Good morning, everybody. This is Switzerland, so we're starting on time. It gives me enormous pleasure to welcome you to Dormakaba Capital Markets Day 2024 in our headquarters here in Rümlang. Many thanks for traveling to be with us today or for joining us online. I'm going to waste no time and quickly take you through the agenda of today. Very shortly, we'll begin with the presentation of our CEO, Till Reuter. Straight after, we continue with a series of breakout sessions. Today, you have a great chance to deep dive into our commercial and operations topics, as well as a unique opportunity to experience our products in our innovation showroom. For that, we'll split into three groups. You have a name tag with a color sticker, which indicates the group you're belonging to for the respective breakout sessions.
We'll ramp up the morning session with a Q&A at 11:30 A.M. here back on stage. I'll skip important parts such as coffee breaks and lunch. This will take place just outside of the room here in front. Afterwards, in the afternoon, we have a great pleasure to welcome one of our valued customers here in Rümlang. It's going to be Andreas Stöckli from the Airport Zurich. We will start with a customer testimonial here in our offices, and we follow with the customer trip on site. We'll close the day at around 4:00 P.M. With that, I have to say it remains to be said that I hope you'll enjoy the presentations and find the opportunity to interact with our leaders today. Now, I would like to hand over to you, Till. The stage is yours.
Thank you, Swetlana, and welcome everybody to Rümlang. Welcome to our offices. A big pleasure to have so many people here and to see the interest in Dormakaba, which is really great, and I think many of you know the Dormakaba story for a long, long time, longer than me, and I'm also excited to get your questions later because having met many of you on the one-on-ones, it's great. Today, I think today is about having more intense dialogue. We can go in much more detail. We can talk about the update on strategy.
I think most important, you have more time to meet more of the team, not only Swetlana and me and Hendrik on the investor relation and on the strategy side, but also have a more intense dialogue on what's happening on the market side, what's happening in operations, and what's happening on a technical side with the team here. Welcoming you in Rümlang is great because many companies are discussing also the home office topic. And you see we have here a very nice office, so people like to come to Rümlang. It's a great atmosphere. I think it's very important these times to have an office space and a place where people feel well and where people can do their best. And I think we have here a great place, and you also have today the chance to do this.
Today, presenting together with me, you have René Peter, who is our interim CFO. Really safe pair of hands. Great to have him. We can talk about questions on Christina. She's focusing on health. It's very important that she gets fit again. But I'm very happy to have René to take over the task and helping us to really steer the company on the financial side. René is with the company since 2013, so more than 10 years, a very experienced leader. So very good to have him also today here. Carsten, our new COO. One of the changes we had at the beginning of the year when Jim-Heng left and also Alex Housten left. Alex was a COO and focusing on Americas in the past. So I was very happy to meet Carsten and to convince him to join Dormakaba.
We know that because of the structure in the past, because of the merger, there are many things on the operations side where Carsten can give much more detail. Carsten joined in August. It feels like you have been for a long time here, but it's only a couple of months. Steve, you know, Steve is since 2008, so 15, 16 years Dormakaba. He runs the commercial side, a great partner. He knows the market inside out. So it's really good, a great partner in the team, having a big piece of the business running the commercial side, and can give you details about the market, Americas, Germany, other markets. Also very happy to have him, and also Martin. Martin is since 2000 with the company.
So I think what you see, you have a mix of people who are longer with the company, who know the legacy, who know the company, who know the pros and cons and some new characters. I believe we have a good mix of know-how, of experience, of knowing the company, also getting some new questions and new topics in the company. And with this one, we are welcoming you together in the name of the whole EC to our Capital Markets Day and have more details on what we want to do and where the future goes for Dormakaba. You heard a lot about we want to shape the company. And I told many of you that when I joined on January 1st at Dormakaba, there was already the Shape4Growth, not the Shape2Growth, the Shape4Growth program.
Many CEOs, when they join a company, what they do, they first engage and consult, have like a benchmark and redo and a little stop the organization and have a kind of a where are we today, what we're going to do. I had the pleasure to be three months in the board of directors, so I was looking at the Shape4Growth. I thought it was most important to continue the path and not to stop again because what I learned in the first three months about the first 10 or 11 months that we know lots of things. Dormakaba knows more about Dormakaba than you believe. It's much more about execution.
When I looked at the Shape4Growth program, my view was that more than 80% are right and that's worth to continue and not have a different consultant, a new consultant with new benchmarks. It's just about executing. Today, on the agenda, what I want to go through is I think it is, and some of you know that my path was more in automation and automotive. What's very important here, this industry, the construction, the building industry is a very attractive industry with less volatility, with good planning, good ways to plan. Also, I think which is very important to come later, we have a great installed base, which is also like the foundation for service for the future. That I will focus on why this market is so attractive, why also this market is clearly a market for the future.
Secondly, there's a great market and we are well positioned. So dormakaba, went to dormakaba, so we are number three globally. The global three players are the guys who are consolidating the market. And I think we are well positioned with our positioning today, with the products, with our structure, with our vision to take really a big stake in this market and to be also part in the consolidation of the future. The third part, when you shape the company and then you have to start to grow again, it's a little bit like a balance. On the one hand, we are executing on the cost program, which is very important to getting the cost measures done. But the same part is very important that once the organization is in a cost efficiency mode, you have to come to efficiency and growth again.
And I think that's where in the middle of where we still have to execute on the cost program, but it's more important, same importance, it's same important to also look in the future. What do we have to do to grow three to five, to grow further, to work on the margin? Because we all know that scale is very important also for the bottom line and that we'll talk in the third part. And then clearly, we have many financial analysts here. It's about the financial profile, the midterm targets, where we want to go. And clearly, I have to always look at Swetlana because on the timekeeping, she will remind me when I'm too slow. Attractive industry. You know the topics. I think it is the two topics which I want to touch on today is the high resilience and the high entry barrier.
So I think one is very important that on the one hand, the market is attractive with good margin. And it's important that two-thirds of the market are refurbishment. And what we see today, even if you have own house or our apartments or buildings, we see that once you have refurbishment, you're starting to have higher quality, more tech involved. And I think that's really helping us. That is really a market which is growing based on this installed basis. And the new products which are coming have higher value added, more technology inside. The second point which really helps us and which is also, if you look about who is coming as new competitors, there are in principle high entry barriers to enter. So why? Because there are many country-specific regulations and requirements and also very robust sales channels.
If I look today, I think that's very important. If I look about who is popping up at competitors, you will never find any hardware company. What you find, you will software companies which are working on the front end. But I think we haven't seen in the. I'm now here for one year, but I've looked back with our partners, our strategic department. There are only a few, maybe no one really coming up with a full portfolio of products. You see people popping up with kind of a user interface for customers. But I think that's really something where you don't see the companies who have hardware, software, and the digital aspect, which we aim, which is very important, which I think is clearly for us value added and a big advantage. It's a big market, a huge market. $40 billion.
