Morning, everybody. Thank you very much for taking the time to come and listen to Breedon's Annual Results 2025. We appreciate it's a very busy morning for all of us today. In true Breedon style, we're going to keep this concise. We ask you all to stick to two questions only, if possible. Also I'd like to introduce our Breedon Ireland CEO, Declan Carr. Declan, just put your hand up. Hiding at the back. Please take an opportunity to say hello to Declan while you have the chance. I will be handing over to Rob and James to take you through the results. Thank you very much.
Good morning, everybody, and welcome to Breedon's 2025 Results Presentation. James and I will guide you through our presentation and then open things up for questions. I'm pleased to report that in a testing year, Breedon has proved again the strength of our model and the quality of our people. Across all three of our geographies, in markets that gave us very little by way of tailwind, the team delivered again. In GB, concrete volumes fell to levels not seen since 1963. In Ireland, two major infrastructure projects were deferred. In the U.S., extreme weather in the first-half impacted our business. None of this was within our control. What was in our control was our response.
Our teams delivered over GBP 20 million worth of self-help. We simplified our management structure to a country-based model, enabling faster decision-making. We continued to invest through the cycle in our quarries, in our plants, and in our people. I thank the Breedon team for their commitment and for making Breedon a better, stronger business in 2025. In parallel to delivering a performance, I am pleased to report that we made significant progress on our strategic priorities. In 2025, we implemented our evolved strategy, Breedon 3.0, in which we committed to expand and improve the group. I'm delighted by the progress you see here.
In respect of expand, the acquisition and integration of Lionmark in the U.S. was the standout strategic achievement for the year. By adding asphalt and surfacing capability to our aggregates and concrete platform, we have created a more balanced, vertically integrated business in the Midwest that now generates almost 20% of group revenue. In respect of improve, we have continued to have success more than replenishing our mineral reserves, and our operation and commercial excellence programs have continued to deliver. As you know, everything we do is through, viewed through the lenses of people, sustainability, and finance. With respect to each of those, we have continued to invest in our people, be it health, safety, well-being, or training.
It's great that this was recognized in our industry-leading engagement score of 77%. We have made significant progress towards our 2030 sustainability targets, and this progress has been recognized with upgraded ratings. Lastly, we maintained a strong and flexible balance sheet, and James will pick up on this later. In summary, we've achieved a great deal in 2025, despite the challenging markets and political uncertainty. I'll now pass you over to James for his financial review.
Good morning, everybody, and thank you, Rob. 2025 was a testing year for the group, as Rob has outlined. Both revenue and EBITDA increased year-on-year, assisted by those U.S. acquisitions. On a like-for-like basis, revenue and EBITDA declined slightly. However, we did see a small strengthening in profitability coming through in the course of the second-half of the year. Our reported margin of 16.3% reflects how volumes dropped through to EBITDA, together with the structurally lower margin in our Lionmark business. However, our like-for-like margin performance was notably resilient and supported by the successful delivery of GBP 20 million of contribution from our operational excellence initiatives.
Our return on invested capital was impacted by the lower levels of profitability, our continued investment back into the business, and the short-term dilution from the acquisitions. We remain confident that we will deliver a ROIC in excess of 10% in more normal market conditions. The standout performance in the year was our excellent free cash flow generation of over GBP 133 million, which meant that we exited the year with leverage of 1.8 x, back well within our target range. To give some context to that is a record free cash flow performance post-COVID for the group and means we've improved our free cash conversion for the third successive year.
We're now ahead of our target cash conversion rate, and the 0.4 of a turn of EBITDA of deleveraging since the half-year was our largest in-year deleveraging since 2021. Our underlying EPS fell by 8%, reflected the expected increased depreciation charge incurred as we start to depreciate our major capital projects and the higher interest charge derived from increased borrowings. Despite lower EPS, we've increased the dividend to GBP 0.15, a 3% increase across the year, reflecting our strong year of cash performance, our commitment to a progressive dividend, and our confidence in the future.
This takes our declared cash distributions over the five years since we started to pay a dividend to over GBP 210 million at a time when we've been undertaking significant M&A activity off the balance sheet and investing back into our business. Pricing across the year was broadly flat, with the 3% volume and mix impact being principally down to the market challenges we faced in GB. The GBP 20 million we generated from operational excellence initiatives meant that the year-on-year movement on costs was a net positive of GBP 9 million. In terms of our individual product sets, asphalt was our strongest category, recording volume growth on both a reported and a like-for-like basis.
