Good morning, ladies and gentlemen, and a warm welcome for the ones joining us here in the room or the ones joining us online. Today, Rolf and I will present you the results of FY 2025 and outline our assumptions for FY 2026 and for the mid-range plan. Before I begin, I assume that everyone has read the disclaimer on page two, I will start directly with page four, starting with the highlights and market developments. FY 2025 was marked by a challenging environment. The headwinds clearly affected our order intake, we could again reach record results, which highlights the strength of our delivery capabilities. Following a strong FY 2024, order intake amounted CHF 784 million, down 32% year on year, or - 27% net of currency translation effects. This reflects the significant market disruptions and the project deferrals across our market segments.
Supported by a strong order backlog at the start of the year, sales reached CHF 1,057 million, down 3.5%, but actually up 1.3% net of currency translation effects. We further improved our EBIT margin to 13.3%, and we reached with this a new record operating income with CHF 141 million and a new record net income with CHF 110 million, up 4.3%. RONOA increased again to 40.4%, highlighting the value creation from disciplined CapEx management and net working capital management. For FY 2026, we're guiding for sales between CHF 900 million and CHF 1 billion and an EBIT margin around 12%, with the strongest sales in the second part of the year, and I'll come back to it later. Regarding our mid-range plan, the achievement of the CHF 1.2 billion milestone remains, but is delayed by the current market disruptions.
We will communicate the new timing once the market visibility improves. I’ll come back to that as well. Let me now set the macroeconomic context. With Liberation Day on April 2nd, 2025, the second day of the fiscal year, this fiscal year was really shaped by the U.S. tariffs and the impact on the Swiss franc and on our customers. The market was becoming even more uncertain with the war in Middle East in the last months of the year, which happens to be our strongest typically. In the systems division, most regions and segments were affected by these deferred investment decisions. The petrochemical was the most affected, especially in China, where tariff uncertainties have affected both the feedstock and the flow of petrochemical products. In the services division, customers protected their cash and profits by delaying as much as they could, procuring spare parts, and upgrading compressors.
In addition, security and logistics constraints have led some plants to stop, and therefore reducing compressor utilizations. On the positive side, the U.S. service market developed well, supported by energy requirements for data centers and also for LNG exports to Europe. At present, we expect conditions to improve in the second part of the fiscal year 2026, especially in the services division, because customers can't postpone procuring spare parts too long. We've seen that with a big catch-up after the COVID pandemic. Now turning to slide number seven and looking at the impact on the different market segments. As you can see from the arrows going up and down, four segments were negatively affected and two went up. Starting with petrochemical and chemicals, which is typically our largest segment, it was the most affected.
China especially was facing overcapacity that was still existing last time we talked, but on top of that, the uncertainty led customers to wait to invest further. Projects in Middle East were further postponed. The one bright spot was India, which continued to grow. In gas transportation and storage, the pipeline remained lively for LNG tankers, even if some decisions were deferred. Uncertainty linked to the IMO regulations remain, and therefore, customers are still buying a majority of low-pressure LNG tankers rather than the high-pressure ones for which we have a leadership market position. LPG tankers orders remain at a good level. The hydrogen mobility and energy segments declined clearly in the U.S. after the removals of supportive government measures. China remained very lively, supported by the government.
In Europe, it was a year still at a low level, but we see now that the regulations are getting enforced, and we see, especially in Germany and in Nordics, that the project activity is increasing. Coming now to the growing segments. First, the refinery segment. We saw there limited new investment in traditional refineries, but we saw a big momentum for sustainable aviation fuel refineries. This is an application where we have been particularly successful, and it's more than compensated for the traditional refineries. Gas gathering and processing remained very active, particularly in the U.S., Middle East, and Africa. biogas also, which I mentioned a few times before, was also gaining traction, which makes us very excited about the acquisition of Fornovo Gas, which I will comment later on. Now, let's step back and look at our fiscal year 2025 in a longer-term perspective.
Over the past eight years, our sales have grown by 6.5% per year in CHF or 8.5% per year in the local currencies. We've increased our EBIT margin by 13.7% per year on average. This performance was achieved despite currency fluctuations, the COVID pandemic, the Ukraine conflict, and now the U.S. tariffs. Compared to 2018, now if I compare the company, how we are now versus then, we have a much more resilient setup. We have a broader product and service portfolio covering now marine, hydrogen, high speed, diaphragm compressors. We didn't have that at that time or much more limited. We also have more services, including digital ones. Now if we try to anticipate our future financials, it's worth looking at the two curves of order intake and sales.
We see clearly on the graph that in the past five years, we had a book-to-bill ratio above one, even clearly above one in the past four years. With that, we accumulated a sizable order backlog, which we can continue to deliver in fiscal year 2026 and 2027. One special aspect in our business, when the backlog decreases, we see that factories are getting free one year in advance, one and a half years in advance, and with that we can offer shorter delivery times so that the sales can pick up quicker than order intake has been increasing, actually. These factors underscore the resilience of our business model and our ability to deliver growth through cycles.
The market disruptions are expected to continue in the next months, and with this, the recovery will most probably not be fast enough for us to reach the CHF 1.2 billion milestone in 2027. In the meantime, that means that we need to continue to adapt to the lower order intake level. That brings me to the next slide. In the current market conditions, we benefit from a resilient setup, as I just highlighted. We are also implementing mitigation measures to strengthen our competitiveness and protect our profitability. In FY 2024, I communicated that at the time, our first response was to accelerate mid-range plan initiatives that improve competitiveness and specific initiatives for growth to compensate for the lower market. In FY 2025, as also highlighted at the half year, we had additional measures, including targeted cost reductions in certain countries and functions.
