Good morning, ladies and gentlemen, and welcome to Belimo Full- Year 2024 Analyst and Investor Call. My name is Marta Bruska. I'm the Head of Investor Relations at Belimo, and with me this morning is Markus Schürch, the Group CFO. We will begin with prepared remarks by Markus, followed by a Q&A session. For the first part, participants will be in the listen-only mode, and after that, please raise your hand in the chat function to ask questions. Thank you, and with that, I pass on to Markus.
Okay, thanks a lot, Marta, and a warm welcome also from my side. So it's a great privilege and honor to present these full-year results. Just we will start with the business highlights, covering the market and the highlights of our business, and then go into the details of the sales performance, both in terms of the regional performance but also the performance by business line. We'll then open for a Q&A later in the call. So 2024 was an extremely successful year for Belimo, and that was driven by, first of all, a supporting market, especially in the Americas, where we had good market conditions in almost all our segments. So a robust construction sector and some very well-performing subsegments in there, especially in line with the reshoring. So things like semiconductor manufacturing or also, obviously, data center performed very well.
The only weakness we were seeing in the Americas was the new construction of new office buildings, but this was more than compensated by a lot of renovation going on, either by repurposing of existing buildings or then also by the need to increase their energy efficiency, not so much from an environmental point of view, but more from a grid stability and the need to offload the grid in large cities and therefore increase the efficiency of buildings. We saw a lot of growth in data center. Overall, data center accounted for about a third of the growth in the Americas. That's coming from both the traditional data center business, which is mainly an air business, so air-cooled data center, but also now the increasing demand for liquid cooling, and that's also a key growth driver for us on the data center vertical.
Then we also saw quite some momentum from the renovation requirements, especially in EMEA. That was able to offset that weak new construction market, and therefore we were focusing on the renovation market, which was showing good growth and was supporting our overall business. Our role was, so what have we focused on internally? Obviously, with the key growth, we're investing at the moment in investment mode. We're investing into capacity and expanding our capacity in all our major sites. We're able to inaugurate now the new site in China, which supports data growth, and we are at the moment building up here the new logistics and customization center in Hinwil in Switzerland. We'll start then by the end of the year, early next year, the capacity increase in Danbury in the US.
We're also able to launch a lot of new products and digital tools that are enabling the seamless integration of all our products. So very proud we were able to launch our Assistant App and also the Retrofit App that simplified the use of the identification of what's to do in a Retrofit job. We're also able to increase our network, both on the Retrofit part to onboard new Retrofit partners and increase our digital ecosystem partners that are able to use our products within their solutions of the digital side.
In line with the strong growth of the data center market, we've launched our internal initiative on data centers, a dedicated growth initiative on a worldwide basis, specifically focusing on the requirements for the data centers, both from a product point of view but also from a customer-serving point of view, which is a truly global market and also requires a global key account management and the global support of those key customers, and lastly, we are very proud we're able to submit our SBTi commitment and submit our commitments to the carbon reduction targets.
That's in line with our overall targets to reduce our Scope 1 and 2 emissions in our own facility, but especially also focusing on our Scope 3 emissions, which have both supply chain aspects but also use phase aspects where we will have over the lifetime of the products a strong focus on reducing the energy consumption and reducing their carbon emission, and lastly, we're also able to make a lot of progress on our climate foundation, supporting their buildings and the renovation in buildings for third parties. Going into the results, we have achieved sales of CHF 943.9 million. That's a growth rate of 13.1% in local currency or 9.9% in Swiss francs, so a very strong growth momentum in 2024.
From a regional split, so Americas is now by far the largest region with 46% of our turnover, followed by EMEA with about 41%, and then Asia- Pacific with about 13%. Looking at the business line, Control Valves accounting for almost half of our turnovers is 49.6%, followed by Damper Actuators with about 45%, and then Sensors and Meters getting close to 5% of our turnovers. When we look at the composition of our growth, we have 9.8% is attributable to volume and mix, so a strong contribution there from volume growth, and then about 3% from price. And we are able to almost offset with price increases the FX effects of minus 3.2%, and then a small contribution from others leading to this 9.9% Swiss francs currency growth or the 13% growth in local currency.
