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Appetite for risky assets improved on the back of strong U.S. economic data released overnight.
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After today's rally, the S&P 500 is down just 0.1% since the U.S. and Israel launched strikes against Iran.
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Comprehensive cross-platform coverage of the U.S. market close on Bloomberg Television, Bloomberg Radio, and YouTube with Romaine Bostick, Katie Greifeld, Carol Massar and Tim Stenovec. -------- More on Bloomberg Television and Markets Like this video?
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International equities grabbed attention last year as they outpaced U.S. stocks, reversing the U.S. market's long-standing dominance. The S&P 500 returned nearly 18%, while developed international markets gained 32% and emerging markets rose 34%.
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Karen Chan: Good morning, everyone. Thank you for attending the DFI Retail Group 2025 Full Year Results Presentation. I'm Karen Chan, Strategy and Investor Relations Director. Joining us today is Scott Price, Group Chief Executive; and Tom Van der Lee, Group Chief Financial Officer, who will be providing remarks on our full year results, followed by a Q&A session. Today's presentation is being webcast in its entirety. In addition, the full text of our results announcement and slide presentation are uploaded on to our IR website. And before we start, I would like to remind you of the following regarding information to be provided during the presentation. The information about to be presented is for information purposes only and is not intended to be investment advice for any person. There's no intention to imply for any dealings in any securities. There may be forward-looking statements mentioned in the presentation materials, which include statements regarding our intent, belief, expectation with respect to DFI Retail Group businesses operations, market conditions, et cetera. You're expressly advised not to rely on these forward-looking statements as they are subjective views, which are subject to risks and uncertainties. And with that, I'll pass it over to Scott. Scott, please. Scott Price: Good morning, everyone. Thank you, Karen. A pleasure to be here talking about our full year of 2025 results and also sharing with you some of the insights that we gleaned from the second half of the year versus the last time we gathered here. We're seeing a more confident customer in the second half of 2025. They're still careful. They're still not going back to, I think, the spending pre-COVID. But we are seeing customers willing to invest in Convenience, invest in their own wellness and also fun, which has been quite interesting. So some of the headlines, we're now up to about 115,000 daily e-commerce orders. So again, that focus upon Convenience. A lot of that is coming from our 7-Eleven China business. A significant increase in what we would call the wellness category within Health and Beauty, where customers, in particular, around derma, supplements are interested in functional value, in particular, a younger customer that I think are more focused upon wellness than particularly previous generations. Collectibles and characters across, I think, not only our 7-Eleven, but also our Own Brand. Cute always works, and we're seeing it as an opportunity for us to grow. I think that we had good strong like-with-like growth. I'll talk about that in a couple of minutes. Good progress overall on the business. And I think from a financial viewpoint, very pleased with the strength of our balance sheet now as we have paid down debt and are in a net cash position. And as we look forward to 2026, I think as Tom will share towards the end, our overall guidance, I think that we're having now an opportunity to benefit from really 18 months of hard work pivoting our business to far more of this customer-centric value plus, again, areas where they're willing to spend a bit money. We obviously have to focus upon becoming a modern retailer, which means the digital -- and the role of digital within our business is critical. We'll share some of the statistics there. We are very much focused upon financial returns, the TSR, our return on capital employed. So a key metric that we're using is increasing our revenue and profit per square foot across the business, which is a great metric within retail to really test how you're doing and continuing to invest in our digital ecosystem, which I'll describe in a little bit more detail. In terms of overall results, which have been released, revenue from our core operating subsidiaries up 0.5%. Now that was 0.8% in the second half. So again, we're seeing this recovery across the total portfolio after a couple of years of challenging revenue. Underlying profit up 34.7%. We have absolutely focused upon everyday low cost across the entirety of the business, which has continued to drive a much higher growth in profit than revenue. I mentioned net cash position at $538 million to $70 million. That is after paying a very significant special dividend of $600 million. So 58.3%. We announced a full year dividend of 10.7% after approval from our Board of Directors yesterday. Overall, we're seeing some interesting trends. High-value tourists are coming back to Hong Kong. We see now in many of our tourist stores great growth. I'll talk a little bit about that, in particular, Health and Beauty. So tourist locations versus the previous tourists who prided themselves on coming to Hong Kong and spending nothing, bring their own water, their own food. We're now seeing a return of high-value tourists, which is a great sign. Good mix now from cigarettes to ready-to-eat, little bit more detail in that shortly. Food growth benefited from the Singapore consumption, the government prior to the elections gave each citizen SGD 600, and that obviously benefited the Food as we saw in our performance there. Great progress in IKEA. We'll talk about that in a few minutes. I mentioned the doubling of our e-commerce transactions. And again, the total shareholder return for the year was 93%. So I'm going to turn it over to Tom for a little bit more detail. Tom Cornelis Van der Lee: Thank you, Scott. Let me take you through the financials for 2025. Starting with the income statement. We closed 2025 with the underlying profit of $270 million, up 35% year-on-year. And with this, we delivered the top end of our guidance. This performance was driven by consistent like-for-like recovery, margin improvement across most formats and decisive portfolio actions, notably the divestment of Yonghui, Robinsons and Singapore Food. For clarity and comparability, we present 2 additional views here. First, a restated 2024 base, reflecting only the comparable periods for divested businesses. Second, a reset 2025 view, assuming full year deconsolidation of Singapore Food and Robinson Retail. And this provides a clearer picture of our going-forward earnings profile. On revenues, revenue from subsidiaries were $8.9 billion, up 0.5% year-on-year on an organic basis, excluding divested businesses for the comparable period. Maxim's revenue, our associate, up 0.4% on improved mooncake sales and Southeast Asia restaurant performance, offset by weaker sales in Hong Kong and Mainland China. Subsidiaries underlying profit, $183 million, up 19% on a comparable basis. All formats improved their operating margin with the exception of Convenience due to reduced cigarette volumes. Our financing costs reduced as we paid down almost all our debt. The share of underlying profit from Maxims, up 9% due to stronger sales and lower costs. And the underlying profit is $270 million, as said, 35% up year-on-year or 18% up year-on-year on a restated comparable basis, excluding the loss-making Yonghui in 2024. The nontrading items, $36 million, they primarily reflect the losses of the divestment of Yonghui and Robinsons Retail, partially offset by the disposal gain on Singapore Foods. These items are all nonrecurring. The ordinary dividend per share, the $0.14 here, that's based on our new dividend policy, which we announced last year of 70%. The special dividend, $0.4430 we paid out last year. I think overall, full year 2025 represents a clear inflection point for the group. We transitioned from a portfolio-driven structure to a much more focused operating company with stronger earnings quality, lower leverage and a greater strategic flexibility heading into this year 2026. Going to the sales summary. As outlined in our Investor Day, growth, margins and returns are the key building blocks for us driving TSR. Turning to sales here on this page. We continue to see sales recovery across the format in 2025, reflecting improving execution and early signs of demand recovery. Overall, consistent like-for-like recovery, reaching 2% in the second half of 2025. Turning on to the formats. On H&B, we saw an almost 7% growth driven by continued share gains in wellness, stronger tourist traffic in Hong Kong and the growing e-commerce presence in Southeast Asia. Convenience, the total sales declined 1.5% due to cigarette volume reduction following a tax increase in Hong Kong in February 2024. Excluding cigarettes, sales increased 1% as we focus on growing higher-margin non-cigarette categories with RTE being the main focus. Food, sales were broadly flat, excluding the divested businesses as price reinvestment supported volume and transaction amid value-focused consumer environment. Home Furnishings, although sales declined 3.5%, a clear improvement from a decline of 12% in 2024. And that's driven by price resets, range rationalizations and accelerated digital penetration. And as said, Maxim grew 0.4% due to stronger mooncake performance and Southeast Asia restaurants. Breaking this down a bit more detail into half year numbers, so you can see the trends here better. Sales and like-for-like trends continue to improve throughout 2025 with a clear step-up in the second half across all formats, reflecting strong execution and stabilized demand conditions. On Health and Beauty, Health delivered sustained like-for-like growth, supported by continued share gains in wellness and the growth of tourist arrival in Hong Kong as well as this e-commerce I mentioned earlier, in Southeast Asia, particularly Indonesia and Vietnam, so double-digit like-for-like sales growth in 2025. A very strong performance in these 2 markets. On Convenience, sales remained pressured by cigarette volumes declines for the tax hikes, although a clear improvement here is seen in the second half of 2025, and that's driven by continued growth in higher-margin non-cigarette categories, particularly RTE. In South China, like-for-like sales were impacted by the intense subsidy competition from food delivery platforms, particularly in the first half of 2025. As we continue and grow RTE with margins about 4x as much as cigarettes, we expect the financial impact from cigarette sales decline to moderate from 2026 onwards as we anniversary the full year cycle of the cig tax increase. On Food, stable like-for-like despite a challenging trading environment. In Hong Kong, pricing reinvestment in the core basket items drove volume up 2%. Singapore Food, as Scott commented, benefited from the government consumption vouchers, which were only redeemable at supermarkets and hawker centers. And Cambodia delivered a very strong like-for-like, both in sales and also improved underlying margins. In Home Furnishings, you can see also here a clear improvement compared to 2024 and also the second half is much better. And that reflects all our efforts on price reductions, better entry price range options and we rationalized the noncore items throughout the portfolio. As a result, you can see that the volumes in the second half are growing. Sales might not grow yet, but the volumes -- underlying volumes in the second half for IKEA has been growing. If we then turn on to the operating profit by format. And you can see here also quite strong results and also a good recovery in the second half. Starting with Health and Beauty. The operating profit here reached $228 million, up 9% year-on-year, driven by strong performance on sales across all our markets. And the margin improved 20 basis points to 8.7%. Convenience, operating profit of $97 million, although down 6% due to the low reported cigarette sales, although the second half here also returned to profit growth, driven by the favorable mix towards higher-margin RTE categories. Food operating profit reached $62 million, a 15% year-on-year increase, driven by earnings recovery mainly in Singapore Food following the distribution of the government consumption vouchers we led to higher sales. Again, here, Hong Kong pricing investment drove volume growth but did not impact our margin because we offset the lower prices with better sourcing in our business. And last, Home Furnishings. Here, we can see improved margins year-on-year despite slightly lower sales, and that's because of significant cost optimization across labor, supply chain and rent across most of our markets. As a result of that, we had a $10 million uplift in profit for IKEA or Home Furnishings in 2025. Turning to the total subsidiary operating profit and the underlying profits. Starting with the subsidiary operating profit. The operating profit is post-IFRS increased 7% year-on-year, driven by broad-based improvements in subsidiary profitability with operating margin now 4.2%, up 30 basis points. The underlying profit, as mentioned earlier, is up 35% to $270 million, supported by stronger subsidiary earnings, as you see above, lower financing costs. We moved from a net debt to a net cash and a higher contribution from associates following the divestment of the loss-making Yonghui. The reported SG&A costs are slightly up, but on a like-for-like basis, they are down. There are a few one-offs, which are not recurring, and you will see this year that costs are coming down on the SG&A line. Turning to cash flow. Strong cash flow, $430 million cash -- operating cash flow, up almost 30% year-on-year. And our free cash flow grew 78% to $281 million in 2025, both because of underlying profit improvements, improved working capital efficiency and the interest savings, which I highlighted earlier. CapEx. Our CapEx was clearly below our guidance and ended at $149 million. Of the CapEx we spent, 50% of the CapEx is spent on stores and refurbs, 30% on digital and IT and the remaining supply chain