Also workload-based reductions of external and temporary workers. We restricted new hires globally. We had a simplification of the global functions in the systems division. We also increased our outsourcing to be less dependent on the Swiss franc, which continues to increase. Looking ahead to FY 2026, we will certainly have similar mitigation measures during the year. We will design these measures so that they don't prevent us to recover as the market recovers. Let me now highlight a few milestones for the year. I start with one of these competitive measures, which is the Fit for Growth program in Winterthur. It has been accelerated in FY 2025, and it helps our factory in Winterthur to remain competitive in the future. On the supply side, for instance, we've implemented a clear portfolio of activities that we keep in-house versus the ones that we outsource.
This has delivered 5%-20% savings on parts that we have decided to outsource. With this, we reduce also the dependency on the CHF, and we have a more resilient supply chain with a clear dual sourcing for all parts. We are also securing our in-house core competencies and innovation capabilities and are modernizing our machine park to be more efficient. The last point on the Laby® assembly line, which is these compressors are the ones that we deliver especially for LPG tankers, ammonia tankers, and there is a big volume of these compressors.
We are implementing an improved flow line, also some automation that will enable us to increase the capacity to 500 compressors per year, and we expect a reduction of labor cost and of lead time by at least 30%, as well as a reduction of the footprint for these compressors by around 10%. All this makes our Swiss factory more competitive for the future. Now I would like to highlight one order which shows how we develop in the marine segment and how we protect our market leadership there. We won our largest-ever marine order during the year. It was for Hanwha Ocean, the shipyard. It was for 14 large compressors for boil-off gas and fuel gas injections, the one that we know for high-pressure LNG tankers. They will equip seven new generation LNG tankers.
What makes this order particularly significant is that it is based on the new compressor platform, which we've developed with the R&D cost we always mentioned. This is for marine. One of the key output of this R&D cost is this new compressor platform. More competitive, also designed for the latest LNG tankers, which have a lower boil-off rate, meaning they require a slightly less large compressor. In addition, we've increased the discharge pressure from 300 bar- 330 bar, which increases the efficiency of the engine and lowers the CO2 footprint. Important as well for us, this compressor has been developed together with Evolens. With that, we could optimize the overall system for the LNG tanker. That helps the shipyards and then the ship owners to reduce, especially energy consumption and the CO2 footprint of these compressors.
This order, I mention it because it really highlights our ability to innovate and continue to be on the leading edge on the marine segment. Let's move to highlights from the services division. In fiscal year 2025, we have significantly improved or increased our footprint with nine new locations. In the U.S., for instance, we relocated our workshop in the northeast, closer to customers, and through the acquisition of ACT, we gained two new locations, one close to Chicago, the other one close to Houston. We also set new service centers in the so-called white spots, one in Brazil, one in Japan, one in Vietnam, for instance. In India as well, we've started to build a new global spare parts production center to be closer to customers and to improve our cost position.
These investments strengthen our ability to serve customers locally on a global basis, and also makes our service component business more competitive. Let us now look at how artificial intelligence is supporting our service offering. We actually started with artificial intelligence at Prognost about 20 years ago when it was not yet called artificial intelligence. Now what we see, as the models are becoming so powerful in the past two to three years, it really has had an impact on our offering. I'll start with the UP! solutions, which I mentioned a couple of times here, especially UPinside, UP! Detect. They now use AI models to identify problems before they occur, and with that, they can identify up to 90% of mechanical issues and alert the customer that something needs to be done.
With BC ACTIVATE, the second service that I mentioned a few times here, we have included in the diagnostic some AI capabilities. Going into our base databases, and with that, a report to produce recommendations for the customer, which required a few days for a service technician to write after he had done the diagnostic on site, now just need a couple of hours. This enables us to bring data knowledge together, and with that, to provide faster, better recommendations to customers. They also start to generate recurring revenues. They make us closer to customers, and they help us address the non-Burckhardt compressors on the service side, which, as you know, is one of our growth opportunities. I would like now to highlight one strategic development, which we announced about one month ago. We have signed in May the share purchase agreement for the acquisition of Fornovo Gas.
Fornovo Gas is a well-established North Italian company, with about 120 employees, about CHF 40 million sales, and already 3,000 compressors installed. They manufacture bare shaft reciprocating compressors, skids, container systems, and also provide spare parts and services. The company specializes in modular compressor solutions with a strong focus on biomethane and biogas. I will highlight on the next slide the significance of this move. Biogas is typically produced in a decentral way from agricultural waste, food waste, or industrial waste as well. That's, for instance, from a beer production. It is then usually upgraded into biomethane, which can be mixed together with natural gas as an energy source. This market is growing fast, at 10%-15% per year since 2020, and its relevance for energy security has been further highlighted with the conflict in Middle East.
We expect further growth in the same order of magnitude in the coming years, in particular in Europe, thanks to favorable regulations like REPowerEU, thanks to the existing pipeline infrastructure, which enables the blending of this biogas into the pipeline. With this strong position in Europe, with this new application, biogas, Fornovo Gas will help us grow in the new markets. Fornovo Gas, as I say, also expands our capabilities in configure-to-order compressors by adding an established platform to configure and to deliver compressors in a very efficient way. Going forward, we also plan to leverage our networks, our sales network globally, to sell these compressors in the U.S., in South America, in Asia, where the market is also growing fast. With this, I close the session on highlights and move to the progress on the mid-range plan.
With the usual picture that you know, our strategy continues to be based on the four pillars that we communicated at the Capital Markets Day in 2022, strengthening our core business, operational excellence, transforming and building new growth avenues, and enhancing our business foundations. We have made further tangible progress on the four pillars, even in a challenging year. We have now completed a few of these strategic goals, like the leveraging of the current footprint and SG&A, which we can see in the RONOA with 40%. We still have some work to do, especially on the service growth and on the internal digitalization. For this, we have about 20 initiatives running, and I will highlight now a few of these initiatives, and what they have delivered in FY 2025. In the Systems division, we've made solid progress across all four pillars.
