Good morning, everyone. Thank you for standing by. This is Hendrik Finger from Investor Relations. I wish you a warm welcome to our conference call on the full-year results 2024-2025 of thyssenkrupp nucera. Our CEO, Werner Ponikwar, our CFO, Stefan Hahn, and our CTO, Klaus Ohlig, will walk you through the presentation. In the room with us this morning are my colleagues from the Investor Relations team. Now, before we start the presentation, some housekeeping. This call will be recorded, and a replay will be made available on our website later. Please also don't forget that today's presentation and potentially some answers to your questions may contain forward-looking statements. For additional information in this regard, please refer to the disclaimer. After the presentations, there will be the usual Q&A session for analysts.
However, we are using Microsoft Teams for the call for the first time, and that changes the process slightly. In order to ask a question, please push the raise your hand icon, and we will announce your name and open your line. If you are on mute, you must unmute yourself in addition, and with that, I'm handing over to our CEO, Werner Ponikwar.
All right. Thank you, Hendrik. Good morning, everyone, and great to have you with us. Let's kick things off with a look at our highlights of the past fiscal year. For thyssenkrupp nucera, fiscal year 2024-2025 was a year of diligent project execution, but also of technology innovation and focused investments. We advanced our positions in green hydrogen and chlor-alkali and kept our financial base robust, which is essential in a volatile market. Operationally, we executed a substantial order backlog in both green hydrogen and chlor-alkali and worked on our maturing project pipeline, where we have been named preferred technology provider for green hydrogen projects with a total capacity of more than three gigawatts. Our service business grew, and we demonstrated financial resilience through strict cost discipline. We invested in our green hydrogen technology portfolio to accelerate time to market and to reinforce our leadership in hydrogen cost efficiency.
Our commercial momentum in chlor-alkali accelerated, supported by technology upgrades and service expansion, and we secured new contracts for state-of-the-art chlor-alkali plants. Just yesterday, we were awarded a new contract for one of the largest chlor-alkali plants in the world, which represents a record order intake for us for a single project in the segment. I will share some more details just shortly. Let's turn to the numbers and compare them with our outlook. While group sales came in slightly below the guidance range of EUR 845 million, I am happy to state that we returned to positive EBIT territory with EUR 2 million, reflecting an improved project mix in green hydrogen and resilient execution in chlor-alkali. On top of that, we achieved all our segment targets. The green hydrogen segment stood at EUR 459 million in sales and EUR 56 million in EBIT.
Chlor-alkali contributed EUR 387 million in sales, which is, by the way, a record high, and EUR 58 million in EBIT. Now, moving on to our largest green hydrogen projects on the next slide. For NEOM, project execution is on track. 110 electrolyzer modules have been completed and handed over to our customer. To get there, we recorded over four million safe working hours without a lost-time injury at our module yard in Vietnam. Construction of the green hydrogen facility in Saudi Arabia is about 90% complete in the meantime. Going forward, we will continue to provide technical support on-site with commissioning planned for the second half of 2026. Let me step back from our daily work for a moment and look at the bigger picture. Our accomplishments in these projects are major achievements.
At times, it may seem like we take the flawless execution of this very complex project for granted or see it as routine, but it truly stands out as remarkable. We are very proud to be part of the world's largest green hydrogen projects, a contribution that will continue to benefit us well into the future. With that, back to our largest European project. At Stegra, cell fabrication and delivery are on schedule. We have handed over more than 80% of the electrolyzer modules, and more than 50% have already been installed on-site in Sweden. The project will feature a total of 37 electrolyzers across four cell houses with continuous operation targeted by the customer for late 2026. Now, let's talk chlor-alkali. In the last fiscal year, we saw a growing order book momentum with the highest demand coming from the U.S. and Saudi Arabia.
With the new build project in the Middle East, which we announced yesterday, it is quite likely that order intake will grow in the current fiscal year as well. From that project alone, we expect a high double-digit million Euro order intake in the second quarter of our running year 2025-2026, which is, in fact, the largest single order we have ever received in that business. We will be able to tell you more about it over the next weeks. Commercially, I like to add that project execution is on track and that sales reached an all-time high. The service business, accounting for 60% of our chlor-alkali sales. Recently, we also launched new BM and BiTAC cell generations with industry-leading power consumption and introduced also a 360° Life Cycle Service Portfolio further enhanced by digitalization. Now, turning to our ESG agenda and the respective developments.
