Ladies and gentlemen, welcome to the Schindler Q1 Results 2025 Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. I would like to remind you that all participants are in listen- only mode, and 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 must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Lars Brorson, Head of Investor Relations. Please go ahead, sir.
Thank you, Sandra, and good morning, everybody, and welcome to our first quarter 2025 results conference call. My name is Lars Brorson. I'm Head of Investor Relations at Schindler. I'm here together with Paolo Compagna, our CEO, and Carla De Geyseleer , our CFO. Paolo will discuss our highlights of the Q1 results and our 2025 market outlook, and Carla will then take us through the financials. After the presentation, we're happy to take your questions. We plan to close the call at 11:00, and with that, I hand over to Paolo. Paolo, please go ahead.
Good morning, everyone. I am pleased to be back to report on our performance in Q1, which I think is another quarter we can be proud of. Let me start by giving you some highlights on slide number three, as well as touch on some of the external challenges we are facing currently. First, our top-line development this quarter was encouraging. Our order growth accelerated to 6%, which is a growth level we haven't seen for almost two years, actually since Q2 2023. Carla will give you more detail shortly, but I'm pleased that as a service company, we continue to deliver solid growth in our Service and Modernization business. In particular, Mod had a strong quarter with close to 20% growth. It is also worth noting that our new installations orders grew this quarter in value terms by 1%, despite the headwinds in China.
I'm particularly pleased that we grew our NI order intake by high single digits in EMEA in the quarter, as we now start to see evidence of the impact the rollout of the new modular platform is having. Revenue growth returned to positive this quarter, with growth across all our regions, with the exception of China. I was particularly pleased to see Mod revenue growth for the group accelerated to double digits in the quarter, as we executed well on the backlog. More generally, on modernization, I think we're making some good progress in terms of our product portfolio, organization, and strategy. Looking ahead, I expect Mod revenue growth to continue at this pace, growing double digits in 2025. On profitability, we had a strong start of the year with our EBIT reported margin hitting 12%, up 110 basis points year on year.
Good to see that our SG&A efficiency initiatives are starting to deliver savings and that our procurement and supply chain operations continue to support margins. Carla will provide you with the details. It is not just the operating earnings, but also the conversion to cash, which makes us happy. We delivered operating cash flow of CHF 540 million in the quarter. We continue to do well on cash conversion, as our team is working very hard to drive continued improvement in our net working capital. Now, let me touch on some of the challenges we are facing in our external environment. Firstly, the NI market in the Americas was off to a weaker start this year than expected, and we see also softer leading indicators, which have led us to downgrade the respective NI market outlook. Otherwise, our market outlook is unchanged. More about that shortly.
On tariffs, Carla will walk you through our estimates on the expected impacts but let me say that I think we are in a strong position to deal with higher tariffs and to mitigate their impacts in 2025. In my view, the bigger question is how tariffs will impact the economics of our customers' construction projects and our NI market more broadly. For now, it's too early to have real visibility on that. Regarding the organizational changes, since I took over the CEO role earlier this year, let me say that the leadership transition has been well completed. We managed a very smooth and seamless transition with no operational disruption. As we discussed together in February at our full-year results, we are staying on our strategic course we set two years ago.
Finally, before I move on, just a word on our innovation launch and the X8 product, which we presented at the Milan Design Week early in April. You will notice I'm using the phrase innovation launch, not product launch, as we believe this is truly a new concept, leveraging innovative digital technologies, providing far more freedom for architects, and setting new standards for sustainability. The initial customer feedback has been very encouraging. Now, moving to slide four, Schindler orders intake in Q1 2025. First, on Service, our portfolio units continue to expand at a healthy pace, with the best growth in China and Asia-Pacific, even as China conversions slow as a consequence of the NI market decline in the last years. On Modernization, as mentioned before, we are really pleased with a strong start in the year. We saw double-digit growth across all regions except China.
The weaker growth in China this quarter, up low single digit, is primarily due to a tough comparison from Q1 last year and fewer large projects booked in this quarter. The pipeline remains robust, and we expect a re-acceleration in the coming quarters. Conversely, Southern Europe was a standout this quarter, and we believe this region can continue to deliver strong Mod growth during 2025. In the New Installation, we saw growth across all regions except China, strongly supported by the new model platform we already introduced. Our performance in the Americas was the highlight of the quarter, with both North and South America growing double digit, and we recorded also strong growth in Asia-Pacific and a pickup in orders in Northern Europe. However, the weak market condition in China led to an overall low single-digit decrease in NI order intake.