The outlook for asphalt in 2026 remains positive across all three of our geographies. Aggregates, cement, and ready-mix concrete each saw volume declines in the year. Whilst the pace of contraction in GB ready-mix has moderated, it still remains significant. The net GBP 20 million contribution from M&A principally relates to Lionmark, where the integration with BMC is now substantially complete. Lionmark was earnings enhancing in the year of acquisition, as expected, and we have good line of sight to the committed synergies from the acquisition. Turning now to divisional performance, which we're reporting under our new segmental structure for the first time.
As a reminder, the restated track record covering the past five years may be found in the appendices. In GB, like-for-like revenues fell by 4%. However, through the operational excellence initiatives, the division broadly managed to maintain its margin. Pricing in GB did come under some pressure as the year progressed, but it's probably been more resilient than I would have expected, given the fact that we've had four years of market volume declines. While I don't think that volumes will decline materially from here in GB, it remains too soon to call a recovery, and pricing will really depend on where the cost environment goes to.
We continue to navigate the GB environment effectively. Ireland saw revenue strengthen as the year progressed, and although there was a contraction in both underlying EBITDA and the margin over the year, the absolute margin level in our Irish business is still structurally higher than it was two or three years ago, and we remain excited about the prospects for the Irish market. A full-year contribution from BMC, together with an initial contribution from Lionmark, has led to a significant increase in our reported U.S. revenue and EBITDA. On a like-for-like basis, revenue in the U.S. increased by 9%, with EBITDA broadly flat.
I talked at the half-year about the expected balance for the year in North America being 35%-65% for revenue and 25%-75% for profitability. We came out slightly behind that, although still with a very significant weighting towards the second-half of the year. In essence, our customers ran out of time to complete their works before winter came. The good news, however, is that that work hasn't gone away, and we have encouraging U.S. backlogs as we enter 2026. Perhaps as importantly, the weather patterns in the U.S. in the Midwest in the year -to -date have been much more normal than they were last year.
As we build out our platform in the U.S., the EBITDA margin will in all likelihood bounce around a bit depending on the margin profile of the businesses we acquire. Over the medium term, I would expect our U.S. EBITDA margin to settle somewhere in the high teens. As you know, we're ahead of schedule in terms of the build-out of our U.S. platform, so I expect M&A in the U.S. this year to be more bolt-on in nature. It's a real tribute to the team that yet again, Breedon has been able to report growth in both revenue and underlying EBITDA, with our compound annual growth rate since our inception some 15 years ago being 18% and 22% respectively.
I talked earlier about our really strong cash generation in 2025. That free cash flow of GBP 133 million was a record post-COVID and increased by 17% in a year where we incurred a structurally higher net interest charge and increased our gross capital investment by some 7%. We continue to believe and to advocate that investment back into our business at this stage of the cycle is what will ensure that we build enduring competitive advantage as our markets recover. Our working capital performance benefited from the disposal of surplus U.K. carbon allowances. You will recall that in previous years, we have acquired significant U.K. carbon credits for cash, reflecting the lack of liquidity in the forward market.
As the U.K. market has matured, we now expect to be able to buy forward in a similar manner to the E.U. ETS, and so we elected to dispose of around GBP 500,000 surplus allowances in the year to free up cash. Net debt for the year closed at just under GBP 530 million, significantly better than expectations and equates to a covenant leverage of 1.8 x. Again, comfortably back within our target range in a year where we completed a significant acquisition. Further details on our banking facilities, our U.S. PP program, our covenant compliance, and our repayment profile are, as usual, contained in the appendices.
Turning now to our technical guidance. As you will recall, the Peak Cluster commenced engineering design during the course of the year, and we started our own FEED on the Hope carbon capture plant. I expect we will incur single-digit millions of costs on decarbonization related projects during the course of this year, which we will account for as non-underlying. For the group as a whole, I would expect a similar revenue and EBITDA first-half, second-half split in 2026 to that seen in 2025. Within that, our U.S. business will continue to have a more marked second-half weighting than the other divisions.