When we look into the regional performance, so by far the strongest growth momentum came from the Americas with close to 20% growth in local currency. That was driven by a solid growth from all the market segments and verticals. We're very proud of the 6% growth in EMEA. That is in a very demanding construction market, a very demanding environment in the EMEA. So there we were able to focus on the renovation markets and also in the southern part of Europe where there was more momentum also on new construction. Asia Pacific with 14.6% growth in local currency. There also all the regions were contributing to the sales growth across all our key countries. We'll come to that when we discuss in more detail different regions. So we'll start with EMEA with a growth of 3.7% in Swiss francs, so 5.9% in local currency.
Despite a very challenging market, especially in the German-speaking part of EMEA and there especially in Germany, so we were able to really focus on the retrofit, on the renovation market. That was a strong growth in there and a strong need also to improve these buildings, and by focusing on that, we were able to offset this missing support from the new construction. As mentioned, especially in the German-speaking part, the new construction or the construction activity was very low. It was a lot better in the southern part of Europe, so in countries like France, Italy, Spain. We had very good growth and we were able to focus and offset there also the weaker market conditions in other parts of Europe. What's also worth mentioning, there was a modest recovery also of OEM volumes, so the destocking is now really over.
We see there from a very low level a small increase also on the demand of the OEM part. With that, moving over to the Americas with 16.1% growth in Swiss francs, so 19.8% in local currency. There, as mentioned, we had strong growth from all the verticals and all the business segments with the exception of new construction of office buildings. A lot of contribution from data centers, so we expect about a third of the market growth is coming from data centers and therefore from both ends, mainly in this year, in the last year from the traditional part of data centers, but increasingly also from liquid cooling, supporting there also the growth of our Control Valves business. We saw there growth across all our market segments and across all our business lines.
Moving over to Asia Pacific with 10.2% growth in Swiss francs or 14.6% in local currency growth. And there as well, we saw double-digit growth in all our key markets. We're very proud of double-digit growth in China despite the very challenging market environment. But there again, the focus on the high-growth segments, also their data centers are a very important growth driver. And focusing on this attractive vertical, we were able to get this high growth in Asia Pacific. Very strong is also the market in India, so a booming economy, a lot of investment also in the HVAC industry. There as well, not only data center, but also the increasing establishment of a high-end segment that also requires high-efficiency HVAC system, and that also helps us there to grow the Indian business.
If you look at the business line, so we have got the growth of Damper Actuators with 9.6% in local currency growth. So there we see a recovery of the OEM business and also a lot of effects of the data center business, the airside cooling of data center that helped us to grow the Damper Actuators business by 9.7%. Control Valves, very strong growth with 15.4% across all the segments and also the need for higher quality, higher functionality valves. They are especially strong against the growth of the pressure-independent segment of the Control Valves, contributing and attributing to this 15.4% growth. And lastly, Sensors and Meters, contributing with 25% growth in local currency. They are our youngest segments continuing to see high growth rate and accounting now for 5% of our turnover or CHF 44 million. With this, just a short outlook on the next events.
We will release our full year results together with also the guidance for this year on February 24th. We will have only one hybrid meeting and not a sales call in front and then the meeting. We'll have a hybrid event at 10:30 A.M. on February 24th and then the annual channel meeting on March 24th and the other parts then more for the capital market. With this, we are at the end of our notes and we'll open the call for questions.
Thank you. Thank you very much, Markus. We have a first question from Martin Hüssler. Please go on.
Yes, good morning. I hope you can hear me.
Yeah, we can hear you well. Good morning.