So once it's difficult to get in, there are barriers. It's a big market and it's a big growing market. So if you look back in the last year, the market on average was growing 4%. And as I mentioned already, the increase of higher value added products, so automation digitization is very important. But I think that also is that government spend. This is again like market big and the market is growing. Besides the topics which you all see in the little film, organization, sustainability, what I see today on this stage very important is that safety and security. Sometimes we are shy to talk about it because you don't want to mention how secure or safe you are because this is something you should not market too much.
But what we see is from the outside that really the impact by safety and security is getting bigger and bigger. And I think what's most important if you're in a hotel, if you're at home, you want to be safe and secure. I think this driving really our products and security and safety have to be embedded in our product. So it's very important to look on this. And also the companies we talk to, I think they all have this on their plate that they have to talk about how can this be part of our product. And I will later talk a little bit about the customer journey who has impacted. If you look at the trends and we know urbanization, so it's getting more dense. Sustainability is important about the carbon footprint. Digitization is on the one hand a big topic, AI.
But with digitization, you can have a cost down, but at the same time also have more application. And I think this is really the trends which we are in the middle of this trend and what is on us, how are we going to shape it? What's most important? And I think how can we benefit from this, this trend? Two topics which are important here. One is clearly especially for our industry, the building modernization. 4%-5% CAGR. So it's installed base, modernization of installed base, modernization of buildings gives us really a good tailwind. And I think the second part, energy efficiency. Energy efficiency on one hand and the whole building. And then it can maybe control the energy efficiency by having different speed of opening door, closing doors, but then also like most of the locks need still batteries.
So how can you be more efficient on battery lifetime to have overall this topic addressed? And this is going to be also shown in products when you talk to Martin, how are you going to bring this trend, these topics in our products? What's the timeline? Where are we compared to competition? And I really believe that in some areas we're really leading this discussion. In some areas, we have to be faster in following it. But I think it's really like it shows that the industry is very good for us and that here we are also seeing that the growth is part of this business. If you talk, and I think that's important when we talk to our customers. So in the past, and if you look back in many industries, you talk about selling door closers. You're selling about automatic doors.
You talk about selling maybe a software solution. Today is much more talking about customers, what is changing in their offices, in their buildings. It's about people flow. How many people at what time can enter the building? Do I know how many people are in the building? Visitor management. So it's more like people are coming in the office. Is it own people? Is it visitors? How can I control it? Which areas are semi-public, semi-private, and how can I control the space and how I can control the flow? When I had a couple of discussions here in Zurich with banks or other commercial entities, it was about like how can I have a good utilization of buildings? So is the building really full? Do I know by sensors? Are my meeting rooms used? Big meeting room, is this space really used a couple of times?
Can I split into four buildings? How is the usage? How can I do more? And the second part, if it's not used, facility management, do I have to clean it? Do I have to think about refurbishment? Do I have to have maintenance? I think everything comes with how can I manage the building more efficient? And here we are part of it. Beside the people flow, the management of the building, and then also about the protection of people, I think that's really where when we talk to our customers, it's very important to touch on this topic and how can we help on this? What's our products which have been in the past maybe purely a mechanical product? How can we help you to work on the people flow?
How can we have with more data intelligent products to, on the one hand, be very clearly selling door closers, selling automatic doors, selling software, but on top, think about what else can we do on top? Because I think it is also very important that we have a stable industry working on the distribution channels, but there's more to offer to our customers. This comes to employee visitor access point, accessibility for all, lobby control, and the topics which are important here is connectivity and cloud, so I was talking about mobile and how can I connect to the cloud? It's interoperability. That's a topic which is not only in our industry, which is very important, so interoperability means that you're coming in a new site, you're coming to a customer where some of your products are in and some of the competition, which is not so good.
But then the question is, how easy can your products be brought into a system where a partner is in or competitor is in? And this means our products have to be more open, more easy to also integrate into other systems because we want to sell door closers, readers, different products. And this interoperability is important to someone. If a customer is with a competitor, how can I get in step by step? And I think that's very important that once you see this one, it's about an ecosystem. An ecosystem of products, which is you're getting more partners in. So two weeks ago, I was meeting Alcatraz. It's a face recognition company. So they are partnering, could be partner with us. How can we use their skills to have easy access?
Some topics are more sensitive on the safety security side, but really we're working in an ecosystem and we are adding partners to our products to have new solutions. Another example in respect is when you see Rohde & Schwarz, self-security check, which we have seen in Las Vegas, same like you have products, you're adding sensors, you're adding new features, and then I think the idea is that in this ecosystem, our products are part and we have connect and we have to make our products smarter products and then really decide that we don't do all on our own. So we will never do any face recognition at all. We will have partners. We will not have some controls.
So I think it's very important this ecosystem that we have a very important part because as I showed you, hardware is a product which the new companies, I'll call it the new competitors, are mainly in the software side. And we have to choose whom to use for the next go-to-market for the next customer journey. So the customer has new requirements. We have more features. We have more products. We have to think with partners in ecosystems. And then we have to think of a lifetime. So there's more to sell. And then over the lifetime of the customer, it's very important that really that it must be and this is something where it's a journey. And you will ask me, okay, is it new? It is a journey and we are on the journey. Are we in some aspects good? In some we are good.
In some we are not as good. So here you see that, for example, you have a very early, you talk to a customer, you talk in the project, you want to be specified, and then you want to come in the end in the execution, in the operation and maintenance. So specification, getting to the customer, and then having the maintenance and service business, which is something where in some areas, mainly in the German-speaking areas, we are very good. We are very engineering, Swiss-German heavy engineering. So our products had a tendency to be more complex than others. And we have to get the word which is on the lower end, ease of planning, ease of installation, ease of use is very important.
Sometimes we see software players which are popping up later than me are more focused and we have to learn here and we are working on the product to really have a seamless integration of the customer from the beginning, from specification. Then once our partners are installing the products that you're having also maybe on your iPad, you're having the right recipe, the right way to do it, and really most important that we also stick to the customers because of maintenance. I think also here with EntriWorX, we have products which are on the way. We have to really refocus on what was planned. How good are we here? What do we have to adjust? I think it's important to understand there's more business and it's over lifetime.
The installed base is a very important aspect for us, also for future service business to look at. I think that's again like a little bit of the technologies. When I think today, you will also not only have people, but you also have some products. You will see that electromechanical transition, AI lifecycle. When you see the products, really ask the question, what is changing? How do you get these topics into the products? What time is required to do it? I think that's really the topics where we have to do something, but where we have to get better because in the past, many systems have been closed systems. So you have one software solution, including hardware. You have your own product, your own firmware, but it only connects within this channel, which is important.
