage the volatilities.
I think the African team is doing a fantastic job. Good news also on sustainability. A lot of good news, I would say. First of all, evoZero is now finally hitting the market. We've started the first projects with the underground station in Oslo, for example, and also a 3D printed house here in the vicinity of our headquarter here in Heidelberg. I've been on the site myself. That's quite energizing to see how you combine a 3D printing technology with near zero carbon products. I think that really moves in the right direction. It shows how applicable this product is and how much value we can drive for the end customer with this product. I have high hopes that this is really our future and this works well. Final investment decision in Padeswood. I think, why do we make a significant fuss about this?
Because the final investment decision, guys, is an important milestone. I think the market is underestimating this milestone, I have to tell you. There are project portfolios all over the place. By the way, also in continental Europe, but there is, in continental Europe, guys, not one project, not one project that has even taken a final investment decision. To be very clear, A, the hurdle to take a final investment decision from a project stage is massive, massive. Secondly, to then deliver the project, that carbon capture.
Ladies and gentlemen, please hold the line. The connection with the speaker has been lost, and the conference will continue shortly. Please hold the line.
Okay. Sorry, guys. Somehow the line broke down. Let's go back to the sustainability side of things. In the end, I think good news is that evoZero now finally hits the market. We have a couple of exciting projects. I think you still captured that. What is important is the FID, so the final investment decision that we took now on Porthos. I think it is vastly underestimated by the market. A final investment decision is a very important milestone and a difficult milestone to hit. Even if you have a lot of projects that you are chasing, to get to a final investment decision is a major hurdle and I think should not be underestimated. Once you have made the final investment decision, you still have to execute the project. You have to capture the carbon, you have to store the carbon.
This takes three to five years before you get there. I am convinced we have, as Heidelberg Materials here, a huge competitive edge. We will rest assured we will build on this. If there are questions later on, I'm happy to make that point. I think let's just be clear that this is a significant edge that we do have in that respect. We are clearly going to build on it. Talking about building on it, I think it's clear that the latest news from this week about the EU Innovation Fund decisions is just another proof point that we are on the right track. Also, the EU government has understood that there are companies that are delivering on what they are promising. In that respect, I think we have all four of our applied projects basically got greenlighted.
The one in Belgium, Antimis, the one in Ervo in France, the one in Italy, in Rezato, and then the pilot project in Goraszcz in Poland. Next to the ones we already had, GeZero and ANRAV. For the four of this week, we alone got EUR 520 million of carbon contracts for difference, or in this case, EU Innovation Fund money. We need to complement and want to complement this now with local supports. Let's wait and see how we get there and when we get there. Overall, this was very encouraging news and a clear sign that the EU has understood who is leading the game here. In that respect, I would move over to the financials, René, and you want to take over.
Thanks, Dominik. Hello, everyone as well from my side. What you see here on one page is a rough overview of about our key financial metrics. Adjusted earnings per share, 4% up. Even if you would take the reported earnings per share, it is even 11% up. If we take the AOR out, it is only 4% because last year we had the impairments of the European Master Plan, part of it in our numbers. Last 12 months, free cash flow is at $2.3 billion. That is $150 million higher than we had the last 12 months, December 2024. I think that is a pretty good result. The final outcome will depend on working capital in and outflow at year end. Let us say we have inflow, but let us see how much. The clear target is to be on $2.2 billion-$2.3 billion. That should flow in.
Leverage, that's seasonal, one and a half right now, which will go down by year end, will probably be between 1.2 and 1.3, depending on, as I said, working capital. I guess that is well showing the healthiness of our balance sheet. Regarding M&A, Dominik alluded to it, we have closed Asment Témara in Morocco. Very good acquisition for us. Also in Australia, the Buckeridge Group of companies is closed, and already in October, it will be in our numbers. That is a very, very good acquisition. The second round of the share back, as Dominik said, we will finalize by mid-December, latest. Dominik, I hand over to you for the outlook.
