Ladies and gentlemen, and to all the charge.
A warm welcome to our Media and Analysts Conference for Schweiter Technologies. The first time we do it with a live webcast, and hence we also do it in English.
Nevertheless, a warm welcome to those here in the room, but also to the participants who are just participating virtually. We are excited to spend the next 30 minutes with you. I'm here with Urs Scheidegger and the program that we have prepared for you. Oh, okay. Now the slide is working. Perfect. What we have prepared for you, I'm back.
I would start with a short session about the business review, a few sentences about how I see 2024, and I would elaborate on certain highlights. In the second part, Urs Scheidegger would do a deep dive into the numbers. The third part is what is our focus for 2025, and what is also our expectation for 2025. Certainly, we will have enough time at the end for Q&As so that we can clarify all open questions. Let's start with some key figures. In 2024, we achieved a top line of CHF 1,011 million net sales. It is minus 5% compared to the previous year and FX adjusted minus 4%. This is in line also with our projection we shared in August last year, where we said we have a slightly decrease of the top line.
On the EBITDA, we achieved CHF 91 million. This is an adjusted number, adjusted by the generated costs. Urs will afterwards dig into the details of what is included in the generated program, our innovation and efficiency program, and how that reflects. We can summarize on top line and EBITDA, we have an increased EBITDA despite the pressure on our top line. We had also a very strong focus on our operating cash flow and our liquidity. We increased our pre-operating cash flow to CHF 57 million. Also a strong focus, we obviously have to earn our capital costs, but we also try to increase our ROIC. We increased that by 2.2 percentage points from 5.2% to 7.4%. Of course, we are not there yet, but we are on that path, and I will come back later to that.
We also confirm our midterm target there that we want over the cycle to achieve a bandwidth of 9-11%. Net liquidity, we more than doubled to CHF 51 million. These are the highlights on the numbers. As I said, in the second part, Urs will dig into further details about the numbers. What I would like to share with you now is a bit more details when we look into different businesses. We have display, core materials, transport industry, and architecture, our four focus areas where we also carboned our strategy last year that we also communicated at our capital markets day in September. The focus in 2024, besides our customers, when we had obviously the strongest focus, was on the operational excellence program, on our generated program, pushing the innovation and reducing our structural cost position.
When we start with display, accounting for about 41% of our business, we had overall a resilient development of our display business in America and also in Europe. We have to admit, very strong first semester and perhaps a disappointing second semester where we had huge disruptions on the raw material side, especially on the clear sheet side, which accounts about 30-40% of our business display Europe. We had a strong decline in the raw material prices, and our distributors, when the prices are coming down, are holding back with orders. They empty their stocks in anticipation of lower prices in the future that we could feel on the top line, but obviously also on the bottom line in the second semester in display. The portfolio transformation continued, especially extended our recycled portfolio, our sustainable portfolio. I will come back with a few examples in a minute.
The footprint optimization we were forcing in display, mainly the closure of our factories in Germany and France, also our strong focus on the go-to-market, how we do sell, how do we do selling, how do we approach our customers, how do we interact with the steps we need in digitalization, etc. Also the focus on the procurement that was supporting our margins in the display business in the Americas, also in Europe. Core materials, about 22% of our net sales in 2024. The wind energy market was still impacted by overcapacities in PET in China in particular. There is a huge pressure obviously there on the margins through that, and we had still a slow project approval process in Europe.
Nevertheless, it's encouraging what we have seen in North America, and the whole business core materials was also able to capitalize on the step we did with the acquisition of JMB that we now can also off-put the kitting step, the last step in the value chain before the material goes into a wind blade. To leverage that, that we have the full value chain in PET and in balsa, was certainly a competitive advantage also in this demanding environment 2024. Market share gains we can claim in marine industrial, where we had with innovative new solutions, good steps to gain additional market shares. In wind, it's our strategy not to win market shares in China because we have strong growth in China, but we focus on high margin business.
We accept that in China, in wind, we also give certain market share away because we want high-quality business and strong margins. When we look at the OEMs around the world, the global market in wind, of course, there we are aiming for market share gains, and I will come back to that and also in the outlook, where we also have some very positive steps in the right direction. The solid balsa business performance, top line and bottom line, supported heavily our results and supported also the margins on core materials so that we could, in relative terms, also increase our margins in 2024 in our core materials business. The transport and industry, about 60% of our business, our smallest business, but over the cycle, we believe there is strong growth, structural growth there in the industry business.
Last year, we had a notable demand slowdown in the vehicle markets and for our industrial solutions. There was a weaker environment in Europe, and our industry business is mainly a business at the moment in Europe. We launched certain new solutions to prepare us for future growth, and we hopefully can get the fruits then in 2025. I will also share an example there afterwards of what we do on the innovation side. The low volumes and the missing scale effects obviously put pressure on the margins. On the transport and industry business, we have to report lower volumes, but also pressure on the margins. The architecture business, about 21% of our business in 2024, is our shining star.
