Ladies and gentlemen, welcome to the half-year results 2024-2025 dormakaba Holding a nalyst conference call and l ive webcast. I'm Youssef, the Conference Call Operator. I would like to remind you that all participants will be in listen-only mode and that the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference will not be recorded for publication or for broadcast.
I would like to remind you that the conference call does include forward-looking statements which are subject to risks and uncertainties. Listeners and readers are therefore strongly encouraged to refer to the disclaimer included in the presentation. At this time, it's my pleasure to hand over to Till Reuter, CEO. Please go ahead.
Thank you and good morning, everybody. It's my pleasure to talk to you about our half-year results for 2024-25. I'm joined today by our new CFO, René Peter, and I'm pleased to welcome him to my team. With his experience, industry knowledge, he's my ideal partner to drive our transformation, and he will bring also what's very important for dormakaba: continuity in this demanding environment and continuity in the team to really transform our journey, and we are just on the way to meet our 16 to 18.
He will also be a great successor to Christina Johansson, who has sadly passed away in early February, and I think it's always important to remind her that on the personal side, we're very sad, but at the same time, we have to work on the company and see that we continue. So let's welcome René and let's start on the financials and look at what we have today for you to present. So I will start with the highlights, the key highlight and development in the first half. Then René will walk you through to our figures, and then for sure I will conclude with an outlook on 2024-2025 before we are going into the Q&A.
So what happened? We had a strong first half year of 2024-2025, strong organic growth and margin expansion in the first half year. We are on track to deliver our midterm targets. You know we know the midterm targets are the 16% to 18% for 2025-2026. The net growth for the first half year was organically 5.1%, supported by all core countries. EBITDA margin, another semester of improvement, increased to 15.2%, up 60 basis points year on year. The free cash flow ended up at CHF 50.9 million, and the balance sheet remained strong.
Our transformation program continues to deliver tangible, sustainable results, and that I will talk to you later about what we have achieved and what our key achievements in the first half year. We have closed three divestments successfully. You have seen we have closed, we sold our UK service, part of the business for automatic doors. We have sold our South African business, and we also lately sold our Kuwait business. Very important on the sales processes, we changed the go-to-market wise. We have been very diversified in some small countries. We were selling to partners to continue our distribution, that we stay in the market but have a different channel.
I think it's important to still serve the markets, however, in a different approach. I think that is the plan here. On the product side, on the company side, we had a very strong start in 2025 with the BAU trade fair in Munich. Record-level visitors and really like a nice boost, a great boost, new products. I will also tell you more about our booth at BAU. And we also, which I will have also a highlight on, we, as mentioned, organically 3%-5% our guidance. We also told you we want to start to do M&A. So we did two small M&A, one bought one in the Netherlands and one in the U.S. I will also give some highlights on these two acquisitions.
Of course, important that in the consolidating market, we also are participating in this consolidation. We have a good order backlog, and that's also why we want to update our outlook. We expect also for the full year of 2024-2025, net sales growth of 3%-5% and an adjusted EBITDA margin of around 15.5%. Looking at the three main figures, so 5.1% organic net sales growth, organic, 15.2% adjusted EBITDA margin, 60 basis points up, and 29.9% return on capital employed, which means like 240 basis points up. René will give you later details on the numbers to have more flesh on the bones.
The numbers are one part, but clearly company is about people and products. A couple of reference projects which we could win last half year. One is in the U.K., Premier Inn, a hotel chain for almost 20 years, one of our partners. We could win in 2024 a multimillion project, replacement of 90,000 locks and a software system. It's going to happen over the next two years, and I think it really shows the close cooperation between dormakaba and the customer in the U.K. Another project, reference project: Victorinox, product everybody at least in Switzerland knows. We can have an ACS solution for the headquarters and European distribution center in Switzerland.
