Good morning, ladies and gentlemen, and welcome to Zumtobel Group 's conference call on the full year and Q4 result for the 2024-2025 financial year. I'm hearing a little bit of an interaction. Maybe, George, you can mute all other participants in the call? Helpful. I see some others having also an open line. Thank you. With me on the call today is our CEO, Alfred Felder, and our CFO, Thomas Erath. Alfred will walk you through the highlights of the year, while Thomas will discuss the financial performance. After the presentation, both gentlemen will be available to answer your questions. In case you have not a copy of the report and the presentation, you may find both documents for download on our web page. After the call, a playback of this conference call will be available on our web page as well. With this, I hand over to Alfred.
Yeah, good morning and welcome, ladies and gentlemen. Thank you very much for joining us today. The financial year 2024-25 was again a very difficult one for us. The demand of new construction, especially in our core markets in Europe, has been weak, and the market climate was challenging. As a result of the extended decision processes causing a decline in the motivation of investors, both in new builds and also in refurbishment, there was a lot of increase in postponements of projects. Before I go into the financial figures and Thomas shows you the details, I would like to, as usual, highlight a couple of our key projects, what we did. This illustrates an example of how we operate and where our strengths are across the large and huge variety of applications.
As you know, our customer range from industrial companies to churches, museums, from sports illumination, airports, and this reflects also the adaptability and the deep sector expertise. What you see here on the upper left corner is the Vienna Airport in Austria. We have done in the past the light for the airport with conventional illumination solutions, and now refurbishment stands on. In the first phase, we have refurbished about 3,000 light cushions of the airport and the terminal area, and that's approximately 30% of the current project agreement. On the upper middle, you see the Monreale Cathedral. I reported that we are the exclusive lighting partner with the Vatican, and that's one cathedral in Italy, part of the UNESCO World Heritage. Here, Zumtobel updated the cathedral's aging lighting to better showcase this unique gold mosaics, what it has on almost 6,400 square meters.
We are using ultra-modern tailor-made LED technology, a new system that allows precise controls of individual lights, creating a variety of lighting scenes. We have been very highlighted in the press and very proud that we have been able to refurbish this cathedral in Italy. Another one, a Tridonic project done obviously with the competitor of Zumtobel, is the Bibliotheca Alexandrina in Egypt, where Tridonic has delivered 500 sets of drivers, and it's actually going into the spotlights. Also, a fantastic project what we have. One of our key strategies, next one, the design, the Cow data center in the U.K. is the build of data centers. That's one of our growth areas, really participating in this height of having ultra-model, very high power-consuming data centers. That's a project in the U.K. where we have done providing high-performance luminaires, achieving the functional and aesthetic goals what we have.
This project had to deliver an energy-efficient lighting system that meets the demand of the data center. In the last couple of years, we have developed tailor-made products for this application. One more is another project of our initiatives, what we did with sports illumination. That's the Sunderland Stadium, where we did also the refurbishments. We are also an exclusive lighting partner with this stadium. It's in the vicinity of our factory in Spennymoor, and obviously, it provides local-for-local solutions using here our flagship product, Altis from Thorn, but also Craft and Spotlight, together with LightCon, our control system to illuminate the stadium. Let me give you an overview now on the financial performance, what we achieved in 2024-25. The group revenue fell by 2.6% to EUR 1.097 billion in 2024-25. The reduction was caused primarily by volume declines in the lighting segment.
We have a decline of 2.8% to EUR 864 million, where we see positive trends and developments, especially in the U.K., Switzerland, but in other more southern regions in Europe and Asia-Pacific, a negative development. Tridonic remained flat at EUR 219 million, being at a previous year level. Again here, an increase in the DACH and the U.K. region, and a similar trend in the other markets, similar to the lighting trends. Despite the decline in revenues in the lighting segment, we successfully increased our adjusted gross profit margin to 36.5% based on a reduction of the material ratio. However, the revenue decline and higher personnel costs resulting again from collective agreements were only offset in part by the improvement in the material ratio. As a result, the adjusted EBIT fell from EUR 57.3 million- EUR 46.9 million in 2024-25.