We had great growth, mainly driven by a strong North America business, top line and bottom line, through expansion into interior solutions with our Monarch solutions for wet walls applications, etc. Multifamily houses is a business and a segment that works very well. We have several businesses in North America in the architecture business, where we saw strong growth, compensating for the challenges we were facing in Europe and Asia. Asia is still, especially on the residential part, a weak environment, a bit better on the commercial and the public sector. Europe was certainly still a construction market that was also in 2024 weak. The margin increase was considerable in the architecture business, mainly driven by North America, but also in the other businesses in Europe and in Asia-Pacific.
We were able to increase our margins with the right focus on the right projects and pushing the right innovations. I would like now to go a bit beyond and give you a few examples of what are some highlights we had in 2024. I would like to start with an example from architecture, for once not out of North America, but for the Middle East. It is actually a project from Oman. It is the Oman Across Stages Museum, where we were able to excite not only the architect investor, but obviously afterwards all the visitors. It is an award-winning project. You see there on the surface, you see the material from us, the Alucobond, also with a special finish, with this premium anodized, which is unique. Our competition is not able to produce that quality in that consistency on such a surface.
This is a good example of how we can create lighthouse projects around the world and positioning us really as the premium supplier and the premium in terms of quality and how we do partner with architecture and investors. A great example that in an environment, Middle East, where you have big buildings, there ACM is a great possibility. ACM, meaning aluminum composite material, our Alucobond is a great possibility to build such great projects. There were a lot more successes, of course. If I maybe start on the right, you are aware that we also reshaped our management team in 3A Composites. It was the first year 2024 that we have split into the three steel boats in Europe. We had one Europe organization in the past. Now we have a focus on industry, on architecture, and on display.
You see there are also the three leaders, Benjamin and Torsten, and now Sonia. There we combined also the architecture business Europe with the architecture business in Asia-Pacific because we see a lot of efficiency gains there in order to use the different geographies in terms of sites, but also in terms of product development and market approach. We also had a change in America in 2024 with a new leader, Nick Scheid, also from internal. He was the father of the success of architecture for the last couple of years. He was leading the architecture business, and now he's responsible for the whole Americas business, including the display. Of course, we hope there that we have also pushed there on the sales side on the display additionally in the Americas. On the top right, digitalization, two examples.
We launched our virtual world with a supermarket, and we showed that already. Now we extended the supermarket by a beauty store and a fashion store, and I will come back with an example afterwards. We started our chatbot, Tia, our product information and innovation assistant for internally first, supporting our customer service people that they had a faster answer to our customers, more accurate, etc. Now we do the learnings with artificial intelligence. The next step is then that we launch it also externally that our customers obviously can use. We do the learnings now internally. We did that the last couple of months with convincing success, I have to say, that we have a lot more efficiencies and people have time for better work than just looking for information. In the middle, certainly two highlights.
We sharpened our business strategy that we also communicated last year, identifying really the key trends we are delivering against with our offering, building on our assets and the strategic priorities with attractive markets, differentiation through innovation, operational excellence, and a strong focus, of course, on cash and our people. We also communicated our ambition over the cycle. I will come back to that when we talk about the outlook. The generate program with the part efficiency and the part innovation, where we closed two factories. We closed the one in Mainz and we consolidated also in Brazil, core materials site. We reduced our OpEx personal costs substantially in all areas of our organization. We started also to review once more our portfolio. Do we have the potential there for adjustments? That is on the efficiency side.
On the innovation side, of course, digital customer relationship management. I mentioned two examples on the digitalization side there. This is not finished with the project, but we will not call it a generate program. It is now in the organization as a standard initiative to bring our digitalization journey on the next level. We also invested heavily into process optimization. For instance, in our new paint line in the Americas, the paint line we need for the coil painting, it is going then into architecture, but also into display applications as an example. Of course, the innovation, and I will come back to that when we look at the far left, where we document a bit our portfolio transformation that we always mention through innovation and sustainability.
If I start on the bottom, we do not just do sustainability and innovation on the solution product level, but also when we look at, for instance, EcoVadis, we did the site assessment for all our sites in Europe and for the global sites of core materials. Our minimum target was always we get a bronze. The majority is actually silver and above. We also did a relocation of our line in the US from one site to another site to consolidate everything from core materials in one site. We reduced there our CO2 emissions with transport, etc., substantially. It is a cost reduction, but also a CO2 reduction. It goes hand in hand. What we also did, we have this Five Dot Initiative. As some of you know, we rate all our products in display from 1 to 15 with certain sustainability dimensions.