One of the features will be mobile access and key cabinets. So it's also a very nice project in Switzerland which we could achieve, which we could win in the last half year. Another project in Australia, build-to-rent projects. The four biggest build-to-rent projects in Queensland, multi-housing, total volume above CHF 1 million and products are hardware automatics. It's just a couple of examples how we win projects, where we win projects, and it's about our solutions, our hardware, and our portfolio of what dormakaba has to offer. On the BAU fair, I mentioned many, many products on the hardware side, on the automatic side, and also on the access control solution side.
T wo things to mention. One is this automated person screening. Some people remember the pictures of the Munich airport two years ago at the Wiesn where the people were waiting for screening, security screening until outside of the airport. So we have now the security screening, which was starting in Las Vegas, where we have a trial operation in Munich airport to be launched in this quarter, and it was very good cooperation between dormakaba and Rohde & Schwarz, where we helped our customers to become more efficient, more cost-effective, and even make the journey for the customer of the customer more easy, and I think it's also a good example which we showed at.
Where we can be more solutions also for critical infrastructure, where you have kind of the same screening of people because you only will allow people access who really pass the control, and here you can do more control, more efficient control. The second part of solutions of ideas goes also in the critical infrastructure here with Kaba. It's for airport utilities in particular, and it allows just the field. We are now in field test.
We are going to launch in the second quarter, and the idea would be that, for example, infrastructure utilities company can much easier do service to send keys to the mobile phone or to an e-key and to allow access only for people who are really allowed to open critical access points. New products, many more at the BAU fair, and I think that is clearly for me one part of the DNA product and people. But looking in the future, it's about our own organic growth, but also shifting gears to further growth, also about inorganic growth.
So I think something we already announced in the last in the numbers for the full year that we decide organic growth also will start to look about bolt-on acquisitions. We have done two acquisitions. One is Van den Berg, a company in the Netherlands which is a provider for service and project support for access solutions, mainly in the airport sector. It's helping us on the Dutch market. It will be accretive from day one. So a typical example how we get stronger in a country, really go to market, and I think a good example and welcome of the Van den Berg team in the dormakaba family.
Second part we just announced last night, it's investing in the U.S. market. It's the fast-growing market for global secure identity and touchless access. So we took a stake in Safetrust. Also the reader is a data collection point, allowing for better customer experience. It's from our side, clearly American market is our most important, the biggest market. We want to work, we are working on a strategy. We want to strengthen our position, and also here with technology, with go-to-market, we are going to be stronger in the U.S., which is one of our key markets for the future.
After M&A, clearly growing, but on the pillar of continue the transformation, and the transformation is delivering on the numbers, so several workstreams are delivering, and I can tell you some highlights. Clearly, the door closers complexity reduction is a project where we are working to reduce the overall complexity of our product offering. So we want to do the best for the customer, but in a way where we can combine products, have more product families, and be more efficient on the production of the supply chain.
I think that's one part which is very important where we showed you also not only door closers, but also software complexity reduction, then we are expanding our shared service centers, and clearly what's important, you have seen and René can give more detail, we have all restructuring-related severance payments already provisioned, which is important from the cost going forward. Maybe some more flesh on the shared service center launch. More than 10 countries are live, around 370 employees already hired in the shared service centers.
One example, Germany finance migration is ahead of plan, and clearly also one part is that we are launching our global capability center for IT also in the shared service center in Sofia. All programs are on plan and on time to be delivered. We have consolidated our sites in Montreal. It's completed, and I think the second part of our call, on the, we had the CHF 170 million of transformation program. In November, we put CHF 40 million for the commercial transformation on top, and also here we could finalize the negotiation with the works council and the employee representative in Germany already in February.
So also here we are on good plan to deliver the 170 plus 40 in the time we were planning. Being more efficient on the product side with our shared service, but also on the go-to-market. So as already mentioned, we have successfully closed three divestments. The U.K. service business, part of the service business. It was a margin dilutive service, so we keep the margin with the value added. Clearly, transaction will be value or margin accretive to our EBITDA margin in the U.K. And it's very important that we remain on our important business, on the service business, which is part of our DNA, delivering high-value service to our customers.