I already mentioned a number of these initiatives. As you can see from the list, which I will not go through in detail, we are currently working with equal emphasis on cost improvement measures and on growth initiatives. Sometimes feels like pressing both on the brake and on the accelerator, but we believe it's exactly the right approach at the moment, and actually one is reinforcing the other. Meaning, with the cost savings, we get more competitive products, which helps the growth, and we also get savings, which help us fund growth initiatives like new locations. When I go to the Services Division, there was also quite some progress, but here the focus is more on the accelerator.
It's also necessary to compensate for the currency translation effects, which are especially strong in the Services Division because they work a lot in local currencies, and also necessary to compensate the current reluctance of customers to spend. When I look at the coming years, the growth of the Services Division will be supported by the acquisition of ACT, by the new locations, by a fast-growing installed base, and by new services, including digital ones. To support this growth, we're also implementing operational excellence initiatives. For instance, with 3D printing capabilities to be faster to deliver spare parts. Also, to be more competitive, we have the new global spare parts production center in India. We also continue to roll out our new services, ERP, to better steer the business. Let me now highlight the progress on our sustainability roadmap.
We made, again, very good progress. If you look at the list, we are really on track or even ahead of schedule. On climate, for instance, we reduced during fiscal year 2025 our greenhouse gas emission intensity by 32% in one year, by 55% compared to the baseline of 2021. With this, we've actually already achieved the goal that we had set ourselves for 2027. Looking at the list, you see that we've already reached actually six of the eight targets that we had set for ourselves for 2027. We will continue to work on the next two, which also need some support from the market side, from both divisions.
On the Systems division, we'll need some support to reach the 40% of applications supporting the energy transition, and on the Services division, some support to reach the targets for upgrades and revamps. Here, actually, our latest two acquisitions will help. With ACT, we will increase our share of upgrades and revamps, helping the cyclability and longevity targets, and with biogas, with Fornovo Gas, that will help the application, supporting the energy transition. With this, I'm closing the first part, and I'm handing over to Rolf, who will present us the financials.
Thank you, Fabrice, and good morning everyone also from my side to this presentation. I will now guide you through the financial section, starting with the group financial overview. Order intake was at CHF 784.3 million, down 31.9% year-over-year, or 27.2% net of currency translation effects. This reflects the significant market disruptions and project deferrals across segments caused by volatile U.S. tariffs, strong Swiss franc, and the Middle East crisis that was mentioned before. Sales came in at CHF 1.057 billion. That was down 3.5% in CHF, but up 1.3% net of currency translation effects, supported by the strong order backlog from prior years. Gross profit margin increased by 0.8 percentage points to 28.8%, mainly driven by a more favorable product mix in the Systems division.
SG&A expenses represented 12.1% of sales, highlighting continued cost discipline and effectiveness of our SG&A spending, which is a key part of our mid-range plan. R&D expenses were at CHF 29.8 million, or 2.8% of sales, which is at the similar level as in the previous year, with continued focus to strengthen our position in the marine markets, developing new applications and AI-based digital solutions. Other operating income and expenses amounted to CHF -5.8 million, mainly driven by negative FX effects similar to the prior year. EBIT reached CHF 141 million, a slight increase of 0.2%, with an EBIT margin improving by 0.4 percentage points to 13.3%, mainly driven by the more favorable product mix in the Systems division. Net income reached a new record of CHF 110.1 million, up 4.3%, supported by lower financial expenses and a lower tax rate of 20.3%, which compares to 23.2% last year.
With this, earnings per share rose from CHF 31.2- CHF 32.6. Let us now look at the systems division in more details. Order intake was at CHF 476.1 million, down 42.3% or 38.2% net of currency effects. As mentioned before, this significant decrease reflects the market uncertainty from global tariffs, the Middle East conflict that happened basically in the last months of the year, and this affected the final months, which is historically our strongest, and led customers to defer major investments. Despite the lower order intake, system sales held up well at CHF 738.6 million, down only 1.4% or even up 2.9% in local currencies, thanks to continued strong operational delivery of the order backlog from the past three years.
Gross profit increased by 9.3% to CHF 156.1 million, with the gross margin reaching 21.1% up 2 percentage points, driven by the favorable product mix and high capacity utilization across all our manufacturing and assembly sites. EBIT increased by 16.6% to CHF 79.2 million, yielding an EBIT margin of 10.7%. This represents a 1.6 percentage point improvement, supported by the higher gross margin and strict cost management, and marks for the first time the systems division, a double-digit EBIT margin since its creation back in 2016. Moving to the services division, order intake was CHF 308.2 million, down 5.4%, driven by the global uncertainties from U.S. tariffs in the first quarter and the Middle East conflict in the fourth quarter. Adjusted for currency translation effects and the ACT acquisition we did last year, order intake was down 0.5% in underlying terms.
In other words, service demand was essentially stable as growth in Marine and the Americas offset declines elsewhere. Europe and Asia were subdued due to high energy prices and tariff-related uncertainty, while the U.S. market developed positively, supported by energy needs for data centers, LNG exports to Europe, and other things. The marine segment continued to grow, supported by the expanding installed base of ships. Due to the softer order intake and some project deferrals, service came in at CHF 318.5 million. While this represents an 8.2% year-on-year decrease, the underlying performance was more resilient, with a decline of 3.6% when also adjusting for currency effects and the ACT acquisition. Gross margin decreased by 0.4 percentage points to 46.7%, mainly due to reduced capacity utilization. EBIT margin was down by 0.3 percentage points at 24.4%, with the lower gross margin partially mitigated by strict cost management and lower SG&A costs.
On this slide, let me guide you through the cash flow statement. Starting with Cash Flow from Operating Activities, which was at CHF 149.4 million, driven by strong cash collection and a further increase in advance payments that we got from customers. While this is below the exceptional prior year figure of CHF 212.8 million, it remains still quite solid. Cash Flow from Investing Activities was minus CHF 29.8 million, related to maintenance CapEx, IT investments, and the acquisition of ACT in the U.S.A. Cash Flow from Financing Activities was minus CHF 65.9 million, mainly driven by the dividend payment of CHF 60.9 million for fiscal year 2024, which compares to CHF 52.5 million in the prior year. Currency translation differences were minus CHF 13.6 million, reflecting significant translation effects on cash positions in our subsidiaries, particularly in China, but also in some other locations outside Switzerland.