stability and maintenance. We, however, remain committed, as you will see later in the guidance, to invest $200 million to $220 million per year, again, focused on store renewals and technology, particularly AI, as we will highlight later. Following the $1 billion of divestment proceeds, we moved from a net debt to a net cash even after returning $600 million to shareholders via a special dividend. And that move to the return to shareholders, as you can see here. Our total ordinary dividend is $0.14 in 2025, up 33%, and that reflects a stronger earnings, but also the increased payout from 60% guidance to 70% policy. We returned $740 million to shareholders, including $600 million special dividends, while we strengthened the balance sheet. We delivered a total shareholder return of 93% in 2025, driven by earnings recovery, portfolio simplification and disciplined capital deployment. And with this, we've outperformed our retail peers and major global indices. And last, the ROIC (sic) [ ROCE ] improved to 9.4% with a clear pathway to 15% by 2028 as we announced during our Investor Day. And with that, I would like to turn it to Scott for strategy and business updates. Scott Price: Thank you, Tom. For those who attended our Investor Day, this framework was presented. And the strategic deliverables are really just the anchoring structure by which we focus our investments and as well the priorities for each one of our formats in the business. We talk about the key deliverables in 2025, retail excellence, being really good retailers. We have, I think, a portfolio that brings synergy across, but each one has a different assortment. We have thousands of products in each one of our stores. The reaction to the inflationary environment meant that we really had to focus upon repivoting. So we had a good, I think, 12 to 18 months of really resetting our customer proposition and being really good retailers. In Health and Beauty, curating the range moving out of commodities, much more into functional value product lines. We're seeing great progress there. On Convenience, moving away again from tobacco into far more of the RTE, ready-to-eat. Food, really strengthened our proposition there as well the value to customers. And on Home Furnishings, enhancing the value of the product lines as well accessibility by the way that we have gone to market, in particular, in Southeast Asia, Indonesia on platforms. Access to customers, we have targeted, I think, appropriately, if we focus upon TSR and ROCE, the Convenience and the Health and Beauty range. There may be stores available in Food, Cambodia, 1 or 2 stores potentially in IKEA, in Taiwan. But for the most part, the majority of our store growth will come from those smaller format, high return and low CapEx because of the franchise model. Omni digital, more than 90 digital channels, that's apps, loyalty programs, the launch of our DFIQ vendor platform, all increasing the mechanisms by which we build a more powerful digital P&L moving forward. Good initial progress on media. So as you go through our stores, you'll see screens, you'll see advertising. Our proposition rather than going with Alphabet or Meta, we're going to have a higher purchase conversion because that new product launch is going to be right next to the product as opposed to seeing it late at night on your phone and trying to remember it the next morning. I think the retail media is quite a powerful opportunity for us as we presented in the Investor Day. And we continue to make progress. I think in terms of divestments, pretty comfortable with the portfolio as it stands today, now ensuring that we redeploy our capital moving forward into the highest value opportunities for shareholder return. We go through some of the formats in particular. I'm not going to go through each one of the aspects here. Tom unpacked the sales and the operating profit in detail. But overall, just this growing wellness focus upon, I think, the generation that traditionally has been the silver hair, they call it, I put myself in that category. But this next generation is far more health focused. And we are finding then an opportunity to pivot towards a younger generation on the health. We still have beauty, appropriate beauty, but it's functional beauty, hair care that has a far more beneficial derma as opposed to more traditional cosmetics. Hong Kong, Macau, again, tourists coming back. Our tourist stores had a 9% revenue growth in 2025, the second half higher than the first half. So we see that as an improvement. We exited the stores in China, return on capital invested being a huge driver of that and then focusing on the GBA strategy. A good increase in sales with Vietnam and Indonesia, a 10% and greater like-for-like growth across our stores. Own Brand, a critical part of delivering value while also good functional, I think, benefits to customers through our products, 35% improvement in gross profit productivity. We did close the nonperforming stores. Any healthy retailer continually assesses things change relative to pattern, competitive landscape. At any given time, you're looking at a single-digit percent of your store portfolio to ensure that you stay healthy. And a 38% growth across e-commerce in the Health and Beauty area. On Convenience, it was a year of transition, I think. So first, a good portion of our sales traditionally came from tobacco. 31% of our sales were tobacco-related transactions. Generally, that's a 1 or maybe a 2-item basket, and we shared that in the Investor Day. They're low margin. So there's a huge opportunity to pivot to ready-to-eat and also, I think, collectibles, creating fun transactions for customers who come into our stores to buy something new and generally then a larger basket. The innovation that we look at for ready-to-eat, it seems like half the population of Hong Kong goes to Japan at least twice a year, if not more often. And so again, that Japanese themed ready-to-eat excellence, and that is one of the benefits of the franchisor. Our penetration now, excluding cigarettes at 33% of sales, ready-to-eat, a substantially higher margin than traditional tobacco. Asians prefer hot food, and we see, in particular, in China. So across our stores, we're launching out food bars, which really is a small quick service restaurant. The challenge that we had is with that proposition, when you saw a bit of that platform battle that occurred, we were not part of that subsidy drive for the big players who apparently were trying to kill each other. And not making any money at it, from what we can see. But we were excluded from that, but we were picked up by the platforms from August as a quick service restaurant, and we saw obviously the value in that, in particular, when it came to those e-commerce click and collect, order online as you've gotten onto the train, pick up at the 7-Eleven near your office, bring that breakfast or that lunch back into the office. We also see, again, franchisee penetration is a great way for us to drive our ROCE with a lower CapEx intensity in terms of revenue growth. We've got, I think, good progress by the team. I think always want more faster, broader, bigger, our 7-Eleven team is looking very nervous right now, but I'm pleased with the progress and looking forward to more. Moving on to Food. Food was a huge year of pivot. The news last year, everyone going north to buy their groceries. And to me, that was a substantial risk. I see a huge opportunity for us based upon the deep knowledge of our Food team and the experiences they bring to drive basically affordable food in Hong Kong. We should not become the food desert that you see in many capital cities around the world. Hong Kong, I think, is unique in that way. So we have embarked upon pretty substantial investment in re-sourcing our product line to be able to eliminate traders, middlemen, all the ones who were adding an incremental margin and go direct across many of the product lines. We strategically identified 3 to 4 competitors in Shenzhen. We identified the 200 most common items in the basket. We shopped that basket and then we came here to Hong Kong. It was 18% more expensive at the beginning of last year. We achieved a 1% difference during Chinese New Year. As a result, with increased profit, we now are able to really, I think, bring forward quite a very powerful proposition in terms of the confidence that Hong Kong customers can shop here. They're not going to get a better deal in Shenzhen as well. We saw that in the volume growth. So we had a 2% volume growth as a result of all these efforts and a good solid start to the year during Chinese New Year, which tells me we are on the right path moving forward. Those strategic price investments, et cetera, while protecting margin we've seen in the results, again, second half better than the first half. Tom mentioned the Singapore government vouchers. We also, I think, have a unique opportunity in Cambodia, a business that was pretty small, not really doing much, all of a sudden became very interesting to us as a part of the portfolio. And we now plan 50 new stores, has a very good margin and a very good return on capital employed. So an interesting business. And we completed the Singapore divestment. Frankly, I think we divested at the right time. I think ex those Singapore vouchers from the government, the business will not be, I think, as attractive. And similar to Hong Kong to Shenzhen, you have the same challenges between Singapore and Johor Bahru, in particular, as we open up the train lines and ease up on the border, you're going to see a lot of those baskets going north. So I think our timing was very good. On Home Furnishings, excellent progress. Look, all of our formats were challenged by this change in customers, but I'd say IKEA was the most challenged by the macroeconomics. The fact that we do not have a high level of real estate transactions in 2025. Look, when people don't move, then they don't do home renovation and they don't buy heavy furniture, which meant that a good part of our portfolio assortment was challenged in 2024 and 2025. But we've made really good progress focusing on what matters. And so sensible, I think, investments for customers coming in, in particular, our marketplace area. But with that understanding of a different economic relative to the basket and the margins for the businesses, the team did an outstanding job of really cutting costs, which meant that despite challenged revenue we delivered, I think, quite a strong profit position. Taiwan continues to be a very good market for us with greater than 10% profit margins. We are quite unique in Indonesia. IKEA, the franchisor has only approved 2 markets around the world to test platforms. So we have a mainly Jakarta-based Indonesia, IKEA business with 1 store in Bali. We went on to Shopee in Indonesia and now are able to offer a good relevant part of our assortment to the entire country of Indonesia. which, of course, as in archipelago of 200-plus islands with 200-plus million consumers. So find that as an interesting opportunity moving forward. Again, those are more of those sensible splurges around portable items. No one's ordering a leather sofa online. So it's an appropriate assortment. And then scaling our Food business. Everyone loves a good Swedish meatball. We now, through research, we now know that 45% of our customers visit IKEA for food. And so you'll see that we have increased the overall proposition as well, importantly, reset the stores to make it more convenient to engage in our food assortment. On our digital, great progress on the digital ecosystem you see across here in terms of driving our online penetration, driving launches. And as a result, we had outstanding economic results. So our retail media grew 400%, 1,000 new in-store digital screens, which we are now making available to our vendors to invest in a media present. We now have 13 million active users. We now have 100 million-plus visits to our store each month. So that's, in essence, 20 million transactions a week now across the DFI portfolio, which is a very powerful data source and now 33 million loyalty members across all of our programs in the markets in which we operate. Yuu continuing to expand across platforms. We're now on Foodpanda with access to the data, which is very important as you think about when you interact with the overall platform. So this is another area where the media -- the digital media team and the data team know that we can do so much more, and I'm looking at them. And so we want to move faster, bigger, harder. He shake his head yes, which is a good thing. So with that, I'm going to turn it over to Tom to review our business outlook. Tom Cornelis Van der Lee: Thank you, Scott. On to the full year 2026 outlook. Starting with the revenue. Excluding Singapore Food, which we deconsolidated last year December, we expect to grow our top line organically by 2% to 3% as we continue to gain market share across our formats. The underlying profit expect that to grow to between $270 million to $300 million. And that implies a 13% to 25% growth, excluding the discontinued Singapore Food and Robinsons. So we go from $230 million restated last year basis to $270 million to $300 million. CapEx, we are further we're going to spend about $200 million to $220 million this year, half again on new stores and store refurbs, about 25% to 30% on digital and IT. And split on formats, about 65% on Health and Beauty and on Convenience, the remainder on Food and IKEA. The dividend payout, the policy we announced last year, 70% payout and our return on capital employed will go from 9.4% to between 11% to 13% for 2026. And with this, I hand over to Karen for the Q&A. Karen Chan: And with that, we'll open up the floor for Q&A. [Operator Instructions] First question, Jeffrey. Ming Jie Kiang: I'm Jeff from CLSA. So my first question would be regarding the organic revenue guidance, 2% to 3% for 2026. Presumably, we exited 2025 with a similar momentum. So can you walk us through maybe year-to-date, what you are seeing across different formats on the revenue momentum? And my second question would be on the guidance for -- sorry, CapEx for 2025. So it is quite meaningfully below the previous guidance we've received. So I just want to understand, was this some timing difference? Or was this something that happened that makes the CapEx has been low? Just anything would be helpful on that front. Scott Price: So I'm going to cover the first one. And Tom, who knows my view on the second one, will cover our performance