Moving now to our market outlook for 2025 on slide five. We continue to expect the Service markets globally to grow at a healthy pace across all regions. Modernization markets will continue to be very active, with mid to high single-digit growth across the world and double-digit growth in China, as the government continues to support renewal of equipment, including elevators. In new installations, we continue to expect the global market to decline high single digit, dragged down mainly by low-teens contraction in China, where residential floor space started declined more than 20% in Q1 2025, marking the first consecutive year decline in housing starts, in spite of the government's resolve to stabilize the property sector. We have decided to make a single revision to our 2025 market outlook, as I mentioned, now expecting the Americas New Installation market to come down slightly in volume terms.
This reflects the weaker start to the year in North America, down close to 10% in Q1, as well as more visible cooling off in the Brazilian NI market after the exceptionally strong 2024. A word on the U.S. market. You will recall that we saw activity pick up in the second half of last year and had expected that momentum to continue in 2025. After a steep drop in the first quarter and in light of the softer leading indicators and added uncertainty from trade policies, we have now lowered our expectations. Across EMEA, we see a good growth outlook in the Middle East and countries such as Spain, as well as signs of bottoming out in the important German market. Asia-Pacific, excluding China, is expected to grow mid single digit, driven by India and Southeast Asia.
With that, let me turn over to Carla to walk us through our financial results in more detail. Carla, please go ahead.
Thank you very much, Paolo, and good morning, everybody. Let me start with slide seven and referring to the left-hand side of the slide, and there you can see that all our headline KPIs continue to point in the right direction. Allow me to give four quick observations before we dive into the details on the following slides. Firstly, as Paolo noted, the order growth accelerated to 6% this quarter, and yes, this is the highest quarterly order growth that we have seen since the second quarter 2023. As importantly, it was broad-based with the growth in all the regions and the segments outside of our Chinese New Installation business. Secondly, we returned to revenue growth in the quarter after the dip into negative growth in the prior quarter, so now tracking in line with our full-year guidance for 2025 of low single-digit growth.
I will elaborate on that later. Thirdly, we continue to make some really good progress on the journey towards our 13% EBIT reported mid-term target. This quarter, our reported EBIT margin came in at 12%. We had no restructuring charges in the quarter, so that helped, but I was nevertheless very pleased to see the pickup in efficiency savings this quarter. Lastly, I will highlight our operating cash flow again this quarter. Now, it continues to stay at a very healthy level, driven by a good development in the operating earnings and a stable net working capital, which is really pleasing after the big improvement that we have seen in 2024. Now, moving to slide eight, and there let me say first that it's nice to see some healthy organic growth return to the business with 6% order growth in local currency in quarter one.
As Paolo highlighted already, it's very much Service and Modernization driving that order growth. Mod grew close to 20% with double-digit growth in all regions outside China. It's also worth noting that our New Installation business actually grew overall in value terms this quarter, albeit very modestly, despite the headwinds from China. This growth was driven by EMEA and the Americas, which grew high single digit and mid teens, respectively, in value terms in the quarter. China New Installation orders were down high twenties, and Paolo referred already to it. We are very pleased to see the impact of the rollout of our new modular platform and the effect it is having on our order intake in EMEA. Now, moving on to the right-hand side of the slide, the revenue development. There you can see that our revenue grew 2.5% in the quarter.
As I mentioned, to highlight, this quarter was the growth in Modernization, which picked up, driven by good execution and a gradual normalization of the backlog rotation times. We expect the Modernization revenue to stay at a very healthy level in 2025, clearly supported by our backlog, which was up 9% year on year at the end of the quarter. Now, a brief word on FX, which was broadly neutral to our financial performance in the quarter, but a big but. Clearly, the recent strengthening of the Swiss franc will have a negative effect in 2025, and we expect it could shave off a mid, let's say, up to 5 percentage points of our top line in the three remaining quarters of the year, assuming the FX rates stay at the current level.
Let me also briefly touch on our backlog because I realized there were already some questions regarding the restatement of our backlog. It is very simple. This relates to our U.S. business, which has historically recognized order intake on a letter of intent basis instead of a contract-signed basis. That has now changed and has been harmonized with the rest of the group. Q1 2024 has been restated accordingly, and the impact on our Q1 order intake is immaterial, while the impact on our order backlog is approximately CHF 500 million. Secondly, I am pleased to report that our backlog margin improved again in quarter one sequentially, and that follows the improvement in quarter four. Two quarters of sequentially positive development after the flattish development that we saw in early 2024, which is very encouraging.