Borrowings remained stable at CHF 152.2 million, including the bonds of CHF 150 million, which has a term still till September 2028. With this, the overall net financial position improved to CHF 110.8 million, up from CHF 69.6 million, providing us with a very strong financial flexibility. With this, our balance sheet continues to demonstrate a robust profile. Property, plant, and equipment basically remained stable, reflecting our disciplined approach on CapEx with limited capital expenditure. The balance between advance payments from customers, work in progress, advance payments to suppliers remained positive at CHF 18.5 million, albeit below the exceptionally high prior year level, which was at CHF 67.7 million. Trade receivables were significantly reduced to CHF 253.7 million, which compares to CHF 356.1 million in the prior year, despite stable sales. That equates to roughly CHF 100 million of improvement through strong cash collection.
On the trade receivables overdue more than 90 days, in percentage, it increased to 36.4%. The absolute amount remained stable, however, at the high level. Total shareholders' equity increased to CHF 361.6 million, up CHF 21.4 million. With this, the equity ratio has reached 30.7%, surpassing our 30% ambition level for the first time, despite high dividends paid and a significant negative FX translation effect on investments in subsidiaries. To be remembered, we report on the Swiss GAAP FER, where all the goodwill is offset against our equity. On this slide, and Fabrice mentioned it earlier, we have a strong value creation at Burckhardt Compression. Our RONOA has almost quadrupled since the year 2018, increasing by over 30 percentage points.
This is a result of continued EBIT margin expansion from 7.4% back in fiscal year 2018 to 13.8% in fiscal year 2025, combined with a strong network in capital management and a disciplined approach on capital allocation. Our asset productivity has more than doubled since fiscal 2018, thanks to the leveraging of our existing factory network, with debottlenecking CapEx and operational excellence measures. With this, the business model of the Systems Division is leveraging the asset base of auxiliaries through the suppliers. That also contributes to our high asset turnover. As you can see, when comparing our ROA with peers, which is shown with these dots on the slide here, even if some competitors have a higher EBIT margin, none can match our asset productivity. This is a structural advantage of our business model and a key driver for value creation.
Earnings per share have grown at a compound average annual rate of 21.9% since fiscal year 2018, reaching 32.6% in the past fiscal year. Based on these strong results, the board of directors will propose to the general assembly a dividend of CHF 18, which is the same level as in the previous year and within the group's guidance of the dividend policy, 50%- 70% payout ratio. It is worth to be mentioned that we have paid a dividend every single year since the IPO back in 2006 without interruption. To conclude the financial section, let me reaffirm our capital allocation strategy, which is in line with what we presented to you also in the Capital Markets Day back in 2022. On organic growth, we continue to invest in maintenance CapEx, dedicated CapEx to support our mid-range plan growth initiatives.
As we speak, we are about to build a factory in India. Fabrice mentioned it earlier. Our approach is still that RONOA has to be greater than the WACC as a key criterion for all these kind of CapEx decisions. On M&A, we remain focused on selective bolt-on acquisitions. For example, our recent ACT acquisition in the U.S. is integrating well and performing to plan, reinforcing our growth strategy. Further to that, you have seen that before. The most recent Fornovo Gas acquisition is another example. On shareholder returns, we remain committed to our dividend payout ratio, 50%-70% earnings per share. On financial leverage, we are slightly above our target ratio of 30% on the equity ratio level, demonstrating a strong and stable balance sheet. With this, I would like to thank you for your attention and hand back to Fabrice for the outlook.
Thank you, Rolf. Let me share now our outlook. I will start with fiscal year 2026, then discuss our mid-range plan perspective, and close with the global megatrends that support our business. For fiscal year 2026, we expect a slight decrease in sales and profitability due to the ongoing market disruptions. Our guidance is based on several assumptions. On the macro side, we expect global GDP at around 3%, a stable Swiss franc, and no new market disruptions or tariff escalations. We expect the Middle East conflict to ease in the second part of the fiscal year, and the market could then take another six months to recover. On the positive side, we have still a significant backlog I highlighted before, and that gives us good visibility. Mitigation measures that I highlighted earlier help us defend our profitability.
We also expect a full-year effect from the ACT acquisition and about three-quarters from the Fornovo Gas acquisition. Based on these assumptions, our guidance is for sales between CHF 900 million and CHF 1 billion, and we expect to see stronger sales in the second part of the year due to the timing of project deliveries in the Systems Division and an expected recovery in the second part of the year on the Services Division. EBIT margin is expected at around 12%. The decrease versus 2025 is mostly due to lower capacity utilization and a less favorable product mix in the Systems Division. Now, regarding our mid-range plan, we remain confident to reach the CHF 1.2 billion milestone and the EBIT margin range from 12%-15%.
However, in the past 12 months, the market disruptions has been such that. Also, the Swiss franc has also increased, and this disruption led us to delay the achievement of these targets. Actually, in this context, what we do, we will continue to work on what we can influence. The service growth based on the strongly increasing install base because we sold many compressors in the past few years. The expansion in biogas with the acquisition of Fornovo Gas. Potential additional bolt-on acquisitions we continue to work on. The development of new acquisitions like CCUS or the development of new regions like Latin America. There are other factors which we cannot influence and on which we need more visibility before we can provide a new timing for reaching the CHF 1.2 billion milestone.
One is the resolution of the conflict in Middle East. Linked to this, the expected catch-up in investment decisions. We would like here to share some very concrete information so that you see the orders of magnitude. To highlight how it works, I took the top 15 projects that we had in the sales portfolio at the half year in September. They represented around CHF 340 million of potential orders, so 15 projects. A bit more than CHF 20 million a piece. When I look at them now, where they stand, we have won two of them. We have not lost any. Somehow we had 100% hit rate. Two are continuing to moving like planned. They will be decided in the next few months. Nine are suspended. Two are probably canceled, which is normal ratio, I would say from 15.