Our ambition is that in three years' time, we have 80% of our net sales with products rated above seven. At the moment, we are at the magnitude of 40%. On that journey, we are continuing. That brings me to the examples on top, the specific examples where we drive this portfolio transformation towards a more sustainable, but obviously also a more attractive business. If I dig into these examples a bit in more detail, I would start with the Duvolet. Duvolet is an example out of the business of transport and industry. It emphasizes that we do the portfolio transformation not only in the display business, but actually the full portfolio in all the businesses. Our target is always that we have enhanced performance functionalities. On the bottom, you see the examples in which dimensions we talk about enhanced performance functionalities.
The Duvolet is actually a combination of elegant aesthetics because it's a glossy surface and with outstanding technical properties. In the past, we were not able to produce such a glossy quality and surface, and that is especially in the vehicle market extremely important, where now all this steel and metal is replaced by, for instance, Duvolet. You need then also this glossy appearance, and at the same time, it needs to be extremely high impact resistance. All those properties are needed to actually differentiate in the market. We launched that recently, and we will certainly see the volume effect in 2025, where we believe we have now a very strong differentiator against our competition because we know the markets, we know all the applications, and a great example of how our portfolio transformation goes into more sustainable, but also more attractive.
The second example I have brought with me is the resolutions. Here I have several examples. The resolutions mean we do not only try to have more sustainable products, meaning more paper, etc. We also try in all our products to increase the recycling part. Last time, half a year ago, I showed you from Perspex the three looks, which actually then was a colorful sheet. Now we extended that also to the clear sheets. You have here the comparison. This is a cast acrylic sheet without recycled material. This is with recycled material. You do not see any difference, same performance, but obviously customer is prepared to pay a bit more for it, if that is true. Also important for us, the raw material is even a bit cheaper. That is the move we want to do to increase our margins.
Yes, we want to make it sustainable, but we also want to have it more attractive, of course. Another example is the Kruger. This is an extruded acrylic sheet. Also here, you have 100% recycled PMMA. One is with recycled, one is without. The Fogex, which is a PVC sheet. Here we have minimum 30% recycled PVC in there. This is completely new in the market that we can recycle PVC and make a proper sheet. You see a slight difference. You have a bit of black spots on it, but depending on the application, not a problem at all. Customers are prepared to pay a bit more for that and are, of course, advertising then also with that advanced material. Paper example. Here you see it from the side. The core is recycled paper, but also the cover sheets is recycled paper.
All the papers are 100% FSC certified paper. These are examples how we move into a more sustainable product portfolio and at the same time also into a more attractive portfolio where we can differentiate ourselves even more. The next example is JP Apex. When we try to do the portfolio transformation, it's not only that we try to be more sustainable for our customers, we also try to have a better production process. Here the outcome is exactly the same. It's exactly the same product with the same materials, same properties. At the same time, we can produce it much faster and with a lot lower energy consumption. We invented a new production process and introduced that last year.
We certainly will see the fruits there this year that we can address more markets and at the same time can increase our margins. I told you that we also have launched our virtual boat and that we have that in many dimensions. Not only on the left-hand side, you see the supermarket. We follow the examples of our applications in the supermarket. Always when there is such a dot, then customer or the user can click on it and you get the information about the different applications. Now we have on the right-hand side a new mall and have also a beauty store and fashion store. The whole idea behind that virtual world goes always in three dimensions. The one is we want to make our offering more tangible.
I hand you now through the rows, some sheets, but everybody's asking, what do we do now with those sheets? This virtual world actually makes that tangible. What do we do and what are the possibilities with those products? We also want to show with that virtual world how broad our portfolio is. We have the broadest portfolio in the market. Our competition has not such a broad portfolio. We have the house of brands and are clearly ahead there compared to our competition. The third element you always want to use that virtual world is for training. Training our salespeople, but also training and communicating towards our customers, towards our distributors so that they can train their people and salespeople as well. By the way, on the top right, you see the link that's open. You can always use that and can also dig into our solutions.
We have prepared a short video, and I do propose that we start that now. I think I have to share with the people participating virtually. Now you have to change from the full screen in case you use the full screen to a split screen so that on the second screen you can see the video. Otherwise, you only see a slide so that you can also change that. Let's start the video so that we go once through the shop, and I would just say a few words about it. If we go now into the shop, we have on the left-hand side the beauty shop and on the right-hand side the fashion store. You see it is a big mall and full of our solutions and our products. We will continually further develop that virtual world with further applications and products.
Let's go once into the beauty shop so that we see how it looks from the inside. You have, for instance, there are advertisements for the lips. You can click on it. You get the information about the product on the bottom, the five dot mission. You can communicate directly with our team. You can walk through that shop. Now let's go to the fashion store on the other side. You can navigate and walk through. Let's go in. You see there on the back maybe some illuminated lights, some communication. You even see a cupboard or furniture. All the applications our products can deliver. This is obviously mostly in the market segment, visual communication. Of course, also here you can click on the different buttons. Here an illuminated 3D lettering. This is cast acrylics.