As a reminder, Lionmark is typically loss-making in the first part of the year, and in 2026, we will be consolidating January and February for the first time. Our hedging strategy remains in place. For energy costs in the cement business, we aim to have broadly full coverage for the year ahead as we come into the year, with layering in place for future years. For bitumen in the U.K. and Ireland, we aim to cover between 1/3 and 2/3 of expected outgoings with the balance priced out on a job-by-job basis. Again, as a reminder, energy and fuel costs comprise only 8% of our overall cost base. The rest of the technical guidance for this year is reasonably self-explanatory.
In terms of performance against our financial framework, we've delivered yet another year of growth despite the respective year, end market backdrops, and thanks again to our successful execution of M&A. That like-for-like margin was remarkably resilient. While our margin performance was below our target range, that is really a function of where we are in the cycle. We've generated record post-COVID free cash flow, which has allowed us to support investment back into the business, M&A activity, and our increased dividend, with our free cash flow conversion now being well ahead of our target. Returns do remain lower than we would like them to be for the reasons discussed earlier.
We remain confident that with more stable markets, we will make rapid progress back towards our 10% ROIC target. We've continued to grow the dividend slightly ahead of our target payout ratio, which I'm comfortable with given that excellent cash generation and where we are in the cycle, while remaining well within our leverage target range and continuing to give us balance sheet optionality. As we said previously, in the event that our leverage was to approach the lower end of our target range, and we saw limited opportunities to deploy capital were available to the group, we would then give consideration to returning surplus capital to shareholders. Thank you, and I will now hand you back to Rob.
Thanks, James. I'll start the operational review by highlighting two central themes that I also flagged at the interims that are out of our control, challenging markets and political uncertainty. Let's look first at our U.K. market, where the picture in 2025 has been one of further contraction. GDP grew by only 0.1% in Q4, and by only 1.3% in 2025, and growth deteriorated as the year progressed. Construction output showed a similar decline as the year progressed. Q4 actually showed a decline of 2.1%. But given relative strength earlier in the year, construction output did grow 1.8% in 2025.
Activity levels within our sector have been well-reported, and I have already mentioned the Concrete 1963 stats. In the summary, volumes across all our major mineral products are now at historic lows. Also, confidence, as measured by the Construction PMI Index, stood at 40.1 in December, having been in contraction territory for most of 2025. Given all of this, recent ONS and CPA forecasts have been downgraded. Considered against this backdrop, our GB performance was resilient, and I will talk more about this in the business review shortly. I want to turn next to the market in Ireland, where the operating environment was more positive.
GDP showed strong growth of 12.3% in 2025. Modified domestic demand, the better measure of domestic economic activity, rose by 4.9%. December's Irish Construction PMI registered 48.4, stronger than GB and just in contraction territory. However, optimism amongst construction firms on the prospects for increasing activity levels over the next 12 months strengthened to its highest level in nearly a year. The latest Euroconstruct forecast, published in November, showed Ireland as one of the leading countries for construction growth across Europe in the next few years. In summary, the Irish economy is in good shape, and our business in Ireland benefited from this backdrop.
Next, I want to talk about the market in the U.S. U.S. economic growth slowed for the fourth quarter of 2025 amid the government shutdown. For 2025, it was 2.2%. However, construction output declined modestly in 2025. There is no Construction PMI in the U.S., but the latest FMI forecast, published in October, concluded that amid sustained economic headwinds, including elevated interest rates, a softening labor market and growing uncertainty around federal policy, the construction industry would contract in 2025. This was a significant change from the strong growth forecast early in the year and the modest growth forecast midyear.
This slowdown has been primarily driven by weakness in the residential sector. Infrastructure spending remains comparatively resilient. Moving on to our businesses. Let's start with GB. The GB business delivered a robust outcome in a contracting market. Inquiry levels remained elevated throughout the year as customers maintained a readiness to proceed with construction activities. However, orders were impacted as fragile business confidence and the uncertain political and economic backdrop delayed project starts. Residential house building was subdued, particularly in the second-half. However, infrastructure activity was stable. Although volumes experienced a fourth consecutive year of decline, underlying EBITDA margins were broadly maintained as a result of our operational excellence program, which delivered material efficiency savings during the year.