Okay, thank you. Good morning to you too. Maybe the first question on data centers. You referred to growth in North America one-third impacted by data centers. Can you maybe break this also down for the full group? How much of the growth was driven by data centers? And maybe even to say how important is data centers today in terms of sales? That's the first question.
I mean, overall, we have roughly 12% of sales for the group is attributable to data center growth. We have a lot more data on the Americas. As mentioned, there's about a third of the growth is coming from data center. A lot smaller in Europe because most of the investments are going at the moment into the Americas or in Asia Pacific. And also a lot of sales that is done in the rest of the world is channeled through the US. But also in Asia Pacific, a lot of the growth is coming from data center. And we accept that especially in China, the majority of growth is attributable to data center.
Okay, thank you. And then maybe the second question on if you look at cost inflation, let's say for this year, so what's the situation here? Maybe labor inflation, but maybe also some raw materials. And then what would this mean for your reaction on price increases? Should we expect further price increase this year or is that just a spillover of last year's price increases that will remain also for this year?
I mean, overall, we're looking at more of a normalization also of the supply market. So prices have stabilized. So that means they're stable. And therefore, we're also back to our normal pricing rounds, which is 1%-2% on an annual basis. And that's also what's the plan going forward.
Labor inflation does not worry you?
I mean, labor inflation is in the range of inflation what we have. And therefore, once our key advantage is that we have the majority of our labor costs still in Switzerland with quite low inflation.
Okay, thanks a lot.
Next question, please, from Martin Flückiger.
Yeah, morning, Martin. Morning, Markus. Thanks for taking my question. Just two basic ones, actually. Just wondering about the momentum you've seen in the U.S. in 2024, how sustainable you feel that is for 2025 because success brings with it that the comps are getting tougher and they're quite tough now for 2024. That's my first question, and my second question would be on your expectations for the 2024 EBIT margin guidance. I realize you didn't, because it's a sales release, you didn't mention it in your press release this morning. But if you could just a few words on your expectation regarding profitability for 2024, that would be great. Thanks.
Okay. So look, I mean, we're just commenting on the market. We're not commenting here overall on our full year results, but we can update on what we said in the half year. So overall, we see a stable market in the U.S. So we don't see a change of the market environment. So the same growth driver that we're supporting our second half year are in place. And therefore, we see that the market condition is similar like we saw it in 2024. Like mentioning on the full year guidance, so we're not providing the details of our EBIT. But we always told you that we see in the second half year, we always have slightly higher costs in the first half year. And we were expecting there in the half year call, we're highlighting the risk from the U.S. dollar exchange rates to the Swiss francs.
I mean, now you know what the U.S. dollar did. So it was slightly better than the expectation at the half year, but it didn't come back to the average rate of the first half year looking at the exchange rate of the Swiss francs.
Okay, thanks.
Welcome.
All right. So the next question, please, from Brijesh from HSBC.
Hi, Markus. Good morning. Hi, Marta. Good morning. So two questions from my side. The first one is on EMEA region, obviously in second half, double-digit growth, which looks in this market pretty strong. And I appreciate you're putting 3% price growth in, so roughly around 6-7%, probably the volume and mix effect. Can you just split that number into is everything of that growth coming from renovation? There is no new build growth in it. So I'm just looking forward if that was to be the case and you're talking about data center being a very small part of your EMEA number. So when you look forward, do we see this is the reason where you probably see an upside potential if the market were to kind of move up a bit in new residential or new build?
Well, I mean, there I think we need to differentiate in EMEA. I mean, it's a very mixed bag. So we saw especially no new construction or very weak market in the German-speaking part. As mentioned, in the southern part, there was new construction. So the economy and also the construction market was a lot better than in the central German-speaking more northern part of Europe. And therefore also, obviously, the increasing demand on construction puts an upside on the part in the central or in the German-speaking part and probably a stable market in the southern part. And obviously, data center construction is also an upside in EMEA, although we expect the majority of the data center being built in the Americas and Asian region.
