Good morning. It's a pleasure to welcome you today to our Fast Forward Media Investor Conference. With me today on the stage is Thomas Hasler, our CEO; Adrian Widmer, our CFO; and Philippe Jost, our Manager, Asia-Pacific. As well present today here in the room is our Chair, Thierry Vanlancker, and the members of our Group Management. Thank you very much for being here as well. With this, I hand over to Thomas to start the conference.
Good, thank you, and also a warm welcome from my side, and for all the guests from far and near, and also the online participants. Here a special welcome to the early birds in the U.S. that have a very long Thanksgiving today, so that's the good part. It's 4:00 A.M. to join this next 90 minutes. I would also like to welcome my team, colleagues, employees of the Sika Group, and it is them that enables us here in front to present a strong Sika with a clear way forward and clarity on the Fast Forward program that we will comment on in the coming 60 minutes. I would like also, before we go into the program, to talk about the foundation of Sika a little bit.
It's a foundation from the past that is also guiding us into the future, and key elements in there are very elementary to our success also going forward. We will also talk about China in particular, and Philippe will take that part. Before we then go into the details of the Fast Forward Program, on one side with the cost measures and efficiency measures, and on the other side, I think the very exciting digitalization path that we have ahead of us. Of course, at the end, we then talk, answer your questions at the final stage. Strong foundation: at the beginning of this year, we started, we declared in February Sika is stronger than ever, and that's absolutely true, and the foundation of our strength is delivering. Our Strategy 28 is on track. We are controlling the controllable and we deliver on the controllable.
There are elements that we don't control. We don't control the markets and we don't control the ethics, but many things we control, and I think we are delivering on that, most particularly on the outgrowing of markets and peers. Talking about markets, markets have been challenging the last three years, and they are still challenging. We come back to that in a moment. It's not everywhere the same, and the momentum—I will also comment on the momentum of the market—the markets are challenged, and the demand, the underlying demand in the markets is actually growing, which means a backlog in construction is piling up, which I will also show later on.
On our side, since the markets are the markets, the outperformance is leading then also to safeguarding our profitability, taking action on the efficiency, also investing in tools that enable us to outgrow also going forward with even more drive. This is all our organic contribution. The bolt-on M&A is a key factor in our strategy as well. Let me show you briefly: this is our strategy. Nothing has changed except the guidance for the annual growth in local currencies 3%-6%. Here, let me clarify very specifically what has changed. As you can see here on the picture on the left, the 6%-9% growth, annual growth in the strategy as outlined at the end of 2023, was assuming a market contribution of 2.5%, which has been a long-time average that has delivered over the last 20 years.
The past three years haven't seen that kind of growth. This is the part we don't control. What we control is our market penetration, market share gains, as well as the M&A, and they are unchanged. The 3%-6% is an unchanged commitment of the company to outperform in the existing markets and also with contribution from M&A. This is not an indication that we assume the markets are going to be the same in the coming three years. Whatever we assume for the annual market situation, we will guide at the right time. If we have, for instance, a market condition where we assume more normalized growth of 2.5%, this will be additive to the 3%-6%, which means we are in the 6%-9% range as indicated at the beginning of the strategy. Now, top-line growth is one thing.
The other thing is we commit to 20%-23% in the strategy starting in 2026. Of course, we have different levers contributing to this, and growth is a key lever, as well as material margin efficiency and M&A. As you can see here on the chart, since the growth is limited, here we have a gap. This gap we are proactively filling with higher efficiency measures that are compensating so that we can, despite, let's say, limited market support, still deliver on the profitability and safeguard our commitment to 20%-23%. Now, talking about the markets, core markets like the mature markets in Europe and in North America, of course, we all have seen big impacts from inflation, from interest rates, political uncertainty, and the residential construction market has been one of the most challenged in these regards.
Still, in this residential, there are also market spots, pockets that are outperforming. Here, I think Spain, Italy, France, for different reasons, also driven by the energy efficiency program, have been stable and helping us also in these countries to offset the overall residential decline in the industry. On the industrial and commercial construction, also here we have a lot of demand, demand that comes from de-risking of the former global supply chain, most pronounced in the U.S.; we call it reshoring. It is a trend that is ongoing for the last two years. Unfortunately, with the tariff discussion this year, this has been put a bit to the side, waiting how the tariffs are going to set the frame for future North American activities. The de-risking of the global supply chain is a topic not only in North America, it is also in Europe.
In Europe, we are facing also some instability from the political uncertainty that is hindering big investments. Nevertheless, in this industrial commercial market, we have hotspots like data centers. They grow despite any of the market condition at the high growth rate, not only in North America, in Europe, across the globe. It's a fantastic business opportunity for Sika as we have been an early mover, and we provide peace of mind in this. Everything that is AI and digital-driven is still going strong. On the infrastructure side, infrastructure is a market that is more resilient. The limitation in infrastructure is more the budgets of the governments to spend, but money is flowing.
It's not enough, so the backlog in infrastructure is building, but we also have these nice programs in North America and Europe, in particular also the new German Infrastructure Act that is also stimulating more activities in this market. Talking about backlog, housing has a huge backlog that is building that needs to be addressed, that will be addressed also, but it requires here interests and consumer confidence to increase. You can see here alone in the U.S., 5 million missing; in the U.K., 4 million missing. A huge backlog here on the residential side. On the industrial side, as I mentioned here, activities are lined up. This is ready to go for most parts in North America, but we need clarity on the interaction between the economies in North America. Infrastructure: that's a fantastic business for us. It's there.
Every year, the infrastructure ages a year, and it is an old infrastructure. As you can see, the U.S., U.K., France, Europe, in general, we have an old infrastructure that needs more renovation, but also programs to upgrade our infrastructure, not only road and rail, but also the energy, the power. Power supply is going to be the big topic to support our AI-driven economy in the future. Power is a major infrastructure need going forward. The investment programs take time, but they are significant, and they are accretive to the normal spend in infrastructure. In addition to the ones in the U.S. and in Germany, also the commitment in Europe to reinvest into defense requires a lot of renovation of existing military infrastructure and new structure that is going to be built in the coming years.
Now, this is the mature market situation, but we have also very strong markets across the globe, starting from Southeast Asia over to India, Middle East, Africa, Latin America. This is the source for us to grow good, mid-single digit, high single digit, double digit in the Middle East and Africa. It is not all the same. We have pockets of growth. We have regions that are less impacted by the global uncertainty. Now, let me show quickly what we showed you at the nine months result. 2.5% is our local currency growth if we exclude the China construction. If we include the China construction, we are at 1.1% growth in local currency.