Our cement team sustained a high level of performance. Plant reliability improved to 97%, and we achieved 39% fossil fuel replacement, a record level for Hope. Also, our CEM II sales increased to 35%. While covering cement, I would like to touch on the Peak Cluster project and confirm that we have commenced FEED on this project. Moving to Ireland, the Irish business delivered a resilient performance during 2025, with revenue strengthening as we move through the year. While the market in ROI has continued to expand, activity was more muted in NI as spending is primarily driven by central government.
Our business was also impacted by the deferral of two major infrastructure projects. We also exited from our non-core street lighting business during the year. Our Kinnegad cement plant maintained its high performance, achieving 95% reliability while replacing 82% of fossil fuels. At times, we have been able to reach 100% substitution. Our CEM II sales also increased to 67%. Lastly, I will cover our U.S. business, where the acquisition of Lionmark established our leading position as a vertically integrated construction material supplier in Missouri. The infrastructure market remained robust during the year as federal and state funding continued to support activity.
Activity, more broadly, was impacted by the uncertain political and economic backdrop. Residential house building, in particular, remains subdued, impacted by affordability. Also, as reported at the interims, Missouri experienced extreme adverse weather patterns in the first-half, disrupting our customers' activity on site for extended periods. During January and February, St. Louis recorded 31 days where average temperatures were below freezing against nine days in 2024, while April was the wettest month for over 100 years. Lastly, the integration of Lionmark into our U.S. business is now substantially complete, and we're on track to deliver the synergy benefits outlined at the time of acquisition.
Moving away from 2025, before I turn to the outlook for 2026, I would like to say a few words on cement advocacy in GB. As a leading provider of cement in GB and the largest British-owned domestic manufacturer, we have campaigned to raise the profile of this foundation industry and advocate for its key role in our national security and economic prosperity, supporting British jobs, supply chains, and decarbonization. The government's ambitions to deliver 1.5 million new homes and invest in schools, hospitals, transport links, and green energy infrastructure simply cannot be realized without British cements. The industry is facing serious risks, including uneven carbon regulation, high energy prices, and a surge in imports.
Importing cement risks exporting jobs, investment, and emissions overseas, while leaving GB exposed to supply chain disruption and geopolitical shocks. In summary, our government's tasks are to establish a robust Carbon Border Adjustment Mechanism, address wider competitiveness challenges, such as the high electricity prices, accelerate support for carbon capture technologies, and promote domestically produced cement in public procurement. Using public procurement policy to support domestically produced cement could unlock huge opportunities, and it would ensure the government's investment in housing and infrastructure delivers wider economic growth. It would also protect thousands of highly skilled, well-paid jobs across all four nations. We encourage the government engagement and action. It's now time to look forward.
Construction market conditions in GB remain subdued, although there are early signs of stabilization. The ROI structural growth story remains firmly intact. In the U.S., federal and state infrastructure programs provide visibility for our Midwest platform. Across all three geographies, we see sustained and increasing levels of inquiry. I want to close our presentation with a clear message. Breedon enters 2026 a better, stronger business with confidence in our proven capability, with the confidence in the agility of the model we operate. We will continue to adapt to the uncertain outlook as it develops. We are primed and ready for when our end markets resume. Thank you. We now welcome your questions.
Thanks very much. Aynsley Lammin from Investec. Just two from me, please. Both on GB. When you look at the kind of cost savings, if you could just provide a bit more insight into the incremental cost savings you'll get in 2026 versus 2025 from what you've already done. If volumes are weaker than we hope, you know, are there any extra levers you can pull in terms of cutting costs for GB for this year? The second question, just maybe a bit more color on kind of trade in first couple of months of the year in GB. Anything surprisingly positive, surprisingly worse, some of the trends you've seen, obviously, weather, but keen to hear any insights.
I'll take the first part of that, Aynsley. Of that GBP 20 million of operational excellence initiatives that came through in 2025, about 1/3 of that will repeat through into 2026. It gives us a bit of a tailwind as we come into this year. I think if you unpick the GBP 20 million, in some respects, the most interesting piece of it was around 20% of the value, GBP 4 million, came from very specific, targeted, site-dedicated initiatives, where we essentially went to a particular site, and we looked at every area of the production process from the moment that the rock is quarried all the way out to how it gets dispatched.
Depending upon the site, that could be just a straight aggregate, or it could be as part of asphalt or as part of ready-mix as well. I think what that has really underlined to us is actually there continues to be opportunities, and we've already identified the sites that we're going to run a similar program at during the course of 2026. Whilst I can't say, you know, specifically today, this is the number that we're going to deliver in 2026, what I am confident about is that as we continue to operate programs of that nature, that we will be able to generate further savings through operational excellence initiatives.