It's one of the acrylics that goes through the row at the moment in here. You can also go into the far corner of the shop, obviously. Here on the right-hand side, we have an example from a sweatboard. You see the five dot mission. This is now a 12 from 1 to 15. Even a paper board, we have the ambition to develop further on the five dot mission. This summarizes a bit what we do in that virtual world. We want to make our offering tangible. We want to use it for training, and we want to show to our customers that we have the broadest portfolio and that we have the best offering. Now we can go back to the slides. Perfect. Super. That worked. Click now. Yes, here we go.
We do not only use the virtual world to communicate our portfolio. We also introduced, as you know, those pictures that show that we make the life lighter and more colorful. This year, we have chosen a beach. Also on the beach, when you do your training on the yoga mat, that can be from us, or when you come with your caravan to the beach, or if you have a nice boat. The message is, of course, we do not only make the life lighter, it also makes a lot of fun with our products. With that, I would hand over to Urs, and he would dig into more details about the numbers. Thank you, Urs.
Thank you very much, Roman. Also a warm welcome from my side. Let's go deep dive into the financials. Starting first with the key figures of the group.
We have net sales of CHF 1,011 million. This is minus 5%, respectively minus 4% FX adjusted. I will explain a bit more about the top line in the next slide. EBITDA adjusted stands on CHF 19.9 million, which is 9% of net sales. It is adjusted by these accelerated expenses, which are the structuring costs. A lot of severance payments, also other operational expenses. We also have impairments on materials, inventory related to the closures of the plants. This is CHF 18.7 million adjusted on this EBITDA line. EBIT adjusted stands on CHF 45.6 million, 4.5%. Here we have a total impact of CHF 22.5 million adjusted to accelerate one-time cost of CHF 22.5 million last year. This then results in an EBITDA reported of CHF 72.2 million and EBIT reported of CHF 23.1 million.
Net income at CHF 12.9 million, of course, driven by lower sales, driven by the accelerate program, and also driven by a bit higher taxes, as particularly in our German entities, they reported very low profits due to the restructurings. That was leading to less deductible interest costs in Germany. I will call this as well a one-time impact. Now let's go a bit closer into the net sales. On the left, you see the bridge from last year, 2023 to 2024. Volume impact of CHF 94 million. Here, the very positive business is architecture. Our architecture business in North America is growing double digit. Not only the first half year, it has continued in the second half year. By the way, we see this growth also now beginning of 2025. That was then a bit compensated by the lower economy here in Europe.
Also, Asia, particularly in China, architecture was not growing. We have our quite resilient display business with one minus, so a growth, negative growth between 0-5%, resilient in Europe and in North America. We have the core materials, which were more negative in the first half year and is now starting to stabilize and be better business, particularly in the fourth quarter of 2024 in Europe, in the US. Finally, T&A stands for transport and industry, which is only active in Europe. That was suffering with the lower automotive business last year. We have positive elements, namely pricing a little bit, but also mix. Mix is what Roman Sonderegger explained. We are moving and transforming our products into higher pricing, more profitable products.
These recycled products in display come a little bit with higher price compared to the commodity business, the pure commodity business of transparent sheets. Also, some of our businesses are growing more than others. That also helps to optimize our portfolio, which is clearly part of our business strategy. We move from commodity to more differentiated products and to the more profitable products and businesses. There is an acquisition effect of CHF 25 million, which is mainly coming from our JMB kitting company. This is core material, which was acquired in 2023. This is a seven-month impact. Last year, we had 12-month impact of that acquisition. A little bit of our new business in architecture in China, ZNL, which we also acquired last springtime. There is a currency impact of CHF 14 million. On the right-hand side, you see the allocation to the different business areas.
It's quite stable, small nuance, but you see that architecture is growing a little bit. Then transport and industry was a little bit losing of the whole allocation. On the left-hand side of this slide, you see the EBITDA bridge from 2023 to 2024. This is EBITDA adjusted, so excluding the accelerated expenses. We have the CHF 90 million to the CHF 91 million, and relative profitability was increasing by 60 basis points from 8.4% to 9%. In gross margins, the group gained 2 percentage points, and this is mainly coming from lower material costs. We have a large sharpened performance initiative in the group to lower our materials from 52.7% to 51%. That was 1.7 percentage points. This is coming from the move away from single sources to dual and multi-sources in architecture, but also in the other business areas like core material and display.
It's also about professionalizing the whole procurement in a company with, in the past, 53%. Of course, this is a big lever, and we want to professionalize that. It had an impact in 2024 and more to come. The SG&A costs, yes, 1.4 percentage points. It was 2.1 percentage points in the first half year. We already see in the second half year the reduction of SG&A to make it leaner in personnel costs, but also in the non-personnel costs of OpEx, which we are lowering with the accelerate program. We should have the benefit then in 2025. Net income is a reduction from CHF 28 million to CHF 13 million. This comes from the accelerate program, for sure. We also have higher depreciations because we have the acquisition impacts from JMB and ZNL.