Second was the sub-Saharan business, South Africa, changed to go-to-market. It's an exclusive dealership agreement where we do not want to lose top line. We want to keep the top line and have a more efficient go-to-market. And here Kuwait is a change of go-to-market, but very efficient to reduce complexity also on the go-to-market side. If you look in both business, we saw in both business good organic sales growth. So in Access Solutions, 5%, in the Key & Wall Solutions, 7% growth. And also both margin have been improved in Access Solutions, 15.3%, and in Key & Wall Solutions, 21.1%.
While the margin of 15.3% is only 10 basis points up, it's very important. Since we are building out the shared service centers, we have to do currently some work shadowing. So work is done twice, once in the shared service center and once at the old location. And René and I see the impact of this work shadowing by somewhere like 70 to 80 basis points, which is the potential we have over shared service, which we will really get the efficiencies out in the coming quarters. But I think that's also one reason if you look at the Access Solutions EBITDA margin. For KWS, clearly another record here, and we are on good track for the full year on KWS.
If you look at the organic growth and look about from which markets the growth is coming, I think the good news is that we are delivering across the globe in all regions, and we don't have any outliers or people are consistently delivering, which also gives us big comfort and confidence on the rest of the year that we are delivering according to plan. Going through market by market, so good organic growth in the U.S. and Canada. We guided our goal is to grow 2% above GDP. GDP has been 2.6, so we were growing in the U.S., Canada, 5.6%. We did in Germany a very good 10%, plus 10%.
Strong volume in all product groups, so it's strong brand, good investment in the market, 10% growth. Switzerland growing around 3%. Then we have Australia, 4%, UK, Ireland, approximately 10%. And what we see is clearly that we are delivering across the globe and that I think all markets are delivering. Some with more challenge, but I think overall a very consistent view on the growth pattern of our company. On KWS, strong top line growth and also profitability, significant margin improvement. The key system with increase in keys and key cutting machines while the automotive solution remained flat.
Mobile walls, good order backlog, strong performance. And what we see that the OEM business has more uncertainties in the geopolitical situation, but overall great performance in the first half year. With this snapshot and this highlight, I will hand over to René, who will give you more details on the financials.
Thank you, Till. And also from my side, a warm welcome to our half-year 2024-25 webcast. As Till said, we had a strong first half of the financial year 2024-25. And I'm very pleased to tell you more about it. Let's have a look at our key figures. We delivered a strong organic net sales growth of 5.1% and an adjusted EBITDA margin of 15.2%. Return on capital employed significantly increased by 240 basis points to 29.9%. Net profit amounted to CHF 96.7 million, driven by operational improvements, lower restructuring expenses, and goodwill amortization, as well as the completion of sites consolidation in Montreal, Canada.
We cash flowed to that CHF 50.9 million. Net debt declined to CHF 466.4 million, down 20.5%. Let's look now in more details, starting first with our top line developments. Net sales for the first half of current financial year amounted to CHF 1,421.3 million. Our strong organic net sales growth of 5.1% was driven by volume growth of 3.3% and price increases of 1.8%. Access Solutions delivered robust, broad-based volume growth of 3.6%, led by our core Access Solutions markets. In addition, Key & Wall Solutions realized strong volume growth of 3.7%, supported by all business units.
The appreciation of the Swiss franc against all major currencies led to a negative currency translation effect of minus 1.6%. Adjusted EBITDA amounted to CHF 216.1 million. Excluding currency translation, divestment impact EBITDA improved by CHF 18.6 million. Volume growth contributed CHF 5.1 million. Price increases and efficiency gains from the ongoing transformation program allowed us to more than offset cost inflation, resulting in a positive price over cost of CHF 13.5 million. As a result, adjusted margin improved by 60 basis points and amounted to 15.2%, demonstrating a fifth consecutive semester of margin improvements.