The adjusted EBIT margin equaled then to 4.3%, which is in the middle of our forecasted range from 3%- 6%. The result of the net profit is EUR 15.5 million. On slide five, it brings you our proposal for the dividend. In line with our dividend policy, which provides a distribution between 30% and 50% of the net profit to our shareholders, the management board will propose a dividend of EUR 0.15 per share for the last financial year to the next annual general meeting. This corresponds to a payout ratio of approximately 42% of the net profit. Ladies and gentlemen, the last financial year was once again a tough one. However, despite the many challenges, we used the spirit, and especially the second half, to further advance our strategic development and to strengthen us for positioning our into our future.
We worked intensively to optimize internal processes, reinforce our market position, and move forward with innovative projects. Here on slide six, I just wanted to give you an update on our strategy focus, what has been refined and evolved into the Focus Plus initiative, an advancement that addresses the current economic and geopolitical condition on one side, but also further strengthens the consolidated activities around the smart building infrastructure. The objective is here to build the existing foundation, further strengthen the strategic direction of the Zumtobel Group , and position the company for the future in light, which is a development in increasing digitalization of building infrastructure and the opportunities arising from more demand on sustainability requirements from legislation of customers, particularly here in Europe.
If you look at slide seven, we have systematically developed all key strategic elements of our business with a clear concentration on sensor-based lighting leadership across the entire group. From components into the luminaires and into the entire systems, this sharpened the focus, evolving requirements from our markets and customers, and positions us to capture additional value along the lighting and the smart value chain in the ecosystem building. As we are continuing to align towards the smart building ecosystems, we are looking with this one new market potential both for the indoor and especially with the latest trends also on the outdoor environments. The technology brand Tridonic here remains the heart of this innovation. Tridonic has solidified its position as a market leader in not only LED drivers and modules, but also in sensors and continues to shape the future of lighting through consistent investment in R&D.
Here we are pushing towards miniaturization, connectivity, integrating sensors into the drivers, and therefore laying the foundation of the digitalization of light. Our flagship brand is on track to become Europe's leading provider of multi-application lighting solutions, especially building on circular economy principle and clean innovation. With this focus on quality, sustainability, and design, Zumtobel is ideally positioned to meet the demands of the modern architecture and infrastructure project. With Thorn, basically the light for the masses is a global brand in professional lighting. Also, of course, as you know, with the arm of outdoor, continues to serve here a broad and very diverse customer base, offering coordinated lighting solutions from indoor and outdoor. We have increased our portfolio dramatically when it comes to around-the-house portfolio, outdoor portfolio in functional lighting, and also in stadium illumination. To accelerate the innovation and integration, we also launched our smart building solution division.
This team consolidates the intelligent products into systems, and it goes beyond lighting, embracing building-wide connectivity. Finally, let me remind you that we have established the strategic partnerships with Siemens and ABB, both in the building infrastructure, two global leaders here. This collaboration strengthens our ability to integrate lighting into a broader building management ecosystem. Before I hand over to Thomas, let me just highlight our Tecton 2 flagship product as one example of what this means in terms of connectivity and multipurpose use. The Tecton 2, which has been a flagship product for the last 20 years, and by the end of last fiscal year, we officially launched this completely renewed product. Tecton 2 gives our customer a highly efficient, sustainable carrier system, now with up to 15 poles. The previous one was only 11 poles and has then the possibility for complete new applications.
Light, emergency light, sensors, controls, all these functions can be combined into one single system, compatible with also our other products, reducing significantly, again, the energy consumptions with state-of-the-art LEDs. We are now talking about efficiency beyond 200 lm/W Even more, as you see it here on the slide, compared to our competitors, it basically offers a 70% faster installation than other products from competitors. Next slide, I don't go into the detail just to have a cross-section of this, the integrated poles of the Tecton, really the plug-and-play solution, what we have. Basically, on the next slide, it just shows how this whole system works together. It's not only the Tecton 2, but it's also compatible on the tracking system with other products we have, what we have refurbished, so that we are offering to the customers a downward and an upward compatibility moving forward.
With that, I would like to hand over to Thomas, who will now walk you through the detailed result of our quarter four.