The other big, let's say, influencer is the FX with - 4.9%, which is, again, it is out of our control, but our control is that the impact of the FX is only a translation aspect and not a transactional aspect. Now, how do we measure ourselves against the peer? This chart, I think we have shown for quite a while, we have now added here with and without China the outgrowth over the last three years. As you can see, we outgrow our peers by roughly 2%-3% constantly over these three years. You can also see the impact on the growth from China in 2023, a significant contributor to the group growth in 2024 and 2025 for reasons Philippe will also show then is being a detractor of the growth. Overall, we outperform our peers on the organic growth.
Now, here we also show how we outperform our peers on the EBITDA. And the EBITDA outgrowth is even more significant than the organic growth outperformance. Here, we outperform by 6% if we include everything, and if we exclude China, even 8.8%, a significant outperformance. So we gain market share and we gain profitability. That's the golden rule of Sika, that's the secret sauce, delivering market share gains with higher profitability. Now, this is the peer comparison. Let's ask the customer. We have done this year the first global survey, customer survey in more than 30 countries, asking how the customer rates us against the peers that the customer is defining. And here, the net promoter score is much higher than the peers, and it is much higher than the industry benchmark.
This is the reason we can outperform, because our customers are convinced their business is with us in better hands and helps them also to create more value for their customer. It's also a clear intent by our customer to buy more from us, to expand the share of wallet in the coming 12 months. This is an indication they like what they have and they would like to have more. This is a strong supporter of our outperformance. Back to the strategy, the levers on the market penetration, our strong position that we have achieved over the past years is helping us to leverage that cross-sell using all channels that are available, go where the money is. There is less money in certain parts of the markets. There is more money flowing. Data center is a good example. Shifting activities into renovation, refurbishment instead of new build.
This is the way how we can agile adjust. The key geographies are the key geographies. They represent roughly 70%-75%. The key geographies from Japan, China, India, Europe, and the U.S. are core markets for us to build on, and the innovation aspect. That is what customers like us, love us for. We provide tangible value to them through our innovation leadership position. Of course, the acquisition, the yellow part, that is an incremental with the bolt-on acquisitions. The innovation power I mentioned before is generating 23%-25% of our net sales with products not older than five years. This is a steady source of incremental growth and profitability. This business comes in with higher material margins. This is how we price innovation and how we are also gaining traction with our new products in the market.
Do not forget, construction is a relatively conservative market. Products are having a longer lifespan than in other industries, like for instance, automotive or consumer goods. We have here 5% of our workforce dedicated to R&D. Our spend is healthy and is contributing with innovation that are relevant to our customers. Ultimately, I come back to the very beginning, it is the people. Our people generate this. It is the outperformance. It is the people's dedication. It is the performance drive of our organization. Our organization, our people do not want to just play the game. They want to be winning the game. They want to be a leader in the market. They want to be a leader in technology. They want to be a leader in digital. It is coming through the organization, this empowerment that is fundamental to our success, that makes us unique with our Sika spirit.
That is compared also with the willingness of the company to support entrepreneurial drive. Also, having courage, courage for innovation, courage for a new business model. This is, at the end, the source of how we can deliver. Now, I hand over to Adrian to talk about the inorganic part of our deliveries.
Very good. Thank you, Thomas, and good morning. Now, talking about another pillar that is clearly driving value is M&A, is acquisitions, is something which we are driving and addressing very specifically and very successfully. I think a very strong track record. If you look across the last 10 years, more than 40 transactions on average, four per year, and particularly being sort of highly accretive overall, driven by strong synergies.
That's also the way how we look at M&A driving additional growth platforms, leveraging capabilities, essentially in the end driving strong top line as well as cost synergies and resulting on average in about a four-turn reduction of the original multiple in the full year. Three, very strongly driving here superior capital returns, but also strong earnings growth. If you look at acquired profit over the number of years, a clear double-digit increase per annum coming through bolt-on acquisitions. If you look at 2025, we've already closed six acquisitions. This is also based on quite a strong pipeline, a pipeline that is also driven a bit by the environment, which of course, given some of the challenges in the market, also driving quite a healthy pipeline, particularly the small to mid-sized companies having here more pains in this overall market environment.
We specifically continue to very sort of methodologically and structurally look at M&A driving growth platforms, trying to close selective gaps here, be it sort of market share, market access, or also product and system capabilities, driving this strong synergy capture which we have seen before. Six transactions, the latest one, for example, in Saudi Arabia, I think also a very good example of here demonstrating how we think about M&A, adding here a specific solution to our offering in this very strongly growing market, also here again being able to drive cross-selling and leveraging capabilities across the board. We also do invest in innovation and new business models. Also two examples from 2025. On the one hand, a joint venture with Sulzer, which is here addressing here sort of the plastic recycling in construction. On the one hand, a big pain point of our customers.
On the other hand, a valuable source of sustainable raw materials. Here we're piloting here a system starting in the German-speaking part of Europe. A second example here, Geotech, a minority investment in here also new capabilities, a company that is the leader in digital concrete technology platforms, specializing here in smart testing and AI-driven solution to optimize concrete mixes across here the value chain. Also for us here complementing similar type of capability investments we have done in the past, also adding here potentially to our offering in the future. Now, when we talk about M&A, we also have to talk about MBCC, I think particularly the successful integration of MBCC with a very strong realization of synergies, synergies that we have been able to increase in terms of the target by CHF 20 million, originally CHF 180-200 million, now lifted to CHF 200-220 million by 2026.
Very strongly driven by this strong complementarity in terms of solutions, in terms of market channel access, but particularly also a very aligned set of values, essentially enabling here a very successful integration and driving value and synergies across the board, very successfully being on track here to deliver this strong set of synergies. This has already resulted in quite a strong margin improvement. If you look at sort of the MBCC perimeter, if you will, prior to us acquiring MBCC, coming in with an EBITDA of around 15%, having obviously performed quite well in terms of the underlying business, but adding now all these synergies, we currently have a 12-month trailing months run rate of CHF 166 million, which also means we're pushing here towards the upper end of here the guidance of this year coming on the one hand from the top line.
Here, this is the profitability contribution. That's about a quarter of it, and three quarter are related to cost synergies on the SG&A side, operations and footprint, but also procurement, including here optimization of formulations, quite a strong development overall as shown. Adding this together, clearly here a very strong performance driving here profitability of MBCC above 20%, slightly above 20% currently. As shown, we're not at the end here of the synergy capture, but overall a very strong and successful delivery of here synergies and in general of the MBCC integration. Also, when we look specifically at 2025, here another bridge also, firstly on a reported basis, when we look at EBITDA, 19.2% reported in the first nine months, slightly up from last year.