Like in the future, you have to have your product, but you have to be open also to connect with others to really get into other customers and to be more flexible in this industry. I think that is the first part. A good industry, growing, good trends. And who are we? How are we positioned? So that you know 80% of access hardware solution, door closers, automatic hardware, then access automation with the sliding doors, revolving doors, access control solution, service, and then key and wall solution. I think that you know. And that means we have a broad set of products. And I expect one question from you because did the merger really happen? Because the hardware products are somewhere or the automatics are Dorma, access control solution is Kaba.
I can tell you it happens where we have good leadership and it's not happening where we have not as good leadership. You will see markets in Asia where one company was then leading the market and the other more or less disappeared. But you will see good and bad examples. I think that's something where we have a journey where we still see today after 10 years or nine years, still there's a potential that we can use products from one of the two who are today one, where we have to push harder and where we see the potential in the market and that it's ongoing. I think here it's, if I look in the future and I don't want to talk too much about the past, what happened? Why have you done to speed? Why did this not happen?
That is something where we can ask whether something to write a book about. It's about how we shape the future, and I think that's our role here, how we shape the future with the know-how we have and what we want to do, and here it's clear we have more potential with the existing product offering. As I mentioned, it's a journey, and mechanical, electromechanical, digital. So you will see some example. There's a door closer, purely mechanical. You put a small motor, which is only supporting a big motor, which will be an automatic door. And then you put a sensor on top, and the sensor on top will tell you if the door opened, door closed. If the fire door, it's very important information because the fire door should be closed. And this means really like that it's not digital like everybody's digital.
It's more. It is something it makes sense to connect our products to have more features. So digital comes not only with asset management. I know how many doors I have. There is a functionality which is really helping to have more for the customer in which really like helping the customer to manage the building safer, securer, and also more sustainable. We have a 90% commercial non-residential share. Sometimes I'm asked, okay, what do you think about should be a tech residential? I think first of all, the commercial piece is a business which is very suiting to our DNA, our profile. Commercial is more complex. Commercial has more request. So I think today the commercial is really the market where we belong to and also the market which is more resilient and where we have the right products for commercial.
Residential is for me more changed also towards the technical trends of Google, Apple, and Microsoft. So I think we should rethink the topic once there are new technical opportunities. Today I'm very happy to have the high focus on commercial and some residential where it makes sense. And that's today I'll share. 60% refurbishment. So if you look about our growth rates in Germany, for example, in the last year, and also the trend is not changed really. You saw a difficult environment. You didn't see any new projects, but we were growing 10%, which really is something that, okay, some new products, but it shows that we have also the new project business is not as good as we would like to have. So some clouds at the sky. This refurbishment share, we really managed to grow Germany, for example, very well.
This is also based on strong projects, but also on this refurbishment business. Then clearly 60% of product business, strong channel management. This strong channel management is of the product is our really strength in Europe, where we have number one and two position. Then if you go across the Atlantic, we see that we don't have the number one and two position. I will look at this later. Steve will have more detail that the strengths we have of our business partners on the go-to-market, that's if you turn the coin, that we have to work harder in the US because here we are much more number three, four, and five. Good projects, good business, commercial, and the commercial ecosystem where we're working is full of opportunities. Hospitality, we have a share of 10%.
Hospitality today, we are strong in the U.S. with a higher market share. We have potential globally. So we are working, Steve, working with a team. How can we do this go-to-market? How can we strengthen this to have a higher global share to go in the countries? We're working with some big accounts in the important market and a very good market where our products are really perfect for this market. Other topic, data centers, different gates, how you're getting to in the end to the heart of a data center. And here you can see many of the verticals which on the one hand give us resilience. And one vertical which is very important is airport. So in hospitality, just to go back, hospitality, hotels, we saw post-COVID a nice development that was growing.
Currently, we still see that the airport business is really booming and the products we have are also, I think here we have a good advantage over the competition. And more for the future, data centers. Data centers is one of the topics where our products, reliable products, are very well suited to serve this vertical. And where you can see that we have a variety of options to grow the market. And for us, it will be important. If you took two verticals, we have to think about product changes which hopefully serve more verticals. So on the one hand, be specific, but also to try to develop products which then suit maybe two or three verticals, then we would be much more efficient and placed for the future. Installed base. We have over the last 15 years, CHF 20 billion of installed base in the market.
This is the basis for service. And when I talk with René and the team about this is really a very good go-to-market, a good basis with the customers. Customer knows us for long-term, good reliability, and how can we do more out of it, spare parts, but also more service. And I think that's really important to work on the service for the future to have more service. All of our what we are doing is based on sustainability. So we want to be more efficient with our customers. So it means this is part of our DNA, part of our products. We do not see a trade-off between sustainability and making profit. I think it's very important that sustainability is part of our product, of our future products. So more energy efficient. Why? Not only because sustainable, because also you have to exchange the battery every year.
So it means like it's also helping the customer to be more efficient. I think for us, I think it's very good that we continue on this one. However, it must be clear that there is no trade-off and that this has to be part of our products. So great market, great positioning. So what are we going to do? What are we going to maybe do different, faster? We showed you this slide which has three areas. One is about elevate the performance, continue executing our cost program, adding some cost efforts. Then the more midterm, reducing complexity. And we will talk for each a little bit more about why and why are we here. And then thirdly, grow because clearly we want to grow the company. You looking at also the competition, growth is helping on the scale, is helping on the top line and the bottom line.
Elevate performance. So what you've seen that we announced last year, CHF 170 million. We already delivered CHF 84 million in the first year, which means close to 50%. And it's mainly driven by procurement, G&A, product development, operation was always HR, finance, IT, and operations. And here we are on a good path to execute. And you have seen yesterday on Monday night, we have announced that Christian Bauer is joining the EC team. He has two roles. One is focusing on the further transformation. And the second role is the leadership of the KWO business. I know Chris, he came from Alvarez & Marsal from a transformation advisor to KUKA as a transformation consultant. And then he was running Swisslog for five years. So he's joining January 1st.
And he will program over two or more years. It's important to keep up the steam. Now, CHF 84 million we'll reach.
It's very important to keep up the speed, to keep up momentum. I think we are totally convinced that we are going to execute on the CHF 170 million as planned. With Chris Bauer, we have one partner in the EC, which is going to support and focus purely on the execution, while we focus on operational growth, but have someone in our team to really do this full-time together with the KWO job. So CHF 170 million. I talked finance, HR, IT, and operation. I think that is something today which is new information. Hopefully some more new information today until now. But it's very important. We are adding on the CHF 170 million, another CHF 40 million savings for the commercial transformation. Commercial is important. Commercial is the muscle of the organization. It's a go-to-market. Dormakaba is about developing and designing a simple great product.
But then I think it's really most important to have this go-to-market and to be very good in this broad reach across the world and the global setup. So Steve will talk more about this. We are increasing from CHF 170 million to plus CHF 40 million. And in the breakout session, you will hear more about the go-to-market, the long-term countries, how can we digitize, what can we do. And I think that's an important part, a next step that we increase our cost program here of the CHF 40 million. Besides on the cost side, the cost is something we had in the first half of the year, the negotiation and the agreements with the works council. So we have to invest in the people who stay. At the same time, we have to be fair to people who are leaving.