Our transformation program continues to deliver. The program contributed savings of CHF 31 million in the first half of this financial year. This resulted in total realized savings of CHF 115 million since the launch of the program. Main drivers continued to be procurement and operational efficiency. The G&A workstream is currently in implementation, as Till already mentioned. This resulted in one-time transformation expense for work shadowing and knowledge transfer in the field of finance, HR, and IT. These expenses are accounted for as normal cost of doing business and are not part of items affecting comparability.
We will continue the strict execution of the transformation programs in the coming months. Regarding our income statement, allow me to focus on a few items. Let's have first a look at the gross margin. Excluding restructuring expenses, our gross margin improved by 50 basis points and amounted to 41.4%. This improvement was mainly driven by operational efficiency and net procurement savings. The functional expenses remained flat at 29.2%. Please note that the functional expenses include the costs related to work shadowing and knowledge transfer mentioned before.
Net profit, excluding items affecting comparability, net of tax, increased by 11.9%, resembling the gross margin improvement throughout the whole income statement. The free cash flow margin slightly declined by 40 basis points to 3.6% as the operating cash flow was impacted by higher net working capital. While we have achieved some further improvements in our trade receivables management, inventory grew proportionally to sales due to supply chain constraints and project-specific inventory buildup. CapEx adjusted for real estate divestments were in line with prior year.
The cash flow from the sale or acquisition of subsidiaries in the prior year included the proceeds from the divestment of 3B. Our balance sheet remained strong. We reduced our net debt by 20.5% compared to the same period in prior year. Net debt amounted to CHF 466.4 million, resulting in a debt ratio of 1.1 times adjusted EBITDA. The maturity of our unused syndicated credit facility has been extended by another two years to December 2027, which allowed us to further strengthen our financial structure. Now back to Till for some further information on our financial outlook.
Thank you, René. I think it's important to see that we have our midterm goals of 16%-18% EBITDA as a goal. I think that is our journey, which we want to continue, which we'll continue. If you look now at 2024-25, our order backlog remains unchanged, so no change. As you have seen, also Germany is very good on the project business. Our on-time delivery, which is a challenging environment, is improving. We have to really closely monitor the macro and geopolitical developments, which we clearly will be questioned on tariffs and what is changing. I can tell you that some of the topics with respect to China we already looked at in the last year.
So in some way, we are prepared, but still have to analyze what is happening in the future. But I think it's important we want to continue our journey. And having this in our back pocket, we believe that for the full year, we want to grow 3-5%. And we want to upgrade our guidance of Adjusted EBITDA margin from 15% or at least 15% to around 15.5% in 2024-2025. And with this one, we also believe we are on a good traction, on a good journey for our midterm targets. This is given in a more volatile environment.
However, with our transformation program, with the things we have achieved, with the things we have accelerated or put on top, we believe that we will be around 15.5%, which will be the next step in our journey. With these comments, René and I are happy to take your questions. I'm looking forward to the next one.
We will now begin the question and answer session. Anyone who wishes to ask a question or make a comment may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the queue, you may press star and two. Participants are requested to only use handsets while asking a question. In the interest of time, please limit yourself to two questions. Anyone who has a question or a comment may press star and one at this time. The first question comes from the line of Martin Flueckiger from Kepler Cheuvreux. Please go ahead.
Oh, thanks. Morning, gentlemen. Thanks for taking my questions. Starting off with the first one, and I suppose I'll take one at a time for convenience purposes. Till, you were mentioning earlier on that you're still in the process of analyzing the impact from the changing geopolitical landscape and all the talk on U.S. tariffs. Just wondering what your first thoughts are on the U.S. tariffs on steel and aluminum, because aluminum, if I remember correctly, and even steel, are quite important raw materials for you guys. And what you're expecting in terms of your reaction for your own selling prices. That's my first question.
Okay. I think it is something where I think we are all following the daily news and see what is the impact. I think on a more strategic level, it is something where I mentioned that we already did relocate some business from China to America last year in the light of a more volatile geopolitical situation, and I think in this background, it's very important to know that our business is very local and also our production is very local, and when we shared on the Capital Markets Day.