Only two projects have been canceled, nine have been postponed, and they represent around CHF 200 million of potential orders, which we are moving in front of us. We expect that when the condition stabilizes, some of this project will be reactivated. In addition to this, we continue to watch the decisions from the IMO and also the decisions on high pressure versus low pressure LNG tankers and on the return of the LPG market cycle. In summary, to be clear, the CHF 1.2 billion sales ambition remains intact, underpinned by global megatrends. It's only the timing which is shifting. I will close now with these megatrends. Again, looking beyond the short-term uncertainties, the three global megatrends, which I presented already more than two years ago, they continue to support our business. Actually, two of them are even strengthening as we speak.
First, the growing global population, especially the middle class in Asia. It drives demand for fertilizers, fuels, polymers, industrial gases, et cetera, and with this, drives the demand for compressors. Second, the energy security is becoming increasingly important in an unstable geopolitical environment, and we've seen it now. We already have countries in Asia lacking energy. That will certainly generate new investments to store energy, pipelines, storage of LNG tankers, storage of LPG tankers, for instance. In addition, that the countries importing energy recognize the value of having more locally produced energy, which requires infrastructure. That leads me to the third megatrend, which is the energy transition. We will see more and more investment in sustainable energy infrastructure. That includes solar panel, which continue to grow fast.
Even there is still some overcapacity in the production, the installation of solar panels continue to grow at a fast pace. That includes biogas, I mentioned 10, 15% per year growth, green hydrogen, green ammonia, et cetera. As well, the growing share of natural gas in the energy mix because it has a lower CO2 footprint than oil or coal, drives demand for compressors. On the service side, we see also an increased demand for monitoring and improving old compressors to reduce the energy consumption, to reduce the CO2 footprint. All these applications requires compressors, requires services, and with our broad portfolio, global footprints, our innovative capabilities, we are well positioned to take our fair share of these new opportunities. With this, I would like to close our presentation. Now Rolf and I are open to answer your questions.
The questions will be moderated by Sandro Zina, who most of you know, our Group Controller and Head of Investor Relations. Sandro, do we have questions?
Start with online or in person?
We can start in person, I guess. Indeed. Let's start in person, then Olivia supports us physically, and then we come to the online questions. Thanks, Sandro.
Great. Thank you. I'll kick it off. It's Patrick Graf from UBS. Maybe on just the numbers you provided on those 15 orders. Very useful context. Those nine orders that are currently being pushed out, would you think how long can they be pushed out further before they have to be canceled or executed by the customers? That's the first question.
Most of these orders are for EVA and LDPE production in China. How long can they be postponed? When you look at the underlying demand for solar panels continue to grow. We know since one and a half year, I communicated there is overcapacity, and this overcapacity needs to be absorbed. Last time I said, "Despite overcapacity, Chinese companies continue to invest because they know that the factories that they build will only be online in four to five years. Actually the current overcapacity doesn't matter so much." That's, I think, exactly the words I used last time. Now the environment becoming so uncertain, it matters, and they don't want to put too much cash at the moment in that. I would say they can be postponed quite a long time because there is this overcapacity.
Can be a couple of years if the environment stays like this, or it can be activated in next few months if it stabilizes. Again, these are exactly the external factors on which we need more information before we can give a new timeline for the CHF 1.2 billion.
Great. That's very useful. The second question on the margin bridge in 2026 fiscal. You already mentioned lower utilization and the less favorable mix. My question on that would be, can you elaborate a bit on the mix effects also last year and this year going forward? How much would actually your mitigation efforts benefit in terms of margins?
On the mix, we have two types of mix. We have the one I mentioned, which affects 2026 on negative side, is on the systems division. We'll have a less favorable mix. That's mostly linked to the LPG cycle. We've delivered quite a number of LPG compressors in 2025 and less in 2026. We also have a positive mix effect between the two divisions, because the services division will take a bigger share. If you look at the order intake share in 2025, there is quite a change, and the services division will take a bigger share, and that stabilizes the EBIT because the service division is more profitable. We have the two effects, which don't compensate fully, but the service division will help stabilize. We don't provide figures on the effect on the mitigation measures.
They happen everywhere in the company and during the year, and that we don't give the number, but they are, let's say, significant in terms of defending the downside as well.
Understood. Just the last small one for Rolf, maybe. The M&A contribution last year, can you specify how much revenues you received from ACT? I think it was minor, but would still be useful.
ACT on an annual basis has close to CHF 10 million turnover. The Baymore acquisition is not yet relevant for the last fiscal year. That will only happen then in 2026 and not for the full year. We had half a year of ACT, meaning CHF 5 million impact.
Okay. Super. Thank you.
Correct. Other questions here?
No? Yes.
Michael Schulz from JMS. I just have a question regarding the Middle East impact. You said that that was a significant factor, and that's also a factor in reaching your midterm guidance range. How much is this more or less in-
In Middle East, there are two aspects. One is the direct impact on the local business.
Somehow, if you look in our annual report, it's quite interesting. We've doubled the sales in Middle East in fiscal year 2025 compared to 2024, meaning that didn't affect our capabilities to deliver the project. Customers have taken the compressors that we have delivered. No project was stopped, and by the way, that's a general statement. Our project, like usual, they don't get stopped when they start. We could deliver all the project in Middle East, but we had anticipated to grow in Middle East. We had a specific Middle East strategy that we defined. Now we've seen the order intake in Middle East decrease quite a bit. You see last year we had CHF 100 million sales in Middle East. That's the order of magnitude for order intake, and I don't have the figure in mind, but it has been quite reduced in fiscal year 2025.