Okay. Then we have just the outlook. I think I mentioned that already. We have specified the outlook and narrowed the range to $3.3 billion-$3.5 billion on the RCO. ROIC will be above 10%. That is the clear target. We have slight reductions on CO2 emissions. CapEx will stay at the promised level, around $1.2 billion. The leverage will be around 1.5. We are quite confident that it will come in even below that, or better than that. That also indicates that there is clear opportunity to continue our growth on the organic side, but also on the acquisition side. In that respect, all lights on green.
Thanks a lot. With that, I would say, let's turn to your questions.
Operator, do you want to start the Q&A process, please?
We will now begin the question- and- answer session. Anyone who has a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioner on the phone is requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time.
Okay. I see a very full line of questionnaires. Please restrict your questions to two at a time, as always. First question comes from Luis Prieto from Kepler.
Hey, Luis.
Luis, hello.
Hello. Thanks a lot for taking my questions. I had a couple of them, hopefully very quick. The first one is, if you could please provide us with some sense of what the percentage level of subsidy obtained from the EU Innovation Fund for the plants in France, Italy, and Belgium. You mentioned $520 million for the award, but I'm not sure what the total CapEx for the three plants was. That would be useful. If you have any updated timing for the projects. The second question. This might be a bit difficult, but a close peer of yours has stated that they see U.S. residential subdued next year in the, I assume, in the U.S. Do you have any commentary on what you're seeing for next year in this particular part of the market? Thank you.
Okay, Luis, thanks a lot. Look, on the subsidies. There is no number we can disclose at this point. Because, A, the investment levels are still obviously under scrutiny. Yes, there is a hand in that you put into the application process, but this is a moving target. It is far too early to make a final conclusion because, keep in mind, we continue to learn from Breivik. We continue to learn from Porsgrunn, and that obviously goes into the budget. We are not going to throw out any inflated number. We do our homework. Secondly, I do not think that the EU Innovation Fund is the end of the subsidy game. There are carbon contracts for difference that are, for example, available in Germany, and the process is still ongoing. I do not want to jump to any early conclusions on this. I ask for your understanding.
Rest assured, we will only greenlight carbon capture projects if we have a very convincing business case. As we always said, Breivik and Padeswood are performing above the average return on invested capital compared to the total group. That will stay the gold post for any additional investments we do into carbon capture and storage. On the U.S. residential side, it's very hard to read. 2026 is still a couple of months to go. The situation in the U.S. on the interest rate side is volatile. There are discussions going on. The good news is that the turning point seems to be reached. The interest rates are coming down. Remember, there is an interest rate and there is a mortgage rate. There are historical hurdle rates where the mortgage rates need to sit at certain levels when you then see things coming back.
Pent-up demand is absolutely there. I think some additional movement down on the mortgage rate side would still help. I'm quite confident. Do we see this in January 1? I don't think so. Throughout 2026, would we see some upside potential on the residential side from today's viewpoint? Absolutely.
Thank you, Luis.
Super clear. Super clear. Thank you.
Thanks. The next question comes from Goldman Sachs, Ben Rada Martin. Hi, Ben.
Hey, Ben.
Great. Good afternoon, Dominik and René. Thanks for the time today. I've had two pleas, and both were on the European cement business. I guess, firstly, Dominik, you mentioned some one-offs within the quarter. I was wondering, could you quantify some of those? I guess the expectations that they won't be recurring going forward? Then second, on the European cement business. On pricing in 2026. We've got some pretty significant regulatory changes when we look at the ETS benchmark, the phase-out of allowances, CBAM. I'd be interested, what kind of pricing do you expect on European cement in 2026? Is it right to think that the contribution will likely be larger than what we've seen in 2025? Thank you.
Yeah. Thanks, Ben. Let René take the first one, and then I'll do the second one.
Ben, regarding the one-offs in the quarter, we had some, let's say, major inventory impacts, roughly $10 million-$15 million due to, let's say, phasing of production in some big European plants. We had some, as well, our other operating income was probably $10 million-$15 million lower than it was last quarter due to timing of some small asset sales here and there. It's really small stuff. If you had 10x $1 million or something, then that adds up to what we had last year. The inventory, that should come back. The timing of the asset sales or other operating income, there's some other incomes there that should come back.