on CapEx because I'm not a happy camper. But in any event, we had a solid start to the year across all formats and saw positive total and positive like-for-like consistently. I really do think 2025 was a very important year for us relative to the change in proposition, much more value-based, much more attuned to the customers relative to what they're willing to spend their money on. So very pleased in line with guidance is what I would say. And I think we can do more. Collectively, we gained share across most of the banners in 2025. I would like to see that continue into 2026. Tom, how do we feel about CapEx? Tom Cornelis Van der Lee: Let me try to answer this. I think -- first, understand is a big impact of Singapore Food. So we divested Singapore Food. And as we announced the divestment, we stopped most of our CapEx. There's no point to invest. But still, even without that, we're still materially below our guidance. And here, I think we have to significantly improve our planning. There is still a culture of holding on to your budget to the last minute and then realizing you can't spend it. So we have to improve planning. We have to make sure that if we give you a guidance that we are going to spend it because the spend is not just for spend's sake, it's to make sure we drive revenue and drive profits. So that has to improve this year so that we get back to our guidance $200 million to $220 million because we don't want to miss opportunities to get the top line and bottom line improved. Scott Price: As I said to our Board of Directors yesterday, as God is my witness, we will spend and invest the midpoint of our CapEx guidance in 2026. Karen Chan: Next question, please. Brian? Unknown Analyst: This is [ Brian ] from Citi. So I have 2 questions. My first question is that I see that 2026 guidance is actually not far away, I mean not too far away from 2028 guidance. So I'm getting a feel that we are getting more optimistic on the overall performance in the midterm. So I just want to check how you feel about that? And are we revising any of our medium target that we released in December? That's the first question. The second question is that just looking at 2026 alone, for each business format, is there any quantitative or qualitative the main target, main missions that you need to achieve in 2026? Scott Price: Tom, why don't you cover the first one? Tom Cornelis Van der Lee: On guidance, we've laid out the guidance in our Investor Day in December. And we said we want to underpromise and overdeliver, right? So we've seen good progress last year. This year, we expect also significant improvements on the back of improved underlying performance as well as lower cost. And on the back of that, we'll see how 2027 goes for that. But we are quite confident that we can at least meet and hopefully, at some point, exceed the guidance we've given you last year December. Scott Price: In terms of the by format, [ con call ], we were very thoughtful around how we positioned the Investor Day by format strategy. And again, in a customer-first environment, that retail excellence and being laser-focused on a winning proposition for customers, communicating that and ensuring that we are modernizing our digital proposition. I think in 2026, to Tom's point, we want to underpromise and overdeliver. '26, based upon the first few months and this sense of renewed customer confidence gives me good hope. But look, we live in a challenging world. Who knows what oil prices are going to do, what that could do to energy costs. Therefore, do we go back to a far more value-oriented customer. Some of that splurging may end. There is great strength in being a daily essential retailer, but it's not without its challenges relative to consumer confidence and people saying, you know what, I'm going to spend 10% less and save that or I need to paycheck to paycheck, put more into paying my electricity bill. So I'm cautiously optimistic, but it's way too early to change midterm guidance. Karen Chan: Any questions? Ben? Unknown Analyst: This is [ Ben ] from UBS. So I have 2 questions from my side. So first one is it's been 2 months after the Investor Day. So just wondering if you could share some updates with us on the e-commerce penetration and also the progress made on retail media, specifically 2 months into 2026. And then the second one would be regarding on -- in Hong Kong market. You know that Chinese e-commerce platform has been aggressively penetrating the market with cost subsidies. So how long do you expect this to last? And what would be our strategy? Scott Price: So on the -- again, it's been roughly 73 days. So a little early to change our minds in terms of, again, the midterm guidance. E-comm penetration, we made great progress. I think it was 140 basis points up to 6.2%. And look, we are after fair share. I'm not trying to win in the digital world. As you think about overall spend, what percent is e-commerce, we want to have a fair share of that. So we don't want to be left behind. The market interaction is wildly different. In Hong Kong, for example, it is some of the lowest e-commerce penetration in the world because there's one store every 20 meters. So why would you wait for someone else as well, there's a substantial for families, number of helpers who get sent out to do a lot of the shopping. Where I see us needing to focus is instant commerce. That will grow. You see this through the platforms. People forgot something, they want something quickly and as well retail entertainment or retailing -- no, that's not what it is. Retail entertainment, there used to be a word for it, I have forgotten, apologies. But people do shop online because it's interesting and it's an assortment that you can't necessarily get in the store. So I think we are in a good shape to continue to drive our e-commerce penetration relevant to the market share. It will grow because in markets like in Indonesia, it's very high. Access to goods in stores and brick-and-mortar is very limited, same as I think in Vietnam, where we see much higher growth. We will keep up and focus on that fair share, not ready to change the environment. In terms of the platform battle that took place in the North, I think that is calming down a bit. We actually, other than really the Guangdong impact to our 7-Eleven business, didn't necessarily see across the rest of our format portfolio a significant impact. I don't think trying to get across the border, a lot of those products don't move very well through the approval process with some of the ingredients, et cetera, in particular, in Health and Beauty. What we see is actually a reverse opportunity, which is there is a very large amount of our product line here in Hong Kong that's very interesting. Certainly, we see it through the Mainland to be able to now digitalize that and make that available in Guangdong. So we see the -- actually rather than necessarily a risk, we see it as an opportunity for us to be able to grow our business through some of those assortments being made available for purchase. We've expanded now the Yuu loyalty program into Guangdong. So I think that is a first step in being able to create a digital ecosystem that is far more in line with the retail porous border that's envisioned with the Greater Bay Area. Karen Chan: Okay. We'll move to online questions. Question from Jayden Vantarakis of Macquarie. He has 3 questions here. First, at the recent Investor Day, management provided clear segment and market targets for M&A. Are there any updates to share? Second, how is the progress on the franchising model for Guardian in Indonesia? And third question, margin improvement at IKEA is stronger than expected relative to what has been shared at the Investor Day. So what has gone well during second half of 2025? And is there more room for higher margins in 2026? Scott Price: Tom, I'll leave the margin improvement to you. So on the M&A, we're very clear what we will and what we will not do on M&A. I think that what we divested relative to minority positions will tell you very clearly what we don't want to do. We only want operating businesses that bring scale synergy to our existing business to allow us to continue to deliver on improved ROCE and improved TSR. This is a situation where we're in the market. We continue to look, I think, more strategically in the Health and Beauty and the Convenience store area, but would not say, I think, no to interesting affordable options in digital. The affordable piece is a little bit more challenging given the multiples on which many of the digital assets trade. So we will follow the policy. We will follow the procedure. M&A activity is episodic. And so we'll update you at the appropriate time. On Indonesia, we have 2 trial stores. You have to get the model right. You have to be able to ensure that a franchisee can make a living income and that this is a good return on investment for them. So you cannot go out with a proposition that has not been trialed and tested. So we trialed 2 stores. We're pleased with it. We'll do another 40 stores this year in terms of the Indonesia franchise stores. This is a model that you perfect over a couple of years before you really go after the substantial growth. So pleased with the pace, and it is, as referenced, in line with our commitment that we made during the Investor Day in December. IKEA margin... Tom Cornelis Van der Lee: On IKEA. So... Scott Price: Other than brilliant leadership by the IKEA team, right? Tom Cornelis Van der Lee: Absolutely. Martin and team did a fantastic job last year. But if you look at 2025, the big improvement in underlying profit is because of lower cost. So labor cost, rents, but also supply chain, so significantly lower cost in IKEA. Part of the lower costs, we have invested in lower pricing. So we saw that volumes are picking up, although sales are still down last year. So we now need to make sure that sales are up. And if sales are up, we will expect better results, but that will take some time. Investing in margin and investing in price will take time before it turns into higher sales numbers. But the initial signs are positive. So hopefully, we'll get at least a revenue stabilization in 2026, and then we'll see higher profits in the following years. Karen Chan: Your next question comes from Meg Kandy of CGS International. Congratulations on an exceptional year. Now with a strong foundation built looking forward into 2026, can you give us some color of the levers you're tapping for further shareholder return from here onwards? Scott Price: Tom? Tom Cornelis Van der Lee: On shareholder return, I think what we announced earlier is, for us, the most important driver is top line growth, right? So growth, and you see that the first 2 months of this year, we are in line with our guidance. And hopefully, some will exceed. So growth is a key driver. And we do that with the right pricing, the right ranging and the right stores. In addition to that, we started last year with a large cost optimization project. And we've seen the results in IKEA, but also across all our formats and also on our SG&A, our costs are coming down. So you can expect this year that SG&A on group level is coming down. That's another lever where you can see profits come to be increased. But in the long term, it's sales and margin. In the medium term, you'll see costs coming down. Scott Price: And probably what I would add to that is there needs to be an incremental value to this portfolio versus the breakup value. Otherwise, what's the point of it. And where I see value is across 3 areas. First, it's cost optimization. We have relentlessly focused on being able to ensure that we're an everyday low-cost operator. As a result, we are able to, I think, operate at a lower overhead as a percent of revenue than any nearby competitor by format. So that's first and important. The second is the synergy of the digital ecosystem. It is -- would be very expensive for all of our individual formats to try and create their own ecosystem, which means the e-commerce platforms and the e-commerce transactional capability, their own loyalty program, their own ability to drive retail media as well data monetization. And then the third is the value of the data holistically that we're able to bring through our loyalty programs. So we know customers better than anyone else and the ability to partner with vendors and be able to say through purchase behavior in IKEA, we understand that this is a young family about to have a child. That helps Health and Beauty personalize offers that are relevant to prenatal and then baby assortment moving forward. So the ecosystem to me is going to be a huge driver of this TSR moving forward relative to investing in a competitor who does a single format only. Karen Chan: Thank you, Scott. Next question comes from Adrian Loh of UOB Kay Hian. Congratulations on the strong set of results. For the Convenience business, you had around 100 net new stores in South China 2025. What are your targets for this in the near to medium term? Second question, on the M&A front, is there any more divestment on the horizon or we're feeling more comfortable with the portfolio we are standing at right now? Scott Price: Tom, why don't you cover the CVS? Tom Cornelis Van der Lee: As we shared in our Investor Day, the medium term 2028, our goal is about 2,400 stores by 2028 in Southern China and overall about 4,000 stores for 7-Eleven as a whole for all our markets. We did open last year 100 stores net. We did close some stores, those were loss-making. And we do always -- we open more stores and we close a few so making sure that the overall portfolio remains healthy. Scott Price: On the divestment side, I think that we have for the most part, eliminated the parts of the business that have been dilutive in terms of TSR and ROCE. It was not too many years ago. I think it was 2023. We had a 1.7% ROCE. We're now up to a 9%. And as Tom said, we aim for a 15% by 2028. In general, I think we've got the right portfolio. I think we have to keep a pulse as changing customer behavior. If we see a substantial move away from stores into digital, we may rethink maybe some of our store commitments moving forward and pivot more towards revenue coming out of the e-commerce, which we are on a good path to make neutral to accretive versus an in-store margin. So overall, I think we're in good shape, but we constantly evaluate. We've had a great year when it comes to TSR. We want to continue to maintain that great opportunity for the capital markets to use DFI as a mechanism