Here, separating the impact of China, clearly a strong underlying improvement to 19.7%, driven on the one hand by here M&A synergies coming from MBCC. That's the contribution or the incremental contribution of this year, but also a very strong material margin development with, let's say, a cost leverage that is slightly negative, but obviously owed to here the low organic growth overall given the market backdrop, but also reflected here largely translation here, the impact as Thomas has mentioned due to a very decentralized cost structure.
We also continue to have a very strong deleveraging profile where our net debt EBITDA ratio will be sort of around to slightly higher 2.1-2.2 at the end of this year, being in line with our commitment of a strong investment grade rating, but also showing here if you look a bit back in time, the larger investments, Parex, for example, MBCC, at least initially increasing here leverage quite significantly, but at the same time in a very brief period of time, over two to three years, clearly being able to significantly deleverage driven by a strong cash generation.
This is also reflected here in our capital allocation policy, which is obviously strongly linked to our strategy. Firstly, first pillar investing here in the business with obviously strong returns on the one hand on the CapEx side where we have sort of around 3% of sales invested in capital expenditures, but also the bolt-on acquisitions driving here these superior returns as shown. Secondly, here also the commitment to an attractive dividend, to a progressive dividend policy that is typically in line here with earnings growth. Of course, a healthy balance sheet, strong investment grade rating with a net debt EBITDA leverage commensurate with it here, 1.3-2.3 turns, as here shown before, our targeted range very much supported here by this strong cash generating profile.
Of course, should we be below that range and we should not find here acquisitions that drive that superior return on an opportunistic basis, share buybacks is a possibility, but we clearly look at this from a risk-return perspective overall. Good. I think with this we look specifically at China, the situation there, but particularly also how we're addressing here the current challenges in China. Over to you, Philippe.
Thank you, Adrian. Good morning, everyone. Thomas and Adrian mentioned China a couple of times, so please allow me to spend the next 5- 10 minutes to give a little bit more context on our business in China and the Chinese overall construction environment. If you look at China, it contributes approximately 10% of our group sales today.
If you look at the split of our business in China, we have about 20% of these sales are in our automotive and industry business, about 80% in construction. A deeper dive into the construction numbers shows that we have about 70%, which we do mainly in our distribution business, mainly focusing on residential construction, and about 30%, which is the industrial and infrastructure part of the construction business. Same as in the rest of the world, we also position our products to offer benefits to our customers and position them at a higher price point than most of our competitors in the market. This allows us to have a very profitable business in China with a solid double-digit profitability and also generating healthy cash flow.
If you look a little bit deeper in those three areas, the construction business on the distribution side here, as mentioned, focused mainly on the residential construction. Sika is today number one in the tile adhesive sector, for example, in that segment. We built up over the years also through the acquisition of Parex. When we acquired Parex, they had about 90,000 point of sales that they were servicing. We've grown that network to roughly around 280,000 point of sales across the whole of China. We also have an end user engagement where we engage with people that use our products, craftsmen, contractors, and grow that network to over 6 million users that we interact with digitally through WeChat and other channels. The products that we sell here are mainly tile adhesives, waterproofing, and sealing and bonding solutions.
The construction, the direct part here, we're dealing with contractors, applicators, mainly in industrial construction. These are manufacturing facilities, warehouses, electronic manufacturing, food and beverage plants, warehouses, data centers, and the like where we mainly offer flooring and roofing solutions, but also sealing and bonding, waterproofing, refurbishment, all the other products that we have in our portfolio. Infrastructure construction, these are transportation, airport bridges, water infrastructure, but also investing into green energy. We have a lot of business with on and offshore wind power plants that we supply with our grouts and other products. A very broad basket of products that we have here in the direct sales offering to the customers.
The last part, automotive and industry, very similar to the rest of the world where we have the sealing and bonding, dampening solutions that we offer here to car manufacturers, both Western and Chinese. We have transportation, buses, trucks, but also supply our adhesives, for wind blade adhesives, also sealing and bonding products that we supply into solar panels in the Chinese market. A very broad portfolio that we offer here, and this puts us at one of the top three players with very advanced technological solutions in the Chinese markets. If you look now at the different parts of the business, how the underlying market is performing, I'm sure all of you read some news a few years back about bankruptcies of companies like Evergrande as a residential developer in China. You see here two numbers on the charts.
On the one hand side, you see in the gray bar, you see the new starts of housing. This is when the building starts to be built, the basement, the structural concrete part of the building, and then you see the new completed. As you remember, the products that I showed on the slide before, the main activity of Sika in this construction is linked to the completion of interior finishing of those buildings. You see here, this is a pretty stable output, even though you had a peak in 2019, 2020 of starting of houses, the completion of these residential structures is more stable over the years. We were able in the years 2019, 2021 to have a strong double-digit growth in this stable environment. Also last year with about a 25% drop.
In conclusion, we were getting very close to being on the same par in sales that we had the priority of a very slight decline, but you see this year another 40% drop in house completions, which is very difficult for us. Overall, the decline is more than 70% in housing starts. We also see a drop in house prices, which leads to a weak consumer confidence, very high savings rates that the Chinese consumers have, and the government policy trying to encourage and revive this sector have so far had limited success. We expect that this is a market that will start to stabilize in 2026. We see, for example, land sales that we track as well as one of the leading indicators starting still slightly negative this year, but starting to bottom out.
We then expect the market to stabilize and recover in 2027, 2028. Overall, I think we also, if I talk to our Chinese colleagues, they're convinced that with the launch of the 15th five-year plan next year, there will be some further government actions to try to have a strong start of that new five-year plan. If we then jump into the industrial and infrastructure construction, industrial construction is after COVID, and many companies had this China plus one strategy, meaning that their supply chains were affected heavily as the country shut down and they started to diversify by putting other manufacturing plants in countries like Southeast Asia, India, or other parts of the world to have a more stable supply chain. This led then to a drop in foreign direct investment, which mainly then was in the industrial construction parts.
At the same time, also the trade tensions continue this effect, but at the same time, large national companies increase their investments and gravitate and kind of fill the gap for some of those missing foreign investors. Here we see the main opportunities that we see still growth is electronic manufacturing plants, semiconductors, but also food and beverage and data centers. The infrastructure construction part over those years was the only one that we had continued growth, even though it has slowed a little bit, but this is still a key part of the Chinese government to continue to invest also in the 15th five-year plan that I mentioned. There is continuous mentioning of infrastructure, communication networks, water infrastructure, wastewater, freshwater, and also green energy. Wind and solar are areas where the government continues to invest in those infrastructure.