Okay. And then on the European question around CBAM, EO, ETS. I think it's true that in the last couple of weeks, there was a little bit of noise about what's going on there. You saw probably that yesterday, the EU has then agreed now on a framework how to adjust some of the climate targets. From all what we see, no significant change to what is relevant for us. I think CBAM is there to stay. EO, ETS, one is there to stay. Is there a discussion around what happens in 2034 and 2039, maybe? But that's way out, guys. For us, it's clear that you look at the carbon price right now, it's 82 or whatever it is. So the significant price moves further up. Our strategy does not change. We are on a fast pace decarbonizing our assets in Europe.
We become not only the cost leader, but also we are clearly, from our side, pushing value over volume. That strategy is absolutely not changed. To your specific question, Ben, do we expect for our company a better pricing performance in Europe in 2026 than in 2025? Yes.
Great. Thanks very much.
Thank you, Ben. The next one comes from Elodie Rall from JPMorgan.
Elodie.
Elodie, hello.
Yeah, hi, good morning. Good afternoon. Thanks for taking my questions. First, it's not really a question since it's a follow-up from the previous question. Did you say that the one-offs were $25 million, more or less, in Europe? If you can just confirm that. Second, on North America. Margins in cement also went down. I think 113 basis points in Q3. Revenues were up 2.5% on a like for like basis. Can you give us a bit of color as well of what's going on there from a margin perspective? What kind of pricing environment are you seeing and expecting going forward as well in the U.S.? Thanks very much.
Elodie, 20 million-25 million is the number for your question number one.
Okay. Elodie, on the second question, on the U.S. cement margins, the picture is quite different in different markets of the U.S. Personally, Elodie, I think there's also some tariff impact left or right, not on our side, but when it comes to the competitive situation in some of the different markets in the U.S. I think overall the performance in North America in Q3 was good. That's true for the volume side. Would we have hoped for even better pricing dynamics in the U.S. on cement? Yes. I'm with you. A similar answer, maybe not with the same amount, because historically, the performance on cement pricing was even better in the U.S. than it was in Europe. I think there is upside potential to the cement price development going into 2026 compared to 2025.
Thanks, Elodie, for your questions. Next in line is Tom Zhang from Barclays.
Hey, Tom.
Hi. Thanks very much for taking the questions. First one, you mentioned in the remarks you're over-indexed to some of the more, I guess, sluggish or weaker markets in Europe. Could you maybe expand on that a little bit more? Maybe you're sort of talking about Central Europe, Germany, and in particular, if you're seeing any changes in the competitive dynamic there as we go into 2026? The second question, just around capital allocation. You mentioned the second tranche of the buyback. We're close to finishing, but I see you haven't bought back really any shares for the last month. If the balance sheet is looking at 1.2x-1.3x leverage, maybe a bit of a slowdown in M&A in this quarter at least, what are the hurdles to just starting tranche three early and maybe committing more capital to buybacks? Thank you.
Thanks, Tom. Let me start the first one, and then if any takes the second one on. Share buyback. Now. In Europe. I think Europe has a large footprint. The question is, are all markets performing on the same level? The answer is clearly no. I think it's no secret that Eastern Europe is, in general, performing well. If you look to our exposure in Eastern Europe compared to others and our exposure in Northern Europe and in Western Europe, I think you will see some difference. My comment was going towards the point that our stronghold markets, they are very much next to Eastern Europe. They are very much also tweaked to Northern and Western Europe. For us, obviously, markets like Norway, especially Sweden, the U.K., Benelux, France, Germany, they are significant strongholds for us. Guess what?
Those markets, volume-wise, have clearly underperformed in the last two or three years compared to the. You are now on levels far from the peak, going back to the 1950s of the last century. The upside potential in those markets is fundamental, to say the least. That is why I think we are doing our homework, trimming the asset space, trimming the cost space, and with that, should have a significant upside potential as those markets come back up. That was the reason of my comment.