In 2025, we completed a revised double materiality assessment. We opened new energy-efficient offices in Houston and also in Riyadh and achieved over four million safe working hours without a lost-time injury in our module yard in Vietnam. Overall, our commitment to good governance and social responsibility is clear. It shows, for example, in the high completion rates for trainings and supplier code of conduct implementation in partnerships with nonprofit organizations and very active employee engagements. These efforts are also recognized externally as in ISO certifications or ESG ratings. In that regard, we are particularly proud that we have received a gold rating from EcoVadis in August 2025, placing us amongst the top 5% of our sector for sustainability. These achievements underscore our dedication to responsible growth and stakeholder value, and now I'm very pleased to hand over to our CTO, Klaus, for a technology deep dive.
Thank you, Werner, and good morning, everyone. Before I move on to my slides, I'd like to make a few brief points since this is my first appearance at thyssenkrupp nucera's quarterly analysts and investor calls. I'm excited to be on board, and I've already met many talented and engaged colleagues during my first month here. I'm certain that we will jointly see great achievements. Today, I will give you a general overview of our technology approach and recent developments that strengthen our position in the market. Our focus is on driving technology leadership and innovation to support the global transition towards sustainable and CO2-free value chains. Let me start with our chlor-alkali business. At thyssenkrupp nucera, we're known for our leading electrolyzer solutions, backed by over 60 years of experience in more than 600 plants worldwide. Our approach combines reliable, durable, and safe technology with deep system integration know-how.
This foundation allows us to maintain an industry-leading track record and 3 build long-standing client relationships supported by our global service network. Innovation is at the core of what we do. We continuously improve our technology to ensure cost competitiveness and leadership in the market, and also to be able to further expand our offering to ensure a one-stop-shop experience for our industrial clients. Our latest developments include new BM and BiTAC generations, which deliver higher performance through unmatched low electrical power consumption, easier maintenance, and simpler installation. Additionally, we have launched our 360° Life Cycle Service Portfolio designed to support customers throughout the entire operational lifespan of their plants and to leverage the benefits of digitalization and artificial intelligence. To sum it up, we reinforce our position as a leader in electrolyzer solutions by combining cutting-edge technology with a robust service network and continued innovations. Now, turning to green hydrogen.
As you know, we're delivering our technology to the largest green hydrogen projects in the world. Our 20 MW alkaline water electrolyzer module, based on proven cell design and operating at atmospheric pressure, delivers exceptional durability and efficiency. In addition, we have secured a supply chain capacity of 2 GW per year, ensuring scalability and reliability for our customers. Our customers' needs are in the center of all of our R&D efforts. Therefore, we are working tirelessly to reduce levelized cost of hydrogen for our customers and to expand our product range, for example, by adding balance of plant elements. We are continuously optimizing our solutions to lower installation costs and energy consumption, reinforcing our cost leadership. Nevertheless, quality and safety remain key. Furthermore, we are strategically expanding our product portfolio into pressurized alkaline water electrolyzer systems and high-temperature electrolyzers for SOEC, offering efficiency and flexibility.
With that, we are positioning ourselves for the next wave of market growth. Our vision is clear: to lead the hydrogen market by setting the technological benchmark and delivering solutions that enable industrial decarbonization and long-term value creation for our customers. That's it from my side. Stefan will now continue with the financials.
Thank you very much, Klaus, and a warm welcome from my side as well. I'm pleased to present the key financial developments for both the fourth quarter and the full year 2024-2025. Afterwards, I will provide an outlook for the new fiscal year 2025-2026. Let me start off with summarizing our financial performance in the past financial year. Ladies and gentlemen, thyssenkrupp nucera delivered a solid operational performance in a challenging environment and remained focused on the diligent execution of its order backlog. Order intake was impacted by market uncertainty in green hydrogen, while chlor-alkali improved due to rising service orders. Group sales were slightly lower than last year, reflecting the phasing of ongoing new build projects in both segments. Chlor-alkali business achieved record sales, which was offset by softer sales in green hydrogen.