The other area of growth and optimism for us is refurbishment. You see here that about only 15% of those investments last year were into refurbishment. This is expected to grow as the infrastructure that was built is aging to 40%. If you compare that to Western countries, Europe, North America, that number would be around 70%. There is still a lot of opportunity for us with the products that we've developed over the years for Europe, for America to have similar products that we launch in the Chinese market to address those needs of refurbishment of infrastructure. What does it mean for us? We've grown in China, high double-digit growth over the last 10 years. This is a very successful story for us. With this growth, both organically and through acquisitions, we've built a network of over 30 plants over those years.
You see they're very dispersed, but you also see clusters in three geographical areas in the Yangtze River Delta around Shanghai, the Greater Bay Area with Hong Kong, Macau, Shenzhen, Guangzhou, and also in the Chengdu, Chongqing area in the western part of the country. Looking at this footprint, there are some actions that we are now accelerating with consolidating some of the decentralized production, combining small volume plants into the larger plants, increasing some insourcing of the tall manufacturing volumes that we had in some of the more remote areas, automation and efficiency, but also looking at using the historically low raw material prices that we have in China to use China as a hub to export products into the rest of Asia-Pacific.
We see on the left-hand side, very hidden in the left corner, you see the graph here how the volumes that we've exporting from China into other parts of Asia-Pacific have increased significantly. Of course, we're also optimizing the organization, readjusting the team sizes, reflecting the different businesses, how they've developed over the years. The plan is then in a couple of years to end up with a footprint that is more efficient with about 25 production sites as we go forward. We also, of course, have actions on the commercial side. Here you see the distribution part working with distributors that we have and wholesalers. Here we're looking at increasing our share of wallet.
The penetration to tier three and tier four cities here, we still have a conversion from site mixed mortar, meaning that the mortar is done by the contractor on site mixing sand and cement in a small mixer and wheelbarrow and creating the mortar themselves. Here we are pushing into those areas, offering pre-bagged mortar solution. This has worked very well for us over the years, increasing this in the tier one and two cities and as we are going into more cities. Tier three cities still are cities with more than a million inhabitants, so this is not a small market in China. The other part that we see here is the home decoration companies. This is an area that is growing rapidly in China where it is about refurbishment of apartments. This is a turnkey supplier.
You go, it's like a huge store, but they then refurbish everything from one hand. You pick a new floor, a new wall, new furniture, new fittings and everything, and they come install this with the contract and network that they have. This is a very attractive market for us because it's a high-end market. We're talking here tile adhesives that are very high performance because the trend there in China is to go towards tiles, large tiles, and this is not 60 by 60 centimeters, but meanwhile we're talking 120 by 180 centimeters. Huge tiles that go on the walls for decorative purposes.
Also in the industrial construction, we hear, as I mentioned, FDI is going down, but we increase our activities with Chinese owners, developments, and contractors and really prioritize the high growth segments, whether they're in the green energy transition or in some of the industrial manufacturing plants that are going up. Specification selling, of course, same as everywhere in the world, is a key area for us. Of course, as I mentioned before, we also go both in housing and residential as well as in infrastructure. We are going towards the growing refurbishment demand that we see in that market and specifically launch products for those areas as well. The last topic I want to address is why China is extremely important for us in the group.
We see more and more Chinese companies not only focusing on China, but focusing on being successful in the rest of the world. On the one hand side, this is main contractors that we work with. They currently, if you look at the top 10 international contractors, meaning the business that they do outside their home country, four of those top 10 contractors are Chinese contractors. This has changed radically over the last 5- 10 years. They have a project value of $2.5 trillion, 64 major projects and 167 industrial projects across the globe. The other part is companies like BYD, Sunwoda, and other companies that you're probably very familiar with. They also start expanding outside of China. Here also we're tracking 63 industrial projects with those companies outside of China with those Chinese owners and contractors.
Just to give you two examples here on the infrastructure projects, these are examples even outside of Asia-Pacific with projects in Latin America, the Metro Bogota, and also in Saudi Arabia, where you have Chinese companies being selected as the contractor to deliver on those projects. Having worked with those contractors in China and having the context, having Chinese-speaking teams that work together with those contractors puts us as Sika in a premium position to service those projects. There are many projects that I could have mentioned in Southeast Asia and the strong growth that was shown before that we have in Southeast Asia, of course, is also linked to a certain extent to being able to capitalize on these projects with those contractors. The other area is automotive and industry. Sunwoda was expanding to Thailand. We have BYD with projects in Brazil, Indonesia, and Hungary.
Okay, thank you, Philippe. Definitely China is a place to be. China is a strategic economy for Sika. As just outlined for the Chinese companies, China is not large enough. The expansion into the rest of the world is going on at full speed, just like we have seen that from other economies like the Japanese, the Koreans many years back.
Nothing new, but we want to be with them and in their home turf as well as in their expansion, as said, 40% of the main contractor. You see that very actively in Africa, in the Middle East, in Southeast Asia. They are everywhere and they need support. They need support just like the other main contractors, the international need support, they need support because those constructions are built to international standards. The owners of those constructions are international. This is the play field and this is our access into that business with the Chinese companies. Besides the automotive that are also doing the same as the Koreans and the Japanese have done many years back. Let's now talk about the Fast Forward Program and a quick introduction before I hand over to Adrian to give some more, let's say, scale and numbers to the program.
I think here it's very important. We have seen the growth lever is not as strong as anticipated because of the underlying market. We are offsetting that with more efficiency. One way to drive more efficiency is just to squeeze more efficiency into an organization. That's not that smart as you are exhausting. You have to provide tools to enable, to accelerate tools which are digital tools to elevate and automate internal processes and also interactions with customers. The investment part of Fast Forward is much more significant in the long term for Sika as it transforms Sika also on the digital side into a leadership position in the markets that we serve. This will lead to overall benefits already within the next three years of CHF 150 million-CHF 200 million, but it comes also at one time cost expense as well as mentioned investments.
First, I hand over to Adrian to give some more clarity on those elements.
Thanks, Thomas. I think very important here, Fast Forward is indeed designed here to strengthen performance now, but particularly in the future. Obviously, talking about benefits here, the investment part will clearly have benefits beyond here the three-year timeframe which we have here given to that program.