The legacy backlog, as many of you have followed closely in recent years, continues to be worked down. It stood now at 10% of the total backlog at quarter-end, down from the 12% at year-end 2024. I should also mention for completeness that the rollout of our new modular platform is progressing according to plan. You will remember that we have completed the rollout in Europe . We are now ramping up in India and Brazil as focus areas and are finalizing the specs for the rest of the regions. Now, moving on to slide nine to give you some insight on the EBIT performance. Allow me to focus on the drivers of our operational improvement, the $37 million uptake that you see in the bridge.
You will remember that through 2024, we shared that the majority of the operational improvement was driven by price and mix, while efficiency was rather a smaller contributor. Now this quarter, I'm super pleased to report that efficiency is the biggest contributor. This comes as savings from last year's headcount reduction program are starting to come through. The SG&A cost savings are coming through in addition to the procurement savings, which are continuing to deliver. Price and mix were for sure contributors, but less than efficiency this quarter and less so than in prior quarters. Also, please note that we had no restructuring costs which were burdening the Q1 results. Now, moving on to slide 10, and there you see our net profit and the fact that our net profit increased to CHF 257 million in quarter one.
The net margin continued to improve and stands now at 9.4%. As Paolo mentioned already, our operating cash flow was also strong, coming in at CHF 540 million, driven by the uptake in the operating profit and the lower cash restructuring. Net working capital change was flat year on year, which I see as pleasing after the big improvements that we made last year. Now, we will have for sure quarterly swings in our net working capital, as we also saw last year. Overall, I expect us to deliver another solid operating cash flow in 2025, even if we might not hit the exceptional level of last year. Moving on to slide 11, a new topic in the presentation, and it's about the tariffs. I wanted to provide you with some details on how we see the likely impact from the tariffs on our business as per today.
Based on the tariff levels as they stand today, we estimate an annual gross impact on our business of around CHF 33 million. For 2025, we estimate the impact to be around CHF 23 million. We have given you the breakdown in the table by tariff category on imports to our U.S. business. If we look at it by country, about 80% of the impact comes from the import to the U.S. from China and 20% from the imports to the U.S. from the rest of the world, and that is primarily Europe. The estimates we have provided you include both our direct and indirect exposure. In terms of the net impact, of course, we have initiated actions which we expect will, over time, fully offset the tariffs.
These include pricing actions, both for our existing backlog as well as for new orders. It also includes supply chain mitigating actions and management of our suppliers. It is clear that these actions, particularly the ones on the supply chain, will take some time to take effect, and we will likely have some burden from tariffs on our 2025 performance. Now, moving on to slide 12, that is the slide that brings me to our 2025 guidance, which remains unchanged. I reconfirm we expect a low single-digit revenue growth in local currency and an EBIT reported margin of 12%. I am sure you will ask why not a more ambitious margin guidance after the strong start of the year.
Let me address this upfront and point you to four reasons why we expect the margin expansion to be more muted over the remaining three quarters of the year compared to quarter one. Firstly, as I just discussed, tariffs are a headwind in 2025, and there is a risk that we are not able to fully offset the gross impact in 2025 with our mitigating actions. Number two, remember that we guide on reported EBIT margin. We took no restructuring charges in the first quarter, so the up to CHF 50 million of restructuring cost, which we have guided you to in 2025, are still to come. Thirdly, China will be a greater burden in the coming quarters than it was in quarter one, partly because China is a seasonally smaller contributor in Q1 and partly because of the lower margin orders taken in in 2024.
Obviously, this will have a greater impact on our P&L as the year progresses. Fourthly, we will have less margin tailwind from mix in the coming quarters versus Q1, which has less contribution from NI, our New Installation business, and also our Modernization business growth in the revenue mix. Let me conclude by thanking, together with my colleagues in the Executive Committee, our close to 70,000 employees across the globe for their efforts so far in 2025. We are facing a very uncertain and volatile market environment, but I trust with the dedicated efforts and commitments of our colleagues all around the world, we believe we are very well placed to continue to serve our customers and to win in the markets we play. With that, I hand over to Lars.