We also went live with new production lines, state-of-the-art automated production lines, which is a part of accelerate. We have a new pipeline for architecture in North America. We have a new pipeline in Poland, and here depreciation started. Finally, we had a CHF 10 million higher currency exchange difference on the net income. I am coming to cash. The free operating cash flow year on year improved from CHF 40 million to CHF 57 million. The operating cash flow from the operating activities, deducting CapEx, adding back some proceeds of biological asset sales, which is a normal recurring business for us, and the lease repayments. The big improvements are coming from optimization of our trade working capital. In particular, we improved the days sales outstanding for receivable, and there is a big reduction on receivables to be seen in the balance sheet.
We also have an optimization of days payable outstanding in payables. Really operational excellence, we optimize and improve in this area. This was also announced in the capital markets day, we have a clear, strong focus on disciplined CapEx. We have a sufficient number of production lines now, which will also allow to absorb growth. We do not expect very large CapEx in the future. We want to keep it maximum at CHF 30 million, CHF 30 million. Last year, it was CHF 21 million. This is leading to a ROIC. I define it as free operating cash flow of invested capital, which is now 7.4% versus the 5.2% one year ago. This has now also resulted in a net liquidity of CHF 51 million for the group. This was CHF 24 million one year ago in our balance sheet.
You see the sequence of the years from 2019 to 2024, free operating cash flow is a very important key number for us. We said at the capital markets day that we want to achieve 9%-11% of ROIC in the future. We are moving in this direction now. We have an equity ratio of 67%, and the board is proposing CHF 15 per share dividend to the general assembly, which means our dividend pay is unchanged to the previous year. With that, I'm handing over back to the CEO.
Thank you, Urs. The question is now, what are our priorities for 2025, and how do we see the outlook? First, yes, the challenging business environment we are facing around the world did not disappear over Silvester. The geopolitical uncertainties are also still there.
The volatility in all those dimensions is still there. That asks even more for a consequent implementation of our strategy. Therefore, our strategic priorities are unchanged. We still focus on our identified attractive markets with full power. We only take left and right opportunistically, but our energy for innovation and all the resources and efforts goes into the identified and selected attractive market segments. We are driving our portfolio transformation. This is the priority towards more sustainable and more attractive so that we can increase our margins there. Urs mentioned it, that where we are a bit more comparable and more towards commodity that we can really differentiate ourselves. The third, that we continue our operational excellence endeavors consequently. Of course, we want to realize now also the savings of the accelerate program.
We spent CHF 22.5 million this year into the last year into the accelerate program. We want now to also realize the CHF 10 million run rate savings on the cost side. Of course, the strong focus on the cash flow can just reemphasize what Urs said. Still a strong focus that we can leverage that dimension as well in order to improve also our return on invested capital. Strong focus remains on our people, on our performance culture around the world. We have many programs running to cultivate that around the world. What we also confirm is our ambition over the cycle. We want to grow faster in the market. We want an EBIT margin of 7-9% over the cycle, the return on invested capital 9-11%. As just proved, we will also in the future have a shareholder-friendly dividend policy.
The priorities are unchanged. We want to consequently implement our strategy. When we come to the outlook, we see in the display business, we see a quite resilient development in Europe and North America and a several times mentioned now to continue with this portfolio transformation. We have a strong lineup of product launches also for 2025. We will also excite our customers this year with many new products and innovations to really drive the market and confirm that we have the broadest portfolio and that we are the market leader in innovation and in the market itself. On the core materials side, we see that this pent-over capacity in China is still there. There is pressure on the margins that remains. That also confirms our strategy in China is right, that we focus on higher margin business, longer blades, special prototypes, special types, etc.
In non-wind applications, we are convinced that we can continue the journey to gain market shares. Maybe a wind example, we just negotiated last week with an Indian customer, an important one. We doubled our volume there to more than 10,000 cubic meters bulk that we can deliver to that customer. That is equal to about 10 with more than CHF 10 million turnover. That shows we can increase our share of wallet with our customers. We can increase our market shares. In architecture business, we see the opportunity still intact in North America. I mentioned the wet walls, interior applications, multifamily houses. That trend continues. In Asia, we are convinced that we can do a lot with geographical expansion. We had maybe traditionally a bit too strong focus on the Shanghai area when we talk about China and not enough on other geographies.
That we are going to change. I'm already on it. I will be next week in China. I will meet a lot of new distributors. That journey continues there. We also see, especially Asia, opportunities for data centers. We love data centers because data centers do not have any windows. It means a lot more surface for the facade. We see a trend there as in several industries, but an interesting application for the ACM because then it is also easier for the temperature control in the building. We have a competitive advantage there. Especially in Asia, we see the trends for the data centers. Transported industry, the markets, we see still muted.