You could see that more than 80%, more than 85% of what we are selling in America is also produced locally, including Nogales and Montreal, which is now something we have to look at, and it's really what we are screening, the impact of our business in Canada and Mexico, but I think we are very already today, we have a good degree of local produced business, which means there's certain autonomy. The impact from the China business is limited. And what we are doing is clearly, when you talk about the impact of tariffs, we are not the only company which has the impact.
So I think we have to always compare the supply chains of others. And then, if you follow the discussion on tariffs, clearly in some way, everybody will try to give it back to consumers to work on the pricing. So I think here we are doing analysis, what's possible, what pricing is possible. And I think it's too early we look at it. I think we have the benefit that we have a good footprint already today in these local regions, means like local for local Americas, local for local in Europe, local for local in Asia. And from this basis, we analyze the tariff and see what we can mitigate, what we can pass through. And that's, I think, René's and my task.
And given that we have a good local footprint, we believe that we will also have a good standing compared to others.
Okay, thanks. That's helpful. And then on your performance in core and as well as non-core countries, trying to do the math here, it looks to me like there's a gap, a widening gap now in terms of organic growth performance between the core and the rest of the world. I was just wondering, because that wasn't the case in 2023-2024, if I remember correctly. So I was just wondering whether you could explain that widening gap there and whether you think that it's going to persist going forward. Thanks.
Thanks a lot for the question. First of all, the strategy obviously of dormakaba is to focus on our core markets. That means we, from a finance point of view, really would like to see the core market to grow out of the outperform even the rest of the world market. But you are right. The rest of the world markets grew approximately by 2.6%. In this market, we have some regions which are more project-driven, like Southeast Asia or the Middle East, Africa, where we had a very strong prior year, where we actually currently see lower project volume.
But on the other hand, in this market, we also see that bigger markets like Austria or France are performing and South Europe are performing actually very positively.
Okay, thanks.
The next question comes from the line of Patrick Rafaisz from UBS. Please go ahead.
Yeah, thanks. Good morning, everybody. I have a follow-up on what you talked about, the duplication of workforce effects. I think you gave us an indication for the margin impact currently. Can you provide a bit more granularity on the phase-out of that margin dilution over the next two to four semesters? That's the first question.
Patrick, on the, let's say, additional costs that Till already mentioned, it was about on the access solution business impact of about 70 to 80 basis points. Now, as you can imagine, these are costs where we are investing into the future, cost savings. This includes, among others, like the work shadowing, but it also includes, for instance, product transfer in operation to our best cost countries, or also, as we mentioned in our Capital Markets Day, professional services related to the door closer complexity reduction. We have a very strict review of our items affecting comparability.
And therefore, while we do not want to have additional adjustments, we really consider those costs as part of our cost of doing business. We will see the benefit of the shared service center cost reduction program in the coming six to 12 months. Our objective is very clear to get the full run rate benefit in the year 2025-2026 when we are targeting the 16%-18% EBITDA margin.
Okay, great. And the second question would be on Germany and the continued very dynamic demand you're seeing there. Till, you mentioned strong demand or strong growth across all product groups, but can you also talk a bit about the main verticals that have been driving this or the ones that stand out?
I think, Patrick, that's something where I always try to a little bit elaborate. So it is across the offering. So I think one topic is we were benefiting from a more solid portfolio. So we added some products to the portfolio. And secondly, the project and airport business is supporting. So it's a little bit of a strong brand, having more products, we've got a more round portfolio. And then the airport and project business. But as you mentioned, clearly, 10% against a more volatile market, a good performance by the team, which clearly is what we recognize and we're also looking in the next half year. Momentum continues. So I think it's something where we believe it's going to continue.
Great. Thank you both.
The next question comes from the line of Tobias Woerner from Stifel. Please go ahead. Your line is open, sir. You may proceed with your question.
Can you hear me now?
Yes.