Our EBIT improved markedly in the past fiscal year, driven by a stronger gross margin in gH2 segment supported by a more profitable project mix. The chlor-alkali gross margin remained on a high level. Active cost management supported the cost ratio despite lower sales. Bottom line, we recorded a positive net income and earnings per share. Lastly, free cash flow improved strongly and was in positive territory, and with net financial assets remaining at a high level, we continue to operate from a position of financial strength, supporting both resilience and future growth. Let's now turn to page 16 for a more detailed look on order intake. In the fourth quarter, we recorded order intake of EUR 107 million, reflecting a sequential improvement, though still marginally below the level seen in the prior year.
Order intake in the gH2 segment remained subdued, while the CA segment in order intake rose by 5% year-on-year. This increase was driven by a strong performance in the new build business, including new project wins in the Middle East and India. For the full year, order intake decreased by 45% to EUR 348 million, with EUR 26 million generated in the gH2 segment and EUR 322 million in chlor-alkali. The decline in gH2 reflects project cancellations and postponements in light of the ongoing hesitancy around financial investment decisions during the reporting period. It is also important to remember that previous year's figure included more than EUR 300 million of order intake related to the Stegra project. In contrast, order intake in the chlor-alkali segment increased by 15% year-on-year.
It was driven by a very strong service business with Central Europe, the Middle East, and the United States, serving as a key regional contributor. Order backlog stood at EUR 606 million at the end of September. The reduction compared with previous reporting periods is primarily the result of further progress in project execution, as well as the current absence of major new gH2 orders. Let's continue with our sales development. In the fourth quarter, sales declined by 28% year-on-year to EUR 182 million. A strong increase in chlor-alkali sales was more than outweighed by lower contributions from the gH2 segment. For the full year, group sales edged down by 2% to EUR 845 million. Sales performance was largely driven by the execution of the order backlog across both segments. In the gH2 segment, sales totaled EUR 459 million, representing a 12% decrease compared with the prior year.
Progress on the Stegra project in Sweden supported the result, while sales from the NEOM project, still the largest contributor to the segment, declined due to the high degree of completion already achieved. Chlor-alkali delivered a strong performance, with sales rising 14% year-on-year to EUR 386 million, an all-time high for this business. Growth was primarily fueled by the service business, which accounted for an impressive 60% of total chlor-alkali sales during the reporting period. Moving to EBIT on page 18. In the fourth quarter, EBIT was in line with the prior year at EUR 1 million. A solid improvement in gross margin across both segments was offset by a higher cost ratio, reflecting the decline in gH2 sales. For the full year, group EBIT increased by EUR 17 million to EUR 2 million.
EBIT in the gH2 segment improved by EUR 20 million to EUR 56 million, while EBIT in the chlor-alkali segment decreased slightly to EUR 58 million. The increase in group EBIT primarily reflects a stronger gross margin in the gH2 business, driven by a more profitable project mix. This improvement more than compensated for higher expenses for the further development of SOEC, which is included in this segment. In the chlor-alkali segment, EBIT came in slightly below last year, despite higher sales, although due to an increase in other cost of sales that weighed on gross margin. Importantly, EBIT in the chlor-alkali business actually improved year-on-year when adjusting for one-time effects that had positively affected EBIT in the prior year. Next is the development of our operating cost.
Cost of goods sold improved as a percentage of sales, especially supported by a more favorable project mix in the green hydrogen segment. In light of the declining sales trend, we acted early with disciplined cost management, and I'm pleased to report that our efficiency measures are already taking effect. SG&A expenses remained stable year-on-year in absolute terms. As we enter the new financial year, we will continue to focus on cost containment to mitigate the impact of lower sales on cost absorption. Research and development expenses increased slightly in absolute terms, with most of the investments directed toward the gH2 segment. As a percentage of sales, R&D remained stable. However, this picture is somewhat distorted, as our overall R&D activity has actually expanded, and a higher portion of these costs was capitalized compared to the previous year.
In total, EUR 8 million of development costs were capitalized in the reporting period. Moving to the bridge from EBIT to earnings per share on page 20. Financial income declined to EUR 70 million, primarily reflecting lower interest income. Income taxes totaled EUR 50 million. The year-on-year increase in tax expense was driven by higher earnings before taxes and higher deferred tax expenses. As a result, net income declined to EUR 5 million from EUR 11 million in the previous year. Earnings per share decreased accordingly to EUR +0.04. Net working capital cost a small cash out of EUR 5 million, mainly related to payments from project execution and movement in corresponding accruals. Cash flow from operating activities improved strongly in 2024-2025. It totaled EUR 50 million compared to EUR 62 million in the prior year period. This improvement was largely driven by project cash flows.