Nevertheless, if we compare quarter three last year to quarter four and just count the number of requests for quotes for new applications from thermoformers, the requests more than doubled from Q3 to Q4. We see base movement coming. It normally takes a couple of weeks from the first sample, testing, etc., until we have then the order. We see movement in the market. Therefore, we are also confident towards the second semester, we will see a certain recovery also hopefully in the transport and industry business. In summary, as an outlook, net sales is expected to be stable. We expect a stronger second semester than compared to the first semester. In this challenging market environment, we believe we can compensate with market share gains. We believe it is possible for us to grow faster than the market also in 2025.
On the margin side, we increase or we target, of course, an increase of the profitability, mainly driven by the savings we see from the accelerate program, but not only. What we just shared with you with the portfolio transformation, we believe this will also support our margins. Therefore, we target a higher margin in 2025. With that, I would end our presentation and would open the floor for questions.
I'm not sure if I missed something. The accelerate program is now done. It's over. This was 2024. Twenty twenty-five is also no more extra costs. Correction.
Yes, no extra costs. Correct. The accelerate program is finished. Also correct. Certain initiatives out of the accelerate program, what we do on the digitalization side, what we do on the innovation side, we will continue.
We just take it into the normal operations and do not run it as a special project because we have now the right teams allocated to it. The jumpstart is done, but no additional costs for the program. Of course, we will also spend money in the future for innovation. The accelerate program is done and costs in 2025.
Maybe a brief question was what I saw was that obviously of your reorganization, instead display architecture have a direct head. Core materials doesn't.
It does. No, core material has a close. Not on that slide. It wasn't. It was not a change. It was only the changes. Oh, it was only. None of you have a core materials lead for the world. He sits in the Saints, comes to Naga. There we also produce PET. Our sponsor in HealthMeds.
He sits there, but he's responsible for the global business, meaning Americas. We have locations in North America, High Point, Ecuador, and also Papua New Guinea.
If I may continue, Duvolet, you said Duvolet you just launched. Yes. Was that already last year, I suppose?
Yeah, we just launched it. We did a pre-launch in the fourth quarter. Now we did the big bang now just at the beginning of this year. We will see the results then in 2025. All the innovation and the push came out of that accelerate program. That's why we did it faster, because we had to upgrade the line that's produced in Ireland. We had to invest in the automation of the line that was part of that accelerate program.
Can you give us a bit of color on the first client feedback for Duvolet?
They are excited.
They are really excited. I start to be even more excited when they place the orders. We have very strong signals, very good testing, very good feedback, because this glossy surface combined with this impact resistance, that's unique.
When do you expect first orders?
Yesterday.
Okay. Fast. Thank you. Maybe about core materials. You can have or you have a competitive advantage with this balsa material for the balsa wood. It is a great asset.
Absolutely. We are extremely happy that we have got it.
Not all competitors have such an asset.
No. I mean, we are the biggest balsa producer in the world. We are the only one controlling the whole value chain in balsa, from the seeds to the trees to make a kit out of it and then bring it into a blade.
We are the only one controlling the whole value chain and at the same time having also a global footprint on PET. We are producing in Europe with PET. We are producing in Americas, which helps in the current environment. The majority of our material for the Americas is produced in America. We also produce in China.
Yeah. Could you remind us what the global wind council or what we can see forecast for this next year, meaning the wind area?
They still protect growth, but we also see soft loss last year. I mean, last year there was about 100 gigawatt capacity slope, about 60% out of that in China, which was 15-20 more gigawatt than the year before. There is growth, but there is tremendous pressure on the price, especially on the 60% in China.
Therefore, we also do not want to participate, as I said before, in all the growth. We want to participate in the global growth, but not so much in the China growth. The projection for this year is again an additional 10-20 gigawatt. There is growth. Important is that we can select and attract good business with attractive margins. We have a good path there. We see very good signs. I explained the example from India. We have other big forums where we are able now, because the negotiation happens normally December, January for the year. We have very good signs that we actually can gain market share. That is why we are also confident to write it into our report. We will grow market shares indeed.
With Western OEMs?
Mainly with Western OEMs.
If the accelerate program ends last year and we do not expect any costs that come here, will the net income go back to 2023 levels or even more this year?
Of course, our ambition is on the profitability. We say that now consistently over the last couple of months. Our short-term target is to achieve as soon as possible again the 10% EBITDA margin. That is our key milestone that we want to achieve short term. Over the cycle, we say 7-9% on EBIT level. Of course, this has then been reflected also on the net profit. Short term, we want to achieve 10% EBITDA margin run rates again. Over the cycle, 7-9% on EBIT level. Yes, it has been leading to an increased net profit.
A big lever for your mid-term margin expansion goal is economies of scale.
I want to get away from the commodity business of sheets. Does that not hinder this lever? Or do you expect to make up with recycled products?