In respect to trading, I mean, what we would say is that January and February are normally very quiet months for our businesses across all three platforms. We are trading generally in line with expectations. The one positive is the weather in the Midwest this year, and it has definitely been a lot more normal than last year, which is a positive, you know, given where we were 12 months ago.
Just one more. When you said 1/3 of the GBP 20 million will repeat, is that incremental or you're saying that it was all kind of captured last year and GBP 6 million of that?
What I mean is that it's going to flow through into this year in a way that, for example, the carbon that's in there, you know, that won't necessarily repeat in the course of 2026.
Christen Hjorth from Deutsche Bank. Two questions. First on the carbon credits sales, James. Thanks for that. Just a bit more color on when they were sold. Should we think of that as a one-off or is there potential for more carbon credit sales as we look forward to 2026? Then one for Rob as well, just on the cement side of things, I suppose. What is the key driver of the concerns that you have? And is that increased imports? Is it the fact that there is this delay between the CBAM in the U.K. and E.U.? And have there been any government response so far to your asks, even if not formal?
In terms of the carbon credits, you know, we started to sell those, you know, really from the tail end of the summer across the balance of the year. You know, the context there is that, you know, when the two emissions trading systems parted company following Brexit, there was almost no liquidity in the GB market, and therefore it was impossible for us to buy forward for delivery at the point of when the credits need to be delivered into the register. There is more liquidity now than there has been previously.
We'd had to essentially utilize our cash flow to buy in credits to hold them on the balance sheet, and we felt that it was a more effective use of our capital to take the opportunity of that increased liquidity to sell out into the market. We still retain about the same, again, number of carbon credits on the balance sheet, and clearly, you know, there is therefore the option should we choose to do so to sell those at some point in the future.
To look in respect of cement, you know, our major concern, and all we want is a level playing field. As you know, you know, the CBAM is up and running in the E.U.. Our government have committed to bringing in a scheme in 2027. There's a challenge of the stub period, but what we want to see, we want to see the policy, we want to understand what's been put in place. That's our sort of number one priority. I think the number two priority is that given energy pricing in the U.K. versus wider continental Europe and other locations, you know, we are significantly disadvantaged.
You know, government are aware. We've reached out, not only ourselves, but the wider industry and trade associations. You know, we are in discussions, but time will tell. As yet, you know, we do not have clarity on what the legislation will be in 2027, and that's a priority.
Cedar Ekblom from Morgan Stanley. Can I just ask on your approach to M&A in 2026? If I look at that cash flow bridge, it looks like you generated about GBP 60 million after dividends before we think about the M&A contribution that you made in 2025. You've made the point around bolt-ons being the ambition. Are we looking at, you know, spending that full GBP 60 million in 2026 on bolt-ons, or are we thinking about, you know, a number lower than that? It would be helpful to get a little bit of guidance around what your M&A ambition would be in 2026, appreciating that obviously timing of M&A is difficult. Thank you.
Well, I'll start that, and James will probably add to it. You know, if you look across our three markets, you know, in GB and Ireland, very much we see bolt-ons. In the U.S., you know, as James mentioned, you know, we're ahead of where we expected to be in the build-out of our U.S. business, after two years. I would say it's more likely than not that further opportunities over the next 12 months will be more of a bolt-on nature than transformational. As you know, you know, we're not in control of our own destiny. You need a willing seller as well as a willing buyer.
You know, it's impossible, I think, to actually give definitive view as to what our M&A spend will be. If there's value-enhancing transactions, we would like to have the flexibility to be able to consider pursuing those.
Can I just ask one other question? Just on the net debt to EBITDA ratio, would you be looking to drive that lower in 2026? Is that something you would commit to? That you'd go from the 1.8 x to 1.5 x or 1.6x? I don't know if you sort of kind of have-
Well, again, it comes back to M&A.
Exactly, yeah.
In absent M&A, yes, I would expect to see some further deleveraging during the course of the year. Probably not at the same order of magnitude that we saw during the course of 2025. Absent M&A, yes, I would expect to see the leverage come down.
Thank you.
Thank you.
