Welcome, good morning, to the Capital Markets Day of Arbonia here in Erfurt. A very warm welcome to the public on the side. Thank you so much for coming all the way along to Erfurt. I know what it means because you did this every second week for five years, so it's great to have you here. Erfurt is a very special place for us. We have our second largest store and the Garant that we will visit this afternoon, and also one of our most important shops. This is where we do business, and this is something that we like to convince you about. Our controlling, our regional department is here, and with Arbonia Next, we have a new project and concept.
We decided to not go to the construction fair in Munich or the fair in Frankfurt, but we were looking for a more innovative approach because construction markets in Germany are still struggling. It is a very challenging time, so we should be sure that we are taking that. It is not enough to just show 15 doors within 15 minutes. It is not enough. We are fighting for more. This is why in Erfurt, this is where the new Arbonia project was born, and this is our new concept that we want to present to you today. Let's have a look at our agenda. I am going to have a brief introduction to walk you through the strategy for Arbonia Next, and then we will have a market outlook and present the financial markets. We will be happy to answer your questions during the Q&A session.
You can also visit the Arbonia Next exhibition, the very first exhibition to present all of the Arbonia products in one single place. We will then go for lunch, and then we will visit our second largest plant called Garant. Unfortunately, I will not be able to attend, even though I really love visiting our construction plants. I can promise that you will like this a lot. We will bring you back to Leipzig, and you can take the drive back to Switzerland. Thank you very much for all your appreciation. Those who know or are already familiar with Arbonia will know that we are taking a new path in Germany. You probably know the old house with the old logo. We have just had four windows, doors.
We went for a jolly wing a little bit with the aim to build a house with a room inside. It's just great. We'd like to show that we're going to have an impact on the homes that we design. At the same time, it represents an opening door and a shower. We tried to align many different approaches within this new logo. Our strategy program is called Arbonia One. It's a concept that we designed together with our management group, which includes one way. Many of you will know Arbonia as a conglomerate, and it's 50 years history. We designed the windows, we built profiles, metal tubes, kitchens. Our strategy back then used to be the idea that someone who would like to build this is a home approaches us and we get help.
Unfortunately, we were never really able to offer all of the products. Let's talk about lighting and so many different single products involved, and we were not really able to offer one stop customer solution. On the other hand, you have to make sure that you compete with the other specialized manufacturers. We always used to be number five or number six compared to other competitors, which is why we went for a return provision. This is why we left Arbonia Climate with the vision because we simply were not able to compete. We tried to focus on the business where we knew that we were able to be one of the top players, being an important player in the first CHF 600 million sales, which is the case in the door business. Because a shower in the end is simply a glass door.
Our top target is to become the number one player in Europe at the moment. We still compete with the Nordics and the U.K. Apart from this, we are already a leading provider. Now, what does this mean? The leading provider does together with our management and our clients. We designed a new concept, which is all about delivering performance. We want to deliver the doors rapidly and in a complete manner. Our doors and showers, they are installed in the very last process of the building procedure. If we do not deliver a door on time, a hotel, for example, will not be able to open on time. Our constructors or our builders are very much dependent on our delivery performance. The same is true for a spare part. When there is no spare part available, we are not able to deliver our performance.
What we looked at was the product range or product portfolio. For our clients, it is important to not have too many contact persons because construction sites are extremely complex. There are so many different things that have to be taken into consideration: emergency exits, and so on. What our clients look for is to have one product portfolio with one contact person to approach to. People appreciate us for our top quality products. Another different part is sustainability. It is an ongoing trend. If I look at the panel discussions, we had meetings with the young architects this week, and for them, sustainability is extremely important. They really want to make sure they reuse materials in already existing buildings. If you do not approach things in a sustainable way, we will not be able to deliver a top performance.
We saw the same thing in topics like digitization and artificial intelligence. There's a big hype of artificial intelligence, even though I think it's too much of a hype. Still, we know that this is going to remain extremely important. Customer service, product range, because we have certain limitations. We have to make sure that customers trust us, trust our work. We take two weeks in order to design a plan to tackle the challenges of our construction sector crisis. Many of them were not aware of the wide product range that we offer. Customer service, like repairing already existing doors, which plays an important role in the hospitality sector when teaming up with big hotels. There's a huge potential in Switzerland. 7%-8% of our sales are generated by maintenance, and it's quite a crisis-resistant sector.