Cash flow from operating activities increased to EUR 39 million, mainly due to higher investments, mostly related to intangible assets such as development cost capitalization and technology acquisition. Overall, this resulted in a positive cash flow of EUR 11 million, representing an improvement of EUR 89 million year-on-year despite increased investments. This underlines our strong financial position. We are able to finance our business from operating activities, which is beneficial for our strong financial foundation, as shown on the next slide. Net financial assets amounted to EUR 656 million at the end of September 2025, remaining at a very robust level. The year-on-year decline primarily reflects the signing of a long-term lease agreement for our new offices in Dortmund. Even after this reduction, our financial resources remain substantial and more than sufficient to navigate the current market environment and to support our future growth plans.
Lastly, let me walk you through our outlook for fiscal year 2025-2026. Based on the current economic environment, we continue to regard the guidance published in our ad hoc announcement on November 2025 as appropriate for the group. It will reiterate this guidance and complement it with an outlook on order intake and segment performance. At group level, we expect order intake in the range of EUR 350 million- EUR 900 million, driven primarily by major new build projects in both segments and robust demand in the chlor-alkali service business. Order intake remains highly dependent on the timing of individual large new build contracts, particularly in the gH2 segments, where projects often amount to several hundred million euros and may shift between reporting periods.
Against this backdrop, the lower end of the range assumes no new significant gH2 customer orders, while the upper end reflects winning several major new build projects across both segments. For group sales, we expect EUR 500 million-EUR 600 million, largely supported by projects already under contract. At segment level, we anticipate gH2 sales of EUR 150 million-EUR 220 million, primarily driven by the existing order backlog. Additional sales contributions from new green hydrogen projects are not expected to materially impact sales in the current fiscal year. In the chlor-alkali segment, we expect sales of EUR 320 million-EUR 400 million, with the upper end contingent on securing additional new build and service orders during the financial year. For group EBIT, we expect a range of EUR -30 million-EUR 0 million in fiscal year 2025-2026. Lower cost absorption resulting from the planned sales decline will be partially mitigated by cost efficiency measures already underway.
EBIT in the gH2 segment is expected to come in between EUR 80 million and EUR 55 million, while the chlor-alkali segment is expected to deliver between EUR 40 million and EUR 65 million. In summary, our outlook reflects a year of diligent project execution, prudent cost management, and contingent strategic positioning for growth as large-scale project decisions materialize. With that, I will hand back to Werner, who will wrap up today's presentation.
Thank you, Stefan. Ladies and gentlemen, let me now turn to the commercial and strategic outlook for the near and midterm. We continue to operate in a period of significant volatility and uncertainty in the global green hydrogen market. In Europe, project development is progressing, but the route to final investment decisions remains slow due to the high complexity of large-scale projects and persistent uncertainties.
To date, less than one gigawatt of capacity has been deployed in Europe, well below the 2025 targets of six gigawatts. In the U.S., the recent One Big Beautiful Bill Act has given clarity for a certain period of time but has simultaneously increased long-term investment risk for the sector. Despite these challenges, the outlook remains compelling. Global installed green hydrogen capacity is expected to reach approximately 30 GW- 50 GW by 2030, representing substantial market potential. To fully unlock this potential, the sector will require greater investment security and clear, stable regulatory frameworks. What does that mean for us? Within this uncertain environment, we remain disciplined and focused. Our leading technology portfolio, designed to deliver market-leading levelized cost of hydrogen, positions us competitively as projects advance. Our asset-like business model and global organization give us the flexibility we need to respond quickly to market changes.
Financially, our ability to fund operations from our own cash flow provides resilience and minimizes the reliance on external capital in volatile periods. In addition, our project pipeline matures, and we expect to convert FEED studies into delivery contracts for large-scale projects over the course of the year 2026. All in all, we will continue to navigate rigorously through the current market conditions while ensuring the company is well positioned to capture long-term value. Now, as the market for green hydrogen continues to mature, our project pipeline on page 26 has become more focused and has strengthened in quality over the course of the year. We concentrate on projects with a high likelihood of realization, supporting our customers from the initial concept through the concrete implementation. Overall, we are seeing a substantial pipeline comprising a large number of opportunities.