Hi. Ken Rumph from Goodbody. I don't know whether Declan's ready for his close-up yet, but a couple of questions about Ireland. One, there's a raft of programs and legislation to address the need for housing, related infrastructure and so on, National Development Plan, changes in regulation. How are these kind of working through in terms of affecting the market? Because they don't immediately affect things, and planning takes time. Some of the laws need to, you know, to be enacted. One is that sort of, you know, all of those various measures, and there are a lot of them, that are aimed at boosting all aspects of Irish construction.
How are they progressing? How will they affect this year? On M&A, you've had ambitions to do M&A, and indeed, organic CapEx. You've done. I noticed Booth, but I think there was another one, an asphalt business that I've forgotten the name. Tipperary, was it? You know, it's been tough to get deals over the line in Ireland. You know, are there opportunities, or indeed, are there CapEx opportunities to get into markets you wanna get into if you can't, you know, buy a business? Thanks.
If I do the first one, James, and you do the second one. I think Dec's on his honeymoon today. He's in listening mode, but I'm sure you can catch him afterwards. Maybe in the future he'll be up here answering. We'll answer on his behalf this time, and you can tell me if I'm wrong. I think, you know, what we'd say is we see the legislation going through as being enabling legislation. It will benefit the delivery of the National Development Plan over the next five or 10 years. As we sit here today, you know, it's for the future, and it will help us, but we're not seeing it on the ground yet.
I think in terms of M&A in Ireland, Booth is an exciting transaction, not necessarily because of scale, but actually because of what it represents. You know, it's the first significant transaction that we have been able to execute on in the Republic of Ireland. It gets us aggregates within striking distance of the Dublin market for the first time. Dublin, as you know, is a key strategic objective for us as a group, and how we address and get greater exposure to that Dublin market is important to us.
Quite often in M&A, activity begets activity, and I think the mere fact of having done one transaction potentially opens up the opportunity to do more transactions, probably of a bolt-on nature, in the Irish market.
Clyde Lewis at Peel Hunt. I think I've got three, if I may. One around pricing. Sorry, I know Louise was saying only two, but I'm gonna sneak in with three. One around pricing. Can you just give us an update as to what you've sort of gone with, and how it's sticking so far broadly by markets? Clearly, you're not gonna give details. Secondly, a little update on cost pressures, the key ones that you see for this year. The third one was really around probably the bigger CapEx projects. I mean, following on from Ken's question there, please.
Okay. I think with the caveat that there's quite a lot of flux around the cost backdrop and the pricing backdrop at the moment. I would have said that coming into this year, I wouldn't have expected very much price in the GB market until we see a volume, a meaningful market volume recovery. Quite difficult to see how price moves forward in the GB market. I would have said that in the Irish market, there is an opportunity for a bit of price to come through. In the U.S., you know, conditions generally and historically have always been pretty conducive to pricing.
Again, I would expect to see some pricing coming through there. I think in terms of the cost backdrop, it's quite difficult to call. I think there's definitely what you might term inflation fatigue in the GB market, and I think another year of significant cost inflation coming back into the GB market probably wouldn't be a good thing. You know, we've all seen, you know, go back to 2021, you know, where we saw significant inflation coming through the GB market, which was broadly absorbed. I said at that time when we exited 2022 that I felt it was really important that we had a period of much lower cost inflation coming through the GB market, and that's what was proven to be the case.
As I sit here today, you know, who knows where costs go within that market. What I would say is that, and I touched on this in my presentation, is that specifically energy and fuel represents only around 8% of our overall cost base, so we're much less exposed proportionally than some other businesses in the space. In terms of CapEx, it's kind of more of the same. We're not gonna be doing the sort of the major capital projects that we've talked about historically, but you know, examples of some interesting projects that we're looking at this year, we're particularly looking at replanting our Dublin asphalt plant during the course of 2026.
The plant there is 25 years old and so is ready to be replanted. There's always activity that goes on at the two cement plants, just in terms of continuing to invest back into those businesses. You know, we will continue to pick off where there are opportunities to invest back into the businesses, those projects that deliver the returns in relatively short order.
Max Joyston-Bechal, Albemarle Asset Management. Just looking at the roads part of your business. Infrastructure's expected to be quite strong this year in 2026. Can roads grow alongside U.K. infrastructure?