We see that with other competitors too who succeed in the maintenance sector. Process costs is also a big topic here. We are under pressure, and we have to make sure that we produce more efficiently, lowering costs, becoming leaner, which leads me to digitalization and artificial intelligence. We have to make sure that we are an attractive workplace to attract specialized workers here in Erfurt, when we have an urban sector. Young people, they usually find it more attractive to become an application developer than working night shifts from 10:00 P.M. to 6:00 A.M. in the morning. You also have to know how to handle the machines that we use. What we like to reach is a cash flow effectivity. We like to make sure that profitability and cash flow is generated in a sustainable way.
In 2021, we had an EBITDA margin of almost 15%, but structurally, we did not perform very well. Nowadays, we have improved in many ways in terms of machinery, in terms of becoming more effective. One also stands for one face to the customer when we team up with Prüm, Garant, and so on. Clients do not want to have different contact persons each day of the week, but they rather want to make sure that they have a streamlined process with one single contact person to reach out to. One stop for the customer, which means that we would like to have a comprehensive product portfolio, meaning that if a client needs a door, he will be able to get them no matter whether we are talking about a metal door, glass door, one overarching brand.
Some of you will know that we used to be simply a share or a holding. Now, we try to make sure that we are a premium brand. We want to be a one-stop shop for our customers and one production footprint. We used to be a conglomeration of several single companies. Now, 60% of the sales that we reach are produced in our grand factory. You'll see that there are many different types of doors. For those where we used to produce six doors or six lots, we only do two. We only produce two or three doors. We have to reorganize our equipment, our machinery. This is why we decided to either produce on one single production site, such as with Prüm, which makes us much more efficient. The prerequisite is to have fully integrated systems. A door is extremely complex, which combines 48 features.
Nowadays, we are unable to deliver a door to Prüm automatically, but every single feature has to be introduced manually. This is where errors may occur. With the new SAP system, the way we designed this, a project that was safe with Garant can then be forwarded to Prüm with one single click, which makes us way more efficient in terms of production. One more goal is to have one vision. Nowadays, it's all about having one single vision, one single mission, one single strategy, a common strategy, vision, and mission. Now, what is our vision all about? We aim to be the most attractive door brand. There are lots of brands available for furniture, for kitchen design, for lighting, but there's no brand specializing in just brand in doors.
It is extremely important to focus on this feature, and this is where our branding plays an extremely important role. We do not only want to look at doors as doors, but we rather want to see them as an architectural feature. This was a debate that was raised within our panel discussion. An open door stands for accessibility to rooms, accessibility to people, but a door may also stand for safety, for isolation. This is why doors play a very important role in our architecture. Just to wrap up, for those who are already familiar with our work, you can see our starting point back then in 2016 with CHF 71 million when I started out with Arbonia in Switzerland. German producers delivered the products to Switzerland, and then we made a deal with the Looser Holding, the Looser family.
Garant joined, and we reached a level of EUR 300 million. In 2021, we said showers are all about doors because in the end, they're glass doors. In 2022, we integrated a specialized door manufacturer brand. We offer craftsmanship and highly specialized doors that cost several thousands of euros. At the same time, we also offer very cost-effective doors. We have specialized manufacturers for specialized production. In 2024, Dimoldura joined, the leading player in France and Spain, and LIGNIS, the leader in the Czech Republic. Let's have a look at how we are organized as a product label. The first clients are already migrating to the Arbonia brand, where they're able to access the entire product portfolio together with established brands and established distribution channels.
With KIWI, we had a digital player and a project with a volume of CHF 1.4 million in the housing market. Then Prüm, where the main owner is present here today with Matthias. We try to think these things together, aligning different ideas. We have a participation of 17% in Clickwerk. Let's have a look at one of our main slogans. We are an international premium brand. This is the way we are perceived by the architects. We had visits from Taiwan, from Japan, from the Middle East, one of our most important partners, from Hungary. All of our international partners visited us. The Arbonia showroom goes to Budapest next, in the middle of the city center. Our aim is to be an international brand.