Thank you, Carla. Paolo and Carla are now happy to take your questions. Can I ask you kindly to limit yourself to two questions only, given the time we have available and the relatively long queue that we have for the questions and answers? With that, operator, please, can we take the first question?
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume of the webcast while asking a question. Anyone with a question may press star and one at this time. Our first question comes from James Moore from Redburn Atlantic. Please go ahead.
Yes, good morning, everyone. And Paolo, Carla, Lars. I wondered if we could start with the tariff environment in two dimensions, really, just to make sure I understand the exposures and how that drives the charge. Secondly, whether you're seeing any change to demand in the U.S. in any category in orders at the start of April. That's really the second question. Going back to the first, my understanding was that you were maybe 95%-96% of your business is kind of local U.S., so you're very localized with a minimal amount coming in and maybe something in the magnitude of China being somewhere around 3% of the import. Is that correct? What's your approach on prices, your approach to pass it all through with a price hike or to try and reroute some of the exposure?
If you could share how much you might do that and what the timing of price looks like, that will be very helpful.
James, good morning, first of all. Very good question. Let me start and then Carla can complete the picture. First of all, without going to the details of reassumptions, but what we can confirm is, yes, we are a very localized entity with our factories in the U.S. for elevators and escalators. That is right. The impact Carla was showing in details, you see the biggest is indeed coming from what we call indirect, which is our local American supplier base. There is an impact, for sure. We have suppliers who import steel, aluminum, all this stuff. This is the impact we expect to come. You see in the assumptions we are taking into our numbers. The import from China even is relatively contained, however, it is for our suppliers the bigger part.
I think Carla was mentioning it, 80% is imported from China, while 20% is coming from Europe. The China tariffs do play a big role to our suppliers, to our supplier base. On this one, we must include it in our assumptions and we have done it. Now, to the second part, how we treat it, this may be two legs of the same story. One is working with our supplier base. We listen to the impact, we are negotiating, we are trying to mitigate the most we can. We must say there's also an impact, and Carla was showing it on 2025, and we come to this in a second, what will be later, is that for sure there are contracts which are still valid for this year. We enforce as much as we can these conditions on the suppliers.
There's a second leg, which is the pricing leg. You were mentioning this. The pricing leg is a very, I'll say, sensitive one. Without going to the details of our pricing policy, but for sure, we are working now on pricing in New Installation and Modernization. This has a different lever, actually also depending from product timing and all the conditions you can imagine to play a role into pricing. Carla, something to complete?
No, I think, I mean, the only thing maybe, James, what I could complement is for the non-China sourcing, I mean, that is purely related to the microelectronics that we actually source from Europe, just to give also a bit of color there what is outside China. Overall, I think we are very well placed when it comes to the tariff because of the simple reason what Paolo mentioned, that we have our operations in the U.S.
Thank you very much. Just so I understand, if you say got $20 million of your $23 million through as price this year, would I assume that that was all on your U.S. business, which is a sort of $2 billion business? It is really only a point of price needed.
No, I mean, the $23 million, just to be clear, I showed the impact on the slide. That is really the impact on our U.S. business coming from the import into the U.S. We are working on different mitigating actions. As you can imagine, it's all work in progress. I mean, we don't have now the clear breakdown on what is pricing and what is the supply chain. It's all work in progress.
To clarify, James, a very important question. Okay. Yeah.
Next question.
Next question, please, operator.
The next question, Martin Hüsler from ZKB. Please go ahead.
Yes. First of all, maybe on the new product, Schindler X8, obviously, we probably went through the product descriptions, but can you maybe elaborate a bit more? How does it fit into your product range? And about the geographical rollout in the future, is it targeting only new construction or also modernization? That is the first question. The second question is, you mentioned that all the intake was down in unit, but actually overall for the group up in value. I was just wondering whether this is pure pricing or whether we should also take into consideration product mix such as large order contracts, which might have impacted here value over volume also a bit. Thank you.
Martin, good morning. Let me take the second one first, and then I come to X8, which is a very nice topic. All the intake is influencing units also very much by the market mix, right? If you take the portion of China with the units there and the value outside of China, the answer is very clear. This evaluation units versus value comes from the market mix. Coming to X8, and I was mentioning it before, we call it innovation launch. Let me clarify in a sentence what does it mean for us. Yes, it is a product. We have included all these new innovations, digital, physical, what we call phygital at the end, in one product, which by now is launched in selected markets and will be applied in selected segments. Therefore, it is not a global product launch as we did in the past with the modular platform.