However, what we see now is a positive impact in countries of the Middle East who don't need to go through the Strait of Hormuz. We received very interesting and significant project in Oman the past two months because they have a direct access to the sea without going to Hormuz. I think the bigger impact of the Middle East conflict is the indirect effect. Just like last year, the U.S. tariffs, we were not really affected by the tariffs themselves, but we were affected, or the Chinese customers were very much affected, so we were indirectly affected by the uncertainty. That's the problem our customers have with these CHF billion investments that they need to make, not knowing if there is a tweet coming in next night. That unsettle them.
Okay.
Yeah, Arben.
Good morning. Arben Hasanaj from Vontobel. My first question would be, in terms of the gross margin on the order intake that you had.
Have you seen any changes? Did you make concessions there? Related to that, how are you handling the rising input costs yourself? Yeah.
Yep. Very good question. When the market gets smaller, the market gets more competitive. Indeed, our competitors were aggressive. We had to be more aggressive, this is why we have the mitigation measures as well. This is why we also had to move also some engineering functions from Switzerland to India. That's part of that, so that we could defend an acceptable or a good margin in a more difficult environment. This is all what we do with these mitigation measures, reacting, making sure we can continue to sell. What I can say here is that in terms of market share, we have won market share in the year. If I look at the past six months, we have a hit rate, which is very high, higher than usual. With all the mitigation measures that we have implemented, we become clearly more competitive.
That's, for me, a good sign, actually, that our competitors are struggling more than we are. Meaning when the market will rebound, we are in a much stronger position and probably will gain market share because we are established there.
Maybe just on the most recent trading, if it's basically similar to what you've seen at the end of the last fiscal year, if you've seen any changes or if the activity is even lower or any changes that you've seen?
What I assume in two months I've gone qualitatively, I see similar picture in the systems division, and I see compared to last first quarter for service, which was very weak as we explained at the half year, we have a stronger start of the year in the service division. It's just two months, so in our business, when you have these big projects coming or not coming, let's be careful. On the service it's slightly higher.
Thank you.
Yes. More question.
Good morning, Torsten Sauter, Kepler Cheuvreux. I have three somewhat related questions, maybe in one. Given that the state of the cycle is a little bit cooling, can you give us an indication on pricing that you see across the various markets? Somewhat related to that, how's the industry happy to give advanced payments and can you elaborate a little bit on the delayed payments in China which have gone up also with respect to revenues?
Okay. Maybe I answer the first one, then you answer the other one. On pricing, I just mentioned, there is price pressure. The market is smaller, competitors are hungry. Although, and that's good for us, some of our competitors, they are part of a bigger company. If we think about Dresser-Rand or Neuman & Esser, they don't only have reciprocating compressors. They have centrifugal compressors which have a boom at the moment thanks to data centers. In a way, they are not too hungry because they can fill their factories with other products which are booming at the moment. It's actually good for us. We only have a couple of focused competitors which are clearly more hungry. There is price pressure, and again, this is why we have our mitigation measures to defend our margins.
I mean, the second part on the advanced payments, overall speaking, it is still a healthy environment. We still have CHF 18 million positive balance between advanced payments and what we have invested from this amount of payments. It is not at the same level as in the past year. This has also to do with the wave of orders where we had a lot of initial payments with not that much work in progress yet.
There is always once in a while approach had with better and with worse conditions. Overall, I would say it is healthy. On the overdue situation, yes indeed, we still have around CHF 90 million overdue more than 90 days on our balance. That is about at the same level as in the past year. About CHF 60 million of that is from China. In China, worth to be mentioned, we have kind of a rollover.
Just to give an idea, last year we collected about CHF 35 million- CHF 36 million in overdues more than 90 days, but fresh ones are coming in. There is a rollover. It's still the petrochemical customers mainly, but also state-owned companies which are late payers.
Okay. Thank you.
Okay. Further questions? Yeah, in the back. Okay, we continue then.
Thomas Wong from GAM. I have a question regarding the current situation around the Strait of Hormuz. I know from today's perspective, the question is early on, but historically, markets have reacted quite a lot to situations like that when you had problems in transports and ports, markets were closing down. Probably over the next year the threat will continue, so the system probably will adapt.
Have you some ideas how this can play out for you and what that can mean for Burckhardt or is that still too early to tell?
Indeed, the system is already adapting and for now we've seen rather negative consequences. For instance, some Asian customers don't have feedstock anymore coming from the Middle East, so they had to stop their operations and the compressors then are stopped. When the flow returns, that will be one impact. We'll see the service business in Asia growing again and spare parts consumption growing again. When I think about what are the adaptation of the overall system, I come back to the megatrends. I think it means energy security is more important. The system will have to adapt by adding storage of energy. We've seen that, for instance in India, which consumes a lot of LPG especially for cooking. After two or three days of the Middle East conflict, they had problems.
There was no LPG anymore because they were living day to day with the daily delivery of LPG ships. They don't have enough storage. Here, for instance, that's a concrete example. Then the restaurants had to close and people at home had problems to cook. That's one example where India probably will invest in LPG tanks storage to have more buffer. I think that due to such disruptions, we expect that along the energy chain, more buffers will be built everywhere. The good thing is that you store typically energy in the form of LNG or LPG, and these are liquefied gases which evaporates, which need compressors to be recompressed. These are the two applications where we are clearly the market leaders. That's one aspect I can see.
I can also expect some more pipelines, again, to duplicate infrastructure so that countries are not dependent anymore from one source. Especially after the war in Ukraine, one adaptation was more pipelines. Here as well, pipelines in Russia to China, that's one. There will be probably also more. More pipeline in the Middle East, that they don't need to go through the Strait of Hormuz. That will be one adaptation. Saudi has already announced that they will build additional pipeline. UAE, together with Oman, they will also probably build some new pipelines. Again, new compressors. The last aspect is the value of locally produced energy has increased, and we come then to biogas, for instance, or to green hydrogen, which is more expensive, of course, than LNG. Although when gas price went up last month, then the business case for green hydrogen becomes much clearer.