Okay, understood. And then looking at Americas' growth, which looks stronger and as you imply, probably the growth is still solid at this point in time. So in terms of the capacities, you are coming up with your logistics by end of this year, as you say. How practical it is kind of to continue to ship to the Americas? And do you see any challenges with the Trump admin coming in? Any tariff issues you find is probably be a hindrance to your growth potential?
I mean, overall, we're fine with the capacity. And we're still producing the majority of the base actuator in Switzerland. And therefore, they also need to be assembled here and then sent to the U.S. And there we have to go. Therefore, we're also starting with the capacity expansion here in Switzerland and then continue in the U.S. So from this aspect, we can support the business with the capacity at hand. Now, from the overall part of the tariffs, we don't see a huge risk at the moment. We don't have a lot of imports into the U.S. from the high-risk countries like China or Mexico. So from this aspect, we have got a very limited exposure towards the tariff situation. What we're obviously exposed to is the general economic reaction of issuing tariffs.
So that if that's going to impact the overall economy, then obviously that will have a knock-on effect on our business. But we don't see specific risks for us from the tariff discussion.
Okay, so if I may just add one more question. It's on the mix effect, and 2024 had a significant positive mix effect. Going into 2025, how do you see the mix coming through? You're talking about pressure-independent front continuity growth there, and then data center obviously has a higher value proposition and that's adding to the mix effect, so how do you see 2025 mix effect panning out?
I think it's a continuation of what we saw as a long-term trend, so we have to shift towards this pressure-independent valves. We have to shift towards more value-add customers, and that is also supporting the mix of components in our growth composition.
Great. Thank you. I'll jump into the queue.
Thank you. So next one from Fabian from Jefferies, please.
Hi, good morning, Marta. Markus, congrats. Strong prints. Most questions already answered, but maybe one on pricing power. Maybe how has that evolved in course of 2024, especially in light of volume recovery? Second one would be on the liquid cooling market. Do you see increased competition in the space? And the third one, maybe on the new build in Europe, permit growth and non-resi returned to positive territory last year. So do you see some sort of broad-based inflection point with regard to 2025? Thank you.
Okay, so thanks for the questions. I'll probably starting with the pricing power. I mean, as you know, we work with annual pricing rounds, and we've increased the price on an annual basis, basically to offset the inflation plus, and that's what we're also able to put through in the market. Obviously, a bit different to our market position, so the stronger we are and the more unique our product is, the higher is our pricing power. And that's also reflected then in the way we put through those price increases. Now, when it comes to the competition on the liquid cooling part, so that heavily depends on the application. Also in liquid cooling, there's the more broad-based standard liquid cooling, which is this rear door cooling. Obviously, there is more possibility also to change the application.
Therefore, there is more competition or also more alternative when it comes then to the dedicated solution for the cold plate part of the cooling. The reference design is extremely important. And once the reference design is specified and that requires our valves, then obviously the competition is very low because that would then require significant changes also on the design and the OEM side. And given the speed of the development, the speed of the deployment, there's low risk of competition. Now, the last question was regarding the recovery of the construction market in Germany, not in Germany, in EMEA. As mentioned, I think especially in Germany, it's probably at the bottom where we are at the moment. And from there, it can start to grow at what pace and when exactly it will start, that remains to be seen now in the course of 2025.
Great. Thanks.
Okay. Thank you.
Now, please, to Axel from Morgan Stanley. Axel, go ahead.
Hi. Good morning, everyone. Morning, Markus and Marta. Thanks for taking my questions. Two questions on my side, if I may. You mentioned in the slide pack that you expanded partnerships with leading chip designers. Can you elaborate on this one? I was reading about NVIDIA's competitors and basically how are the discussions taking place here. And yeah, if you can elaborate on this, that would be helpful. Thank you.
And then.
Yep. Go ahead.