It does consist of an element that is more shorter term, more related to cost measures, but particularly driving here accelerated efficiency, also compensating some of the missing growth leverage at the moment, but particularly also here putting the ground here then not only for shorter term optimization, but then really also in combination with our digital investments here driving long-term efficiency, long-term value also for our customers and across the value chain where we will talk about more details in terms of what this is and what will be driving here the impact. The first part here, more on the cost side, the shorter one here also comes with an element of one-off cost. I'll come to this. It is on the one hand, as said, designed to further here optimize here also our footprint and supply chain.
Some capacity measures, for example, as in or primarily in China, but also some simplification on parts of the portfolio overall. In generally here, aligning your operational staffing levels also to some of the market prospects, really taking here the opportunity to drive efficiency and basically also prepare the ground here then for investments that will be starting. There is about a CHF 80 million-CHF 100 million one-off cost attached to this part. About 80% of it is EBITDA relevant. The other 20% is then write-downs or impairments of assets. This will drive about a CHF 80 million-CHF 110 million benefit over the next two years with a large portion already being or having effect in 2026. This is also reflective of the fact that particularly when it comes to the organizational side, also to the personnel side, we are quite well advanced.
It's also not something that has just materialized over the last few weeks here. Preparation has been ongoing for a while and we have already addressed about 60% here of the reductions already, so being well on track and making strong progress. The investment part clearly related to an accelerated digitalization to drive long-term value on the one hand, on the customer side, simplifying our interactions with our customers, providing leaner processes, but also increasing here in some areas. We'll talk about this specifically later on here, our time to market.
Across here the supply chain and the organization driving structural efficiencies through digitalization with some more foundational projects as we call them, for example, a worldwide ERP rollout acceleration, but also particularly building here a system to effectively use the wealth of data we have for various use cases to drive efficiency, but also to generate additional business. Here within the timeframe, but obviously this will go beyond, but within the three years, we're expecting here a CHF 70 million-CHF 90 million benefit gradually increasing, obviously starting relatively slow as this is related to investments and build-ups and rollouts, but providing a very strong foundation here, coming with investments of about CHF 120 million-CHF 150 million over the three years. We will now talk about some of the specific here initiatives and elements and I'll hand back over to Thomas for that.
Okay, thank you, Adrian.
Now we come to the, let's say, most exciting part of the program, the investments, which will make us in the industry the digital leader. We are market leader, we are technology leader, we are innovation leader, and this is our opportunity to become the digital leader. Digital leader in three aspects we would like to emphasize or three buckets here. Digital leader in creating customer value. Customer, direct or indirect customer, are facing an increase, a massive increase in complexity. To deal with this with regulations, specifications, with demands from owners and so on. The engineering part, the specification part becomes enormous complex. Here digital tools make life easier for those stakeholders. Contractors are facing difficulties in executing for various reasons as well. Here again, we can provide ease of doing business, simplicity, also faster response, less lead times to serve our customers.
It is also a mean to elevate our own operation, our own processes to make, let's say, redundancies in repeat operational steps automated instead of human or manual. This is a great opportunity to streamline our supply chain and drive more operational excellence. The third and the most exciting part is driving through data's innovation. Innovations into the market, innovations also in our processes. We want to show you in three blocks these elements. I start with the first one, customer value. Before I start with the customer, I talked about our people. Our people are everything. We have and we will and we do invest into the skills, the digital skills of our organization.
We are all exposed to digitalization in our private life, in our business life, but here we also want to empower and provide the skills that the organization, as mentioned before, can also on the digital journey be entrepreneurial. They know their procedures, they know their processes best, the interaction with the customer, but for this we also have to give them the confidence and the ability to embrace the full power of digital. This with trainings, of course with communities, but also selective additions. We need scientists, we need chemists, engineers, but we also are looking for data scientists to also bring us this angle in and onboard them. As mentioned, this is to simplify, automate as much as we can, and then leaving, let's say, the human brain and the human factor for the real creativity and interaction with the customer.
AI, buzzword everywhere, AI is in many ways already implemented, but it's more to come when we have also the tools in place. I will show a few examples there. Here on the digital journey, value creation with our customers. We have a digital excellence in China. Philippe was explaining that a little bit, this ecosystem end- to- end. This is coming from us, from our supply chain into the distributor with the 280,000 point of sales and then 6 million applicators. In China, it's even going further with 8 million homeowners that are also on our platform. As the homeowners in China are involved in selecting the materials to finish their apartments, homeowners in China are very different than in the rest of the world.
They are used to fake and cheap, and they want to have quality and they buy the interior finishing, the tiles that Philippe mentioned, the big ones. Eventually coming out of Italy, coming out of any place, they want to be sure that they are not fooled by the installation of the waterproofing of the tile setting. Nobody cares about that in Europe or in the U.S. You take it for granted. Nothing is granted in China. If you do not watch, you will be fooled. This system that the Chinese have established several years back is a system that we are rolling out across Asia, but also then other markets as well. I talked about the complexity for our designers, specifiers. The environmental footprint is becoming more and more relevant across the globe. You need data points. You need to verify.
This is very cumbersome if you do it in an analog way. This can take months and months to have validated numbers that are credible and can be used. With the automation tools that we have in place or soon have in place, we can automate that and can have thousands of data sheets, credible data sheets in a very short period of time, enabling then also our specifiers and the contractors to have here a tool to be faster in their work. The Carbon Compass that we recently launched is one element, is one of many more that will follow to provide here a platform, the EPD next year. It is also an opportunity inside the organization to accelerate. I will have here the example of our lab catalyst by utilizing data across the globe to speed up the time to market by speeding up our development process.
Nuage is the name for this tool. We have more than 500 chemists already on the tool. They put their data every day into the system. The system is then available for everybody. All experiments that go into the system can be read and can be retuned through machine learning also to new requirements or adaptations in a foreign country where you can benefit from learnings in another location. The retail journey that I mentioned in China, this is the network that is connecting all the dots in the whole supply chain from us through to the end customer. Visualized here, our own logistics going out, the distributor in the middle, and then the applicator actually using our product. In an analog world, we have a very strong connection to the distributor. We have then only limited access to the applicator.
The applicator is then through promotions, trainings eventually, but you only can go so far. You do not have all the applicators handy. With this program, we have all the applicators. We see them daily where they are, where they are working, what they are working, what they are not doing, and we can steer our information and our marketing and promotion directly to the people that make the selection with which product they are working. Supporting also our distribution channel, giving them the data where the demand is, also making them more effective. This is the picture of the journey as it is in Asia-Pacific. Thank you, Philippe. This is the transformation of the Chinese way into Southeast Asia. As you can see, we are already at 150,000 points of sale in Southeast Asia in various countries.