I mean, on the clear sheet side, that we want to leverage more our assets we have. I mean, we just closed an extrusion factory for extruded acrylics because we want to move towards the higher margin. We believe that we have now the right setup to transform our portfolio with the assets.
You're not scaling backwards? You're just not focusing?
I mean, we are still producing acrylic sheets, and it's still an important business for us. Yes, the higher margin business we see in the recycling part that we increase the business with recycled acrylics. Yes.
At the Capital Markets Day, you showed a slide with geographical net sales. Americas, Europe, Asia.
Have there been any real relevant changes to those numbers, like 28, 58?
No. Americas, 99. The answer is it's quite unchanged year on year. We have close to the 60% exposure in Europe on net sales, 30% for Americas, and the rest then in Asia.
If we are looking a little bit more granular, for instance, Germany, Germany hopefully will soon step up the building of flats a little bit more than it did in the last three or whatever, ten years. What's your specific exposure to Germany on the top line?
Overall, less than 10%. We have a widespread revenue generation in Europe in all the main Western European markets in display and in architecture. Those 60% are really spread, are nicely spread, as I said, also towards Eastern Europe. Also, U.K. is a very interesting, attractive market for us.
If I may follow up regarding the recycled materials, could you imagine that maybe in five or ten years, Schweiter purely produces recycled, well, where it is possible, recycled products?
We defined the target in 2028. We want to have 80% of the net sales out of recycled materials. As I said, we are halfway through at the moment. It is still a way to go. We also launched now in the last couple of months or last year a whole bunch of. Probably have to be polite and ask once if there is any question from the webcast.
We do have a few questions. Some of them you have answered. I think one I would like to point out here is a question here. Did you expect any impact from the new US administration on your business in the US?
My name is certainly. Thank you.
When we talk about tariffs, we just talked about 30%, 29, I believe. 29% is Americas. Our business, let's say $300 million. Out of this $300 million, about $200 million is architecture and display business, even a bit more. In the architecture and display business, more than 97% is produced locally. The sourcing, we just switched now, for instance, aluminum colors, we just switched to local supplier. Of course, the local suppliers will also raise prices when there is an import duty from others, but they will increase a little bit less. Of course, we increase the prices completely and then over to our customers. This will drive inflation, of course, and will increase the prices. There is acceptance in the market. We see that. Maybe on the other $80 million-$100 million of these $300 million, this is coming mainly from the core materials business.
They are 80% of the business is produced locally in Americas. The 20%, this is, for instance, sport and health. We produce meth in Switzerland and export it. The majority of our business in Americas is actually also produced locally. We also localize and have the flexibility in supply chain. At the moment, this is rather a competitive advantage, but we will see how that evolves. We need to be flexible and agile and react. Yes, higher prices, we also hand over to our customers and we increase the prices. To summarize, the impact is quite low. At the moment, the impact due to the tariffs is rather low. Let's see how it evolves and what that means for the investments. Maybe that leads to more investments or less investments in the construction market in Americas. That's a tough one to predict.
If there's more investments, this will help our business. If there's less investments, rather not support our business. On the display business, we have great examples. Aldi is, for instance, straight investing in Americas. New shops means new business for us, because especially at the beginning, they need to invest into furniture, into communication, etc., etc. This gives us a great opportunity. We are confident for, as I said, for Americas, we don't see any slowdown or any challenges on the horizon at the moment. We need to be agile and flexible also in the future.
Yes? You're guiding for a back-end loaded 2025? Yeah, yeah. You are guiding for a back-end loaded 2025? H2 being stronger than H1? Yes. What are the evidence points for this? If it's something related to the end market, it's more Schweiter-specific? No, we believe it's in the markets happening.
The example I just said for the industry, for instance, that we see that we have quite an increase in quotes for new products, etc. We know it takes a couple of months until we get them, or maybe we get the orders a bit earlier, but that we can deliver and really turn it into turnover, that we know we need certain lead time. We have indications that the second half will be stronger than the first half. Yes, the visibility is limited, but we have indications. Otherwise, we would not stay with that. We see it in the markets. It's not an internal thing.
The previous flow, I mean, you had at least CHF 20 million benefit because you already produce base of receivables and prepayables. How do we see this going 2025? Is it something repeatable?
I mean, that's a good question for you also.
I didn't fully understand.
If we can continue the improvements on the net working capital, they will be super sustainable.
This is clearly our ambition, right? This is one element of our free operating cash flow generation. On net working capital, yes, we have now optimized the receivables and payables. However, the inventory still went up last year by another CHF 6 million. These net sales, this we have to address. We will address this year to optimize it. Yes, we have a clear roadmap and action plan across the world in all entities, also with incentives to drive an optimization of net working capital.
May I follow up on this? Long term, once it's optimized, what is a reasonable target in terms of conversion from EBITDA to free cash?