Thank you, Alfred. Good morning, ladies and gentlemen. A warm welcome also from my side. Let me start with the lighting segment on slide 11. Q4 revenues in the lighting segment amounted to EUR 212 million and were 6.2% below the previous year. The decline in sales was mainly driven by lower volumes in the U.K., Austria, Nordics, and Benelux. Lower personnel expenses and lower material costs were partly offset by higher costs for digitalization efforts. Nevertheless, adjusted EBIT in the lighting segment decreased from EUR 13.5 million to EUR 11.4 million, mainly due to lower volumes. Our adjusted EBIT margin declined to 5.4%. Let's move now to slide 12, the component segment. Revenues in the component segment declined by 5.2% to EUR 72.8 million in the fourth quarter.
The development of sales was negatively impacted by both pricing pressure from the market and lower volumes. Adjusted EBIT in the component segment declined to EUR 0.2 million. The adjusted EBIT margin stood at 0.3%. Slide 13 shows you the overall results for the group. The revenues in the fourth quarter declined by 6.2% to EUR 269.1 million, mainly due to lower volumes, especially in the U.K., Austria, Nordics, and Benelux. As a result, the adjusted EBIT decreased to EUR 6 million. The adjusted EBIT margin stood at 2.2%. Let me now explain the building blocks of our adjusted EBIT development for the full year in more detail. Let's start with the prior year result, adjusted EBIT of EUR 57.3 million. Negative revenue development, especially in the lighting segment, and also pricing pressure in the component segment had a combined negative effect of EUR 17.5 million.
Looking at our costs, lower material costs were partly offset by higher personnel expenses. We recorded a net positive effect of EUR 14.5 million. SG&A and research costs were impacted by higher personnel expenses due to wage and salary increases as a result of merit round adjustments. Based on these factors, our adjusted EBIT decreased to EUR 46.9 million. Slide 15 provides you with more information on our income statement. As indicated, our adjusted EBIT stood at EUR 46.9 million. Special effects were negative EUR 14 million and include costs for the closure of the lighting plant in Luzern, the assembly plant in Sydney, and the downsizing of the plant in Lemgo, Germany. After deduction of these special effects, our EBIT totaled EUR 33 million. Our financial result amounted to - EUR 16.9 million, and net financing costs amounted to - EUR 9.3 million.
Other financial income and expenses totaled - EUR 7.5 million and included the interest expense for the pension obligations, FX, and hedging valuation. After the deduction of income taxes, our net profit for the full year amounted to -15.5 million. As a consequence, earnings per share equaled EUR 0.36. Let's now move to the next slide, the cash flow statement. Cash flow from operating results fell year on year from EUR 105.8 million- EUR 86.4 million. The cash outflow from challenges in other operating items amounted to - EUR 6.6 million, mainly due to the reduction in provisions for bonus and holiday payments and guarantees. These effects were offset by the increase in restructuring provisions. Cash flow from operating activities fell to EUR 72.3 million in the full year. Cash flow from investing activities amounted to - EUR 52.7 million in the reporting period.
In addition to the investments in property, plant, and equipment, this also includes capitalized development costs of EUR 14.4 million. As a result, free cash flow equaled EUR 19.6 million. Cash flow from financing activities amounted to - EUR 37.9 million for the full year. Let me finish with slide 17 and some comments on our balance sheet. The balance sheet structure remains stable and strong. The equity ratio is almost flat at 42.9%. Net debt increased to EUR 118.5 million, mainly due to the extension of a lease contract in the U.K. by another 10 years. Our debt coverage ratio is still healthy at 1.36. With this, I am back to Alfred.
Before discussing our outlook for the 2025-2026 fiscal year, let me share some key sector insights we just have received in June, so the latest one.
After two challenging years, we are seeing the first signs that Europe's non-residential construction sector is returning to growth, as you see it here on this chart. Data provided is by the Euroconstruct in June, and it indicates progress not only in the new build, but also in the renovation. As I said at the beginning, despite the fact that renovation was one of the key drivers, we also saw in the last fiscal year and continued now Q1 a quite slowdown also in the renovation. That means the outlook looks a little bit better. Looking ahead, the construction activity is set to accelerate, especially in the education and healthcare sectors, while the growth in storage facility projects is stepped off. In summary, the data show that there are early signs of recovery in the construction markets, although the regional distribution remains uneven.