The total pipeline amounts to almost 70 GW, underscoring the significant market potential. Approximately 17 GW of this relates to projects already at an advanced stage. Our regional pipeline distribution highlights Europe as currently the most attractive market for green hydrogen projects, with additional opportunities spread across Australia, North America, Africa, and also the Middle East. Noteworthy are the paid engineering contracts, the FEED studies, and the basic engineering studies that we are currently carrying out in Europe, which have even increased in capacity since the last reporting to 1.7 GW. Our planned engineering work in these studies is paving the way for investment decisions on large-scale hydrogen projects in the near to midterm, based on our leading alkaline water technology. Ladies and gentlemen, let me conclude today's presentation by outlining our key priorities for the year ahead.
Commercially, our focus is on strengthening and expanding our customer relationships and strategic partnerships across both the chlor-alkali and the green hydrogen markets. We aim to increase our order intake by securing new large-scale projects as well as long-term service contracts. At the same time, we intend to accelerate the growth of our service business in chlor-alkali through our new 360° Life Cycle offering while fully capturing the emerging opportunities in the green hydrogen sector. From a technology perspective, we will continue to leverage the benefits of standardization and modularization to achieve the economies of scale and efficiency improvements required to further reduce the levelized cost of hydrogen. Moreover, we will broaden our green hydrogen product portfolio to include high-pressure electrolysis systems and to drive continuous product enhancement across both our alkaline water electrolysis and chlor-alkali platforms.
On the cost side, we are maintaining strict discipline across all divisions and regions, ensuring that our operations remain efficient, agile, and aligned with market conditions. We take a prudent approach to cash management, but we are prepared to seize opportunities in the green hydrogen market as they arise. Ladies and gentlemen, all in all, we remain focused on disciplined execution, cost control, and innovation as we move into 2026. With these priorities, we are creating the right conditions to react flexibly to market changes, expand our technological leadership position, and ensure sustainable growth. And with that, we wrap up today's presentation. Thank you all for your continued interest and trust. We are now ready to take your questions. Hendrik, back to you.
Thanks, Werner. At this time, we will begin the question- and answer- session for our analysts.
Again, some instructions: as we are using Microsoft Teams for this call, please push the raise your hand icon to indicate that you would like to ask a question. We will then announce your name and open your line. When it is your turn, please ensure that you unmute yourself additionally. We are aware, just a side note, that it might take a few seconds to get everything going, also depending on the settings on your side. So no worries if it takes a few seconds. The first question today comes from Martin Wilkie from Citi. We have just opened your line, and you should be able to unmute yourself now. So please go ahead.
Yeah, thank you. Good morning. It's Martin from Citi. The question I had was on the pipeline. You've given some outdated numbers on both the pipeline and the actively pursued projects.
Now, we know the industry has obviously changed over the course of 2025, but when you consider the new pipeline, in terms of the surety that some of those contracts will actually end up being signed across the industry and will go ahead as opposed to being canceled, how have you gone through that in terms of ensuring that what is still considered actively pursued is still sort of economically viable from the customer's perspective and therefore is likely to convert at some point over the next few years?
Martin, this is Werner. Thank you for the question on our pipeline. I think in terms of how we qualify and ensuring that we understand the likelihood and the maturity of projects in our pipeline, nothing has changed, really. I mean, we are still running a very rigorous and diligent gate process on our pipeline, actually.
We are trying to feed in all the information that we are able to gather in the market to understand the maturity grade of individual projects, and that has certainly also led to what you have certainly recognized, actually, that in particular, the substantial pipeline actually has seen some deletions as well, projects that simply through our process were not seen anymore as being likely to be realized. Many of them, I would say, were projects that were sitting in the U.S. and for obvious reasons, actually, in particular because of the very tight deadlines now for the 45V. A number of these projects are simply taking too long and will not make it actually to the finish line, and that led us to the conclusion, for example, that these projects we have to remove from our pipeline because they are not very likely to really be implemented.
We are pretty sure that in particular, the projects that we have in our actively pursued pipeline, so the 17 GW, as you see here, actually, that they have a very high maturity grade already. And I would believe that quite a number of these projects actually we would be able to realize in the next months and maybe towards the end of 2017, most of them actually should be reaching FID.