If you take the 2024 EBITDA adjusted of CHF 90 million, right, and we see the free cash flow of CHF 57 million, then with our targets mid-term on EBITDA going to 11-13%, you can do the math. I clearly would expect that the cash flow absolutely has to match the improvement on EBITDA level and a bit more, because we will still find ways to further improve our networking capital. I do not see a stop now after 2025. You can further optimize by extending terms with suppliers, by even better on the customer terms, and also on the inventory rotation. In a company like ours, with 30 factories worldwide and quite a decentralized landscape, you will find still pockets to further optimize. Last question from the webcast.
Yes, there is one. Turbine manufacturers are currently experiencing an increase in order intake.
Can you confirm this for your core materials business?
The example I just mentioned, India, also the increase we see with the OEMs in the Western OEMs. Yes, we can confirm we see a positive movement, but we have to be aware there are still then frame contracts, and only when they build the blade, then it turns into turnover. There is a certain uncertainty in that. Yes, we do see the good indications that we see positive into 2025 and beyond. Nevertheless, at the end, we need to confirm it then with real orders when they really call up the frame contracts. Yeah. Final question, Mark.
I would have a, yeah, I mean, concerning M&A, you did not, normally historically, Schweiter has been influenced massively by investments and purchases. How does the landscape look like there? I mean, you close two factories, two plants.
Is there any further closings projected or needed? Any disposals pending?
Maybe two answers to that. First one is we constantly review our portfolio. If we see that we have movements and we are surprised on one or the other corner, then we might take decisions. At the moment, it's not planned to close any further there. Of course, we are ready to take action if needed. In terms of acquisitions, maybe a last sentence to the factories. I mean, I rather want to fill them instead of closing them and using the assets. On acquisitions, what we say, our clear priority is organic growth. We want to grow the 3A Composites business with innovation, with attractive markets and driving that business. We see growth there. We see enough opportunities. That's why we selected those markets. Nevertheless, we are also prepared to do acquisitions in the future.
Especially at the moment, we see that in our environment, especially we just had a discussion around two competitors in Germany. There is consolidation happening in the market. If we are ready and the right opportunity arises, we are prepared for that. Also the board, and we are prepared to leverage ourselves if needed to make an acquisition. The priority is on organic growth. Perfect. Thank you very much. Yeah? Okay.
Regarding these acquisitions, you did two acquisitions, one in Denmark and one in China, and you had a negative impact, CHF 2 million on the profit. What's wrong here?
Normally, you do not acquire business, which is not Sweden.
Actually, it's not Sweden. It's Denmark. It's the Sentinel and JMB. Maybe you can comment on that.
Right. It's really not Denmark. JMB is a kitting company out of Poland.
They are also active in Portugal. We are now moving this capability as well to China. Indeed, our kitting business, particularly in the first half of 2024, was not doing well. It was a moment of shrinking business for the kitting in the first six months. That has not fully recovered in the second half year. We see now much better orders in Q4 and also already now in the beginning of 2025.
Yeah. Regarding this wind, how much of the business from those sales is in our country? It is still 15% or?
Core material overall, right, has a share of 22%. Out of that, two-thirds is for the wind. One-third is for non-wind applications, mainly in the industrial applications, where we also have seen a little bit growth in 2024.
When you look at the second half, is it really for the overall business that we did see a pickup in demand or, let's say, a request? Or was it during the whole year? Or was it mainly in Q4 for all the business lines?
In core material, there was a clear pickup in Q4 compared to the first nine months. Architecture was quite proportionally developing and H1 to sequentially moved from H1 and H2. In display, we actually had a stronger H1 versus H2 in Europe because of lower raw material costs. We have explained it. The distributors went a bit on a wait-and-see attitude in the last two months.
Maybe to add on that, on the way forward, when we look into 2025, we do not see that the markets will go through the roof.
What we see, where we have indications that we gain market share. Therefore, we believe that we can compensate the weaker market environment with market share gains. We do not see that the markets would go immediately through the roof. We have indications that in the second half of the year, there might be a certain recovery. In the first half of the year, the market environment will reach end.
The last question is, the volumes were down in 2024, but the use of energy increased. How does that come? When you have low volumes, you have more use of energy. Yeah, yeah. Who else can answer that? You read the report. We read it. Of course, this is in value.
Some of the energy costs went up in the U.K. and in Ireland because some earlier contracts were based on perfectly negotiated terms. Now they have expired, and we had to renew on a bit higher cost, point one. We also went live with new production lines. I said it, the new paint line in the U.S., the new PET line in Poland, which consumed a bit more energy costs. Particularly in the ramp-up of the lines, the spend was a bit higher.
I understand that's important. The new paint line consumes less. Since when you ramp it up, you still run the old one and the new one. Yes. Good. Perfect. Thank you very much for participating. Also, the ones virtually, the ones physically in the room, we happily invite for lunch.
Thank you very much for participating and showing interest in our company. Thank you.