Tom, regarding capital allocation, regarding the share buyback, let's correct the last two, three weeks, we did not buy a lot of shares, but that's in the process, is in the hand of the banks, and they steer, let's say, the purchase. That's what I can tell you. I can tell you that the deadline is mid-December, that we want to finish this. That's all on track. Regarding the third and last tranche of the second program for next year, we want to keep the same. We want to keep the same rhythm as we had it. Rest assured. We stick to what we have said. We will finish the share buyback next year. That's it. We see. When we have announced it or when it's finalized, we see what else we do.
That depends as well on M&A opportunities or whatever and how our cash flow goes. We keep you informed when the time is ready for this.
Yep.
Thank you, Tom, for your questions. Next one comes from Pujarini Ghosh from Bernstein.
Hi. Thanks for taking my questions. If we look at EMEA and APAC, we're seeing a significant margin expansion. Could you talk a little bit about what's driving that? Is it pricing, maybe volume growth leading to operating leverage or cost efficiencies? My second question is on Germany. We know that volumes haven't materialized as maybe we were hoping for at the start of the year. On the pricing side, what are you seeing? Have you started talking to your customers about pricing for the next year? What should we expect on German pricing in 2026?
Yeah. Okay. Let me comment on your two questions. First of all, I think if you look at APAC, I think it's clear that René was making the point that Australia, I think, is moving in the right direction, and that is very much driven also by cost management, disciplined cost management, and also stable pricing and good pricing, I think, overall in Australia. Clearly, I think the team in Asia is doing their homework. We are massively looking at our costs. The majority, I'm looking a bit to René, but the majority of the improvement on the margin side does not come from the pricing. It comes clearly from our cost management. That's the name of the game right now in Asia, which I think is also the right thing to do. On Germany, please.
Allow that I'm not commenting on pricing for competitive reasons on certain markets. We've never done this and cannot do it for legal restrictions. Overall, I think I go back to my earlier comment. I'm absolutely, for us, it's a clear focus to focus on value over volume and see a significantly better pricing performance for our operations in 2026 in Europe than in 2025. That obviously also includes Germany.
Thank you.
Thank you, . Next question comes from Julian Radlinger from UBS.
Hey, Julian.
Hey, guys. Thanks a lot, Dominik, René, Christoph. Two questions actually on CO2 for me today. First of all, you just got another four sets of subsidies on these projects. We're seeing quite little activity in that area from most of your smaller competitors. Of course, you're doing a lot of other things to reduce your carbon intensity and clinker factor and so on as well. Where do you think you are on the CO2 cost curve today in Europe? Very low end, bottom half, or put differently, do you have a view on what portion of your cement plants in Europe might make it into the benchmark, the top 10 cleanest plants? That's my first question. Secondly, you mentioned earlier the CO2 price in Europe is now above EUR 80. That's up from EUR 65 or so a year ago.
Any good explanation why you think that might be happening? Thank you.
Sure. Julian. Good questions, but maybe we are not the right ones to answer that. I think, first of all, on the benchmark plans, you know that this benchmark is run by the EU in a secretive process. There is very little transparency around this. We have our own assumptions, but please understand that we cannot—I am not starting to speculate. As a general mark, it is clear that we want to be at the very top of that. Or if you wish to say the other way around, at the very bottom of the cost curve in order to—especially if you include the CO2 price. That is the whole game for driving this decarbonization agenda that in the end we want to have the majority of our plants sitting in the benchmark top 10. I think in that respect, that is the clear aim, but I cannot comment on any specifics.
Of the running process. On the EUR 82, there is only speculation. It's very difficult to judge what's driving that price. If it would be easy, we would all speculate in CO2 certificates, but I don't. I think in that respect, hard to predict. Obviously, the higher the price moves, the better it is for us. If we are the decarbonization leader, for us, that's absolutely okay. We have no problem with that. We are in the camp of saying, "Hey, this has been the agreed system. This is how it works." Whether the price sits at EUR 80 or EUR 120 or EUR 150, we are able to cope with everything, given our strategy. In that respect, we are also fine with EUR 82.