Thank you. That's helpful. And in terms of the timing, obviously, you've given order guidance for next year, which understandably is a very wide range. What is the trigger, if you like, that is going to drive an order to be booked next year or not? I mean, a lot of the regulatory backdrop is now a lot clearer than it was, say, 12 months ago.
But are there other factors that are causing an order to be signed in January 2026, sorry, rather than, say, a year later?
Yeah, Martin, I mean, that's a very good question, actually, and it would potentially require some sort of a crystal ball as well. It's very, I would say the correct answer is it depends. It's really project by project, actually. The obstacles and the challenges to really reach FID are different. I mean, we have projects in our pipeline, and you can imagine that, in particular, the ones where we have a standing reservation agreement, for example, with Moeve. There you can have problems in or you can have challenges, actually, in supply, in energy, in grid connection. You can also have still issues, actually, moving ahead when it comes to your funding.
Some projects, actually, need to finalize their offtake agreements and so on and so forth. So there's really every project has its own challenges, if you want. What is clear for all of these projects is the larger the projects, the more complex it certainly gets to move towards FID. And that is something that we have experienced also over the last fiscal year. But we also see that these projects are all progressing, and that keeps us very confident that moving into the next calendar year, 2026, we will see also projects reaching FID and with that, basically, us also being able to book order intake.
Great. Thank you very much.
Thanks, Martin. The next question comes from Michael Kuhn from Deutsche Bank. The same procedure. We'll open your line, and then please unmute yourself and go ahead.
Thanks. Good morning. Can you hear me now?
Yes, we do.
Thanks. Perfect. Thank you. View from my side. Firstly, on the guidance in CA, EUR 40 billion-EUR 65 billion, I think quite a broad range with the lower end, I think, pretty much covered by the backlog. Maybe you can give us a few more details on what would make you reach the lower end versus the higher end and would need to happen, let's say, over the course of the year.
Yeah. Sure. Hello, Mr. Kuhn. This is Stefan Hahn speaking. Of course, I think as our chlor-alkali business is quite stable, the past years are a very good reference here on what we have usually in service business under execution and the amount of sales that we are realizing in service business. The upper end is clearly.
This should pretty much explain the lower end as it assumes that no bigger chlor-alkali project would be booked during the fiscal year. The upper end certainly requires larger chlor-alkali projects. As you've just heard in the beginning of our presentation, yesterday, we announced the signature of one of the world's largest chlor-alkali plants projects. Of course, it takes time until the sales are realized out of that project, but they will certainly also impact this fiscal year as we were able to book it quite early. For that reason, I think rather the upper end of that range becomes more likely in this fiscal year. I hope that answers the question.
Definitely very helpful. Thank you. Then one on cost containment. Obviously, we are all keeping our fingers crossed that green H2 orders arrive better sooner than later still.
If we're, let's say, temporarily running into a situation where you realize just a marginal level of segment sales, what would that mean for profitability? So basically, what is your current kind of overhead OpEx in the segment, and what would be a loss in the absence of project sales? Your question now relates specifically to the gH2 segment?
Exactly. Yeah. I think, as you have heard during our presentation, the sales that we have in our outlook for the current fiscal year mainly relate to our order backlog. And for that reason, we do not expect, or an absence of these sales is quite unlikely.
Fair enough. But let's say towards the end of the upcoming fiscal year and then maybe early into next fiscal year, if we see some further delay, what would be the kind of loss that we should expect or let's say the OpEx run rate maybe on a quarterly basis?
Of course, as we are always saying, we try to keep flexible here, and we can do that by using very different kinds of measures. First of all, currently, and as you've just heard, we have quite a substantial order backlog in our chlor-alkali business, and this for sure allows us to also shift resources between segments because that is our big advantage here. We can do that. For that reason, we can always mitigate the impact of a lower order backlog position in one segment, and here, we have currently a very strong segment. So this effect can certainly be mitigated.
Secondly, our expectation is, as you've just heard, that we can book further order intake in the gH2 segment. And for that reason, it is not our current assumption that no bigger gH2 order is booked in the current fiscal year. Third, of course, if that should happen, we will react that. And I mean, that is also certainly not a surprise with further cost-cutting measures, but this is an assumption that we currently do not have.