The problem is, until today, nobody makes a 10-year contract based on the gas price of today. Read a very interesting article yesterday. Germany has announced that they will build a system and put EUR 2 billion to take the difference by the state between the cost of green hydrogen and the price which market players are ready to pay. With that, they expect takeoff agreements to be activated, and with that, additional infrastructure for these new renewable energies. I think these are all this additional infrastructure, basically renewable, also not renewable, but the world sees that we need more solution, and we cannot be dependent on one Strait of Hormuz. I think that's the top. That for me, positive midterm. There was one question in the back. You still have it? Okay, good.
Maybe we will move to the online.
Thank you. Louise from AWP. There was one little question about the mitigation measures. Can you say something more about the details for this year, the ongoing year, about maybe workforce adaptations?
At the moment, I cannot say. We are starting to plan, and we will communicate internally before we talk externally. We are in the planning phase at the moment. Okay. Maybe we move online with Sandro, if we have received questions already.
Yes. Thank you very much, Fabrice. We received quite a few questions also from online. The first question is coming from Oddo. Sorry, from Alessandro Foletti, from Octavian. He has a question to you, Fabrice. The question is on orders. You seem to ascribe all growth obstacles to tariff and the Iran conflict. It was clear already before the Liberation Day that your order levels were very high, maybe even too high. Can you put that into context? How much of the decline is the real exogenous tariffs war, and how much would have happened anyway?
Yeah. Very good question, Alessandro. I think we have to look at it segment by segment, because indeed, some segments were too high. It is never too high, but were at a peak and we expected that to decrease, and we also communicated, especially the solar panels, these hypers. We reached seven or eight hypers orders per year, and already two years ago, we said, "That is not the normal. The normal will be around four." That will go down, but the four, it was already twice as much as the period before. That we said already, that was too much. By the way, I did not give the number, which probably you would have asked as well. In FY 2025, there was only two hyper compressors on the market, and we won both of them.
We won 100% market share, but that was compared to the eight of two years ago or the seven of last year. This is one big reason for the decrease of order intake. That was before too high, now I would say with two, this is too low. This is really a Middle East impact. That's why when we planned our order intake in the mid-range plan, going in the direction of 2027, when we increased to CHF 1.2 billion, there we could see solar panels going down, but we could also see hydrogen at that time going up. This has been much lower than expected.
I think here it's tariff, the Iran conflict, but even before that, the stop of the Inflation Reduction Act in the U.S. has been a big hit, and also the high gas prices linked to the war in Ukraine made the production of hydrogen in some countries too expensive, or the electricity very expensive, which then makes it too expensive to produce hydrogen. Overall, we knew that some would go down, but we expected some to go up, and the ones going down are going down. The ones going up take more time to go up, and that's why we have the dip at the moment. If I come back at the fundamentals of what are the new things coming, they are still here. They are postponed. That's why we're confident that the CHF 1.2 billion will come, but it needs a bit more time.
Thank you very much. There is another question from Alessandro also for you, Fabrice. It is on the sales guidance. The question is, you mentioned that the guidance stands if, quote, "disrupts in the Middle East subside." Do you have any indications that this may happen? The second question is also, if not, there are incremental risks to the guidance. Can you quantify?
Good question. Of course, I don't have any hints that it will happen, but I think you know us, Alessandro. When we give a guidance, typically, we achieve it. That's also the reason why the guidance is a bit wider than we typically give. One reason is that even if the Middle East conflict will not be solved in the next few months, we still have enough backlog, actually, to be confident to give you this guidance. Again, that's why it's a bit wider today. Without the conflict in Middle East, we'd be probably higher and a bit narrower. Maybe I can give a figure here to help you gauge what I'm saying. Today, well, when we start the year, we had about three-quarters of the midpoint of the guidance in sales. We had three-quarters of that in the backlog. That gives you an indication.
We only need to book and bill 25% during the year. That's the typical value compared to the previous years.
Still another question from Alessandro on the EBIT guidance. The question is, the EBIT guidance declines to approximately 12 percentage points. Can you give a bit of a split on what is the possible production mix, product mix effect, and what is the operational leverage effect in the systems division? I assume service margin will be plus-minus resilient.
I couldn't calculate that on top of my mind, Alessandro, sorry. I don't have the figures here. I don't know if you can answer that in any way.
The mix is a tricky one. We have LPGM business with a very high gross margin that has most in effect when it comes to product mix within the division. You have the factory loads, the variance that depends on the backlog, the phases of the process and everything. It's a complex question, Alessandro, so we're not guiding on that on a detail level.
Yes, the service margin, EBIT margin will be resilient. There is no reason that it really changes.
That's correct.
Right.
The last question from Alessandro on net working capital. There are some, I would say, weird changes in the different positions. Given orders are lower, I would expect inventory down, but they were up a lot. Receivables down seems fine in this respect, but then again, payables and advance payments up seems counterintuitive. Can you explain?
It's a good question, Alessandro. You know that we have introduced a POC, percentage of completion, so that has a strong impact on the inventories. With ups and downs, we also have the advance payments I mentioned before, the net balance, CHF 18 million versus CHF 67 million the year before, so there are partially giant swings, and it's always a snapshot as per balance sheet closing date. Indeed, there are some substantial swings when it comes to net working capital. Important is that over time, we have there a stable situation, and I think our run rate confirms that. Hope that answers your question.
Thank you, Rolf. We move on to the question of Fabian Piasta from Jefferies. His question is: Good morning, and thanks for taking my questions. Could you please break down your considerations on sales guidance FY 2026 by end market? Also indications on orders are appreciated. Can you share some details on the competitive environment in China about hypers and non-hypers? I will stop here and then read the second part of the question.