Our aspiration is to reach 300,000 point of sales in Southeast Asia. That is about the amount that we have currently in China. On the upper right, you see this leads to significant double-digit growth. This works. This is in full rollout mode, and this is also what we want and will bring to other markets in the Middle East, into Eastern Europe, into South America relatively soon. This is working. This is enabling us to outperform the markets and the peers. Okay, I hand over quickly to Adrian to talk more on the inside benefits in supply chain and efficiency.
Of course, here the customer value being most important, but very strongly related to this is obviously what we do in-house. I mean, the full sort of value chain, supply chain, and operational excellence also extremely important to ultimately drive customer value.
I think here the program through digitalization will, on the one hand, enhance resilience, drive efficiency, but particularly also here further improve quality and add transparency to drive also new and improved solutions for our customers. There is an element of what we call sort of foundational investments, if you will. One being here a full ERP rollout across the group, accelerating and leveraging here some of the integration activities we do with MBCC with a clear target to at the beginning or by the beginning of 2027 to have this rollout being concluded across the group, being able then to fully sort of leverage here the benefits of aligned processes.
The second element, very importantly, and I touched upon this briefly in the beginning, is really the ability to make use and sense and monetize the wealth of data we have, we collect on a daily basis through the build-up here of an internal Digital Lake and the system that essentially allows here to increase transparency on the one hand, also again benefiting here our customers, but also making sure we have full visibility on the various touch points and also in the various areas of quality, of delivery performance, for example, but also then driving here on the cost side, for example, through here a harmonized transport management system, which we have now piloted and will start to roll out at the beginning of 2026. Also here driving efficiency across here the value chain. This will also drive further optimization across the network, particularly here on the factory side.
This is one specific investment part here of that bucket. It is basically the digitalization or scale-up of digital capabilities across our factories, essentially to drive optimization, also to more autonomous production, for example, but also being able to capture here the wealth of data that is being generated and to use that through a full connectivity here of the production environment, linking it to our system, our data lake, also at the same time improving and increasing here security. That is also a big topic today to fully sort of have a fully integrated process landscape.
At the end of the day, being able to drive efficiency, safety, sustainability, and performance across many areas in terms of inventory tracking, in terms of preventive maintenance, for example, but also process improvements overall, which ultimately will lead to faster growth, but also to optimization and cost reduction when it comes to logistics and operations cost. Last but not least, also addressing here the optimization of our working capital, particularly on the inventory side. Also here we have designed basically that program in 2025. We're currently piloting it in a couple of factories and we'll start with a more full-blown implementation here in 2026 with targeted 40 plus factories, including some of our key factories to be implemented in 2026 and gradually go on from there. Now for the innovation part, the last element here, I'll hand back to Thomas.
Thank you, Adrian. Yes, we keep the best for the last. The digital innovation, I talked about Nuage. This is utilizing, as I mentioned before, all the test data that are collected globally, accelerating incremental product improvements. Here is an example of a mortar that through this tool can be much faster brought to the market, can reduce also the efforts in R&D by 75% less experiments. This is significant in enabling us to go faster in incremental innovation. The database is collecting all the results of so perceived failed and successful trials, as any failed trial can be the source of a feature for a performance demand of a future product that can help to get faster to incremental, not incremental, fundamental innovation, which is the potential of this tool going forward. The more data we have in this system, the more R&D hubs are onboarded.
The chemists will always be the ones that are handling the system, but they are supported by the machine learning, benefiting from all experiments worldwide. If you have ever been in a lab, you see this magic black lab book where every chemist is scribbling down whatever the trial shall be and what then the outcome was. This is all electronically now available or becoming available for machine learning. First, fundamental improvements that we have seen is for cement additives. Cement is changing quite a lot. We have here calcinated clay, LC3. We have new elements in there where incremental optimization of former know-how is not successful. This tool has enabled us to be here much faster with fundamental innovation because of learnings across the whole organization. It does not need to be from the cement.
It can be also from the motor side, which influences then and helps us to generate more powerful new additives for new cements as they come forward. This is an example of Nuage, and Patricia is leading this, and here much more is to come, and here we invest heavily. We also are exploring with outside data coming in. You remember we have the tools in place, SITRA, to measure concrete from the mixing until it is on the site poured, and we can control the performance of the concrete. This gives us data, real-time data point of uncured concrete. Now with this data, we can also optimize the mix of the concrete, but we can now go even further. We can also measure when the concrete is poured and cured, how the concrete is aging with sensors.
Here we have a collaboration with a startup, Duramon, to be able to stay with the construction not only during the build, but also post the build during the lifespan. This is also on the roof with sensors that are measuring the effectiveness or let's say the leakage potential in a roof. We get data, real-time data already today back from the roofs that we can then also convert into refurbishment jobs, which we can also convert back into customer confidence that our system is the best system in the industry, giving real-time data during the life of a construction structure or building. This is the beginning. This is ultimately the vision that we not only are involved at the build and the renovation, but we are in between. Waterproofing is a key aspect that is driving renovation needs.
Sealing is another key element that is driving innovation refurbishment needs. This can be watched, monitored, and optimized through digital means. This is innovation to come. This is also reflected in our interaction with external partners. Sulzer has been mentioned. Construction waste, especially plastic waste, is a huge issue. This is not only in Europe. This is globally an issue. Here, engaging and finding new ways to steer this waste and make out of waste new input material for us, but also for others. This is the drive that we have here in the partnership that we have established, creating new business models. Lastly, I think as a global leader, we know 100 plus markets. We have the technology leadership. We have the best customers. We have all the data. They are our data. They are in our data lake. We can connect them.
In the past, we had connections through an ERP. We had connections through a CRM. We had connections through our sales organization. We can connect everything in our data lake. The data lake of Sika is the most powerful data lake in the industry. We want to fish. We want to fish in this data lake. We want to make this connection. We want to use here models, machine learning models to give us benefits out of this unique data pool that we have in our hand. Adrian talked. We are building the foundation. We are connecting, but this is going to be a key additional competitive advantage of Sika besides the innovation, the R&D, the technological expertise that we provide to our customer. With this, I hand over to Dominik for the Q&A.
Thank you very much, Thomas. We start now with our Q&A.
The people that are in the live stream, they have as well the opportunity to ask questions. We installed the chat. The first questions, of course, go now here into the room. Please raise your hand if you have any questions. Let's start over there directly with Cedar, please.