We have to work on this performance culture to really make Dormakaba the company we want to be, focusing global performance, having the right incentive, having the right structure to get this cost topic done. This is really the execution of our Shape4Growth, the cost topic. Second topic is reduce complexity. What happened to Dormakaba in the past? Two topics. On the one hand, Dormakaba was geographic. We had many focuses in the region. It was a different setup. It was a merger. Then there was a shift from regional to functional. It means like in the past, America, Europe, Asia, each had their muscle, each could ask for product. We have many things which are too complex, which are double and triple.
I think this is very important that having a merger, having change in the functions, in the, how I call it, the setup of the organization, and more focus on the function. It's very important that we still are aware of the complexity. So we are taking parts not only one time in the hand, we move it three times. We are sending parts around different sites. And this is something where we really want to get better, where we have to reduce complexity in each function. And Steve, Carsten, Martin, René, and also in Chris's function, it's very important that we continue to reduce complexity. The first topic of this is which is already ongoing. So we are global, but in some markets, the tail-end markets, we are too small and we have to get more efficient.
some markets we are going to change from direct distribution to partners. That means we don't lose on the top line too much, maybe a couple of percentage points. But it's really very important that we are getting more efficient and reduce here the go-to-market with new models. And it's ongoing. We have already divested South Africa, where we're waiting for the closing. We have exited this year in the last month the unprofitable service business in the U.K., service import, but the right service. And I think that we are going to continue. There will be more in Southeast Europe, where we want to more consolidate and have a more focused go-to-market. Second part, the access control solution and the door closer portfolio. So we have a high number.
Once you have business in America, Europe, and Asia in parallel, you have many software platforms which have been developed in parallel. In parallel means you have a new go-to cloud, a new security protocol. What have you do? You have to do 40 plus security protocols. Maintenance, you have to do everything in parallel. Number one, which is very important, where we have a clear goal how we want to do this. It's not overnight, and I can tell you, I think the cost is something which we have in plan for this year, for maybe a little bit of next year with commercial.
The work on the complexity reduction takes two to four years, and some might even take longer because with the convergence of the software solutions, you need migration paths with the customers, so I think that's the path which we go over, show you more.
Really one of the goals we have to do. The second part, which is more visible because software is always like you see, you don't see software. You just think about it. It's more like it's okay. What does it mean? Because software, you have the user interface, you don't know what's behind. On a door closer, you see it much more crisp. It's easier if you know from the past, you have 10,000 products, you're going to 4,000. You see a difference on the software side. You do not see it as clear on the hardware side. I think with this one, I will show you, we want to free up resources for innovation, but also you see some cost savings. On the software, the goal is to reduce the software platform more than 50%. I think that is a big number.
Over the next four years, we want to halve the software platforms, which means we only have to have new security protocols of half of the software. It's about having then the people who are released or we can use for more innovation in the software side because it's very important to innovate and to invest into the software side. On the other hand, once you have the software platform, it comes with firmware hardware, which means the installation in the building, which we also have to align and have to be mobile-ready and be, how I call it, more agnostic and more standardized. So I think this is really happening, and the team, Marc and the team, are working on the strategy to fine-tune the migration plan.
How can which products are stopped at what point in time, what is migrated, which features do we require, where are we on the timeline, and then the consequent execution of the migration. The second part, when I joined, I had my first talk to Dormakaba 2023, sorry, 20 years ago, last summer, and everyone told me about this high door closer complexity, and I heard it, honestly, I heard it in June, I heard it in October, I heard it in January when I became CEO. And I think it was very important that we know many things. It's a question about priorities, what we want to do, and then taking actions, and at Dormakaba, it's not like one silver bullet, everything has changed.
It's many, many small steps which we have to prioritize, where we all in the EC have to agree, what are we doing first, what are we doing second. But you see this streamlining of the hardware portfolio, and we have CHF 1.4 billion hardware. That's only a part of CHF 300 million. And what we saw is with less than 3% of the SKUs, we're generating 80% of the profit. So that means like there are many products which are maybe not really efficient, many products which are on the shelf, many products where we have one or two. And here the goal is we have someone, and I've done this before in the part where when I looked at KUKA, the non-automotive business, how do we get less products, but a better market offering?
What we saw and what the analysis shows is that what we are now doing is we want to reduce the number of variants by 80%. It doesn't mean we have to reduce the number of the SKUs because in the end, the question is more, how many of the same parts do we have to come up with a variety of products? And what we see that, and I only show this to you because there's an analysis, it's based on facts. We believe we can get at least CHF 20 million of cost down on the CHF 300 million revenue. And there's only a fraction of the hardware. And I think also here, this is a journey. We took out the door closer as one product which is highly complex, which may be the highest complexity.
But this should be also like a path, an idea for the rest of the hardware. We might not have the same cost savings, but we are starting here. We see on CHF 300 million, CHF 20 million savings. It takes time. It takes three to four years. But I think it's the right step to do. And once we have done this one, we are going to do the next complexity reduction because it shows like we have too many products. And too many products, what does it mean? It means like, for example, I make now one comment. We have 80 different housings, so where the door closers in 80, 8-0. That means on Carsten's assembly or Carsten's first, he has suppliers for 80 housings. Then he has assembly to change assembly for the housing.
So that really shows that this is not only changing the number of SKUs, but it's changing the process of procurement, less parts, more power. It means assembly, supply chain, so we could be more efficient. I think that really shows how we are tackling this one. But it's taking time. And we must be really here patient and consistent in reducing the number and getting that in the people's minds and heads. Please continue on doing this. First global R&D roadmap. Next year, I have a second roadmap, but this is a first global roadmap. And come back to where we came from, regional, not global, not functional. Now we have one global roadmap. And we can talk really about the go-to-market. We are aligning with the markets, with the big markets, the big five markets, with the rest of the world. What's most important next year?
What's the timeline? What product went to be launched? And then we have to align the resources. And for sure, it's clear that we have wishes for CHF 500 million , but we only have CHF 120 million of R&D resources. And it's really about choosing the right products, the right developments from the market side, and then also think about which technology is helping out in the future. So it's a mix of market-driven and innovation-driven. But I'm very happy to have the first global R&D roadmap, which is most important to steer a company.
If I don't know which product coming next year or in two years, I cannot know. I cannot push Steve like, "You get this product in two years. What is the market? What's your sales behind it?" And then we can really challenge, was it the right product from the market or where are we?