Thank you for taking my questions, if I may. Number one, when I look at your free cash flow in H1, you've seen a deterioration mainly because of the change in net working capital. How would you see the full year unfolding? Last year, you got to a 7.2% free cash flow to sales ratio. Are we still on track for that number? Thank you.
The first half year in our business is normally the weaker business from a cash flow point of view because in the first half year, we have especially personnel-related cash outflows related to vacation, accrued vacation, as well as to variable compensation. And in addition, in the second half year, we normally have our annual maintenance contracts, which we are billing in January. So therefore, it's normally a seasonality in those figures with a lower cash flow in the first half year and a stronger cash flow in the second half year. Now, in this financial year, we obviously will face in the second half year some cash outflow coming from the restructuring expenses.
And so therefore, if you look at the cash flow before items affecting comparability, we're expecting to be in the same range as we were in the last year.
Thank you. The second question, when I look at your bridge in terms of price cost and prices, you seem or price in particular at the top line, you seem to see a slight deterioration or deceleration in that price movement. Would you hope, given what you said earlier, that the year coming should see that at least stabilize or reaccelerate?
We have seen price increases to become a little more demanding. We have also seen that in the industry overall. From that point of view, the focus certainly on us is currently more on productivity improvement, efficiency improvement, because on the pricing side, we see some headwinds when it comes from a market point of view, what is possible to implement.
And lastly, thank you. Lastly, when looking at your transformation story or your transformation as a group, where do you feel in terms of benchmarking against best in class you have most upside, whether this is in context of purely financial, but also operational and product-related KPIs?
I think, let me try to answer differently. So we have a cost program of CHF 170 million where we delivered now CHF 115. To me, there's kind of a CHF 55 to come for the good cost program for procurement, finance, IT, and HR. We have put in CHF 40 million for commercial, where we showed you that, for example, the negotiation with the German employees have been done in February, and we are now also means like here we are on execution. And then we have to put on the door closer complexity, which is another CHF 10 million, which we showed you on the graph. The transformation program did start at a cost program as a benchmark.
And you look at the function, and now it's going to be much more like efficiency when you think about our complexity on product, on software side, hardware side, and on structure. So I think on the benchmark side, we are over the middle. Maybe if you look at the 115 out of 200, 170 plus 40 plus 10 means 220. So I think we are somewhere in the middle of the transformation. On the complexity reduction, which is more like the processes, the things which you discussed for 10 years, what we're going to change. If you change the complexity of the product, you have to change the supply chain, the operations.
Here we are at the beginning, and this process takes another two to three years because you have to clean up legacy. You have to look at all the details of the product offering. So cost-wise, 50%, complexity-wise in the first semester.
Thank you. Just following up on that complexity, I actually went to your stand at the BAU, and I was impressed there was a vibe around the place. At the same time, sometimes one can put forward too many products. Is this something you're considering as well, streamlining the product offering to reduce the cost base in that context?
Let me know what I think too many products. I think the only guy who can judge on is the customer. So I think what I want to have is I want to give solution to the customer in the most efficient way. On the fair, you want to show that you are leading innovation or can transform trends into good innovative products, and I think that really the team did fantastic at the BAU fair, where, for example, batter-assisted door closers and new software solutions. I think then we come back to how it's done, and you know that dormakaba had been two years ago much more decentralized. We have our first global product roadmap, which means there'd be some parallel and double R&D.
I think our goal will be to think about product families on the software and the hardware side to have a similar offering which allows diversification at the top level, but having a much more like a toolbox system on the lower level that we can do more or similar with less variety. That's exactly what I've done in the past on other industries, reducing complexity, which means reducing complexity on the product, reducing complexity in the supply chain, reducing complexity in the operation. Then you have multiple projects about. I think this is a process which goes from sales or product management to R&D or from sales over supply chain to operation.
These topics we did start last year, and we have to do more. And this will be changing the way we work and the way we can also react to the market, act on the product and on the customer side. But the idea will be that the customer still feels dormakaba is delivering the right product at the right time.
Thank you very much, and just to repeat, it was a fantastic event at the BAU. Thank you to this team.