What we also aim for is to offer wood, glass, and metal solutions, such as steel doors, which used to be a deficit, and we were able to fill this gap. We would like to further expand in this field in order to cover the full demand. We also aim to make life at home and life in public more comfortable, stylish, and safe. We know that the housing sector was under big pressure, faced many challenges. I am sure they are going to benefit from the new loans that the federal government is going to facilitate. You will see it in our exhibition. We have very innovative products, for example, with temperature control within a glass feature. You can see that basically it is all about offering the complete product range. We had a CHF 12 million product, the biggest project in our company's history.
We want to make sure that we always offer a customized one-shop solution. We also offer first-class maintenance throughout Europe. You can scan a QR code, for example, and you will get a maintenance service within seconds. Our RWD celebrated its 150th anniversary last year. You will see that it is always a combination of trying to offer large quantities that is combined with high quality. We are rethinking doors and fittings. We try to offer doors together with the fittings. What we saw was that different industries or crafts did not communicate well enough because in the end, a door always comes with a fitting. You have to make sure that we rethink doors and fittings with grift. We have a very rapid fitting where you do not have to drill in the way that we used to, but it makes things much more feasible and effective.
Talking about investments, let's give you a brief summary of our investments, where our capacity reserves are less than 30%. The last machine at Garant was delivered last week, which was the squeezing machine. We would like to extend our capacities. We knew that we had to get new machineries. With the new investments in the industry in the last five years, we invested less than EUR 300 million. Thanks to new technologies, we are able to produce more doors with less personnel. Because once the market goes up again or once demand goes up again, we will probably face similar challenges to what happened to the hospitality sector back in the pandemic, where many people, when demand decreased, went to other sectors. Once demand went up again, companies lacked staff, and they struggled a lot.
We offer a visual 3D configuration, which we launched at Arbonia Next. We then talk about technical configurations, which we do with our calculation program called DoorIT. You can have a look at it. We invested lots of money in order to make those calculations way easier. From the DoorIT, the information is then forwarded to our SAP program. The information is forwarded to the MES, our logistics partner, and then further to Industry 4.0, our machines. You get the seamless solution for all of the processes involved. We did not only invest in production but also in energy supply. In 2023, when energy prices skyrocketed, we decided to build new waste generation plants, one at the Prüm and one at the Garant factory. We will also be able to transform our waste into energy.
Our chips, for example, will then be burned, and we'll be able to get energy out of our production waste, where we'll save between 28% and 30% of emissions. Wood as a key to success. Steel frames cause 12 times more greenhouse gas emissions than wooden frames. We are able to save CO2, which is a great feature provided by wood. When you combine it with a wooden frame, you're able to save greenhouse gases. In Germany, we try to make sure that many of our products made of steel are replaced by wooden frames, which would equal to 50,000 combustion vehicles per year, just to give you an idea on how we are trying to reduce our ecological footprint. We will also promote wooden doors in order to make them more sustainable. We developed a great product, a linoleum surface, which is a completely natural material.
Together, we developed a door with the advantage to bind much more carbon dioxide than other laminate products. We would be able to save 6.4 kg less CO2. 1.5 million CPL doors are in Arbonia, so we could save 10 million kg of carbon dioxide. We had a great reaction to this communication, to this product, especially in Germany, where there is financing for schools. For example, linoleum is used on a wide scale. Of course, we are open for aspiration, for aspirational products, aspirational clients, customers, and investors and analysts, of course. I am looking forward to our discussion, and I would like to pass the floor to Uwe Schiller.
Thank you. Thank you very much. Welcome. I find it is a bit difficult now, after looking at those beautiful doors and other products, to start talking about financial figures. I will just give you a recap of 2024.