to invest broadly in retail in Asia because we're multi-format, multi-country. Karen Chan: Your next question comes from Selviana Aripin of HSBC. Could you share your thoughts around the impact of inflationary pressure, such as higher oil price on your guidance in 2026? And if you could share some thoughts around sensitivity to oil prices, that would be helpful. Scott Price: Maybe, Tom, you add on. So just we've looked at it. We've actually looked at our supply chain. We've looked at our sourcing. We have modeled a 20% increase in oil prices. The reality is that as a large-scale daily essential, that as a percent of our net product is not substantial. We now have over 50 country of origins from which we source. We have the ability to pivot in terms of not only geographically where we source, but also, I think, through the right mix, able to mute any impact on customer pricing. If it becomes substantial at any given time, clearly, there'll be an inflationary impact. I think we would like to be the last to raise prices as a strategy. I think there's other things that we can do to protect the bottom line while also being able to serve our customers. Tom Cornelis Van der Lee: I think to add on, if we model a 20% increase in oil price for this year, we will still stay within our guidance. So it has an impact, and we'll do all we can to minimize the impact, but it will remain within the guidance. Karen Chan: Your next question comes from [ Tong Honxi ] of DBS Bank. Congrats on the strong results. Two questions here. First, given the recent Dingdong acquisition by Meituan, is there any change to your Hong Kong Food strategy? Second question, in Malaysia is your second largest geography outside of Hong Kong. Your biggest competitor is planning a listing this year with a valuation as high as USD 5 billion, which could bolster the firepower for expansion. Could you share your views that, that will affect, if at all, your overall competitive environment? Scott Price: In terms of the DDL, we actually are involved and engaged and are very aware of what that transaction. We have an exclusive relationship here in Hong Kong. We have their commitments. Frankly, we are a valuable customer to them. They are not a direct competitor to us in Hong Kong. So we see no conflict nor issue from that. In terms of how we look at the listing of AS Watson. I was raised in retail by Walmart. And it always was a bit perplexing to me, but now appreciate this view that says you want a really strong competitor. It is to your value to keep you on your toes constantly looking as to how you can be better. So if a listing helps them become a stronger competitor, net, I think we have an opportunity to, one, have a benchmark, but also it just ups our game as well as we move forward. So I don't see that as really a threat. We'll watch with interest, but we're focused on ensuring that we beat everyone, including those admirable competitors at serving our customers. Karen Chan: Thank you, Scott. Any questions from the floor? Unknown Analyst: I guess I have a follow-up question on the DFIQ. I know we are like 70 days after the presentation during Investor Day, but that we've launched the DFIQ portal, right? And for the DFIQ media, we also increased the revenue by fourfold. So are we like that serious about the 1% revenue contribution by 2028? And how do you see about the EBIT margin? Because if it's like more than 50%, then we have a meaningful contribution to the bottom line by 2028? Scott Price: So as we think about our TSR model, I'm very well aware that an omnichannel retailer has far superior P/E multiples than the traditional brick-and-mortar only. As we map our way forward, we are pioneers in this area. There is no substantial retail media player in the markets in which we operate today. DFIQ is a critical enabler for us to be able to create a seamless ability for vendors to go through DFIQ and access-specific screens in specific locations in the Health and Beauty in certain markets. At some point, I'd call us retail media 1.0, 2.0 is also going to get to a time a day relative to traffic patterns, et cetera, et cetera. We believe, again, through conversion of immediacy, a much higher effective proposition for a very substantial above-the-line media budget, including digital penetration coming across to us. It's been 90 days. Internally, the team knows more and more and more and more. If I were to say what is the area where we would potentially relook at midterm guidance, it's going to be in this area because it is so new. I do think in the future, I'm talking 5 to 10 years from now, 15 years from now, my North Star would again be the progress that Walmart has made in this area. We will never have digital as a reporting operating unit. It's too complicated and it's artificial. It's embedded across our formats. But speaking about what is the penetration of sales growth and profit growth from the digital proposition is an area that we're focused on as we progress forward. So I'd say watch this page, too early to guide anything other than what we said in December. Karen Chan: Thank you, Scott. If there are no further questions, this will conclude our session for today. Thank you very much for your participation, and we look forward to seeing you in our next analyst presentation.
Horst Pudwill: Good morning, everybody. It gives me great pleasure to welcome all of you to our TTI Group Company 2025 Annual Results Announcement. Obviously, you can see we are trying to save money. Last year, the table was twice as big. Anyhow, we are in a semi-war condition. And what I can tell you and deliver you today by our Group CEO, Mr. Steve Richman; Vice Chairman, Stephan; Group CFO, Frank Chan. I think that we have done fantastic and none of our competitor has duplicated our results over the last 3 years. And we will go with full confidence ahead. To make it short, we delivered a strong 2025, particularly given the macroeconomic and geopolitical volatility. We continue driving market share and gained market share and delivered record profit, with the third consecutive year of free cash flow above $1 billion. Now to make it easy to understand, $1 billion means $1,000 million. So, we're talking about $3,000 million, and that is an achievement. I'm now going to hand over the floor to our Group CEO, Mr. Steve Richman, to explain and enlighten you about our activities on our future and why we are so bullish looking forward for 2026, with a strong momentum like never before. Please, Steve? Chi Chung Chan: Well, before Steve gives you the most exciting news and prospects, I will start from giving you our results first. So yes, like I said, thank you, Chairman. 2025 indeed was a pretty challenging year, and yet we managed to deliver a 4.4% revenue growth to USD 15.3 billion and a record net profit of $1.2 billion, a 6.8% increase. MILWAUKEE continued to fuel the group's growth with 8.1% reported sales growth. Excluding the discretionary suspension of some promotion programs in the second half of 2025, on an underlying basis, MILWAUKEE actually grew 10.3% last year. RYOBI business had another outstanding year, with sales grew 5.4% in local currency. Our 9% non-core business declined by 20.4% due to the planned exit of the HART business and the rationalization of our floorcare sales. Gross profit increased by 6.7% to $6.3 billion, with margins increased by 91 basis points to 41.2%. The improvement is due to the positive mix of MILWAUKEE and RYOBI business with higher margins, strong EMEA performance and our ongoing focus in improving productivity and operational efficiencies across all business units and manufacturing locations. With gross margins increased by 91 basis points and our SG&A increased by only 80 basis points, our EBIT grew 5.2% to $1.3 billion, with margins improved to 8.8%. After adjusting the associated cost for the exit of the HART business, our normalized EBIT margin will be at 9.3%, a 57 basis points increase. Net profit increased by 6.8% to close to $1.2 billion as we continue to further reduce our finance costs despite partially offset by slightly higher effective tax rates. Net profit margin of 2025 was at 7.9%. Earnings per share increased by 6.8% to USD 0.656 per share. The Board recommended a final dividend of HKD 1.32 per share, an 11.9% increase as compared to the HKD 1.18 per share in 2024. Together with the HKD 1.25 interim dividend paid, subject to shareholders' approval to the recommended final dividend, total dividend for the year 2025 will be HKD 2.57 per share, an increase of 13.7% over 2024, representing a payout ratio of 50.5% as compared to 47.5% in 2024. We have continued to invest in strategic selling expenses and R&D for new product innovations and to improve our group's performance. In 2025, SG&A as a percentage to sales was at 32.5%, 80 basis points higher than 2024. Part of the increase was due to the one-time write-off of intangible assets as we exited the HART business, which will not be recurring in 2026 and the associated costs related to the rationalization of underperforming product lines and business units. We have, however, managed to lever down our non-strategic SG&A by 42 basis points. Admin expenses now account for 9.8% of sales, and we do expect further efficiency improvements can be achieved. Net finance costs reduced by 37.6% to $33.6 million as we continue to leverage our very strong balance sheet, exceptional free cash flows generated to effectively manage our debt portfolio and get very favorable terms from our finance providers. Effective tax rate was at 8%, 20 basis points higher than 2024 as we continue to take a prudent but proactive approach to the group's global tax strategy. We continue to maintain that current high single-digit effective tax rate is sustainable going forward. Our balance sheet continued to be very healthy and strong. Shareholders' equity increased by 9.3% to close to $7 billion. Net current assets increased by 21.8% to $3.4 billion. With this strong balance sheet, we will be able to navigate any changes in this still very challenging global environment. Working capital as a percentage to sales was at 15.5%, slightly higher than the 14.4% in 2024, and yet we believe this ratio is still one of the best in our industry. Inventory days increased by 4 days to 106 days, mainly on finished goods due to tariffs. We are comfortable with the current level, but expect there can be further improvements in inventory days going forward. Receivable days was at 46 days, lower than last year by 1 day, while our payable days held flat at 96 days. CapEx spend was at $289 million, very comparable to the $291 million reported in 2024. The spend mainly focused on new products, automation, quality and productivity across all our global manufacturing units. We expect the CapEx spend for 2026 will be at the similar level, approximately 2% of sales. We've delivered over $1.2 billion operating free cash flows each year in 2023 and 2024. In 2025, we've continued to deliver close to $1.4 billion free cash flows despite all the tariff headwinds. We firmly believe we will be able to continue to deliver another $1 billion free cash flow in 2026. With our very strong cash flows generated and prudent working capital and CapEx management, we ended the year 2025 in a net cash position of $700 million. We have continued to cost effectively manage our debt portfolio. In 2025, we've reduced our total gross debt by $300 million or 23.5%, while increased our cash balance by $446 million to close to $1.7 billion. As a result, we are in a net cash position of $700 million at the end of 2025. Fixed rate, lower cost debt account for 80% of the group's total debt portfolio, while short-term debt is only representing only 36% of the total debt. With our robust balance sheet and strong cash flows, we've been asked a lot about our capital allocation strategy. We structured our capital allocation strategy with the primary objective to expand enterprise value and deliver long-term attractive returns to our shareholders. First priority is to invest in our core business to deliver sustainable growth with continued profit margin expansion. Next is to evaluate high-quality acquisition opportunities that will create growth opportunities and synergies with our current core business to further improve the group's value. We will continue to assess our dividend policy, balancing the payback and internal growth opportunities. Over the past 10 years, our dividend per share growth has outpaced our net profit growth, with dividend per share delivering a 21.8% CAGR, while our net profit delivered a 14.1% CAGR during this period. Last but not least, share buybacks. The Board intends to implement a discretionary share buyback plan of up to USD 500 million over a period of 18 months to be administered by an independent leading financial institutions. With that, I would like to pass the floor to our CEO, Mr. Steve Richman. Steven Richman: Thanks, Frank. Good morning, everybody. Our journey at TTI has been one based on our bookends of success; our people and our culture. We recruit, retain and invest in the best people throughout the globe. That is core to who we are at TTI every single day. Now our users, our distribution partners, our shareholders have seen it firsthand what these people need, how they're passionate about our business, how they drive solutions every single day and how they drive the top line and bottom line performance. Our people, the passion they have and what they deliver has resulted in outstanding performance year after year after year. And that is because of relentless focus on our consumers and our professional end users, delivering outstanding solutions that help their lives every single day. The end result, another record-breaking year in 2025. Now when we talk about 2025, leading into 2026, there's 3 areas that we really need to talk about. Those areas all combine from growth, profitability and execution. All of this is based on a one-team performance. If you think about TTI, it's about the people throughout the company coming together as one team and how do we deliver as one team. Well, our operations people challenge each other based on the manufacturing in the RYOBI business or the MILWAUKEE business. Our new product development system says what does great look like and how do we get better? How do we improve? How do we change the game? Our growth engine from our sales and our job site solutions and our commercialization, all challenge each other to say, what does great look like? That one-team philosophy leads