The next question comes from the line of Martin Hüsler from Zürcher Kantonalbank. Please go ahead.
Yes, good morning to everyone. I have two questions. First of all, you mentioned projects such as a replacement for a Premier Inn hotel in the UK. Another question a bit more generally. Do you see a trend towards more renovation and retrofit projects versus new construction? And maybe you could remind us what's the current split between new construction and retrofit and renovation business.
Okay. I would not say there's a trend. So we have 40-60% of refurbishment, as we call it, and 40% of new construction, which is what we didn't see as a change in trends. It's now even less new construction. I think we still work with this number. What we see, and that's something we'll also explain, that once you think about refurbishment, you refurb products, which might be 10, 15, 20 years old, which mean you can upgrade and can sell higher value products, which should be beneficial to us. So I think this is somewhat unchanged. We have 90% commercial.
We have only 10% potential. We have a 60% refurbishment, 40% new. And then also we have a 60% product, 25% project, and 15% service. So I think these metrics more or less are stable. But one trend is that refurbishment should be on higher value added.
Okay. Thank you. That's clear. And then my second question, if worst comes to worst and Mexican tariffs would unfold, I mean, how flexible would you be to react in Nogales to compensate higher tariffs to the U.S.? This is a very good question.
Your question raises 10 different answers. So I think first of all, we analyze the tariffs on Canada, on Mexico, and also if that tariff is cut on steel and aluminum. And you have to look about the whole equation. So the good thing is we have good local and we have lots of business which is produced in the U.S. for the U.S. And as you know, we have some business in Mexico and some in Canada. So if you think of changing something, you have to look at the tariffs, but also you have to look at the labor arbitrage. So even if something is changing, the question is, is the underlying business still valid or not?
I think that is something we have to do. We have to look about the exposure to Canada. And here we're doing what we can adjust maybe already today, which might be adjustable or we change some stuff. But overall, I think it's very good that we have a strong local for local business. That is one topic. And the second topic is tariffs are not hitting only dormakaba. Tariffs are hitting the whole world. And if you look at Powell from the Fed, if you look about tariffs, what is he looking?
He doesn't look at the interest rate because the big impact from tariffs might end up in higher consumer price, which means companies will try to push the pricing through to the end customer, not only dormakaba, and that means there are different measures, and we have to be smart in looking about what is competition doing, how much are they exposed, doing our analysis, and that's exactly what we are doing, looking about our exposure compared to the competition, what's our pricing power, and then reacting as it's wise, but I think it is something where our strategic rationale of being local for local is still valid, and we have to see how much more we can do local for local.
You also remember that last year we were relocating business from China to the Americas in the light of this geopolitical volatility. So I think we are acting on it. And I think it's important that not acting in a rush, but doing your analysis and see what's the right measure to do.
Okay. Thanks a lot.
The next question comes from the line of Remo Rosenau from Helvetische Bank. Please go ahead.
Yes. Hi. Good morning. In the half-year report, there was mention that within the adjusted EBITDA with a margin of 15.2%, there were also one-off expenses included for work shadowing. Could you quantify that, how much that was and how much that will go down now going forward?
When we look at the total group result, we talked before 70%-80% for the Access Solutions. It's roughly about 60 basis points for the total group. This was the impact of this double cost. This will continue in the second half year at a lower level. But keep in mind that we are starting now with the commercial transformation, which in principle includes another transfer of activities in the commercial area to Sofia, where we will see a similar impact also in the coming months. From that point of view, it's not something where you can say it will be immediately disappearing. It will continue certainly for the next months ahead.
But it should show you kind of where our running costs should go to. I think that's the indication when we have in 2025, 2026, it has to be lowered, and then we will be up in the 16%-18%.
Okay. And for the current year, I mean, your new guidance goes now for 15.5% roundabout, which implies a margin in the second half of around 15.8%, around 100 basis points up versus the previous second half. So is that mainly underlying improvements or also some of these items?