Thanks. Good morning. It's Cedar Ekblom from Morgan Stanley. I'd like to dig a little bit into China. You put up a chart there that showed that housing sales had actually started to decelerate around 2021, 2022. And the sales in China have actually been relatively resilient for the group. Can you please unpack what the strategy has been in China in the last two to three years, whether you have been introducing products that might have supported the revenue growth at the expense of margins? I ask this question because there is a very clear intention now to size down the China business in order to support the margin profile of the product mix. That's the first question. Give us some color on what the approach has been in the China market. We're not at the beginning of a downturn.
We're well advanced, and now there is the strategic shift there. That would be helpful to understand the journey. If you could just reflect on, say, the last two years, I know that you've been very clear that you've been controlling the controllable. What do you think you could have done differently or maybe more rapidly? Obviously, we've got to a point now where obviously the business is addressing some of the margin headwinds, et cetera, but I'd just like to get a perspective on, with retrospect, which is obviously a perfect, or with hindsight, which is always perfect science, where we could have responded quicker or otherwise. Thank you.
Okay. Thank you, Cedar. On the China, I think the China chart is very important that you look at the yellow bars that are indicating that's the actual consumed residential housing square meter in China. It has been almost kind of constant for many years while the gray bars indicate the overbuilt, the speculative overbuilt that ultimately led to this, let's say, dilemma that there is so much, let's say, empty capacity in the market. The actual consumed square meters in China have been kind of very stable over many years, indicating that the urbanization need and the movements in China are supporting such a level. 700 million square meter is the number. In 2023, this is the last year where we had this. We came out of COVID, and it started to pile up.
That is when also the consumer confidence into the housing market started to deteriorate. To your question, what happened, how were we able to have significant outperformance in this 700,000 sq m is very clear. The geographical expansion, we moved from tier one into tier two and tier three. We expanded our distribution network, as indicated by Philippe, from 90,000 point of sales at the year 2020 to 280,000 point of sales. We also have a Chinese maturity level in this application field, which is far lower than in other parts of the world. Philippe mentioned the wall. The wall is a sensitive application for tile. In China, this is done today at the prefabricated level of about 70% because this is sensitive. The floor is only at the level of 25%.
This has also helped us that this conversion from on-site mix to a more mature approach has been driving exceptional growth in China in those years. This is also continuing. This is also to your the second part of the question, how can we outperform now in a very challenging volume reduction with the square meter being so down? It is the value aspect. It is the high-profile application where the owners and where the requirement of the applications are high. That is the focus. That is what Philippe indicated. That is where we are also proactively expanding. We have growth in those segments. We have on the lower entry-level side, we have more, let's say, challenges where we have local players that try to penetrate where we have made a decision that we put margins over volume as the Chinese competitive landscape is very different.
It's the first time they have the situation, and they try as hard as possible to continue to grow while deflationary effects are making that very disastrous when you look at the profitability that companies result in with going down that path. We don't want to go down that path.
Next question goes to your neighbor, Pujarini, please.
In terms of the one-off costs, is there any risk that some of it might spill over to next year based on one of the charts that you were showing? Related to that, the benefits that you shared, is there a possibility of a deceleration? Going back to the question of optimizing your product portfolio and your plant footprint, could you give us some more color into exactly what kind of products you're trying to skew towards and more color around the plant optimization?
Yeah. On the one-time cost, I mean, at CHF 80 million-CHF 100 million, I think there is a very sort of limited risk that there will be an amount in 2026. I mean, it could be a few million, but I do not expect this to be significant. As mentioned, we are well progressed here with the program and also defining and communicating exactly what it is in terms of the benefits. That is then sort of the logical answer to that given that we are well on track. I think that is also well confirmed. I think there is no risk that this will decelerate.
Good. I have seen questions over here. Patrick, please. Yeah.
Yes, thanks. It's Patrick Raffers from UBS. Maybe half a follow-up to Cedar's question. If you look at China, currently there's a conscious decision to rightsize the organization, bringing in tolling products, but also maybe some limited points of sales cuts, right? I think you alluded to that with the Q3 call. This process will take until mid-2026, right? I think that's what you said. By Q3, this will be washed out. If you fast forward to that point, where are your China sales compared to, let's say, 2019 when Parex was fully included? I'm just trying to understand, right? You had a period of relative outperformance, but now we're going into relative underperformance. Where do you stand? A similar question on MBCC. Adrian, you showed us the chart with the synergies, the implied margin for MBCC.
If we took the same approach for growth, how has MBCC tracked versus Sika on organics in that period?
Maybe I'll take the MBCC one. I mean, here on top-line growth, the synergistic element and obviously the underlying performance. I mean, together, I'd say the MBCC, including the synergies, is over the two and a half years now, is basically low to mid-single-digit growth, including here the synergy element, which essentially means that, let's say, the underlying organic performance, if you will, is pretty similar to, let's say, the overall group.
Good. On China, to your question, where are we next year compared to 2019? We are substantially higher than 2019, even with this rebasing that takes place. We had significant growth in the years before. If I add this up, this is absolutely still the case that we here have almost doubled the business in those years, including the rebasing. This is just to give the magnitude of how much we have been able to achieve when you look back in these yellow bars in a more flat dish, we have outperformed with the point of sales, with the distribution network, with our retail journey. I am absolutely convinced also that when this yellow bar moves back into more normal ranges, we will have here a very strong growing business. This rebasing is not over from a build rate.
This confidence in the Chinese economy from the consumer needs to be improved. In absolute terms, it is absolutely still very significantly higher. It is profitable. Just to be very clear, our China business is a profitable business. Many of our international players exited China because they could not make money in China. We are profitable, and we preserve this because we believe in the long-term future of the China economy. To your question, the point of sales, the point of sales, 280,000 point of sales, we are not aiming at reducing that significantly. We are replacing some of the distributors that are not effective by other distributors. For us, it is crucial that we have the reach into the point of sales because this is a very fragmented market. These are small applicators across China that are doing this job.
The point of sales, I would rather say, stays on this or is eventually even increasing. The distributors behind, there, we have movements in directing those that have more success and those that have less replacing by new ones.
Okay. Further questions? Priyal, please.
All right. Thanks. Priyal Wolf here from Jefferies. My first question is just on capital allocation. There was a slide there where you said right towards the bottom, you might consider buybacks if there's not much else to do effectively. Is there a nuance there in terms of strategy? Obviously, you're still targeting the 1.5%-2% from bolt-on M&A, but is there anything to read into that in terms of maybe some of the larger deals will be slightly smaller or there's less of an appetite to do some of those bigger deals and therefore we could see buybacks coming through? The second question was just in terms of the FTE cuts. It looks like it's fairly evenly split across your three regions. I just wondered outside of China, are there any particular regions or operations where you've seen those cuts coming through? Thank you.