Yeah. Thanks for that. And then last question. Obviously, we have heard some regulatory news out of the EU also around synthetic fuels or RFNBOs. And I've read some comments in that context that this might be a major driver also for the demand for green hydrogen. Would you share that view? And could that change the market outlook for Europe also in the maybe not near term, but not too distant future?
Hi, Michael. This is Werner. Yeah, that's definitely the case. That's certainly something that we expect. I mean, we also observe that as very positive developments, in particular when it comes to the mandates, the existing mandates. We were part of RED III in the European Union, which is now converted actually into national law in many of the member states, which requires a certain percentage of SAF being blended actually into aviation fuels going forward. And I think most importantly, that is also penalized if you're not achieving that. And that has become and that has proven to be, I would say, quite an effective mechanism in other cases to really drive also the implementation of these quotas. So we are quite positive when it comes to e-fuels that this development will drive additional demand for green hydrogen and with that certainly also electrolysis system.
And as you were saying, certainly not in the short term because we all need to consider that projects that would be geared towards those applications, they certainly also need some development time. But we see already a number of projects starting to develop in that space, which is also, for me too, in particular in Europe. And that's certainly, I would say, a quite encouraging development. The same holds true also for RFNBO regulation where we have also been, I would say, a bit more noisy in the past about these regulations being too firm. And with these firm regulations, cost of green hydrogen will never reach a level to make it really a cost-competitive alternative to other energy carriers, in particular in Europe.
If these rules would be relaxed, you could immediately, if you want, shave off up to EUR 2 per kilogram of four kilogram of green hydrogen simply because you would be able to run your systems more efficiently and effectively and so on and so forth. So yes, also there. Here also, the European Union has signaled that they want to review the rules now beginning of next calendar year. That could also lead to an additional push in terms of developments in the green hydrogen market, in particular in Europe.
Perfect. Thank you very much.
Thanks. The next question comes from Skye Landon with Rothschild. Please unmute yourself and go ahead.
Hi. Thanks for taking my questions. On the technology side of things, I was wondering if you could give us a timing update on the pressurized alkaline systems.
When should we be expecting to see these be a commercial offering? And the same on the SOEC side of things with your high temperature electrolysis. How's that going? When could we expect to see a commercial offering there? And then as a second kind of sub-question on solid oxide, are you looking at the fuel cell side of solid oxide at all, or for now, are you concentrating more on the electrolyzer side of things? Thank you.
Yeah. Thanks for the question. Klaus speaking here. Let me start with the pressurized alkaline water electrolyzers topic. As you may recall, we have taken over assets from Green Hydrogen Systems earlier the past financial year, and we are currently integrating this into our portfolio offering. So expect a rollout rather soon, probably in the next financial year. And that would certainly be linked to respective customer engagements.
SOEC, the high-temperature electrolyzers, let me answer the second question first. We are focusing on the electrolyzer side, not on the fuel cell side, simply because the fuel cell side is a rather smaller system, and we are focusing more on large installations. On the electrolyzer side, with respect to rollout timing, we see initial, let's say, very vague developments with respect to the market development here. So we expect that this will still take some time until high-temperature electrolyzers will really find its way into the market. And we will adjust our timing to fit to that market development here.
Great. Thanks. And then I've got another question on the financials, switching to the chlor-alkali division. If I look at last year's numbers, it's a 15% EBIT margin. This year, at the midpoint, it's a 15% margin.
How should we think about service versus new build as a mix and margins? And as you move up and down the range within the range of guidance that you've given for chlor-alkali for 2025, 2026, is kind of 15% the broad EBIT margin target that you think we should be looking at?
Yeah. It's, of course, a very good question. As we've presented, the service share in last year's revenue was quite high with 60%. I would say this is extraordinarily high, and we expect it to rather be balanced going forward again, so balanced with the new build business. And of course, new build business has a slightly smaller contract cost contribution margin. And for that reason, of course, a larger share of new build business diminishes the overall margin a little bit.
However, as you've noticed, we are currently operating on a very, very high level, and that usually ensures a margin at a high level. So I think the assumption is right that is also shown by our outlook for this fiscal year that we expect the margin to be on a similar level.
That's great. Thank you for the color. Perfect. Thanks for the color, and thanks for the call this morning, guys.
Thanks, Skye. Next in line is [Klaus Rehner] with Ardour. Just one brief reminder. Currently, we don't see any other hands raised. So therefore, if you still want to ask a question, let us know. And over to you, Klaus.