I didn't understand the rest of the question, some of it.
Well, in the second half, given your new guidance, this implies a margin of 15.8% versus 15.2% in the first half now. So is that mainly driven by underlying improvements or are there also some extra items in use?
No, there are no extra items. But what you can expect is obviously we have accelerated the transfer into the shared service center, and we will see bigger savings, especially in the finance and HR and IT environment in the second half year coming out of this transfer. There's no extra. It's underlying transformation.
Okay. Great. Thank you very much.
The next question is a follow-up from Martin Flueckiger, Kepler Cheuvreux. Please go ahead.
Yes, thanks for taking my follow-up. It's actually one for René, a financial question, housekeeping, I suppose. It looks to me like for this year, we've reached about half of the targeted incremental cost savings. I was just wondering whether you could confirm that. So if we're still talking about roughly CHF 60 million incremental cost savings from the transformation program in 2024, 2025. And simultaneously, if you could spare a few words on the guidance regarding items affecting comparability and the tax rate, because I believe the tax rate was a little bit lower than what most people had anticipated. Thanks.
First question on the savings, yes, you can confirm. We are heading towards CHF 170 million cost savings in the year 2025, 2026 on the program. As you still already mentioned, we have an announced budget increase by another CHF 40 million in the years 2027, 2028 on the commercial transformation and another CHF 10 million on the door closer complexity. We are well on track to deliver this. Regarding the items affecting comparability, we had roughly about CHF 21 million restructuring costs in the first half year. We had some benefit from the divestment of real estate in Montreal.
We expect items affecting comparability the same magnitude as we have seen in the first half year, which will bring us to about CHF 30 million-CHF 40 million items affecting comparability in this financial year and a similar amount in the next financial year. Regarding tax rate, we have elements like the goodwill amortization, which is not tax-deductible. On the other hand, we have the benefits, let's say, from restructuring costs from the past, which we actually did not consider as a deferred tax asset, where we will see some impact.
Therefore, I'm expecting that the tax rate will be lower because we can benefit from the tax deductibility of the restructuring expense, especially in Germany.
The next question comes from the line of Ingo Stößel , UBS. Please go ahead.
Hi. Good morning. I have two questions from my side. You have a bond maturing in October. Could you maybe provide us some guidance on what your plans are for this? With it being CHF 320 million, I would expect probably refinancing, but if you have any input there, that'd be great. And regarding M&A, do you have kind of a targeted budget which you're looking at on an annual basis? Or maybe phrased differently, how much inorganic growth do you want to achieve on a regular basis?
Maybe first on the loan. As you know, we are in a very, let's say, we have in the industry, we have a strong cash generation. And as already raised the question before, we expect a stronger free cash for the second half year. So therefore, unless there will be some major acquisitions, we will target and repay part of the loan, which needs to be renewed. But we are still assessing which magnitude and how much we will renew. But we will renew the loan, most likely a smaller portion.
On the M&A side, I think also as indicated, the last full year figures and also on the Capital Markets Day, that we want to organically grow by 3%-5%. But it's important because the industry is a consolidating industry. The Big Three have 35%. So I think they are much more smaller and medium-sized players. So really, it's one part of us to also buy more companies. I think it's very important that these companies are accretive to our margin targets. And we didn't tell a number of how much to invest, but we told you once that the level of leverage we would maximum have is like 2.5 times EBITDA, just to give kind of a ballpark. We are a cash flow generative business.
So in the end, it gives you kind of a cornerstones where we want to go. Clearly, I think today, having the transformation, we will much more do bolt-ons, which we can easily digest to grow the business. One focus will be Americas. But I think it's important acquisition, helping us on the go-to-market and not increasing complexity too much for the time.
Thank you very much.
Ladies and gentlemen, that was the last question. I would therefore like to turn the conference back over to Till Reuter, CEO, for any closing remarks.
Thank you for your questions. Thank you for listening. I think we have done another step in our transformation towards our midterm targets. Hope to see you soon. And thank you for today's for your attendance.