to outstanding results year in, year out. How does that occur? It occurs clearly through leadership. We talk a lot about leadership. Do you believe we can have this success without great leaders? And I'll tell you no way. And we have outstanding leaders from the entry-level leaders we bring into the company and grow and learn and educate to our middle management leaders that have been here 5 years or 10 years that are growing with experience. And those leaders continue to have a thirst for growing and learning and educating and getting better. And then, of course, there's our senior leadership group. Now, think about this for a second. How many companies do you know where the senior leaders have been together for over 19 years. Very few. What does that mean? It's because of our culture. It's because of these gentlemen up here. It's because of what has been developed year after year at TTI. That senior leadership group with the relationships they have built over the 19 years is exceptional. But what they have because of that relationship is part of our culture. They have the candid dialogue, candid communication where they can challenge each other. Alex Duarte, who runs our EMEA business, can challenge Darrell Hendrix and Greg Borland and the rest of the sales team on where do we go from here? What does great look like? What's the right commercialization plans? We do the same in the operations side, the supply chain piece, the financial side of our business. And this is what drives excellence every single day. That is because we are TTI, and we think of these things differently. How does that tie to 2025 and beyond? When we think about growth, we think about how are we going to grow in the future and what does that look like? Let's start with EMEA. EMEA and the team dominate in specific markets, both in the consumer side of the business and in the professional business. However, there's also opportunity. And that opportunity is to take that same domination and expand that domination into new other markets on the consumer front with RYOBI and on the professional front with MILWAUKEE. The next opportunity is where we're at the beginning of our journey of growth? Asia and Latin America. On the MILWAUKEE part of the business, we've gone from a test and learn to be able to now grow, now invest more, now understand how we drive solutions in those markets in a significant way. David Butts on the MILWAUKEE side in the Asia portfolio is driving that kind of success as we enter markets like Japan and say, how big can we become? How do we earn the right with that professional end user? We have that same opportunity in Asia and Latin America now for the first time with our RYOBI business, our consumer business, the #1 brand in the globe. And we have that opportunity to be able to say, how do we test and learn in Asia? How do we test and learn in Latin America? And how do we drive that success so we become, like in other regions, the dominant brand? Our success, many of you believe or may believe that how can you grow more in North America? How can you grow more in Australia with both the MILWAUKEE brand and the RYOBI brand? Well, let me tell you, we believe we're still in the early innings of our journey. Question may be why? And the why is because we have a relentless opportunity to expand the market, get users into new businesses. And as we build new businesses, the opportunity to grow becomes more and more significant every single day. That expansion is also how we think of those businesses and how we say, how can we solve the problem of the consumer and the pro in North America and Australia in a different way? Not only taking market share, expanding those markets, launching those new businesses and earning the right from the consumer and the pro to grow. Next in 2025 and beyond is profitability. We made some hard decisions. We eliminated the HART business. We made a decision in our Floor Care business to restructure the entire business and start from scratch. We brought in one leader, a veteran in Floor Care, but understands that we need to change, how we do product development, how we do manufacturing, how we look at supply chain, clearly, how we commercialize. And the focus there is how do we follow what RYOBI and MILWAUKEE has done and understand we have to earn the right with the consumer to win. And if we do that in a way where we're delivering disruptive innovation, leveraging our technology partners from RYOBI and MILWAUKEE, leveraging the people as one team from both, then this journey, even though it's at the beginning, has a bright future in many, many years to come. Last but not least, is how we think about the globe and how we say, how can we leverage our back office? How can we leverage our negotiating costs on IT? How can we do the things globally to be able to free up more cash to invest in the 2 most dominant brands in the globe, MILWAUKEE and RYOBI. And that continues and will be the path for '26 and beyond. Last, just clearly execution. Now, many people believe that execution is the easy part. We are a paranoid group at TTI. We actually believe this is the most challenging part of any business. You have to prioritize, you have to execute flawlessly and what do you do? I can stand up here all day and so could Ty Stravinski and Shane Moll, who are coming up next and talk about our execution throughout the globe in each and every business and all of the regions. I'm going to give you 2 examples today. One is the foundation of our global manufacturing organization that we put together years ago on the basis that the world was going to change, and we had to have a global footprint. Last year, you combine that with a one-time sales suspension in North America, and that combination allowed us to mitigate tariffs in a way that no one else could. The second is how many of you have heard of disasters with ERP implementation at companies that shut down distribution, shut down manufacturing, shut down sales. It occurs every single day, and you read about it. Our teams in North America were relentless about this. They understood the risk. They put a robust plan together. They understood that project leadership and execution and a one team was absolutely essential. And they did that in a manner to ensure that we were going to have success. And guess what, they executed flawlessly. The combination of growth, the combination of the right profitability and the combination of execution is the foundation not only for what we delivered in '25, combined with our people and our culture, but why we're confident about '26 and beyond. Now, our financial focus areas, as Frank just talked about, and Horst, sales growth, absolutely essential for our success. We all understand that. We are a growth company. We are a technology company that must grow. How do we do that? How do we accomplish that? Mid-single-digit growth for TTI. No question about it. Double-digit for MILWAUKEE, single digit for RYOBI. Profitability, our internal plan, as we stated, is to grow to 10% EBIT in 2027. And last, which is clear, is free cash flow with a target over $1 billion. These fundamentals of financial focus are throughout the company. All the leaders understand, and we've all embraced it together to understand this means we are doing the right things for our consumers and our professionals and our distribution partners throughout the globe. Now, let's talk a little bit about the business in 2025 by brand. If you think about the business today versus where it was many years ago, we have the 2 most dominant brands in the world, the #1 consumer brand in RYOBI, the #1 professional brand in MILWAUKEE, 91% of our sales today in 2025 and growing are these 2 brands. With that, the results from those 2 brands delivered over 4% growth in 2025, even with the challenges we had with tariffs and other factors, as Ty will discuss and Frank already took you through. The MILWAUKEE business grew over 7.9%. The RYOBI business had a great year at 5.4%, outstanding results overall and just the beginning. Now, why did we dominate so well with both of those brands? The relentless pursuit of all of our team members for our consumers and our professional end users. We understand that clearly. What makes up that dominance? Clearly, cordless leads the way for the dominance with both of the brands. Why are we unique with cordless? We've been in the cordless lithium ion product lines and product range longer than anybody else. And part of that is for over 20 years, both in RYOBI and in MILWAUKEE, we have clearly been forward and backward compatible with every product that a user would buy on the consumer space or the professional space. Now, why is that important? It's the confidence. It's the confidence. If I'm a pro on a job site, I understand that all of my batteries are going to fit all of the products. If I'm a consumer buying a lawn and garden product today and I had a power tool, I know that they will all fit. That confidence is unique and something that MILWAUKEE and RYOBI have built year after year after year. Now, let's spend a couple of minutes on MILWAUKEE. Shane Moll is going to take you through an extensive perspective on the MILWAUKEE business. But let me just cover a couple of facts. $160 billion opportunity, total addressable market. Now, that's based on the verticals that we're in today, the market segments we're in today, the regions that we are in today. It is not based on the future. The future is bright because we're going to go into more markets, more regions of the world. We're adding more businesses throughout. We're adding more verticals. And what we want to leave you with is we're not a product company. MILWAUKEE is a solution company. We deliver productivity and safety on the job every single day for our users. That's why the pros trust us everywhere in the world. RYOBI, $80 billion total addressable market, #1 brand in the globe. Once again, opportunities to expand into new markets and dominate markets, markets in EMEA, markets in Asia, markets in Latin America, add new businesses underneath the RYOBI platform, continue to innovate and disrupt in a significant way. All of that with RYOBI leads us to success. And the RYOBI brand, what is it? It's the brand that the consumer is confident in, in their home, in their garage, in their outdoor power equipment and outdoor space and clearly, in their lifestyle space where they can bring it to a soccer field or bring it to the mountains for camping. That is RYOBI. We combine that like MILWAUKEE that has the best distribution partners in the globe. But in RYOBI, think about our dominance in ANZ and the Americas. In the Americas, we have the #1 distribution partner in the globe in The Home Depot. In ANZ in New Zealand, we have the #1 distribution partner called Bunnings. The combination of that gives us a clear competitive advantage versus everybody else in the market. And then you combine the opportunities for our other distribution partners everywhere in the world today and into those new markets. Now when we think of innovation, we at TTI think about disruptive innovation every single day. Disruptive innovation, many of you remember what we talked about last year. Disruptive innovation clearly comes from Clayton Christensen's Harvard Professor's model about The Innovator's Dilemma. How do we disrupt what we are doing? Many of you may believe this is about product. And what you see is just the product we introduced in 2025. And we clearly believe our ability to deliver disruptive product for the consumer and the professional is better than anybody else in the globe. No question. However, disruptive innovation for us is not just product alone. It's how we leverage AI in the supply chain. It's how we use AI to leverage quality and manufacturing inside our facilities. It's how we disrupt what we are doing. It's how we think about our service strategy throughout the globe and what matters in one country versus another as we disrupt the current formula. Disruption is not about product alone. Although it's important, and we believe we're best in the world in delivering those solutions to our consumers and professionals, we believe that disruption is part of our DNA in TTI and leads to our success year in, year out, and that's what we are dominating with TTI. Now, let me turn this over right now to 2 of our other outstanding leaders, Ty Stravinski, who's going to take you through after Frank, some in-depth analysis on our financials going forward. and Shane Moll, who's going to take you through some information you've been asking for in the MILWAUKEE brand and the detail behind where we're taking the markets to disrupt with MILWAUKEE going forward throughout the globe. Ty? Unknown Executive: Great. Thanks, Steve. I'm super excited to be here today, and I'm going to go through a little bit more of in-depth into the financial results that Frank mentioned upfront. So, we're going to start off with our first slide, which is the sales growth -- full-year sales growth for TTI. Our 2 leading brands, MILWAUKEE and RYOBI, delivered solid results in 2025. MILWAUKEE reported 7.9% in reported growth, but a 10.3% in underlying growth when adjusted for the non-recurring events. RYOBI reported 5.4% in local currency. Our other non-core businesses, as Steve mentioned, represent 9% of our total global revenue. That declined 20.4% due to that planned exit of our HART business, along with the market softness and rationalization of our Floor Care business. After adjusting for the non-recurring MILWAUKEE events, the TTI adjusted full-year sales growth was 5.7% versus the reported 4.1% in local currency. Let's dive a little bit deeper into that MILWAUKEE underlying growth, so you can get some clarity there. Full-year sales growth was impacted by our decision made at peak tariff times to suspend certain product sales and promotions in the second half that were disproportionately affected by tariffs. MILWAUKEE reported a global sales growth of 7.9% in local currency, but the estimated underlying sales demand of 10.3% after adjusting for the 4.2% of the reduction related to the sales suspension, offset by the 1.8% of pricing actions that we had. The underlying MILWAUKEE demand remains strong and consistent with our multi-year growth trajectory and reinforcing our confidence in our continued growth in the future. Turning to our RYOBI sales. The RYOBI business had an outstanding year, growing 5.4%, marking the second consecutive year of single-digit growth off of the high pandemic levels. Power tools grew single -- high-single-digits, and our outdoor products grew low-single-digits as certain storm events from 2024 did not reoccur in 2025. As the business is more closely tied to our consumer spending and weather, these results demonstrate the strength of the RYOBI platform, and they reinforce its ability to deliver sustainable long-term growth. When you look at our other business, Steve hit on it a little bit, but looking at the other areas of business, we're really focused on driving profitability and improvement and stabilization. We reduced the all other business sales, which now make up 9% of the total global revenue by 20.4% in local currency in 2025. The planned exit of the HART business contributed 40% decline to this decrease and the $156 million of sales will not repeat in 2026. Now, I want to take a little bit of time and talk through some of the color and clarity around the first half and second half sales growth for TTI. When you look at how the non-recurring items impacted the first half and second half sales growth, you'll see the adjusted sales growth is well balanced across both halves with a slight acceleration into the second half as sales were reported 5.6% in the first half and 5.7% in the second half. The main driver of the adjusted sales growth relates to the major ERP conversion that Steve mentioned that we did in the MILWAUKEE business on July 1. This required the pull forward of sales from the second half into the first half, and this inflated the first half sales by 1.9% and impacted the second half sales. The second non-recurring item relates to the MILWAUKEE sales suspension I mentioned in the prior slides. This impacted the second half sales for TTI by 3.2 points in the second half. Clearly, this demonstrates that the strong demand continued for our products across both periods within 2025. Gross margin walk. So, looking at our full-year gross margin compared to 2025, we saw a 91 basis point accretion. The main contributors were outperformance and growth in our higher-margin businesses of MILWAUKEE and RYOBI, which now make up 91% of our total global revenue. This drove a 55 basis point margin improvement. Our strong performance in our EMEA and Asia regions, which have higher gross margins, drove 57 basis points of margin accretion for the business. The work the teams did to really leverage costs in our factories and work with our supply base to drive down costs and move and mitigate tariff activities, but we still saw a 21% drag even over these efforts in our -- after our pricing actions. Overall, TTI continued its overall year-over-year increase in gross margin in a challenging tariff environment and landscape. Looking at our EBIT. We delivered a normalized EBIT margin before the HART exit cost of 9.3%, which is a 57 basis point increase versus 2024. The main drivers were the work that we've done to take out the structural corporate, admin and G&A costs and really leverage synergies, AI and leveraging our assets. As I mentioned earlier, the gross margin performance from our EMEA and Asia regions drove additional EBIT margin accretion of 18 basis points after the investment in resources to drive the growth in those regions. Finally, the mix towards higher-margin businesses aligned with the leverage of the global initiatives that Steve mentioned before, really delivered another 19 basis points of improvement. These combined brought our normalized margin to 9.3%, which is where we're using as our basis as we build towards our internal target of 10% EBIT margin in the near future. As Frank mentioned in his section, we've delivered 3 consecutive years of over $1 billion in free cash flow generation, and our gearing is now negative 10%. This performance, along with our confidence in our future plans, allows us to continue our increased dividend trend and to announce our intended stock buyback plan of USD 500 million over the next 18 months. We anticipate that the combination of our plans, along with these actions will further increase shareholder returns for years to come. Thank you very much. And I'd now like to turn it over to Shane Moll, Group President of MILWAUKEE Tool to go through some more exciting details regarding the MILWAUKEE business. [Presentation] Shane Moll: All right. MILWAUKEE Tool employees throughout the word are united by a single mindset that is to disrupt everything we do for the greatest outcome for our users. As you saw in the video there from Dan, Max and Tony, leaders at the center of our innovation engine, we challenge the status quo in what we do every single day. Our expertise in machine learning and AI is reshaping how we're bringing new solutions to market. We continue to extend our capability to increase the safety, productivity and quality of our users throughout the world. MILWAUKEE continues to expand our capability to address the problems that are being approached in the field every single day. Today, I will share with you how MILWAUKEE remains unique in understanding the distinct problems that are encountered by the trades throughout the world and how we're leveraging technology to increase safety and productivity. I'll share with you how MILWAUKEE is purposeful and intentional in the verticals that we serve and the end markets that we compete in. We serve in end markets that are not only recession-proof, but are also delivering the highest growth in the world. And finally, I will share with you how we continue to invest in innovation that's purposeful to keep MILWAUKEE in a leadership position, to expand our profitability and accelerate our growth. Today, MILWAUKEE is developing deep relationships within 10 key trade verticals, a level of scale and focus unmatched by anybody in the industry. MILWAUKEE continues to compete in these trade verticals with execution that begins with over 1,600 highly skilled job site solutions team members that are embedded deep, building partnerships with the trades to understand the rapidly changing needs. The workplace is simply becoming more complex, and MILWAUKEE continues to engage in the field to better understand the challenges that they face every single day. Our partnerships enable us to develop solutions with the trades that we partner together, solutions that they not only trust but specify and demand in their work, creating an opportunity for MILWAUKEE to increase our position in the market and expand our profitability. Solving the challenges today, in addition to anticipating the problems that will occur in the field together, enables us to continue to expand our $160 billion total addressable market. MILWAUKEE's pipeline of innovation is evidenced by over 17 distinct global businesses, each catered specifically for our core trades and aligned with the problems that they're facing in the field every single day. Each of these businesses are led by subject matter experts, experts that understand the challenges that we are facing together. These subject matter experts work together to address this $160 billion total addressable market that is bound by our understanding of the trades unlike anybody in the industry. As the job sites continue to evolve, we ensure that we stay ahead by continuing to address the problems that the trades face every single day, and we address them together. Not only does this allow us to enter businesses, this allows us to create entirely new businesses to continually increase our progressive opportunity for growth well into the future. This results in a cycle of innovation, business creation and partnerships that make MILWAUKEE the brand of choice. Now, I would like to thank the investment community for this next topic we're going to address because this is something that we've been asked for quite some time. And the question is, what is MILWAUKEE's end market exposure? Well, before I get into the detail, a couple of key takeaways. Number one, our exposure to our end markets is purposeful. It ties to the trade verticals that we're focused on, the segments that they work in, the solutions that we deliver. So, this is intentional in the markets that we serve. We serve markets that are both recession-proof as well as high growth. So if you look at MILWAUKEE's end market exposure, the key takeaway is that we are anchored by the highly durable market of service and maintenance work that is work that requires to be done regardless of the economic environment, in addition to taking advantage of the high-growth opportunities that are in the markets of technology, energy and manufacturing. So, MILWAUKEE is anchored to both durable markets that are recession-proof as well as these high-growth markets, is one of the reasons why we continue to be very confident in our 10%-plus growth well into the future. Now, let's talk a little bit about each of these markets. Service and maintenance, as I shared, is highly durable. It's one of the most robust and fastest-growing segments of the market for MILWAUKEE. This represents residential services, commercial services, transportation maintenance and mining. And if you think about this aspect of work, it's around us everywhere; aging homes, aging commercial buildings, aging industrial facilities and aging vehicle fleet and increasing demand in transportation and mining throughout the world is resulting a surge in retrofit, repair and upgrade work. In addition, electrical efficiency mandates in addition to smart building adoption as well as labor that's being outsourced as the trades exit in a lot of these facilities where the work needs to be done. That's why MILWAUKEE is partnering with these trades within service and maintenance to deliver safety and productivity solutions that we can address the problems together. This is why MILWAUKEE continues to invest in this very robust and fast-growing segment of our market. Next, technology, energy and manufacturing. It simply is hard to ignore. This is areas of the market and the fastest-growing markets across the developed regions throughout the world. This includes data centers, high-tech manufacturing, power utility, water utility, gas as well as telecom utilities. These are simply put the fastest-growing segments of construction throughout the world. They're supported by heavy investment throughout the world, led by artificial intelligence, reindustrialization, grid modernization and electrification. And if you look at these segments of work, why we like them a lot is we've been focused on our trade verticals coming up on 2 decades. And if you look at a job inside of a data center, in a data center, the work required by the mechanical, electrical and plumbing trades is double the amount of work in a traditional non-residential construction site. So simply put, in a market where the constraints on labor have never been more challenging, that's why they work with us to develop these safety and productivity-driven solutions. So as you see, as you look at these 2 end markets combined, these end markets represent about 80% of the demand for the solutions of our product worldwide. These greatly overweigh our exposure to residential construction and remodeling. This is why MILWAUKEE is so confident in our growth as we move forward to deliver 10%-plus growth because we are anchored to in a purposeful strategy to the fastest, largest and most resilient segments in the world. Now in order for us to be relevant in these end markets requires a continued investment in innovation. Now, you see this innovation as we release hundreds of new solutions every single year. But the true matter of differentiation for MILWAUKEE is not just the solutions that we deliver, it's the manner in which we innovate. Because we're deep, tied partner to the trades, we have unique insight unlike anybody in the industry, solving the problems with them. So, we're able to pinpoint our investment in R&D and our investment in innovation to maximize the safety and productivity of the trades. You could see this in 3 key areas throughout our business. First is the physical solutions that we deliver to truly interrupt workflows. One of the unique solutions that we delivered this year is the M18 Branch Conduit Bender. This is an application that's done in data centers and high-tech manufacturing throughout the world. It's one of the largest consumptions of labor on job sites, period. And why is that the case? Because today, it's being done by manual tools. MILWAUKEE innovated by bringing powered intelligence to this application that brings a high level of quality, drastically increases productivity on the job site as well as in pre-fab environments to provide a safety and productivity solution that is unmatched in bringing productivity to the job site. Another example is in a newer end market that we're servicing, which is the natural gas technician. MILWAUKEE just introduced the MX FUEL Electrofusion Processor. That is a unique product that provides portability and capability unlike the industry has ever seen. In addition, it provides the intelligence to deliver traceability and quality of work that MILWAUKEE can only deliver. These solutions let these end markets know that we are focused on delivering solutions specifically for them. If you look at the area of PPE, one of the fastest-growing segments of our business, what we've done with our BOLT Safety program worldwide in our helmet program simply is remarkable. We recently received accolades by receiving the top 2 spots of the 5-star Virginia's Tech Gold Standard Safety study that have reaffirmed to us independently that we are leveraging innovation to increase the safety of workers throughout the world. Coupled with this, MILWAUKEE continues to invest in innovation across our platform technology, the things that are hard to see unless you crack open our tools. What we're doing to innovate in areas of motors, batteries, electronics and sensors to truly bring intelligence and productivity unlike anybody in the industry. And last but not least, is that MILWAUKEE is very well known for our physical solutions, but we probably have not talked a lot about our digital solutions as well. MILWAUKEE continues to invest in software, connectivity, AI and machine learning to create digital unified ecosystems like what we delivered with AUTOSTOP, deliver safety to the world that has never been seen before by leveraging machine learning and the largest connected tool platform in ONE-KEY. ONE-KEY is the largest digital enterprise-wide inventory management system that allows unmatched investment and productivity for trades throughout the world. So as you see, MILWAUKEE is not only adjacent and tied to the end