So hi, good morning. Can you hear me? I hope so. Yeah. So thanks for taking my question.
It's probably more a broader one as well, maybe more a qualitative one because I want to understand the metrics for the tipping point for new orders. And here, the question would be, I mean, we see that the European Union is currently reviewing the regulatory framework for the automotive industry. On the one hand, a bit more relaxing on this combustion engine end date 2035, but it seems that they are formulating something like a green steel rate or a mandatory use of green steel in cars looking ahead. And in your view, and I appreciate you won't be able to quantify, but maybe from a qualitative point of view, how you would view this as a potential tipping point. I mean, you said there's high policy uncertainty and also investment security, which is holding back potential customers from placing orders.
But is this a point where you would say, "Okay, that could trigger really new orders in gH2?"
Yeah, Klaus, this is Werner. Absolutely, it can, along with many other of these potential events actually that could also do the same trick if you want, right? So I mean, we see green steel and the steel industry anyway as one of the applications that has a significant near-term potential simply because emissions are pretty high, and in particular in Europe with the Emissions Trading System actually, and basically also with the very limited effect on the end product. So the steel that goes into a car and then the final car price, for example, there's certainly something actually that still keeps us positive that green steel will move ahead.
And of course, if there are regulations coming into place, and we know that also for other applications, the European Union is working on some more stringent rules here, that certainly always is an additional driver for potential market pickup. I think there's not one inflection point or one tipping point, if you want, that now does the trick. But we see a very positive development in many different applications right now across green steel, but also refinery and also ammonia fertilizers, etc., which we believe, and not to forget SAF, so e-fuels. Where also there have been some interesting developments, even in Germany. You would not think that that could happen, but even in Germany, we see that actually there is a positive development that could all be additional triggers for additional demand for green hydrogen going forward. Absolutely.
Okay.
Thank you very much for the color, and have a good holiday season.
Thanks, Klaus. There seems to be a follow-up. Skye, do you want to ask another question? Then please do so.
Hi, yes, sorry. I couldn't help myself given we've got a little bit more time. In terms of the green hydrogen division, is there a megawatt number or a revenue or sales number that you see as kind of the key number based on current bidding figures and so on and so forth that would allow you to get to kind of EBIT break even? And would you be able to share some color on that with us as we kind of think about the longer term?
Yeah. So I would love to give you that figure. However, we will not have it due to several reasons.
As I just said, we have the great advantage to shift resources between segments here. That means if one segment is very busy executing orders, we can shift resources to that one. And for that reason, we have certain flexibility that also allows in the gH2 segment to be more or less profitable with similar sales volumes. Secondly, sooner or later also for the gH2 segment, and I'm now going mid to long term, also service business will kick in here, which is more stable and usually also comes with a higher margin. And for that reason, and thirdly, of course, it also highly depends on the project mix and the contract cost margin of individual projects. For that reason, I cannot give you a precise sales number that allows us to become profitable in the segment.
I think what can be observed quite well over the past three years is that we make continuous progress on our gross margin in that segment. And even this year, despite our sales, we were able to improve it significantly. And I think this is a trend you can also expect going forward.
That's great. And you mentioned service in the gH2 business. Can we expect to see service contracts, or have you got service contracts for the NEOM projects and Sweden projects?
We are working in both projects actually on the service contracts. They are not finalized, but for both of the projects actually, we are currently in discussions there. I mean, it goes without saying that these are all systems, and that's regardless of the technology or the OEM. They all need significant maintenance and service, as we know, and as it's also demonstrated in the chlor-alkali field.
Our customers are pretty much aware of that, as you can imagine. Everyone is currently looking for long-term service agreements. That's certainly also one asset we bring to the table. We know how that should work. We know how to do that very efficiently. We are also well prepared for long-term engagements there. Yes, we're working on that for both of those projects, and we will certainly also leverage that in projects to come.
Perfect. Thanks, Werner.
Sure.
Thank you, Sky. There seem to be no more questions at this point in time. For that reason, we close the Q&A session, and I hand over to Werner one last time, and he will conclude today's call.
Thank you very much, everyone, for joining us today. Of course, if you have more questions during the day, please feel free to reach out to Investor Relations.
And with that, and also on behalf of my colleagues here, goodbye. Merry Christmas, and all the best to all of you, and talk to you next year again.