I'll be brief on this, and then we will try to remember the guidance for 2025, which we communicated at our last conference. Then we'll talk about the outlook until 2029 and our midterm targets and objectives. Claudius said it already. We are the new Arbonia. We are focusing only on interior doors business. 2024 was a very important year for us. I arrived on the 1st of October. I don't know about the others, but I just couldn't wait for the sale of the climate division. Many other things happened too. We acquired Dimoldura and LIGNIS. I'll talk about that later. We sold a building in Arbon, which is not part of our core business anymore. With all those activities, we were able to prepare the start of the new Arbonia, which we are going to show you today.
Looking at what we did with Dimoldura and LIGNIS, this will be a key pillar of our new strategy. We will look at our markets, where have we been present, and where will we be present now after having acquired Dimoldura and LIGNIS? The factory in the Czech Republic will not be as big as the one we have in France. Before, we had a much smaller sales team, and now you can see our sales team here. We will be much more present in the new markets. Let's just have a close look at the sale of the climate division. We got permission at the end of January and at the closing on 26th of February. After that, nothing changed. I don't have a final balance sheet for this now. Those are still the estimates we communicated at the beginning of March.
We are awaiting a debt of about CHF 132 million, and we'll have assets of about CHF 50 million sales price. We did a first step telling the public about the new acquisition in Russia. We will go to the closing on that part as well. Talking about the media conference, the shares, the dividends will be decided at the shareholders' meeting, and payment will be done on the 25th of April. Nominal value repayment is included as well. We launched the debt call, which will be closed soon, as soon as the shareholder meeting will approve this. Let's look at the summary for 2024. We have the pro forma figures here. We are a business with sales of CHF 604 million, EBITDA CHF 48.7 million. Corporate costs, especially in 2024, comprises the cost for the climate division as well.
We have a large potential for savings, and we talked about that at the media conference. Including those high costs, we still have an EBITDA of 8.1%, an EBITDA margin. This will be the last time we are presenting slides like this. We are still looking at the CHF 58 million EBITDA without the headquarter costs. In 2021, already, we had a very attractive margin of 14%. If we can increase our volumes, our margins will increase. We will have between 75 and 100 basis points of EBITDA margin. In March, you asked me why we decreased that estimate. We said we were always talking about 100 basis points. That is because of Dimoldura, which has a higher EBITDA margin. We have less operational leverage here than in the core business, where I am already or I am still seeing the 100 basis points. Let's look at the competitive landscape.
Claudius has already mentioned this. Looking at the markets where we are present, the key markets, not only the export markets like the Nordics and the U.K., we have a very good positioning in those markets already. We are also seeing that our position is very good as compared to our competition. Of course, our sales decreased as well, but it decreased less than the competition's sales. The EBITDA, we have a decrease by double digit, but we could stabilize our EBITDA, and we still have small currency exchange differences here. In 2025, we will be able to produce some growth. There is nothing new compared with our guidance. We are hoping for CHF 60 million of adjusted EBITDA, 3-5% net revenue growth, and an expected cash flow improvement. This is our continued business.
AFD Russia will not be included anymore in these figures because we already took it out of our calculation. Now I'd like to talk about the new part, which we have not shown yet, and we will try to have a look at the European market and at the German market. We managed to decrease our dependency on the German market. In 2023, we had 61% of our sales in Germany. This has gone down to 49%, but Germany is still one of our most important markets. In Spain, we increased our sales by 12%. Now the market share has changed, and it's clear that the dependency on the German and the Swiss markets is increasing. What happens on these markets is still important for us.
It is important for us to talk about market development because that is the basis on which we are communicating our midterm results because we have our plans there, and we need to take them into account. What we showed at our media conference, I will show you again these market estimates. What happened in 2024 and 2022, 2023, we started the financial developments there, but I think at the middle of 2024, the market outlook improved, got worse by 23%. If we have a market share of 50%, we have to take into account this decrease. We might increase our market share in this market, but still we have to take into account the market outlook. Of course, our market position is very good, and I am very happy to look at the exhibition today with you, and you will be able to reach a position where we can grow.