Our strategic focus will be leveraging opportunities in renovation, as well as positioning the Zumtobel Group to capitalize on recovering in the non-residential construction. Here, it's also worth noting that the lighting industry is typically late in the construction site. Similar to that, we are hit heavily now by non-built infrastructure back three or four years ago. This brings me to the last slide, the outlook for 2025-2026. Ladies and gentlemen, the overall market environment remains tight and challenging. We do have also partly due to the geopolitical instability, shifting trade dynamics, growing protectionist tendencies, and that's also creating a high degree of uncertainty in all our markets we operate.
This complex mix of factors is not only affecting market sentiment, but is also making short-to-mid-term economic forecasts in our key markets increasingly difficult, especially, as you know, in the lighting business, it's project business, and we are depending on the amount and the reliability of those projects. As a result, we are observing more cautious customers' behavior that is reflected in a prolonged decision-making process, in an increased number of project delays and shifts. These conditions are having a noticeable impact on our activities. On the other hand, after two years of recession, we see a little bit of light at the end of the tunnel. On the other hand, after two years of recessions, we see especially the non-residential construction sector returning at least to a moderate growth, will be then also automatically positively impact the lighting sector.
However, we believe that the recovery for lighting will still have a certain delay. Against this backdrop, we expected revenues to decline by a single-digit percentage compared to the previous year. To navigate this environment, we remain strongly focused on operational efficiency, on executing the long-term strategic initiatives outlined earlier in the updated Focus Plus strategy. Given the current revenue pressure and the time required for our actions to have the full effect, we expect an adjusted EBIT margin to be in the range of 1%- 4%. We will stay focused also on CapEx, in reducing the CapEx, but still investing in our key projects, approximately EUR 50 million. With that, I would like to conclude, and thank you very much for your attention. Thomas and I will take your questions, and we are open.
We will now begin the question and answer session. Anyone who wishes to ask a question from the webinar may click the Q&A button on the left side of the screen and then click the Raise Your Hand button. If you are joined by phone, please press Star and 1. If you wish to remove yourself from the question queue, you may press Star the lower-hand button on the webinar or Star and 2 through the telephone. Anyone who has a question, make your up now. Our first question comes from Patrick Steiner with ODDO BHF Corporate & Markets. Please go ahead.
Good morning. It's Patrick Steiner speaking. I just have one question. You stated earlier that you now get hit by infrastructure not built three to four years ago. Given this expected upturn in non-residential construction, when do you expect this to materialize in your P&L?
As maybe for the entire audience who is not so familiar, basically, we have two trends. One is the new build, and here we are late in the cycle because the house needs to be built before the light comes in. Basically, fast projects like data centers are built within a year, and that could be quite a fast turnaround. However, large infrastructure buildings like high-rise office towers and stuff like this will take two to three years. Much faster, we are expecting the turnaround in the refurbishment. In most of the countries, still, the established non-refurbished infrastructures are in the range between 30%- 50%, and there's a huge potential. We are counting on that one. Especially if this materializes, what the German government has announced with this huge infrastructure project, obviously, that's a lot of business for us to be out there.
We are expecting, if this is all released, that potentially in the second half of 2026, we are seeing a momentum here.
Okay, very clear. Thank you very much. I'll get back in line.
Our next question comes from Elias Neau with Kepler Cheuvreux. Please go ahead.
Yes, good morning, everyone. Thanks for your time. I have two questions. I will take them one at a time, if I may. Just touching on your top-line guidance for the next fiscal year, could you just give us some color of what your underlying assumptions are within there, and also particularly in terms of the regional development that you expect to see? Perhaps just, you know, sort of when do you expect to see volume growth to return into positive territory? Is it sort of more into 2026-2027 for you guys?
Yeah. Let me start maybe with the components business first. The components business is basically after the recovery of COVID and then the huge inventory levels that the customers have returned to normal business behavior, which means very short notice projects, coming in at the beginning of the month and then being delivered 10 days later. We expect that the OEM customers, being competitors of our lighting brands, Zumtobel and Thorn, will basically continue to do so, reflecting also our intelligence that we are seeing a very volatile market with shifted projects. I think that will continue for the next couple of quarters. On the project business, we believe that once this, let me say, momentum gains, there's more stability in the projects, which means less postponements of projects. Once the investment is released, that we can count on it, what gives a better planning accuracy.