Here's much more about promoting the innovations, promoting the solutions, which then will find their way also in other products going forward. It is more of an innovation launch, introduction of innovations in the industry rather than a product launch globally by now.
Okay. It's my understanding that it's like high premium for residential, but rather small to mid-rise buildings. Is that correct?
Yes. Thank you for the well-summarized point. It's very much a premium product for residential and therefore also in selected markets and in selected segments. Yes.
Thank you. Thanks a lot.
Thank you, Martin. Next question, please.
The next question comes from Daniela Costa from Goldman Sachs. Please go ahead.
Hi, good morning. I have one question and a follow-up. First, just wanted to go back to the North America guidance and to understand, was the downgrade on the market outlook there more prompted by your macro expectations or actively on the ground? Have you started to see any project delays or cancellations? I will ask the second one after.
Okay. Daniela, good morning. Happy to answer this one. Our estimation is based on the Q1 NEII, as well as the public available market numbers, which just came out these days, end of last week. We have numbers from Q1 new installation, which are public. This was taken into consideration. To the second part of your question, do we see now cancellation coming in? Not now. The answer to the second part of your question is not now. We cannot confirm.
Understood. Thank you. As a kind of on a similar vein, your comment on Germany bottoming out, I was wondering if it's more sort of just your expectation given the stimulus that we've seen there, or are there any concrete signs that you can point to of things that are happening on the ground to call that bottom?
Here we have two sources. One is our own sales force, which in Germany is very close to the ground. Second, we expect now slowly but surely something which everyone is expecting, that the pickup in infrastructure project would start showing some effects. Even we do not assume this being a very fast pickup, as we know very well that this specific segment moves quite slowly. However, we anticipate that we might have in the course of this year some first contribution, which then leads us to the overall assumption of bottoming out the situation or the market trend in Germany.
Germany is a margin accretive country?
Excuse me, can you repeat, Daniela?
Is Germany a margin accretive country?
Yes, it is. Yeah, it is. It is. Yes.
Got it. Thank you very much.
Thank you, Daniela.
Thank you, Daniela. Next question, please.
The next question comes from Benjamin Heelan from Bank of America. Please go ahead.
Yeah, thank you. Sorry, I wanted to kind of touch on that question around North America again. Sorry, can you go through in just a bit more detail, like what has driven the change and what have you seen on the ground in Q1? I'm a bit confused in terms of the comments you just made to Daniela versus what was said at the beginning of the presentation. Thank you.
Benjamin, Q1 in the U.S., talking market now, right? We just received last week the numbers collected by NEII, which are the public available numbers of the units sold in Q1 in the U.S. This was the first indication that the market in Q1 was down around 9%. It was not anticipated last year when we did our assumptions, we were looking at a flat market on a higher level. We have a drop. This is a given fact from Q1, which we had to take into consideration. Now, why we have adjusted going forward is, as we say, this 9% drop in Q1 to be recovered in the coming three quarters would implicitly assume that the market would pick up. This, we say in the light of the tariffs, we assume be more unlikely.
Even if it stays at the level of now, we would have this drop of Q1, which influenced the full year outlook.
Okay. That's very clear. Thank you. As just a very quick follow-up, what have you seen in Q1, and have you seen any change in the last three to four weeks in terms of customer buying patterns since the tariffs were announced? Thank you very much.
No, we don't have signals of a visible slowdown. It's also maybe too early to draw, let's say, assumptions. Now, we would look at single projects. Therefore, I think with this, we have to wait a couple of months to have a clear insight. Coming back to your question, we don't see it on the ground. Without.
Okay. Thank you.
Thank you. Ben, next question, please.
The next question comes from Miguel Borrega from BNP Paribas. Please go ahead.
Hi, good morning, everyone. Thanks for taking my questions. Going back to tariffs and specifically wondering how you calculated these indirect CHF 7 million. How much cost inflation are you effectively expecting from your suppliers? In terms of mitigating actions, how much of that would be possible to offset in 2025? I imagine pricing will be difficult given the delayed times. Is it more of an issue of changing suppliers? Wouldn't that also come at the cost? That's my first question.
Yes. Thank you for the question. I will take that one. Yeah. Your question related to the $7 million, as I said, is all pretty much work in progress. We are now around the table with suppliers, but it's early days. Yes, it's not only about negotiation. Of course, we are also looking at alternative sourcing, and it all depends on component by component. Yeah, it's too early to give more details than what we actually included in the slides. Happy to share more in Q2, and hopefully, we have a clearer view on the world.