I think that is very important that we are using this roadmap. We are working with it and updating every four weeks about, are we in time and how are we continuing? Product, R&D. Then coming to the operations side. You know that we have always set up in America with Mexico and Nogales. So we have a, how I call it, high-cost country, best-cost country. We have established Sofia, where we also have the shared service center and some operations where already 150 people are working on Sofia and the shared service center. And we have Malacca in Malaysia, close to Singapore, to be used as a best-cost country. What's for me important, and here with Carsten, we'll talk more about it. On the one hand, it's important to send less products around.
So we have some maybe big-size, big operations where we do the majority of products, but in principle, it's important to do local for local. America for America, Europe for Europe, and Asia for Asia, China for China even more. But then think about how can we reduce the number of parts traveling, which means come up with less cost for sending products around, but being much more resilient. And here you see some numbers where clearly it's important on the upper part to increase the local for local stake that we are trying to be maximum local. And then shift between local and the high-cost countries and the best-cost countries and work on this and getting here more efficient. And here Carsten will tell you more about.
Complexity. Complexity, two to four years, ongoing tasks which we have to do. And now we have shifting gears.
Now we're coming up to innovate and grow. Look at the competition, and look at some are always like it's about we tell you 3-5% growth organically. I think it's right to have a number organically, but also sometimes tell you 3-5 plus inorganically. I think here three parts, innovative ecosystem products, America, and then external growth. I think first of all, it's important that we understand it's not only a door closer. It's door closer, but it's also connected. And it's an IoT device that we are using the power that we are not starting to do our own cloud ourselves. We are using that. We are working in ecosystems, and we have intelligent products, which we sometimes can make intelligent our own and sometimes with partners.
And I think it's important that it's the door closer, the automatic door software is speaking on its own, that we change and that we're getting from mechanical standalone connected with data digital. And I think also we will see some products, how are we connecting hardware products, how are we connecting automatic products, and then access control solution. And I think the benefits are clear that we want to be connected, intelligent, and digital to use AI with the products and also in our process internally. These are examples. I think it's much more interesting if you talk to Marc about the example, the go-to-market, what does it mean? What's the impact? What's the feedback on the customer side? How can we be more efficient? And I think that is one important part for me, how do I want to grow the company?
The second part is with EntriWorX, how can I get the customers closer? So we have the channels, our partners. And our partners are somewhat in planning, installation, operations. And we have some tools established. We're testing them, and we have to get more precise and more consistent about what are the benefits of these tools, how are they helping our customers to be more efficient. And it's mainly about in planning cost down, installation cost down. And then also if you do operation with our products, it should be less of maintenance cost. Hopefully, some of our products, some of our, how I call it, of our service products, but it's important that the customer knows that the operation costs go down. Combining physical digital, have we talked about? Now America. Being number one and two in Europe, we are strong. Strong product base.
The products are built up in Europe. PD is very much fed out of Europe and German-speaking engineering. And we have, I call it, a good portfolio in Asia, but we have the biggest market, the biggest potential in America. And therefore, the focus for the strategy must be besides keeping number one position, being more efficient to grow America. Here, Steve will give you more detail. The goal will be to grow GDP plus 2% per annum in the next three years. And we did already start in working on the hardware portfolio to have working on the go-to-market and also on the commercial productivity. I think here it's clear that Steve will give you more details, and then we can follow up in Q&A about how to get this done. And the whole EC, we are all focused on this one.
So I think that's clear also that we are aligned, that we want to get America great again for us and benefit from the American market. Vertical approach. Here, airport, utilities, currently we are mainly focusing in the U.S. We want to go to Europe hand in hand with the customer journey. I think that's something we talked about. And then the other topic is external growth. It shows the big three players and how the industry is consolidated or not consolidated. And here there's lots of room to grow inorganically. And I want to come up with someone where we grow organically, but also have a target for inorganic, maybe for the next business year. But you also know that we are already looking for external growth also in this business year.
When you look about external growth, some people are questioning, okay, your legacy, your past experience is not the best one. So this is also a new management, so you have to give the new management a chance to do the right acquisitions and the right priorities. So it's about strategic fit, convincing USP, critical mass, and the question more like it should not add today too much complexity, but in the end, it has to be accretive to the business, to be clear here. This is reiterating, everything is based on sustainability, performance, complexity, and then grow the company in the future. To use some of my last minutes for the financials, because you can have more discussion on financials clearly also with René, where are we today? We're getting traction. So we've seen good growth in the last years.
EBITDA margin 2021, 2022, and in the two years flat, but in line with expectation, we had a good 2023, 2024. These numbers, you know as good as I, but we are on track also for the future that we want to grow 3%-5%, that we had the 16%-18%, which we have mentioned 2023 on target, on plan. You've seen the return on capital employed should be above 30%. The numbers for 2023, 2024 was 14.7% and 29% adjusted. So we are on the right journey here. And we do have an attractive profile. So balanced business profile, commercial refurbishment, limited volatility because the market is growing, low capital intensity, and a nice profitability, high cash generation. And we do have, after some years, a stronger balance sheet, which I think is a great profile. And I think clearly market and balance sheet are working together.
And what's important, we want to maintain this strong balance sheet. We want to fund organic growth. We want to value accretive acquisitions. And clearly, we want to give good shareholder return, which is our principles. We're clearly also will have more questions about, to more detail about what does it mean to have an accretive acquisition. Coming up now, some initiatives, how are they fitting together? So, 3%-5% organic growth for the business year. America should support this. So we want to grow further, grow more in the verticals America to support this. Then we have the 16%-18% for 2025, 2026, which we keep on. We are adding the commercial transformation of CHF 40 million. And clearly what you saw, we have more numbers. Clearly software is more difficult to grab and to explain, but you've seen complexity reduction.
Only the door closer reduced cost by CHF 20 million. So we have things which are on our plan where we are already start to execute top line and also efficiency. And with this, we clearly reconfirm our guidance for this year, but also for the coming year. The Shape4Growth program will allow us to be in 2025, 2026 at 16%-18%. And the new measures will allow us to do further progress in our plan. And clearly, we have the plan to go to 16%-18%. And clearly we have more ambition, but it's very important. Dormakaba did never deliver 16. So before asking about something else for us, for all of us, it's very much, they're all trained to not tell anything else, 16%-18%. All the measures are helping, supporting. I see some smiling faces, but it's not overpromising.
It's really about the 16 to 18. And then we do the next. And I'm confident that we're going to do this. And thank you for your time. Very happy to, I think, no questions now, Swetlana? No question. Thank you for your time. Thank you for listening. Looking forward to have this day together with you and hope to have many interactions later. Thank you.
Software SAP numbers, different software SAP systems we have in the US is sometimes much more closer to other providers. We have some smaller in Europe and same like in Asia where we have double and triple versions of ERP.
As you know, we had a program Reside and we are you know we are restarting it and I think that is on the one hand an IT project but much more important and I think that was also in the session I had in my break is it's about the underlying processes. And this is what did not happen after the merger so operationally you kept the old processes which means like you know you can only grow as fast as the process allows and the processes are different. And this will be a going it's will be a project for three years plus going to be restarted in January and this is a you know it's a benefit of if you want to really grow efficiently.