Now, I skipped some of the slides. This is the new slide. You have read it. There is a great financial package for the federal government in Germany. This will certainly give an incentive to the market. There will be new buildings, hospitals, for kindergartens, hospitals. We are also seeing that regulation is changing in Germany. The e-building regulation will be implemented, and hopefully, this will make the housing market more lively. This will mean positive development for us. From this package and from the discussions they are having at the moment, we see lots of positive impulses. Of course, we hope that bureaucratic costs will decrease as buildings are concerned. That will make things easier for us. If we look at the interest development, and if I look at Germany and the European Central Bank, they have decreased their interest rates in Germany.
Building loan interest is increasing, but it might decrease in the future. At the moment in Switzerland, we decreased to 1.2%. Now we are at 1.7% for building loans. Since the interest rates are decreasing, ECB is decreasing interest rates. We will probably have more new building activities in Switzerland and in Germany. The second topic is a very heterogeneous development in Europe. I do not think Germany is the best growing market at the moment. The most dynamic markets are Spain and Portugal. If you look at the growth rates there, especially Spain, it is very interesting to look at the prospects for new buildings. You can see that development in different countries is differentiated. It is important to be present on all European markets so we can profit from growth in the markets where we are present.
If we look at Spain and Central and Eastern Europe, it's quite important. We see that permits for constructions are decreasing in the German region. Of course, if buildings become older, they need renovation. In renovation, there's a higher increase than in building of new buildings. Talking about the Iberian Peninsula, we have talked about it a lot. It's one of the best growing regions at the moment, and Central and Eastern Europe is growing as well. A second topic, which is important for us, is urbanization. Even if Germany has decreased in population, we still see population growth in big cities. Apartments are needed, housing is needed, and buildings will have to be renovated. Apartments will have to be built or renovated. Once this increase is coming, it will be a big increase.
There will be growth in the building sector in all the cities and all the regions, and we can do that. Let's just look at the market distribution. We have about 10% of market share. It depends if we look at the sales or at the number of doors. It's 10% as the number of doors is concerned, 12% as the value is concerned. We can grow. We have the capacity for growing. We have potential here for increasing our market share, and we also have more potential for increasing our production capacity. Let's get now to the most important slides. That's the midterm guidance. You might have read it this morning. Maybe you have questions for that. I'd like to look at these slides carefully together with you. I already said it, and Claudius said it too. Arbonia has a great position in the market.
There's been a very positive development last year, market share increase, new products. We have a great reaction from customers here, and we also believe that we can increase our sales up to CHF 850 million. This midterm guidance is without the mergers and acquisitions. The last midterm guidance was including the M&A. I'm not really in favor of that. Mergers and acquisitions, that's 0 or 1. Either you do it or you don't do it. If it's lower than 50, I cannot take it into my results. If it's over 50, it will be there. This only is 0 or 1. There's nothing in between. This is our guidance without acquisition, and that has to be taken into account if you look at the guidance that was there before.
With Immoludura, we have a new profile now with a different capacity in the factories, and we are looking at an EBITDA margin of 14-15%. I talked about the qualitative aspects now. I've had about quantities. The last plants have been delivered, but since they are not in production, we cannot have depreciation and amortization for them. We can start with 2026. In print, it will be a few months later. There will be an activation drive from these acquisitions, and this will help us to reduce taxes. Of course, this is against EBITDA. It will help us to keep our taxes on a low level. Net working capital, we are at about 8.1%-8.5%, including the acquisitions we did. We are expecting a low increase of net working capital. I would expect that increasing sales will lead us to build more net working capital.
We have to increase that slightly. There will have to be new investments. CapEx will normalize below 4%, and this will be positive for our cash flow. If we take everything together, on the one hand, I have increasing—oh, sorry, I forgot one thing—the lease payments. Many have asked us for our lease payments. This was one of the figures missing for 2024. We have CHF 4.2 million in leasing cash out, CHF 3.5 million was payment for leasing, and CHF 700,000 was interest. We are expecting an increase to CHF 6 million. We have government and government, which have this kind of effect. There will be compensation as energy costs are concerned. We have Immoludura in leasing, and then we have the effect for 2025. If I take everything together, we have increasing EBITDA, we have a decreasing CapEx, and we have potential for taxes.