I think for GB, you know, and it's not just GB, it's probably the U.S. as well. You know, it's residential, which is a part of the market that's underperforming and it's weak. It's really residential where we need to see some inflection, which will then start to drive returns. As you say, infrastructure is relatively stable, and compared to resi is stronger. We need to see you know the wider construction output industry starting to deliver. Are there any callers on the line at all that might have a question? No?
We have a question on the line from Arnaud Pinatel from On Field Investment Research, if you'd like to go ahead, please.
Yes. Thank you for the presentation. I just have one question. Could the upcoming revision in the ETS system have an impact on the level of protection from Turkish imports?
You're saying about the potential change in the European emissions trading scheme?
Yeah, like, the potential similar adjustments in the U.K. as well.
There isn't clarity on what might happen there. You know, when you read about it, you know, it seems to be more about the tapering off of free allowances as you move further out. I think for us, our challenge is here and now, and it's about U.K. implementing a CBAM. I think everything we do, you know, in parallel to that in the short term is very much focused on reducing the use of fossil fuel, which we've been doing, and about reducing the clinker content, which is very much around the CEM II and the stats I gave out earlier.
For us, our priorities are those and making sure that the government put the legislation in place that they've committed to, for 2027.
All right. Thanks.
Thank you. We also have an additional question on the line, from Bruce Hubbard with Lancaster Investment Management. Please go ahead.
Morning, guys. Looking through my notes from your results announcements. The last nine months, you've talked in more positive than negative about inquiries and also talked about the problem of conversion. The question is, does an inquiries lead pot tell us much about the future? Are there any indications of change in conversion? Really the question I guess is why did reasonable inquiries not generally turn into business? Was it simply a sort of failing hope for the U.K. economy, nothing more complex than that?
Yeah, I mean, there isn't. It's not very complicated, you're right. It's, you know, if you look, take residential and you take GB, you know, there were an awful lot of ground workers who 12 months ago were pricing for house builders to get back in and to open up new sites. As the house builders believed that the volumes weren't materializing, they held back. We probably got to the autumn and those ground workers probably repriced work again. There's been a number of false starts. You know, what we need is ultimately for the house builders to start to deliver on their increased volume, opening up new sites, and then those inquiries will start to convert.
Given that we've been on an effectively U.K. economy and construction slowing trend through 2025, the fact that inquiries are still strong, is that a good indicator or is that sort of hope springs eternal?
I think if we'd been having this conversation 10 days ago, I would like to think that on balance there was a bit more positivity out there in the market. I think given the events of the last week, I think no one knows. You know, affordability, whether in the U.K. or in the U.S., was a key challenge to demand for house building. If you looked across the U.K. and the U.S., you know, rate setters were leading us to reductions in 2026. You know, in the last few days, that sentiment's changed and there is a risk that residential gets pushed out again, both in the U.K. and in the U.S.
You know, the governments might have the opportunity to do something on demand side stimulus. Let's wait and see. I think the key message from us is that, you know, we've had challenging markets for the last three or four years. You know, the self-help we've talked about this morning and the agility of our team and the model we've got, Bruce, means that we, whatever happens, we will adapt and ensure that Breedon continues to deliver.
Thanks very much.
Thank you. Currently there are no other questions on the line.
From Goodbody, I'll go for the Clyde Lewis amendment and ask a further question. Data centers were a topic for your U.S. peers. In Missouri, one community has not backed a proposal, but they seem to be finding another that might go ahead. Have projects like that or related energy been a factor for you in the States? Likewise in Ireland, there's a feeling that they've not been able to take advantage as they could have done and changes are being made there. Again, anything in prospect on that front. Has it affected you at all yet? And is there anything in prospect? Thanks.
Look, I wouldn't say it's had a material impact on our business to date. You know, we all look at the opportunity that it might create. I mean, one of the challenges with data centers is electricity. So ultimately, you know, there's got to be the distribution in the grid to be able to deliver to those sites. You would expect us to be pursuing opportunities and looking at, you know, what our potential is, you know, across all three of our platforms over the next few years. I'd expect it to be part of our portfolio of jobs going forward.
Conscious of time, I think it's probably the right time to wrap it up. I'd like to thank all of you for coming today. Can we just leave you with the message that's on there? You know, we are a better and stronger business than we were 12 months ago, and we are primed and ready. When the markets inflect, you will see the returns. Thank you very much.