As I said before, top-line growth, we believe, will be possible earliest in the second half of 2026.
That was very clear. Thank you very much.
For your regions that are not so obvious, we are seeing in most of the markets, maybe the only exception currently is Switzerland, the momentum slowing down. We had a good momentum last year in the U.K., for example, and that's flattening out, being slightly declining. We see the regions across Europe pretty much in the same shape, a little bit better in Eastern Europe, but the rest is pretty much all very flattish, negative growing.
That's very clear. Thank you. Just maybe as a follow-up on your margin guidance for the next year, that seems quite conservative to me. Could you just sort of help us understand the moving parts behind that? In particular, is this expected decline driven by sort of continued headwinds from labor inflation, raw materials, or is it more negative volumes and pricing that is driving this margin decline? Can you just sort of give some color on that, perhaps?
The biggest impacts are labor inflation and volume decline. Volume decline increases our fixed cost ratio, of course, and we know we need time to adjust our fixed costs. Price pressure is not an issue in the lighting segment and only to a limited extent in the components business.
That's great. Thank you. Very clear.
As a reminder, if you wish to register for a question, you may press the Raise Your Hand button or Star and 1 from your telephone. Our next question comes from Michael Marschallinger with Erste Group . Please go ahead.
Yes, good morning. Thanks for taking my questions. Two left. Firstly, on further special effects, how should we think about any further restructuring efforts going into 2025-2026 in this weak environment? Any comments on that, please?
As our margins are not great, we need to further reduce our cost base. We have also started an efficiency program where we will update you after the first quarter results. There will be some restructuring to be expected.
In line with what Thomas said, that covers across the group, which means looking into especially high-cost territories where, due to last year's wage increases, we have increased substantially, like Thomas said, the wages and the personnel costs. We are now evaluating all this, and we will update you here on when we have the Q1 conference call.
For Zumtobel and Synca and lastly, on the pricing environment, could you maybe comment on the pricing pressure you saw now in the fourth quarter in comparison to the previous quarters? Would you expect this to further intensify now going into 2025-26?
As already said by Thomas, I think on the lighting brands, we have not been able to increase substantially the prices. On average, it's still a slight increase, which is good news for us, but really very slight, depending on the different countries. Tridonic is back into the usual mode of a slight price decline, which has not changed from quarter three to quarter four, so you're pretty much clear. Lighting brands on project base, we are expecting, of course, with less project, more pressure coming. So far, okay. On the components level, on the usual decline, what we have. No change.
Okay, understood. Okay, understood. Thank you.
As a reminder, for questions from the webinar, please click the Q&A button on the left side of the screen and then click the Raise Your Hand button. If you are connected via phone, please press Star and 1. We have a follow-up question from Elias Neau. Please go ahead.
Yes, I just wanted to follow up on if you're seeing anything in terms of tariff impact in the U.S. I know it's quite a small business for you guys, but I know you saw a weak development in the Americas. Could you just perhaps comment on what you're seeing there and what the expectations are going forward?
Yeah, as I said already, Elias, we are having a very small business in the U.S., which is a mix between, let me say, one-third local production and two-thirds imports. Excuse me. Of course, we are monitoring this very clearly. Obviously, if the tariffs are becoming, then I think we need to see how to proceed or if to proceed in the U.S. because obviously then our imported products, which are mainly Zumtobel products, are becoming too expensive even for high-end applications. With Tridonic, we are very small here. We are leading already with the tariffs as some of the parts are coming from China, but it's a relatively small business. The impact on tariffs for us is overseable. Currently, we are benefiting a little bit, as you know, from the exchange rate of dollar, whereas the materials are bought in U.S. dollar.
The impact on tariffs is overseable for our business.
Thank you.
Ladies and gentlemen, this was our last question. I hand back over to the management for any closing remarks.
Ladies and gentlemen, thank you very much for listening. That was the update now for the last fiscal year. As already said by Thomas and myself, we are currently positioning the company for the upward strength, meaning that we have this efficiency program started across all the divisions, across all the groups. We will have the first impact and results now in autumn, and we will update you on that one. Looking forward to talking to you again then.