Very good. Thank you very much.
Thanks, Julian. Next question comes from Cedar Ekblom from Morgan Stanley.
Cedar, hello.
Hello.
Hello. Just a question back on pricing. I appreciate you won't give any specifics around how you're thinking about the pricing potential next year in Europe. I do think it's interesting that some of your peers are willing to give more specific commentary, but I won't push you on that. What I do want to know is, is there any reason why you would not follow a supply leader in the market if that supply leader was going for quite large price increases? Is there a reason why you would try and maybe be a little bit more commercial and be undercutting or looking at volumes? I'd like to just hear more around the commercial strategy if you won't talk to specific potential price increases. That would be helpful. Thank you.
Yeah. Thanks a lot, Cedar. First of all, there's only one reason why we don't follow. There's only one single reason why we don't follow, because we take our decisions independently. I don't care what others do. In this respect, we take independent decisions. Especially on pricing, this is a completely independent process, and I don't care what others do. Of course, we are competing in the market, but our pricing decisions, we take absolutely independently. I think that's the first point. The second point is, I think we have taken you along over the years. What the transformation of the company is all about. I think I'm very thankful for your question, Cedar, because while for decades, if not centuries, we were a very production-focused company, trying to build our assets in a competitive way, this transformation now moves very much.
EvoZero is just one prominent example towards the commercialization. We are just scratching the surface in that respect. That is why I keep telling everybody internally, it is value over volume. I think it is clear we need to drive the best value for our customers. If we drive the best value for our customers, we also demand the right price points for that. That is the name of the game. That is how we run the internal incentives. That is what we focus on as the leadership in the company. It is all about doing the top job in our countries with our customers and our commercial teams. I think, as I said, we are probably just scratching the surface in that respect. That is our clearest strategy, Cedar. Thanks for the question. Very important topic for us.
Thank you, Cedar. The next one comes from Anna Schumacher from BNB Paribas.
Hey, Anna.
Hi everyone. Thanks for taking my questions. I'm on to Paul Radlinger today, so I have two. The first one, now that evoZero is on the market, do you have a better idea of the green premium for net zero cement? Is it possible to quantify it and compare to evoBuild low CO2 cement? Secondly, how could the U.S. shutdown impact demand if it isn't resolved soon? Does the potential stalemate in Washington make a new infrastructure bill less likely next year? Thank you.
Just to assure, I'm sure, Anna, I got your second question because some of the line is not very good. At least maybe it's our fault. Are you asking about the US infrastructure spending or?
Yeah. So whether.
You are talking about the shutdown in the U.S., no?
Yeah. So whether the shutdown in the U.S., is there a risk that the infrastructure bill might be less likely to happen next year?
Okay. Anna, let me get to your two questions again. The net zero product, from our perspective, is not a question around the premium. When it comes to evoZero, it's a unique product in the market. It will demand a unique price point because it has unique value we can drive for the customer. That is what we are all very—to my earlier remark to Cedra, that is what we are very focused on. We're not talking about any premium because it is a completely different product. That cannot compete with any—that is. Or the way you can say it that way or the other way, there is no competition for this specific product. That obviously comes with a sound commercial strategy and a sound value strategy for those customers that are buying those products. That is, for us, the clear focus. It is clear for us that.
This uniqueness will also turn into a good pricing and margin performance, if not to say very good pricing and margin performance for those products. On the shutdown, Anna, I think.
Ladies and gentlemen, the connection with the speaker has been lost. Please hold the line. The conference will continue shortly.
You can go ahead, Chris.
Hopefully we are back. I'm not sure whether I paid the bill for the telecom provider. Sorry. Let's get back to your question, Anna. I think I don't want to speculate on the shutdown in the U.S. There is a lot of volatility around this at this point. There's also a lot of political rhetoric going on. Hopefully, it will come to an end rather sooner than later, but it's difficult for us to speculate on infrastructure. I don't think that there will be a significant impact. You know that the current administration is up for some reelection November next year. If you would scrap infrastructure stuff, that doesn't go down well with the voter. I do have significant hopes that they're not going to play around with this. With that, I'm quite positive for the infrastructure situation in 2026.