They will not increase as much as our EBITDA. We have an increase in cash flow thanks to that. What will we do regarding our dividend policy? CHF 405 million will be the dividends if the shareholder meeting confirms. I can promise that from CHF 300 million investments, we will immediately have a very attractive EBITDA. I do not have—there will be positive tax effect, of course, but we will have a lower limit. We have an upper limit, about 50% free cash flow. That was the midterm guidance. Let's look at the M&A strategy. We have no surprises here. We are looking at what happened in the past years. If we have the possibility to go to new markets, we will take that opportunity. If we can acquire new product ranges, we like our product portfolio and buy new capabilities, we would like to do that.
If we see the possibility to get a good combination with existing market channels, that would be good. Of course, there are great doors, which I would like to have in our product range, but it's also great to have the great sales team in France. Thank you very much for your attention. I know after the great products, we are sitting here, and that was this financial presentation, with lots of figures. Now, I'd like to start with a Q&A session. Let's wait for your questions.
How many questions from the audience?
Just one more prologue on the slide on page 58. I'd like to know your interpretation of what's happening there. Interest rates are decreasing. The market volume is decreasing, which is sort of counterintuitive. This is the case, indeed, but investments in construction and the construction sector have a lot to do with a personal point of view or a personal outlook into the future?
Insecurity is very high in Germany, as we see in the automotive sector too. There's a lot of insecurity amongst the population. No one is really daring to invest in renovation, in building, in construction. In the last two years, people saved much more money than they used to in the past, which means that the money hasn't disappeared. It was just not spent. Once people feel more confident or optimistic, I'm sure that the spendings will go up again. What we saw is that the base rate went down, but the mortgage interest rates did not go down. You can see that the credit or loan volume decreased. In the beginning of 2024, the volume went up.
A few weeks ago, I assisted a panel together with the board of a major German bank, and I asked just this question: why in Germany banks do not pass the decreasing interest rates to their clients, which is indeed the case in Switzerland?
The situation in Germany, according to the base rate, is much different. In Germany, interest rates were at 2.3, and then they were 3% or 3.8%. Actually, they could have adjusted the interest rates accordingly, but they simply were not willing to increase their own risk because they felt quite insecure regarding the future of Germany. That was the answer I received from a board member I interviewed. One more question. You mentioned a capacity of 30%.
This was a question I was not able to understand because, according to my calculation with Garant, their production capacity went up to 3.4 million, and we produced approximately 1.9 million last year in Dimoldura, which sums up to 75% of reservation. If we take the whole group into account, we have between 30% and 40%, with Garant, the reserves are higher. With Prüm, we saw it at the slide. They have a capacity of 1.3 million doors, and at the moment, we are between 800,000 and 900,000.
One more question regarding the guidance. There is one sentence which says, "Up until 2029, we intend to normalize the CapEx of less than 4%." What does this mean in short term? At the last capital markets day, it was said that CapEx was aimed to be below that figure in 2028.
Maybe I can hand over this question to my colleague here.
Of course, we had to look at this picture. As mentioned, we made new acquisitions. Capacities may vary according to the production side, but we can expect that production capacities are going to decrease within the following years, and we will probably be below this CapEx rate, which means that I'll have to invest more than I had expected. No, I would not agree here. I just tried to translate this into a free cash flow margin. When I have an EBITDA margin of 14% or 15% and a CapEx of below four at 10 or 11, this is what I reached before taxes and 10 or 11 after taxes. That would be CHF 55 million or CHF 60 million of free cash. Do you agree?
I'd say that this figure is basically not totally out of order to put it like this.
One more question regarding the midterm guidance. The 850-120, can this be understood as a low and high scenario? What about further risks apart from the financial markets in Germany that we touched upon? In general terms, when you set up a midterm guidance, you look at how markets evolve. What about CapEx? What about interest rates? What about the risks?
These were all the factors that were involved when designing the midterm guidance. When I say all of the risks were involved, of course, not because if I knew all the risks by 2029, I'd probably have a different job. You will not be able to make sure that there is no risk involved at all. There's no guarantee.