Okay. We do a detailed bottom-up forecast where all these elements are in. I don't have now the breakdown by segment for the sales. One element which I can indicate is that we expect the share of the Chinese business to reduce. I think you can see that in the annual report. It's about 41%, I think, still. Above 40%. Now, I mentioned the orders, the most affected were petrochemical in China, so we will have a more balanced portfolio of project in 2026. hyper compressors, I mentioned it, we received two. How many we delivered, I couldn't say, but probably seven or eight we probably delivered during the year.
Thank you, Fabrice. The next question is coming from Adrian Pehl from ODDO, and the question is also for you, Fabrice. The question is: You speak about the low utilization of compressors at clients and reluctance for overhauls. Does it mean service growth kicking in as of 2027 as a consequence of the past high deliveries can only come later and potentially less pronounced?
The reason for the postponement to do overhauls are the current uncertainties. Actually, it's quite differentiated between the regions. Actually, in what I mentioned that customer protect their cash, it's mostly in Asia, Middle East as well, where they don't know what will happen, so they protect. Actually, we have the reverse, actually completely reverse situation in the U.S., where capacities are used at 100% and more than 100%. They make cash like crazy, they don't want to stop the facility because they're making so much cash. They are typically, they also reduce maintenance. They do what typically Americans do. They do a maintenance to crash. They run the compressors until the compressors crashes. At the moment, we have both these effects, which are actually not positive for the short term. For the midterm, in a way, both are positive.
If you postpone these upgrades, at some point, they will come. Same for orders of spare parts. If they do crash maintenance in the U.S., at some point, it crashes, and then you need real maintenance. We expect, therefore, some growth. On top of that, you have the increased install base, which continue to be installed. We expect, therefore, the growth in 2027. No reason that these current market disruptions affect the growth in the midterm 2027.
Another question from Adrian, again for you, Fabrice. The question is: Middle East revenue has strongly grown in 2025. What was causing this, and how can you benefit from a potential infrastructure renovation after the Iran conflict has hopefully ended at some point in time?
What was causing this, actually, Sandro, you answered the question because I asked you the same question yesterday. I think there were four projects for Aramco, and I think in Abu Dhabi as well. Saudi and Abu Dhabi. We just delivered four large projects in the systems division, which have contributed a lot to this growth in 2025. After the Iran conflict, we actually even during, because I just mentioned as well, in Oman. Oman has started to invest now. They see the opportunity. They have the access to the Indian Ocean, and they build some new capabilities, and we just won project. After the conflict, I mentioned additional storage because we see it's a problem at the moment. They produce, but they don't have any place to store, and additional pipelines going around the Strait of Hormuz.
That would probably be the direct impact in Middle East.
The last question from Adrian, again for Fabrice. You mentioned that you have gained market share. Is this the case for all regions, in particular, taking into account the strong decline in the U.S. revenue? Did you face tough competition from Dresser-Rand, for example?
Good pick. The market share that we gain globally are thanks especially to Asia, China as well, Europe. We didn't win market share in the U.S. There we remain a smaller player and indeed a tough competition from Dresser-Rand or Neuman & Esser.
The next question is coming from Louis Billon from Alpha Value. The question is for Rolf. Good morning. 90 days plus overdue receivables rose to about CHF 92.3 million, which is 36% of the net book versus 24% last year. Yet your bad debt allowance is only CHF 19 million. It seems that China and U.S. project balances aren't quite paying on schedule. How confident are you in recovering them, and is the current provisioning adequate?
Thank you for that question. Yes, indeed. We do have a CHF 19 million bad debt provision that compares to about CHF 23 million in the past year. We do that not as a percentage of the overdue amount, but case by case, where we have a thorough assessment every month in all our subsidiaries. I have to say, I mentioned it before, in China, we have a rollover of the positions. I would say I'm confident we have sufficient provisions there. We get paid, but we get paid slowly. The U.S. is a kind of different picture. That's not a secret. It's a publicly listed company. We had some large orders with Bloom Energy. They are paying, but they're paying also in a staggered form, also there we're confident that we get paid.
There was one larger position also in a million amounts that was fully provisioned end of FY 2025, which in the meantime has been paid. Yes, I'm confident that this is sufficient. It's also audited, by the way.
The last question. We're seeing the currency translation impact grow. Can you give some more color on how easily you can repatriate that cash, particularly out of China? This question would also be for you, Rolf.
Very important question. In China, we have generated substantial cash over the past couple of years. I have to say, the hyper compress, for example, those we export directly from Switzerland into China, so that cash goes directly to Switzerland. There's a lot of local business. There what we do is every year we basically take out the cash that has been generated in the form of net income in a particular year. We try to keep that at a low level. We also have a cash pooling concept ongoing that will further optimize that. To withdraw cash physically from the countries, yes, we do that in China. Also, by the way, in all other subsidiaries, we take out what we don't need locally.
We were at the end. We just received one more question from Alessandro Foletti. I can read it for us. Can you specify your capital allocation criterion, EBIT over purchase price greater than weighted average cost of capital? Does not sound particularly tough or precise. Sounds like you are willing to accept dilution. This question maybe could be answered by Rolf.
Yes, indeed. This is one of the criterion. Of course, first of all, in any kind of M&A transaction, the product, the business case has to fly. It has to be known equipment that we're familiar with. The people topic is important, and this is more to be understood as a minimum criteria because in some cases, they might not be yet at the level that we wish them to be financially. That's why we said at least after the third year after an acquisition, EBIT over the purchase price and not the assets on the balance sheet, but the purchase price has to be higher than the weighted average cost of capital. It's a minimum requirement.
Thank you to both of you. There are no more questions in the chat. I would hand back to Fabrice.
Okay. Thank you, Sandro. Thank you everyone for joining us here or online. We really appreciate that you take the time and that you think about the very interesting questions. Your questions, I hope, have helped us to explain the current situations, the current drivers, short term, long term, and that you come back home with a better picture of how we could develop. Again, thank you so much for joining us and for continuing year after year to come and understand our business ever better. Have a good day, and see you next time probably in November for the half-year results. Thank you.
Thank you.