I mean, obviously, we can't reveal the names of the partners, but I mean, there are not that many chip manufacturers. And just to put a bit of perspective or flavor around that, I mean, with the new chip generation, cooling becomes much more difficult. So the cooling part is an integral part of the performance of the chip. And therefore, the cooling is designed together with the chip. And therefore, also the discussion you have with those chip manufacturers, with the hyperscaler and dedicated OEM are during the development phase of those chips. And then you're also reflected in the reference design. And therefore, that's a very close relationship and an extremely important one for both sides, for their side, because that is mission-critical to the performance. And for our side, obviously, that's a unique opportunity to get integrated and designed into this reference design.
Okay. Very helpful. And then my second question on the Chinese recovery. Was this just due to easier comp or was this expected on your front? Because obviously, the Chinese construction market is not going into the right direction. So I just want to better understand where this is coming from. Thank you.
I mean, this is coming from our focus on the attractive segments. I mean, overall, the market is very low in China. There's not a lot of construction going on. But in there, there are obviously the high growth segments that are also happening in China. And like in the US, a lot of reshoring is happening also in China. And that means a lot of factories for pharmaceutical, for semiconductor production needs to be built. And they have got high requirement on HVAC. And focusing on that is supporting our growth. And then also with different hyperscalers, a lot of data centers are installed in China. And that's also a key focus area. So for us, it was despite a very low market and a weak construction market, focusing on these high attractive, high growing verticals, that was able to pull through also growth from our end.
Okay. Thank you very much.
Welcome.
So the next one in line is Sebastian from UBS. Sebastian, please go ahead.
Good morning. I have three questions I would ask them one by one. The first one is with regard to the U.S. dollar exposure on the revenue side versus on the cost side. In the past, you were providing us some sort of rough ballpark figures in terms of percentages. If you can give us an update there, that would be my first question.
It's still about the same. What you saw, we have got now close to 50% turnover that is related to U.S. dollar or U.S. dollar-related currency like the Canadian dollar. And from a cost side, we have got about 20% of the cost basis in U.S. dollar.
Got it. Second question is with regard to the investments that you mentioned before in Hinwil, also in other parts of the world. I assume that is having some impact on the D&A charge going forward. Do you think you can offset these sort of impact on through operating leverage, economies of scale, and so on? Or is that something that is having sort of an incrementally, potentially more pronounced impact on the group margin in that regard? Or how do you think in this context?
I mean, since it's mainly the investment or the highest investment is into buildings, and they have got a very long depreciation period, therefore the effect of the investments comes over a long period, and with that, that can be about offset with the operational leverage.
Got it. And the third last question is sort of going also on the cost side, R&D investments. I mean, as you said, you're increasing your exposure to distribution centers. I guess there are sort of developments in terms of what they need in terms of products are changing a little bit quicker. And in that regard, I was wondering, do you think that given this large exposure to data centers that going forward, you also need to be a little bit more active on the R&D side in that regard? Or how do you see the situation?
I think, I mean, in the past, we have specifically increased our R&D expenses to also renew our portfolio to react to all these new requirements, also on the digital side. And that was always our strategy to stabilize and then slightly reduce that as percentage of sales in absolute terms. That still means an increase of R&D spending. And that's still the plan going forward. Within there, obviously, a part is then dedicated to data center. But that was always our strategy to invest there where we see growth. That was in the past. And it's now the same, similarly with the growth coming from data centers.
Got it. Many thanks. That has been all my three questions. Much appreciated.
Thank you all. So just to check, Fabian, do you still have Fabian Piasta? Do you still have questions? Or you just didn't lower your hand?
No, I'm good. Thank you.
Okay. Thanks.
Same question to Martin Flückiger.
Yeah, I'm good.
Perfect. So it seems like there are no more questions. So thank you very much for your participations and very valuable questions and discussion. And I pass on to Markus to close.
Okay. So thanks a lot for the interest. And we're very much looking forward then toward our full year results and hope to see you all there at our call, either directly in the middle or then online on the hybrid event.