We have a very heterogeneous market development across Europe, which we took into account, and we also expected a—
What about the tax rate for next year?
This is a very interesting or insightful figure because when I have the consolidated result and the tax rate, which is used at the statutory accounts. If you have a look at our tax rate in 2024, we had approximately CHF 20 million of taxes, which can be divided into one-third belonging to climate, one-third to special effects, and one-third that remained in cash taxes. According to our guidance, we will stay on this level. With an increasing EBITDA, we will also have an increasing cash tax, but probably not in the same growth rate because our amortizations or our write-downs will look different. We discussed this a couple of days ago.
According to the figures that you use, the final figure may vary because you also have to take a different evaluation that varies according to latent taxes because there are differences between local gaps and IFRS. At a tax rate of 24%, this is the average tax rate that is applied at our financial statements. When we have a look at the Nordics and U.K.
Is this an implicit indication that Arbonia is aiming to increase its impact on this Nordics market?
Nordics is extremely dominant. We're talking about 60% or 70% market share. There's another company which doesn't belong to the group, so I would probably exclude the possibility that something is going to happen at Nordics. There are two local producers with U.K., with the Nordics and Mecenite. Both are in a very bad shape. On the European mainland, there are only a few competitors.
Now, when I look at the new construct figures, Poland and Hungary seem to perform very strongly in 2025 and 2026
In terms of growth c ould that be a region where further acquisitions could be made in order to close the gap?
Europe is a very exciting market, especially in terms of the real estate market in Eastern Europe, which is extremely liberal because there are no tools available in order to limit rent income because they were able to increase the rents. Because in construction, there are three factors involved. It's about construction costs. It's about funding or financing.
And what about the rents and possible income?
In Germany and France, we have a very regulated market, but in Eastern Europe, there is almost no regulation, which is why rental prices went up a lot and became much more attractive to get involved in the construction sector.
I think we have a strong position in Eastern Europe. We have our partner who's in charge of Central and Eastern Europe at Arbonia and who's very familiar with the Eastern European markets. I'm sure that this person is going to have exciting new ideas for the future.
Thank you. Two more questions. One question regarding slide 48 and the non-residential sector. It says total health and education growth grows much more than the other markets. What does this mean for you? Does it mean that some of the products are going to be more expensive?
We stem from the residential market, especially in the shower and door sector. We were very much involved in the shower construction sector. Really makes 70%-80% of our sales. Now, we have a big advantage in terms of hotels. They have many more doors than other buildings.
We have stronger relations in terms of fire protections. We have more people's homes, universities. The most demanding sector are probably hospitals. We should have made acquisitions two years ago, but we were not able to do so, which is why we did not get involved in the hospital sector. In the future, I am sure we will find new ideas to work around this.
Regarding the funding program in Germany, could this have an impact on if it were to be implemented the way it was designed?
I think in Germany, it could be a bit of a disappointment because there is a great hype going on at the moment. Just bear in mind, until you get the licenses and all the final decisions are being made, where schools are being built and how, and all the regulations in place, this is going to take lots of time.
Doors will only be involved in the very last stage of a construction phase. It will probably not have any impact for the next year, but possibly talking about 2028, 2029. We also have to think about where investments will go, whether this is going to be invested in the German armed forces, which would actually be a very interesting client too, but this is yet to see. I think we can only adopt a guidance once we have a fact-based situation. I'm sure that we'll have many more meetings to discuss this until those ideas are going to be implemented.
One more question. What about the sales in Germany for schools, hospitals in Germany?
Maybe just a comment here. I do not want to split any longer. Indeed, Prüm and Garant, they're primarily involved in shower construction.
With Yogo, we are involved in several school projects with great references where you will see which companies are involved in schools, which is primarily Yogo in Germany. You will see that there's a great potential, but we do not have enough capacities to get involved in schools. We intend to increase our capacities. We will launch a new stock, a new warehouse with Yogo, and we will be able to produce at Lignes too, where we will increase our capacities in terms of wood production, which leads to very attractive production costs.
Thank you. One question regarding the production. The marginal volumes. And regarding its effect, would this be on top of the profitability?