Thank you. Just in terms of China, we've seen some positive leading indicators coming through. Just wondering if you're becoming, let's say, less negative on the outlook for China, or in other words, what would be the catalyst for you to become more constructive? Is it volumes or the pricing of orders that keeps going down?
Miguel, thank you for the question. Without saying what would need to make us more positive looking forward, if we look at the situation today, we still see a healthy growth in Service and Modernization. Here, we have to keep in mind, it is the largest market in units on this planet. Therefore, I think by all means, we remain positive in terms of markets when it comes to Service and Modernization in China. When we look at New Installation, it is very early time to assume a, let's say, recovery of the market is our view on that. You were mentioning one argument, which has shown us in the last three years becoming always the negative point, and it was the pricing on New Installation especially, which we do not expect this year to recover yet.
Thank you, Miguel. Next question, please.
The next question comes from John Kim from Deutsche Bank. Please go ahead.
Hi, good morning. Two, if I may. Just a quick follow-up on that. Specific to China, can you talk about activity levels that you're seeing in tier one and tier two markets, whether they're meaningfully different on new construction or if there's any positive lead indicators? I'll wait on the second.
John, good morning. Especially Q1, as you know, is in China a very special quarter, right? Mostly, this is traditionally mostly influenced by Chinese New Year. To take this as a reference of activities in the market, one could say maybe it's not a relative one. You are asking about Q2, and by now, in the new installation, we do not expect a recovery. Sorry, it was tier one and tier two. By now, we don't see a significant change in new installation. We don't by now.
Okay. Understood. A completely unrelated question for two. If we think about your cost efficiency initiatives and the effect of modular units being sold through new installations, is there anything we should be paying attention to in the cadence through the quarters, or is it fairly evenly spread in terms of impacts?
I will take this question. It is actually the journey we are going through. As I mentioned already, last year, because of all the efficiencies that we are working on, you see that gradually picking up, and that is expected to continue going forward. Going forward, we will see an, or we are working towards, an incremental effect of the efficiencies coming through, and that is in the different areas that we are working on and that we shared before. It is both covering our New Installation business, the Modernization business, but obviously also the overhead, which is also a big item next to the continued work we are doing in the procurement and the supply chain.
Okay. Thank you.
Pleasure.
Thank you, John. Next question, please.
The next question comes from Vlad Sergievskii from Barclays. Please go ahead.
Good morning. Thanks very much for taking my two questions. I'll ask them one by one if I may. First, on the pricing in China across your product spectrum, what would you say is happening on leading-edge pricing on new orders for new equipment, Service, and Modernization?
Good morning. By now, we don't expect any significant change on the pricing coming through this year. We were talking about New Installation before, but now your question is also including the other product and businesses. So we don't count now on a pickup on pricings in China this year. This is not what we count on.
Understood. Thanks very much. A more conceptual question on Modernization globally, if I may. Historically, this business has been cyclical. Where do you think we are in the modernization cycle right now? Is there any impact or any risk of impact on this cycle from U.S.-related uncertainty, given, of course, that U.S. is one of the biggest modernization markets out there?
Yeah. I take the first, and then Carla, you can complete. Cycle, let's say, we were discussing this also in our full year result. Modernization business is here to stay, in our opinion. The Modernization volume worldwide, and I come to the U.S. in a second, is there to continue to increase. Yes, number-wise, we have a big impact from China as the biggest installed base is there. You make a right point. Volume-wise, the U.S. and Americas play a big role. Therefore, we count on further growth in Modernization business. As I mentioned before, in some regions, double-digit. Therefore, this remains a key business in the future. Cycle, I would say, now we are in a cycle which is there to stay for a while.
Yes. Maybe also one point is that the financing is really a small part of the modernization decision. That's a good point because when we look at our portfolio, the majority comes from what we call the modernization replacement.
This is great. Very clear. Thanks very much.
Thank you, Vlad. Any final questions, operator?
So far, there are no final questions. I remind participants to press star and one.
Very good. Thank you very much. With that, I think we close out. Thank you very much for attending the call today. Please feel free to reach out to me, IR, for any follow-ups you might have. The next scheduled event we have is the presentation of our first half 2025 results on July 18th. With that, thank you and goodbye from us. I'll hand it back to the operator.
Thank you. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.