Maybe here on the capital allocation and the M&A side. I mean, clearly on the M&A, we see strong possibilities. I think Wolf also demonstrated that they are highly accretive. That is the clear focus. I think we have also said that for the time being, this is the clear focus as opposed to, let's say, looking specifically at very large transactions. I mean, this being said, there is obviously also bolt-ons that are slightly higher, which can be very strongly value-creating for us in that context. I think that's one element. I do not see a change there. The other one is the overall leverage consideration. Obviously, we have here sort of moved into that range we are targeting. I think it will take a bit more here also from an overall perspective driving then.
This is essentially to say not excluding here the possibilities as specifically we haven't done in the past, but there's also no, let's say, clear plan to do so. It is an element that is really related to risk and return.
Thank you, Priyal. Now we have some questions from the livestream. Christine, you formulated them and can you?
Yes. We have a few questions, and I'll try to bundle some of them. One is, since you now take out or you exclude the external market growth in the three to six, can you please give a view on your expectations on the underlying markets over the next three years in the different regions?
Okay. That's a fully loaded question. That's a crystal ball again. But let's start where we are today. We have seen a lot of confusion starting from this tariff discussion, the geopolitical tension. We have seen that North America has put some project on hold in regards to the reshoring. We expect that there will be relatively soon clarity on how the tariffs in North America will turn out. I'm sure it will be the best deal ever that will be defined in the NAFTA trade agreement. This will provide companies clarity in then allocating substantial CapEx either in Texas or in Mexico or in Canada. That's what these investments are waiting for clarity. I think those discussions are going to take place in the next three to six months.
This will be a boost clearly in North America, which I anticipate rather in the early part of the next three years that we have here in North America. We are back to this reshoring. We are back to, besides also the, let's say, the continuation of a very strong data center investment and infrastructure investment. Europe, I think here we know we have a lot of issues here in Europe. Lately, we talk about potential peace talks for Ukraine. This is, I would say, from the sentiment point of view, a very important part to bring back some stability to Europe. I think Europe has a good opportunity to advance in these three years. A few elements need to come back. I think also from a political clarity, I think the German government is helping to bring some more business-oriented decisions. The Infrastructure Act is one.
We expect more to come. Also in Europe, we expect within the three years, again, that we go into a growth mode. We already see now that Eastern Europe for us is a place where there is growth visible. It has built up over the last three quarters. In Europe, it is not all the same. Spain is doing very well given the circumstances. Europe has absolutely also a possibility to advance. I talked about those strong markets: LatAm, Africa, Middle East, India, Southeast Asia. I expect here a continuation. They do much better than the mature markets. Some of them extremely well. Our business in the Middle East is in a double-digit mode of growth. This will continue. Also, Africa is on an expansion, double-digit. India is close to double-digits. Also, that is to be expected under the current government to continue.
We are confident on that. China, we talked a lot about 2026 to be a transition year for us, a rebasing year. China is a huge market. Construction is super relevant. Housing is relevant. Things will also come back. This cycle will not be forever, but it is going to be a difficult 2026 for the economy. I think here we will articulate that and be more precise when we guide for next year's expectation. We are very clear, our three to six, the outperformance, the market penetration in our hand, the acquisition in our hand. We are fully committed to deliver. How we then base in the markets and add that to our own, we will then define early next year. I see elements that bring us rather more back into normal terms.
The 2.5% of construction growth over the last 20 years has only been disrupted during the financial crisis. It came back rather strong. Now we have several such elements in a short sequence, but as we call the backlog is building because we are in a relevant field. This is tangible, and we need infrastructure, urbanization. The megatrends are continuing. Without challenging market condition, this is for us absolutely a perfect, let's say, market to be a market that will also recover. How quick? I have to be a bit careful because we have indicated in the original strategy 2.5 as a base. The base has been, let's say, become questionable. Overall, the 2.5, my strong conviction, in the next 10 years, the 2.5 will be realized.
Some years will be clearly above that to catch up with the unserved demand due to uncertainty and consumer lack of confidence.
Thank you, Thomas. Maybe one more question from the livestream.
Could you please expand on the initiatives in America and Europe, which represent two-thirds of the split? How are you making those production footprints and product offerings more streamlined?
Okay. That's a very good and valid question because when we talk about automation, digitalization, I mean, scale is of relevance. Here in these mature markets, these open markets, we have still, let's say, technologies in our footprint that we can consolidate. That's less reduction in sites. It's rather a concentration of expertise, bringing scale of similar technology in one factory and moving things into another factory so that we can then also absorb the investments into automation and digitalization by having more, let's say, technologically oriented factories instead of territorial factories. Because a few of our products don't travel far. Many of our products within Europe, within the U.S., can travel. This is part of the consolidation that we less like in China are reducing production sites, but rather consolidate competencies and then allow for more significant investments into automation. Thank you very much.
Being mindful of the time, maybe two more questions here in the room. Yes, please.
Thank you, Rick and Friedrich, to the next ideas. I just want to come back to the discussion on capital allocation. If you look where your share price is trading at now relative to the last 10 years, it's the lowest valuation, 5% plus free cash flow yield. I mean, it seems like the best investment you can possibly make is buying back your own shares. Why not prioritize that over M&A?
Shalai?
Yeah. I think our cash flow is above 10%. I mean, this is also a consistency that we are aiming at a healthy cash flow so that we have cash that we can allocate. I think what Adrian also demonstrated is that we have a very good return on our M&A investments. I think this is significant. We have strong benefits from our credit rating. We have very favorable conditions for our company stability. The deleveraging is still a priority for us. At, let's say, the next 12 months, 18 months, this question that you raise is a fair question. It will, of course, also depend where our share price will be in that period. That is why we call it optional. That is absolutely something to consider. We cannot anticipate now where we will be.
The stability of the credit rating and the deleveraging are current priorities, as well as the bolt-on investments that are very accretive to the company. The cash flow is not 5%, but 10%.
Okay. Further question? If this is not the case, thank you very much. Thank you very much for coming. We have now lined up a light meal that we will have up on Riverside. If you want to, and as well, join us in this meal, this would be, in fact, very welcome. Please take all your belongings with you because afterwards, we have another conference here for other investors just following that one. Thank you very much.