There's certainly much of a potential to improve here, but we want to give a realistic guidance that has the potential to evolve in the future. The potential of production footprints is enormous.
We can see this with Dimoldura. Maybe we can have a look at the production sites here. The Dimoldura Group involves four production sites on the Iberian Peninsula. What the previous owner did very well was to have four individual dual production sites where each of the sites produced everything. They specially slice each production site. All of the production parts are all produced in or were produced in Portugal. The sites in northern Spain only do white lacquered doors. We have another production site in Toledo, which is very efficient. Maybe we'll be able to organize a capital market day in Spain. The white lacquered doors are extremely efficient. When you have a look at the Garant site, you will see that it's much more complex, which means less efficiency.
There is still so much potential in our production setup, which we have not dared to write on paper yet. We need the right systems because one door costs EUR 60 and has 48 features. As soon as I am able to deliver those features with one mouse click, this becomes extremely efficient. There is a high potential regarding the setups. I think this company is probably way overperforming for the capital market state.
What about the drag-of-margin situation? What about the midterm guidance in terms of glass solutions?
It is probably the more challenging business in comparison to wooden doors. We had significant EBITDA growth in 2024 in wooden solutions. Glass solutions are more challenging. There is much more of a dependency in Germany.
We are more diversified in the wooden sector in Eastern Europe and also in Spain and France, which plays a role here. Also, the shower cabins are much more in the army sector or in the schools or in hospitals. There is much more of a dependency on residential construction in glass. Diversification was much more limited in the past than with doors. We used to have very innovative products from products where you were able to control the temperature within the glass feature. I think there is yet a lot to happen in the future.
No more questions from the audience. Apparently, are there any questions from the stream? Could you please remind us? What about the exposure on usual construction and difference between new constructions and conventional or renovation?
Traditionally, they were quite equal, but now we have 30% new construction and 70% renovation.
We started out quite well in the beginning of this year. You should divide renovation into two sub-segments. We usually talk about energetic renovation, which was a segment which was extremely flourishing in 2024 with the heating act and the skyrocketing heating costs, which is not the case anymore, in which we saw at Arbonia with the heat pump business decreased. We sold it just in time. Now there's more budget available for those nice-to-have renovations for kitchens, for showers. There's not a lot that has been done in these segments in the last years because everyone wanted to try to invest in heating solutions to make himself more independent from heating costs.
What about the split of residential buildings and non-residential buildings?
In Switzerland, we have a share of 50%. In Germany, it's probably a bit more. Are there any further questions from the stream?
Yes? What about visibility and the current evaluation of on-hold projects? I'm sorry, the volume was very low. Could we repeat the question? What about the visibility and the current evaluation? Do we have any information on on-hold projects?
Visibility for specialized doors is relatively high, where we have 50-60% of the annual sales. We are able to plan in advance. When we talked about the residential sector market, we talk about three or 3.5 weeks that we are able to plan ahead. I have no idea what's going to happen in May or June. I can only say what happened in the beginning of the year, which was very promising in terms of wooden doors. We had much demand, but quite a lot of demand, not so much of a demand in terms of showers.
Next question, please. Martin Süssler.
What about larger renovation projects? What about the largest competitor?
I think there's more of a renovation budget for doors and for showers compared to the situation that we had two years ago. Are there any further questions from the stream?
No more questions from the stream.
All right. Thank you very much. Maybe just in a nutshell to wrap things up, I'm deeply convinced that this is an incredible company that we build, and production sites are in excellent conditions. Unfortunately, there's no second Arbonia because if there were, I'd do anything to get it. We have a great management team. The key staff members have been on board for many years. We feel sorry for the numbers, for the figures, but there's not much that we can do about it.
I think that we evolved a lot, and I'm sure that this company is going to perform outstandingly in a few years from now. We have a great potential, great setup, be it market positioning or the commissioning of new production sites. We have highly motivated staff members, and I'm sure that anyone who believes in Arbonia is not going to be disappointed. Your trust is going to pay off. I'd like to thank you once again for coming all the way here and to assist us today. Thanks a lot for your time.