markets that deliver resilient growth, we also are delivering solutions that is the reason why they continue to ask and partner with MILWAUKEE on job sites throughout the world. I think you see MILWAUKEE has been executing a very unique strategy over the past 20 years. It's a strategy that enables us to have unmatched insight into the challenge that the trades face every day. It enables us to not only deliver new solutions, but also create new market opportunities for growth and purposely aligned to the end markets that are recession-proof and are the highest growth in the world. MILWAUKEE continues to invest in innovation to provide safety and productivity that will enhance our profitability and enhance our growth well into the future. But as Steve noted, all of this is anchored by remarkable people and an exceptional culture. Thank you. Unknown Executive: All right. Thank you, management team. We'll now go to the Q&A session portion of the presentation. Fast, maybe if everybody can just say their name and firm and try to keep it to one question and a follow-up to give everybody an opportunity. Karen? YY Li: Yes. This is Karen from JPMorgan. Thanks a lot for the management team once again making efforts to fly to Hong Kong. I know it's a lot of effort flying from the U.S., particularly given the current situation. And then congratulations on the solid results. I do have -- I can ask only one question, is it? So, maybe I think my first and foremost question will be regarding your revenue growth. I hear you regarding, I think, mid- to high single-digit blended revenue growth for MILWAUKEE plus will be low teen for MILWAUKEE in 2026. I think that is certainly very solid, particularly given a lot of uncertainty going on in the world, including the U.S. But how do we actually think about while we've been talking about in terms of TAM expansion, a very solid demand driver? I think Shane is highlighting, and thanks so much for sharing the breakdown in terms of the end demand for MILWAUKEE. We are definitely seeing the data center and so on is now forming a big part of that. But how do we think about how this is playing into our numbers? And particularly, yes, Home Depot, which is our partner is also talking about the TAM expansion. And then can I ask, Steven, what is the underlying assumption for that revenue growth in terms of interest rate fiscal policy in the U.S.? Horst Pudwill: Go ahead, Steve. Steven Richman: Clearly, as you heard from Shane and from Ty and from Frank, we clearly believe that the TAM expansion as we add new businesses and as we go into more depth in the verticals that, that opportunity becomes very, very relevant for us on the MILWAUKEE side as well as on the RYOBI side of the business. Both of them have geographical expansion opportunities as well. The one thing you have consistently seen from us is, as we add new businesses, our current TAM for each one of those verticals continues to grow and our opportunities that we see globally continue to grow as well. Underlying demand is extremely positive. And that's positive because of our ability to drive market expansion. It's our ability to be able to go deeper and partner with our core users. It's clearly the ability on the MILWAUKEE side where there's a shortage of labor everywhere in the globe of that talented labor, and they are looking for more productivity solutions and more safety solutions every day. And that's why our confidence level for double-digit growth continues year after year and our investment in disruptive innovation to be able to accomplish that. YY Li: Are you assuming any interest rate cut for the year behind that 10% to 15% level? Steven Richman: We are not assuming anything dramatic in terms of interest rate cuts or changes. As you saw from Shane, the majority of our business is not based on residential construction. And that's why we are so confident in terms of the verticals we're in, the users we supply every single day. Jacqueline Du: This is Jacqueline Du from Goldman Sachs. First of all, I just want to say, I think this is TTI's best ever results presentation. And thank you so much for the very detailed top line breakdown as well as the performance attribution analysis. Super helpful. I just have one question. I think you have a slide on EBIT margin walk. If we take a forward-looking perspective, you have this 10% OP margin target by 2027, right? I just want to know what are the detailed measures to deliver that target? Can you do a forward-looking attribution analysis as well? Unknown Executive: Yes. First off, I think if you take a look when we back out the HART business, right, and you take a look, you can get to that 9.3%, from that perspective, it's a continuation of what we do as a business, right? It's a continuation of what Shane talked about. And as we look at new product verticals to get into additional trade verticals to get into where we see higher profit margins from those products, as we continue to expand our geographical regions, right, into different parts of EMEA into Latin America, as we get into the Asia markets more, those tend to be higher gross margin regions of the world for us, both from the RYOBI and the MILWAUKEE side of the business. And that really helps us drive that gross margin side. And then from an SG&A side, we've continued to look at ways to leverage costs, leverage the back-office operations, leverage technology, AI, continue to work as one team globally to try to leverage in those costs, too. So, we have the plan put forth, I mean, to get to the 10% internal target. And as Steve mentioned, it's a matter of execution, which is what we do really good. Johnson Wan: This is Johnson from Jefferies. Thank you for giving me the opportunity to once again meet you guys. It feels like every 6 months, we see all the friends and the whole investor community all here at the TTI results presentation. So from the set of results, I get the sense that TTI is very focused on profitability, which is something I really like to see. And exiting that HART business was, I think, one way to go to that path. So, what was the reason though? Why we exited the HART business? Because I remember a few years back, sitting in the same room, we were very excited about the HART business. So, was there a relationship breakdown with Walmart that led to this? What was the lessons that we took away from this exit of the HART business? So, that would give us some clarity on that. Steven Richman: Thanks, Johnson. Let me be real clear. As we stated, yes, we're focused on profitability. But we are a technology company based on growth. And our growth drivers are the 2 most dominant brands in the globe, one being MILWAUKEE on the professional side and the other being RYOBI on the consumer side. Overall, it was our decision that as we have this most dominant brand in RYOBI, the ability and the need to be able to compete with ourselves was not strategically the right approach versus us to, say, how do we leverage and increase innovation in the RYOBI brand? How do we take that brand and develop more market opportunities with that? How do we expand into new markets? And how do we look at all of that together? And that led us to the conclusion that the strategy to exit HART was the right call. Johnson Wan: So the RYOBI products will now be sold in Walmart or that will not? Steven Richman: No, that's not what I'm saying. What I'm saying is that we believe in the RYOBI brand. We believe in our distribution strategy that we have today for the RYOBI brand. And we believe that there's additional new markets for us to attack from Asia to Latin America, as well as delivering more and more innovation and more and more new businesses under the RYOBI brand and the RYOBI platform. Xiao Feng: This is Xiao Feng from CITIC CLSA. So, 2 quick questions. I think this is a very interesting presentation regarding the downstream market exposure breakdown for the MILWAUKEE Tools. So the first one is, what do you expect a potential change of the exposure? I'm very glad to hear that you guys are very recession-proof, but do you think the breakdown between manufacturing, energy, technology, manufacturing versus maintenance, repairment, will that breakdown change potentially in the future based on your outlook? The second question is, what is the downstream exposure of RYOBI? How does that look like? Shane Moll: I'll take the MILWAUKEE question. So, one of the exciting things about these end markets that we serve that represent a majority of our demand is on the technology, energy manufacturing side, there's a very significant backlog of work that needs to get done and a lot of the challenges are driven by the access to labor and the shortage of labor. So, we think that the current relationship between those 2 end markets for our business is going to be very consistent into the near future, driven largely by the stability and the durability of what's happening in the service and maintenance side as that continues to -- it's hard to ignore the aging infrastructure and what's happening. And then also technology and energy and manufacturing, you see the investment there continues. The backlog is incredibly strong. We're very close to our trade partners that are completing the work as well as the owners that are investing in these projects. So, we feel confident with the mix into the near term in terms of our end market exposure. So, we don't expect that, that is going to change drastically moving forward. Steven Richman: On the consumer front, let's talk a little bit about RYOBI and why we're so confident in the brand. There is the future piece of new geographical expansion. There is the ability to be able to say, we're going to enter new businesses under RYOBI. But the core is real clear. When you have an installed base of millions and millions of batteries and products that are out with individuals throughout the globe. And that platform is backward and forward compatible for over 20-plus years. And people have already invested in that platform and that system. The ability for them to continue to buy and acquire more and more products into that platform that will help them solve their needs in the house, in the garage, in the yard, in the lifestyle that they live is absolutely unbelievable in terms of long-term growth and long-term opportunity. You combine that within the Americas and Australia, as I said, with the 2 largest, best understanding consumer-driven distribution partners with The Home Depot and Bunnings. And that's why we are confident on top of the rest of the growth opportunities that we have nothing but growth in the future. Eric? Eric Lau: Eric from Citi. Actually, a big congrats to the management for the excellent result. And then thank you so much for the great presentation. May I have just a follow-up question about the top line growth like Karen just asked? You said the top line growth mid- to high single digit. And then my question is, why don't we set higher, right, high single-digit, then assuming MILWAUKEE, not low teens, but should be mid-teens? Because the point is we see a couple of tailwind this year. You just mentioned you are going to reduce the tariff exposure, right. Suppose this speed up the industry consolidation. And then the second is the -- you just mentioned AI machine also improve their R&D, speed up the new product development. And then more important is the largest customer, Home Depot and then the competitor, Lowe's also speed up the same-store sales growth this year, around 2% as maximum, right, versus flat last year. So, why don't we set mid-teen for the MILWAUKEE growth this year? Shane Moll: Eric, you always have an optimistic... Eric Lau: So my point is concern... Shane Moll: No, let's walk through it a little bit. I mean, when we think about what that looks like for 2026, we continue to charge forward with the double-digit 10% to 12%, let's use that range for the MILWAUKEE side. RYOBI is always going to -- we're looking at a low single-digit to mid-single-digit growth from that side. We're exiting the HART business, which won't be repeating. So, you're going to have a drag, right, in '26 from that aspect. And we're still working on that stabilization and improving the profitability of the all other business right now. So, we're going to continue to have that as a continued shrinking piece of the business as we go forward. So when you model all of that together, I think when you get to -- that gets you to a mid-single digits with a stretch to get higher, but obviously, mid-single digits from that perspective. Eric Lau: Yes. I know. My point is why don't you set a little bit higher for MILWAUKEE growth, I mean, say, mid-teens rather than low teens, I mean? Shane Moll: 10% and 12% on a -- really big number, is a big number, Eric. Right? Steven Richman: It's a lot of new companies, Eric. Lot of new companies. Eric Lau: I mean, what's your concern or growth constraint for this year? Can you share a little bit more color here? Steven Richman: Growth constraint or concern? We don't have concern. We do not have concern. We believe everything that Shane talked about in MILWAUKEE is why it will continue to grow, while the new dominance in new markets and regions will continue to grow, that the Asia and Latin America are opportunities. All of that is opportunities for continued growth. The level of growth that you want is we love the passion that you always have about the business and the growth expectations. At the same time, we are -- believe that we are very prudent in terms of saying this is where our numbers are as we go forward into 2026. Chi Chung Chan: Yes. And Steve, internally, we do have a higher target for our business units. Shane Moll: There's always a stretch. Steven Richman: There's always a stretch, Eric. Always a stretch. Terrence Chang: This is Terence Chang from Macquarie. So, I just want to kind of ask management about -- obviously, last year, the company did a great job in mitigating the tariffs. And obviously, a week ago, we have the Supreme Court ruling on the tariff. So, I guess it's a 2-part question. In terms of first part, on the U.S. business, what exactly is your sourcing exposure by region, hopefully? And also with the tariff rate currently at 10% as compared to 20% for Vietnam specifically, are we going to see some potential tailwind going into the second half of the year, while maybe first half, you will see some sort of tariff headwinds? So, maybe it will be helpful if you can walk through the sourcing part and also on the tariff cadence -- impact of the tariff cadence. Steven Richman: So as we discussed years ago, we made a strategic decision to have a global manufacturing strategy, which clearly means China, clearly means Vietnam, Mexico, U.S., Germany, throughout the globe and many other parts throughout the globe as well. That plan was clearly executed, as we said, by the end of last year, which leaves us in a situation to supply the U.S. market that we will not be shipping product from China for the U.S. portfolio and the market today for 2026. Now, you say what's next? What does it mean with all the rulings? There's clearly not clarity. We are in a fluid situation that changes sometimes daily, sometimes weekly, sometimes monthly. And because of that, we cannot give you any distinct clarity on what that's going to look like for the rest of this year until we have some final clarity ourselves on what that means for ourselves and our distribution partners. Unknown Executive: Good. Why don't we wrap it up there? Let me hand it back to the management team for some closing remarks. Horst Pudwill: It's not getting boring. Don't worry. I think the strength of TTI is that we have accumulated cash. We are ready for opportunities. And I'm very proud to say of our management. We have a succession plan, and you have seen that our business has been growing from strength to strength in the last years. And I assure you the best is still to come for TTI. If you have watched what was presented by Shane Moll and by you, Ty, you are not wrong, why keep an eye on TTI and invest. And I will be one of the first one who will lead the coup. Thank you very much for attending.