Thanks, Anna, for your questions.
Welcome back, Arnaud Lehmann. You're the next speaker.
Hello, Arnaud.
Afternoon, Arnaud Lehmann. Thank you for taking my questions. Just a couple then. Can we talk about Africa? It's been quite strong for a while, but I think in the quarters, the margin was at EBITDA level above 30% for the first time, maybe ever, or at least for a very long time. Could you please give us a bit of granularity in terms of which countries have performed better than expected? Heading into next year, do you think this performance is sustainable for the Africa region? That's my first question. My second question is on the cost outlook. Have you seen raw materials and energy moving a little bit higher, including coal? Does that give you ideas around price increase in the kind of Asia and Africa regions for next year? Thank you.
Okay, Arnaud, let me do the first, and then I'm going to take the second one. Because you can then also comment on Australia maybe a little bit because that's an important part of Asia-Pacific. Look, on Africa, we've always said it's not about one country. Africa is a portfolio of countries, and it would be far too volatile and risky to run Africa on just one and bet on one horse. That's why also it doesn't make much sense to comment on single countries there because things go up and down. What I recommend, Arnaud, is to look at the past five years and our AMBA performance. Everybody gets excited that things are moving right now in the right direction. If you take the trajectory of our.
AMBA portfolio and its performance over the last five years, I would say there is almost a straight line in only one direction, and that's up. That has to do with good management, but it has to do also with acquisitions and everything. I think overall, this is our task as a management team to deliver consistently a good performance. Now, is this somewhat volatile within the different countries? Absolutely. Overall, as the AMBA portfolio proves over that time frame, and I think that's a meaningful period, I'm actually quite confident. Now, can we guarantee you for the future? For nothing, there is a guarantee for the future. Are we working very hard to keep the trajectory moving in the right direction? Absolutely. We have a fantastic management team in place that has shown that it can perform on a very high level.
I have no reason to believe that that can't continue.
Regarding your question regarding cost outlook and here energy, raw materials, we have our budget meetings still to come, but obviously we have a view for next year. Energy, I do not expect that we get a lot of headwinds here from energy. If you just look, if we increase our alternative fuel rate like we do this year, there will be obviously fuel cost relief. From the power also, it should be at least flat. Maybe it is even a little bit lower than this year. Energy is not, currently, status of the day, not a big concern. Then raw materials and other items as well. The world economies are not booming. There should be as well some cost relief in certain categories over there. As you know, with our Thai program, we have changed our procurement organization.
We now try to organizationally do much more here centrally to get leverage also. That is really, you will see in our numbers. I think that's okay. Asia. Outlook, as Dominik said, right now, it's not booming. It's not great. Let's see how the political situations in these countries go. If we have Australia working, that is half of the result in Asia. As I said to you, Q3 was good. October was very good. The outlook for Australia 2026, 2027 is pretty good. Fingers crossed that this will come, like I just said.
Yep. Thank you very much.
Thanks, Arnaud. Moving on to another Arnaud. Arnaud Pinatel from On Field.
Arnaud.
Yes. Good afternoon, gentlemen. Thank you for taking my two questions. The first one is on evoZero. You are telling us that we should integrate much more of your decarbonization benefits. Could you help us by giving us a little bit more granularity on what tonnage you have already sold on evoZero? And is it fair to say that we have not seen in Q3 any real contribution of evoZero in Europe in your EBITDA? That will be my first question. My second question is on the U.S. One of your competitors highlighted this morning that they are announcing a $12 per ton price increase in the U.S. for 2026 across their markets. They are mainly on the East Coast. It would imply a mid to high single-digit increase for the U.S., a market where we have not seen any momentum in H2 2025.
Could you please help us to understand if such price increases are possible, taking into account the impact of the tariff and other parameters of the equation?