So today, if we grow above market and then you look about how much of the scale ends in the bottom line. If you have efficient process, your gross margin should end up in the bottom line. If you're not efficient in more people, it is you don't see the result of the scale and I think that's exactly where we're working on the ERP system where it will be a three years program and it's going country by country company by company to work on this IT platforms. But Marc, maybe you tell something more about the software migration, how long it takes and what is, where it comes from and how to solve it.
When we took the exercise to transform and then reduce the complexity of software, the first approach was we were in front of a legacy systems and we first took with Steve the approach, let's see what are the customer segments that we want to address with what softwares. We have defined four core customer segments and we then identified the different needs whether there were some needs for America specific but basically what we have done is we have had several smaller softwares under critical that were just kept on maintenance and that were just adding complexity to the market to the sales and this orientation to what had to be sold.
So in that sense I think also with Steve we have reached a clear orientation on what are the products that are in the basket of the salespeople to sell and which ones are the ones that we are going to migrate or if the critical mass is so small we're just going to golden freeze and leave under zero maintenance for the customer to opt for another better solution without a complicated migration. I think that just to reiterate we now have the target architecture which platforms are the platforms which are long term to invest in. Thank you. Hello, my name is Dev Gunjay. I work for Pictet Asset Management here in Zurich.
I have two questions on the M&A side, given that your two biggest competitors also have quite an appetite, and I'm assuming all the pipeline of opportunities out there has been approached by one or the other at some point. How do you compete on M&A going forward without entering bidding wars? How do you convince one of those smaller shops to come with you and not with them? So that's my first question on the M&A dynamic, knowing that everyone wants the same thing.
Second question in the Americas. For having spoken with distributors of products in the US, one comment that I heard about the perception of your company, at least at that point in time that was earlier in the year, was that your lead times in the US were worse than your competitors, and that made a difference sometimes to decide to go with the other two. Is this accurate or is this, and if so, what are you doing to change that. Thank you.
On the M&A topic, and you know, I think we always give a guidance or we gave a guidance and this year for the organic growth, and as we believe together that the market is very interesting and we want to go inorganic, so the three plus five plus the inorganic part in the future.
I think you have to have some criteria how we want to look at, and what you mentioned is if there is a hot asset people will bid for it, so I think that's something where we should expect when there's one asset really in the focus. What we see today is there are many succession topics where companies in the smaller area bid CHF 5 million, CHF 10 million, CHF 20 million where you know you talk to people you know for a long time your company knows and they are much more aligned to us and to the competition. I hear it will be not a public situation and clearly here we have the benefit of you know not ending up in a very competitive process.
I assume you know also like then we want to go for market share, and I think market share as you know that the other two are someone have acquired already a lot so there could be some limitation that we have more room to maneuver just to be very vocal in a neutral positive way. I think maybe we have there more ways and can look differently and the others might have more limitations which could be beneficial for us, and clearly if something is really everybody wants to have it will be something where is the biggest synergies to have a good plan how to look at it, and I think that's how I can answer it today.
It's very important to look early on which companies if you really want them engage early to avoid to be in a competitive process as possible, as you know, try to be as early as possible. On the U.S. lead time, maybe Steve, you want to talk about the U.S. the topic in the last year.
Yeah, so I mean, I would say that as we've grown and we've grown with volume in North America, clearly that gives us a pleasant challenge which is to try and keep up with the deliveries that demand creates. I would say many product clusters in North America were as strong if not better than the competition, so hospitality solutions, you know, we have really good on-time delivery market needs.
In some of the other areas as we increased in volumes we saw lead times extended and we've worked with our colleagues in operations and specifically let's say in automation access automation to reduce those lead times down to market acceptable levels and beyond as we've seen in recent weeks and that really is just down to the collaboration between the operations colleagues and the marketing colleagues you know we need to make sure that our S&OP planning is refined to match our growth aspirations and but whilst acknowledging that we can improve we need to work out how we can improve so it's probably a fair criticism but I would say in recent months recent weeks we've made really good inroads into improving that reliability just through good collaboration internally.
Thank you, Delphine Brault, Oddo BHF.
You said that more than 80% of the Shape4Growth program was right. I'm curious to learn what was wrong in your view in this program. And second question, can you be a bit more specific on your North American market? You decided to refocus on some verticals. What drove your choice? Was it a question of market penetration or market prospects and what could be the breakdown of verticals in five or 10 years from now as compared to your split presented on page 19?
I will try to answer the first question and then Steve will go to the North American market.
No, I was elected to the board of directors last year in October. Then I joined the board and I got to know the Shape4Growth program as a board member, so the colleagues were presenting what they want to do and together with a consultant.
I mentioned that in the earlier conversation today that some CEOs when they start new in a company they want to have like a what is the baseline I'm starting off so they take you know we had Bain we had BCG maybe go McKinsey we like them also they show us then our R&D costs are 4.4 instead of 4.5 and the benchmark is 3.9 or 4.0 which means like I think the company knows a lot about where we are and the Shape4Growth the starting point was a accurate one but not 99%.
I think lots of the topics, you know, we have to make decision in an imperfect world, and you know, then you are starting and over the process you're getting to learn more about what is important, and I think here what I decide on to start on with the 80%, but then you have to filter what is noise, what is information.
We change some of the topics. For example, one site in Germany was not closed. We kept it. We have a different model. So the idea was together here with the team. We keep on with Shape4Growth. We know not that, you know, some headcount numbers are whatever. Now over 400, yeah, 439 people in this site. So maybe it's 420 or 450. So it's more like let's continue and let's get more. The closer you go, the clearer you are on really the process. There was, like, so I felt something.
The program is somewhat accurate, and it's the right basis to continue because not to lose speed in execution instead of having maybe 85% or 95% accuracy and then start one year later. And this was a trade-off between time and accuracy, but I had enough input and also having colleagues here enough trust that we're doing the right things and if it's not right to adjust. That was more like the starting point to not know everything. German engineering 120%.
I think to answer the vertical question specifically in North America and then probably extend it to generally. I'd say North America where we will still try and build upon our strengths so sports and entertainment we hold a very strong position and we'll continue to invest there working with our partners such as Ticketmaster as I mentioned in the presentation.
In the airport sector we're starting to see greater acceptance of our solutions and the innovation of our solutions across the American infrastructure and air transportation they're investing heavily in airports such as Dulles for example we're highly engaged with them on and that's on the security side but also the airline partners who work on their own hospitality rooms you know their fast tracks we're well engaged there so I would expect to see an improvement a continued improvement in the airport sector and again specifically in North America our multi-housing offering has really improved over the recent years
I think you will have seen the Evo Lock in the demonstration room there the American form factor very well received by the customers a much sleeker and more modern design compared to our competitors and that's supported by a really adaptive software suite behind it so I'd expect us to see a continued growth there and that's where we're strong where there's real opportunity for growth and we're starting to see that with selected partners again in North America is data centers and we've got good offerings and good solutions and working with the right partners the right route to market so I would like to see that improve and probably the final one.
In North America is utilities as well sorry is education we have a strong offering in education this is really boosted by the extension on the CORMAX patent and also the introduction of the five pound 2.25 kilogram exit device which will cement our specifications globally and when it comes to verticals utilities is a real clear opportunity for us it's traditionally been a slow market to adapt technology because of the physical nature of the offering and as you saw today with Skyra.
We have a very good offering that I think will enable us to take part in European initiatives such as critical infrastructure and also again our form factors are reliable and robust so they pass like the loss prevention tests and the physical attack tests so there's a good opportunity and whilst sometimes that element of a sale is quite small it pulls through elements a broader portfolio and the same in multi-housing where we've seen successes it pulls through other parts of our offering so I think we're well placed to develop in those particular verticals.
Marie-Christine Fritsche from SAB: I have a question regarding the American market as well. You mentioned that it's one of your biggest markets and you also want to grow there. How do you view the influence of political changes like we've seen with the election of President Trump? Do you think that will have an impact on your industry and in the markets, for example with the infrastructure industry, or do you think it can even benefit you?
I mean, I'll go first. I've always been taught don't comment on politics, so that's my first statement, but I think when you look at inside North America there are opportunities, there are investment opportunities whichever administration took office, so I don't think that changes our anticipation or affects our growth plans. I think our growth plans will be independent of which administration came in, and that's what we, you know, it's one of the things that we considered when we launched it. I mean, I think I'll pass when it comes to what impact does it have in North America. It's probably more external trade, import and export, which is where we'll see the potential biggest impacts, and maybe Carsten can take that one.
Yeah, I can connect to this as well. You see, in principle, we already started by utilizing principally our Nogales factory principally to move product out of China into the factory. This is a big opportunity, and this we are speeding up quite fast. Yeah, I think the decision was done in a couple of months ago. We're already starting now. Yeah, so acceleration of this activity started as well. Yeah, which is good. Here further opportunity we're looking at this point of time, and then what we need to evaluate in more detail is the principle: what does it mean principally in the full supply chain, yeah, when it comes to component topics.
Yeah, but here also we have a good local footprint, so I don't think that we have big issues, yeah, from this perspective. We have, we're looking into this in more details here, and we're looking at the risk mitigation overall. Yeah, so we have a task force team for sure on this as well because tariffs could impact our financial operations as well. We're looking principally and with legal organization in North America. We're looking at this day by day: what could be the opportunities, how we can react on this as well. Yeah, but I see principally limited effect from our perspective, yeah.
Just maybe to look at from our joint perspective, we have seen that in the last years, you know, interest came back, cost of transport changed, and also that, you know, this convergence of the world changed, so I think our role must be that we, independent of any political direction in countries, we want to be more local, so we do more in America together with Mexico, we want to be more in Europe for Europe, and then in Asia we also talk about like China for China, so I think we have to, when we are going in one market,
we have to want to win in the market, and I think this is something which is, you know, really local, and I think we globally have to support the local company local entity to win in the countries which might change, but independent of any changes, I think our business stays local and we have to do the best to win locally.
Thank you, Patrick Rafaisz, UBS. Can we stay on this topic? Carsten, you showed that slide, right, that Till also showed with the local for local production. Can you just remind us the 50% in Asia? That's not local for local. What are the flows internally here or what kinds of products? What are the destination markets? And related to that, the second question: you mentioned also, Carsten, the expansion of Bulgaria, adding another, you know, adding more capacity by 26. How big do you think Bulgaria could become as a production hub long term as a share of production?
Yeah, two topics. The first question about the local for local in Asia Pacific. So we have a big facility in Singapore where we are principally producing door closures principally for also for the world. Yeah, so this is a big; this is principally driving the 50%. Yeah, in the Singapore facilities where we are concentrating those activities for door closures here and this is driving this main topics from this perspective which gives us the opportunity to bundle to scale. Yeah, and also you will see at this point of time the first automatic lines in Singapore. Yeah, so it's a it's scaling up.
Yeah, it's consolidation gives us the opportunity as well. Yeah, the second topic about the further opportunities in low-cost countries. It is in principle in Nogales, Mexico but also Bulgaria. So first of all, the extension expansion what we're doing at this point of time has two effects. First of all, what we already communicated, moving out of from Germany from Bühl those kind of products into Sofia.
We also take the advantage to go out of the current facility which is in the middle of the city surrounded by housing. So it's a nice area. So we're also moving out as well, take advantage as well. So this is what we are already doing at this point of time. What I can tell you, principally, there are further opportunities coming and the new facility is built up in the, also in building you can do in a modular concept at the end of the day. Yeah, so the building is built up in a modular concept so that if we see more opportunities coming up here further grow we can expand it step by step. Yeah, so furthermore than we communicate I think opportunities coming up and I think it's something we need to work on and furthermore. Yeah, but it's we go.
Yeah, in addition I think you know you have seen that Nogales I think is 15% and Sofia is 5% which shows the potential. So I think Nogales already more moved from Indianapolis to Nogales which we can extend and also on the supply chain and I think Sofia just tells you the big potential and I think it's asking Carsten to come up in the next months maybe for next year with a target what do we believe how much of the European workload can we do out of Sofia.
I think it's too early. It just shows the potential and where we are starting and we are investing in the plant and clearly 5% is not the number you want to end up. We'll tell you maybe next year what the target will be here.
Holger Fritsche, Zürcher Kantonalbank, two questions on the saving initiatives. So the targeted CHF 40 million saving from the commercial transformation. I understood that a major part will come from a further workforce reduction. Where's this supposed to happen and can you talk a bit about the phasing or the timeline of the costs and the savings? So will the cost be more front end loaded and the savings back end loaded? And then on the additional CHF 10 plus CHF 10 million savings from the streamlining of the hardware portfolio, are there any additional costs related to these initiatives? Thanks.
So made a conscious decision not to communicate the number of affected employees today. We have a process to go through which we follow. We've got governance in in each of these countries when it comes to entering in negotiations or information with the employees. So we took the decision not to to do that. There is a clear plan. It's just not something that we're able to communicate at this stage. In terms of the the phasing of the costs, the costs will be phased over the duration of the of a 3-year period. I wouldn't say they were necessarily front end loaded when it comes to the termination costs.
We have a clear country by country plan and that will be communicated individually country by country. Some of the transformation costs such as involving product and involving digital tools will be more front end front end loaded but the majority of the costs are restructuring termination expenses which will be phased over the over the time period.
Maybe the question regarding the cost about complexity reduction door closer. This is a normal operating expense so that this will be part of the normal P&L structure.