Yeah. Arnaud, thanks a lot for your questions. Let me comment on both. When it comes to evoZero, you know that we are not disclosing too many specifics around this. I think to just draw the line, it's absolutely right, your assumption that there is no meaningful EBITDA contribution at this point. As you know, we have just told you that we can only and want only to start selling this project when the whole supply chain is robustly working. That means that the CO2 is really stored. We are on track. The carbon capture is working. In fact, I get it every morning. I get the capture rate on my mobile phone. The carbon bank is filling. There are CO2 being stored. That means that we can now sell EvoZero. We are very, very focused on what we want to achieve.
Again, value over volume. We're just running out there, selling everything of CO2 just to chase something. We chase the best value from our side. The good news is we have time to do so. We will get the EBITDA contribution for sure. You are right. Come Q3, there is basically nothing in there from evoZero at this point. This is ramping up as we go through the next quarters.
You cannot comment on the tonnage? Just a normal quantity for.
Yeah. We said at the capital market, there is a couple of hundred thousand tons for next year, cement. I think that is a little bit the target. I think that is what we communicated also in briefing. Again, that cement, I was earlier talking about the CO2 being captured, and that turns into higher volumes of cement. Just for you to understand, the capturing of CO2 is then multiplied with something in order to end up in a cement tonnage. Pricing in the U.S., I ask for your understanding that I cannot comment on any other announcements that others make. We do not make any announcements around this. You will also not hear this from me. I am going back to my earlier remark, Arnaud, where I did say that for us, we expect a significantly better pricing performance in 2026 than we have seen in 2025.
That is true for the U.S. as well. That is all I can say. I cannot comment on what others do.
Okay. Thank you very much.
Thank you, Arnaud.
The last question comes from Sven Edelfelt from ODDO.
Hey, Sven.
Sven hello.
Hello. Good afternoon, gentlemen. Thank you for taking my question. Apologize if it has already been answered. My line was cut several times. The first question is on Europe margin. Europe margin is down in Q3. Can you perhaps tell us more about the price over cost specifically on this region? Is it volume-driven, the decline in the margin? Has there been any unusual maintenance? That is the first question. My second one would be on the EU ETS. Can you maybe elaborate on the benchmark? I understand it might be lowered by roughly 50 kg of CO2 going into next year. I would be interested to better understand, if you can specify, what is driving this. I would be interested to know what is really linked to the benchmark and what is linked to the inclusion of calcinated clay on alumina. Thank you.
Yeah. Sven, thanks a lot. Let's really start with the first one, and then I make a comment on the second one.
Sven, regarding European margin, I said it earlier in the call. We had roughly $20 million-$25 million one-offs in there, which should roughly come back. You asked about price over cost. We have price over cost in the quarter for Europe positive. Just the volume slightly down. That is a little bit what to answer your question.
Okay. Then on the, Sven, on the EU ETS benchmark, again, as I said, it's a fairly intransparent process. There is a lot of discussion around what's in, what's out. I also hear the speculation that the benchmark should come down, but I would be very surprised if it doesn't because then what would be the message? There is no decarbonization going on. For us, again, if the benchmark comes down, we'll deal with it. We absolutely expect it to come down. By how much? Difficult to say. For us as the market leader in Europe, I think it's clear that we want to be at the best end of the cost curve in that respect. Whether calcine, clay, or alumina is in or out, I think I understand there is a constant discussion with the officials in the EU, what's in, what's out.
They certainly have an interest to drive down the benchmark. I think it's clear that this benchmark needs to be realistic and not driven by some specific setups that have nothing to do with the main market in Europe. Let's wait and see when the benchmark comes out, what will be the final result, and we'll deal with it.
Okay. That concludes our Q&A for today. Thank you very much for your questions. That concludes also our call. We will be on the road, even today in London, and then tomorrow seeing some of you guys, and then next week attending some of the conferences in London, and also U.S., Zurich, Paris, and many, many more locations. We look forward to seeing you there. Thanks for joining.
Thanks, everybody.
Thanks, Arnaud.
Thanks a lot.