Just a question generally on the electromechanical part of the business. I probably missed this in the slides. Can you just give us a sense of how big it is today and what has been the growth that you you've you've been seeing there? And then from an R&D perspective, I think Till one of the criticisms before at Dormakaba was perhaps the company has been overinvested in electromechanical locks at or electromechanical solutions at a time when the market has not matured enough at the expense of the more hardware bread and butter for example door closures which is one of the most if not the most profitable product that you're selling. How do you think about sort of that priority between the electromechanical part and then the innovation amongst the hardware business? That's number one.
And then number two just on the modernization opportunity. I think a peer industry namely the elevator industry has been quite vocal about the potential here over the next coming years just thinking about how you think about the opportunity here and more specifically in terms of how do you sit or how the access control industry sits when it comes to electricity consumption within a building. Is it a case of commercial building just getting away with it by just replacing lighting heating and elevators and then maybe access control does not consume a lot of electricity so you can get away with with that? Just if you could just help us understand there.
Okay.
I would like I would like to answer your question regarding the electromechanical part. You said there was a criticism in the past that we had invested too much on the electromechanical part. I would like maybe to to to rename so the electromechanical is the access control solution so the electronic access control solution electromechanical we consider also the access automation and all the other so focusing on that particular topic the reality was that this software platforms that we are now trying to reduce these software platforms were intended to be platformed into one solution and the big investment that Dormakaba had done was to build on a platform that the decentralized structure of R&D did not benefit from so there was like Dormakaba digital entity which was developing a platform base which the other regional development centers did not exploit
and this let's say was an organizational structural topic that we are now addressing so that now there is no choice when we are migrating a software into a new path then we follow the platform business so this is again scaling global which is my main leitmotif other than innovation with the with the products
I've shown and the solutions but the you know the the day-to-day work of me is still strongly related to transforming the legacy into a healthy platform global scaled business and then being able to reduce the legacy cost that we have in the R&D department and being able then to invest more in innovative products
maybe in addition to Marc when when I joined Dormakaba last year as a board and then as CEO I think many companies between 2007 and 18 was were investing heavily in digital but it is was really sometimes not really focused and that then you have the many platforms many whatever security protocol safety protocol whatever and what I think it's very important that Dormakaba stands for mechanical electromechanical software and digital and that once you develop a product it starts in mechanical it's getting add-on and add-on and then it starts to be a connected product which can get more intelligent and if I have an intelligent product
I will I will work on a starting point where the product was already mechanical so it's a family and the family is a one guy who doesn't need connectivity but the same guy and then I put a sensor and get connected so it is seamless and that's a journey and I think much of it in the past and if I now look in some buildings where I still have a mechanical pure mechanical and now we offer the customer you can have mechanical you can have electromechanical or you can have a sensing yeah and there will be more sensing coming and we can just decide how much sensing we want and
I think that the journey and we want to offer customers the whole journey and then we talk about which features which customer journey you can get with this and I think that is happening on the door closers is happening on the automatic doors including MotionIQ.
And I think here it's important that you know it's not that mechanical and electromechanicals you know it's it's in the end it's the same family but you add on the next one and you don't do a parallel which happened in the past so I think here we have to align that we have always like a family which start mechanical and then adds on features and gets more complex and you decide how much how how big of complex product you want because of features if I think about the the bigger bigger change.
And you talked about this how is access control in the future I think one is very important which is going mobile so key card mobile phone which is important like that we have a seamless flow at home in the office we have to at one point this time decide on do we want to have camera.
And then the door opens or not I think it's also like your own how got appetite how how techy you want to be or you still need the key for we talked about the key for the garage so I think there are lots of things which there's a clear key card mobile and then the other topic is on promise and cloud there will be more cloud because clouds and principles more safe I think this topic interoperability is a very much important topic that you can also your systems can work with others so the standards and I think then clearly about features and one topic could be controller free access so do we need controllers just think about energy do we need batteries or does the energy harvesting be enough.
I think like same like heat cooperation in electric vehicles so lots of things where we can talk two hours we have to decide where we are today I believe I I'm sure we have good engineering capability so we know a lot and we have to find the right timeline what's coming which appetite which which comes on the market what's required I think Skyra is great because it helps the customer on the journey so I think we are in the middle of this development and believe that we have lots of the ingredients in our own hand.
I think I think I just add to that when you when you talk about the energy consumption of an access control system it's relatively modest compared to the energy consumption for heating and ventilation so the benefits of our solutions are confirming that doors are closed confirming that we reduce the the door closing time so that we can actually save energy in other parts of the building so it's it's it can be beneficial even just with simple door monitoring to to to save energy costs
I think we've got time maybe for one or two final questions from the room
sorry me again I have another one quick one just you were saying you have a task force in place to examine the whole terror situation did you get any comfort that Mexico and Canada could not be impacted by new tariff rules or it's still open as far as I know it's still open but maybe you have more confidence.
We do not have more information than you okay we also can all follow what is public and I think today you know it's it's yeah we follow what is being discussed here in the forum but it's not only press but it's also what's behind what's happening on the regulation side and I think here we should have the same same basis
one final question
yep here in front yeah
Marc Possa VV Vermögensverwaltung AG from a longer term perspective a bit visionary could you maybe elude where you see the industry and car as such in the in the frame of maybe 5 to 10 years in terms of capital intensity footprint the the vertical integration monetization of services where you only make 15% today data is the new goal so is is there a potential there that is substantial.
I t would be a good crit to do then the financial model but you know I can tell you we want to do more in the U.S. we want to grow GDP plus 2 which means like we want to increase our market share in the U.S. U.S. should grow we want to benefit from more service you have $20 billion of asset installed and you have CHF 450 million of service we want to do more service I think Asia is someone where we are strong where we can do more from the priority I think America is more important towards the market where we are already in we want to do more in the best cost countries huh which is another potential and but the DNA of Dormakaba should be that we are talking about how can we work.
On the customer journey so what what I just mentioned is the structure so more in best cost focusing on regions but then the topic is like which products you want to show and I think here it's important that Dormakaba is a company of product and people we want to attract the right talent to work on the future of the industry be it controller free be it more even more mobile how can we work on the ecosystems you have this Las Vegas experience where we can but self self service security check many more options will come and I think on us it's that we are part of this ecosystem decide where we want to be strong I think security is clearly one of the key drivers but we should be seen that we can be part of many solutions with a system.
Which is how called where we can deliver what Dormakaba as a whole company and not as a how called as a bouquet of different flowers but one Dormakaba which then is part of the wallet and part of the solution of the customer.
All right on that note I would suggest we close our session Q&A session and would like to first of all thank you very much for your active contribution and for your for your great questions please join us for lunch use also the opportunity to maybe raise any further remaining questions right now and interact with our senior leaders we expect you to be back here at 1:00 P.M. for the customer testimonial session all right thank you and enjoy the lunch.