Michael Preuss: Hello, everybody, and welcome to our Financial News Conference for the Full Year 2025 and the Outlook for 2026. Many thanks for joining us today. To begin, Bill Anderson will share his perspective on our performance and the path ahead of us. Heike Prinz will provide an update on the progress of our Dynamic Shared Ownership operating model; and Wolfgang Nickl will provide an overview of our financials in 2025 and the group outlook for 2026. We will then hear from Rodrigo Santos, Stefan Oelrich, and Julio Triana on the performance of our divisions and the plans going forward to execute their respective strategies. We also have a chance to briefly hear from our new Board member, Judith Hartmann, who joined the company on March 1. Now before starting, I would like to briefly draw your attention to the cautionary language included in our safe harbor statement. And with that, over to you, Bill. William Anderson: Thanks, Michael. Thank all of you for joining us today, and we're really happy to go through our 2025 results and provide an outlook for 2026. But before doing that, I want to share a short update on company leadership. As we announced in November, Judith Hartmann has joined the company and the Board of Management as of March 1, and she'll take over as CFO in June. But between now and then, she'll be busy getting to know the company and its stakeholders. But we wanted to give you the chance to hear from her today. So before getting into our results, I'm going to turn it over to Judith, who's joining from one of our pharma facilities here in Germany. Judith Hartmann: Thanks, Bill. And yes, I have started my discovery tour of Bayer today here in Buckautal, Germany. It's an impressive site, and I have already had some great conversations here this morning with our Pharma R&D team. I'm eager to learn much more about all of the businesses, of course, in the next few weeks ahead of me. So yes, this is only my third day, but I'm very pleased to have joined Team Bayer. Health and Nutrition are personal passions for me, and I am very excited to contribute to a company that truly makes a difference in people's lives. The mission, Health for All, Hunger for None, really resonates with me, and I can already see many great things happening at Bayer. Our novel operating model, Dynamic Shared Ownership, our investment in AI, both of these are very important levers to accelerate our business. And most importantly, I have already been impressed by our passionate and talented people. I'm looking forward to continuing my onboarding over the next months as I prepare to take over as CFO from Wolfgang in June. I will have the opportunity to meet many people: customers, stakeholders, employees, and I'm sure many of you over time. Until then, I'll turn it back over to you, Bill. William Anderson: Great. Thanks, Judith. Well, let's start with 2025. In July, we upgraded our currency-adjusted sales and earnings guidance for the year. Today, we're announcing that we delivered that guidance, landing comfortably within the improved corridor. Sales came in at EUR 45.5 billion, and we posted core earnings per share of EUR 4.91. And our free cash flow came in at EUR 2.1 billion. Here's a picture of our businesses. Crop Science progressed in the first year of its profitability improvement program, a rejuvenated picture of our Pharmaceuticals business emerged with launch medicines establishing themselves as growth drivers and others advancing through our pipeline to the market. Our Consumer Health business suffered from market softness in the United States and China, but maintained the bottom line. And across the firm, we're seeing improvements to the way we operate. Launches are moving with great speed. Resources are moving more fluidly. Our organization is considerably flatter and leaner, less managerial and more mission oriented. We have roughly half as many layers and have reduced management by 2/3 compared with when we kicked off this work. The 88,000 people of Bayer are doing more faster with less. All-in-all, we recognized progress on our comprehensive turnaround plan, but the journey is far from over. There's much more to do in each of our priorities, in each of our businesses. Our focus is on the important work ahead. One of those key priorities is significantly containing litigation. Two weeks ago, Monsanto and plaintiffs lawyers in the U.S. announced a nationwide class settlement to resolve eligible, current and future cases in the glyphosate litigation. Today, I want to reiterate a few key points. First, the class settlement is moving through approvals. Just as we said 2 weeks ago, we're confident in the merits of the agreement. We await the judge's ruling and will be ready for any scenario. Second, Monsanto has filed its opening briefs with the U.S. Supreme Court, and the case has received strong support in the form of amicus briefs from the U.S. government, Attorneys General in 15 states the U.S. Chamber of Commerce and many others. We will continue preparing our case in anticipation of a ruling likely in the second half of June. We're particularly grateful for the backing we've gotten from farmer groups across the United States who know better than anyone how important glyphosate is for their work. In fact, the White House recently recognized how essential glyphosate is for U.S. Food Security with an executive order. We share that view, and we're fully prepared to comply. Overall, our multipronged strategy proceeds at pace. We know we have some important milestones ahead of us. We'll stay focused on taking the right steps for the company and remaining prepared for all outcomes. Beyond that, this issue has garnered a lot of attention lately. And in the coming months, we expect a rigorous debate about American agriculture and what's needed to create a food system that's robust, sustainable, healthy and regulated by sound science. We appreciate that people come to this issue with a range of opinions, and we welcome that conversation. Most importantly, we've got to be clear on the facts. Fact one, glyphosate safety is resoundingly confirmed by regulators, more than 50 countries, including the U.S., Canada, countries across Europe, all say so. These are thorough reviews, not designed at getting clicks or going viral, but carefully assessing risk and reaching scientific assessments. Fact two, Glyphosate is essential for agriculture and food systems. It keeps carbon in the soil and protects harvest from being wiped out by weeds. It keeps a trip to the grocery store affordable at a time when food prices are a topic of concern. American farmers are a bedrock of the nation's economy and a force for food security around the world. We want to keep it that way. Fact three, litigation in the U.S. is big business. Litigation costs amount to more than $600 billion a year. That's taking more than $4,000 out of the pockets of every American household every year. And it's growing, thanks to backing by private equity and foreign investors who enjoy tax-free returns. Last week, the Washington Post called on Congress to pass tort reform and specifically cited the glyphosate litigation as an example of how this system has gone wrong. The next time the narrative is framed as sticking it to the big corporation, people should question who is actually the big corporation here and who's ultimately bearing the cost. For years now, we've been on the record on this issue and many others surrounding the glyphosate litigation. We've made our case to politicians across political lines and the general public. We'll continue to be clear and transparent about our interests. We'll engage with people of different opinions, and we'll hope to find common ground. Most importantly, when it comes to questions this big, we will always start with what's true. Beyond litigation, we have a full agenda for 2026. We have ambitions to help many more patients with Nubeqa and Kerendia. 2026 will be the first full year of sales for both Beyonttra and Lynkuet, and we want to launch Asundexian as soon as possible. Our Crop Science business set the foundation in 2025, establishing its 5-year framework. Execution is underway and will continue in 2026 with the goal of improving the top and bottom line in 2026, all while preparing important launch plans scheduled for '27 and beyond. Consumer Health plans to advance its Road to Billion strategy, offsetting an uncertain market by making the right investment decisions in categories where we have the most to win. And in a year where we're bearing the brunt of the litigation-related impact, we're exercising vigilant discipline in how we manage our resources. Cash conversion is of the utmost importance. Deleveraging remains a big focus area and Wolfgang will tell you more about our financing plans for this year. And we're laser-focused on delivering the EUR 2 billion in organizational savings through our operating model. In terms of our outlook, we expect a solid performance in 2026, with product declines in Pharma and Crop Science due to loss of exclusivity and regulatory pressure in the EU, offset by continued strong performance of our launch products in our annual portfolio refresh. In addition, we want to ensure continued investment in our pipeline and launch products in 2026 to set ourselves up for growth in 2027 and beyond. Before accounting for FX changes, we see our core earnings per share landing roughly in line with last year. And as we shared 2 weeks ago, we're expecting a negative free cash flow this year due to the litigation-related payouts. So that outlook is emblematic of the company's current strategic position, strong signs of progress, but still working on a comprehensive turnaround. We've made major gains across the company, but that work is not yet complete. We focused on delivering what we've committed for 2026 and making the right long-term decisions to set Bayer up for sustained profitable growth. We have a clear picture of what needs to be done in every area. We're dialed in on the tasks at hand, and we're ready to deliver. Wolfgang will walk you through the numbers. But before that, Heike is going to tell you more about our progress in implementing our new operating model. So over to you, Heike. Heike Prinz: Thank you very much, Bill. And ladies and gentlemen, let me give you a brief overview of where we stand with the transition of Bayer to our new operating model, Dynamic Shared Ownership or DSO for short. Today, 2.5 years after its announcement, DSO is the operating model of the Bayer Group in all countries, in all divisions, in all enabling functions. We are now organized as an agile network of teams. And with redesigned HR processes, we are placing more and more decisions in the hands of our employees. The reduction in bureaucracy is also reflected in our costs, which we were able to reduce by a further EUR 700 million last year. By the end of this year, the savings achieved through DSO will total EUR 2 billion, as announced previously. But DSO has not only reduced cost. Bayer has become noticeably leaner, more flexible and more effective overall. An outstanding example of this are the recent product launches by our Pharmaceuticals division, some of which took place in record time. I myself worked in the pharma business for a long time, and I know what an enormous achievement this is and how important it is to get a new product to market and to patients quickly. With DSO, innovations are created more quickly, and they reach our customers in the shortest possible time, directly benefiting patients, farmers and consumers. And with that, I'm handing it over to you Wolfgang. Wolfgang Nickl: Thank you very much, Heike, and also a warm welcome from my side. Let's together, take a closer look at the group financials for the full year 2025. In the pivotal year, we fully achieved our raised financial guidance for all group KPIs. Group net sales grew by 1% year-over-year in currency and portfolio adjusted terms. All divisions delivered their adjusted guidance. Let me briefly highlight the main business drivers by division. For Crop Science, the anticipated regulatory headwinds from the dicamba label vacatur and the Movento expiration were offset by strong corn seeds and traits growth. That was driven by several factors. First, we had historically high corn acreage in North America; strong performance of our corn seeds and traits globally; and finally, a portion of incremental licensing revenue from the resolutions with Corteva in Q4. Let me pause here for a few additional comments on the Corteva resolutions. First, the resolutions represent licensing fees rightfully owed to us for the usage of our proprietary technology across multiple periods, including the years '25 and '26. Licensing fees are an important element of our business model and thus are accounted for as operating revenue. Second, based on content and timing of the resolutions about EUR 300 million, supported our corn performance in Q4 '25, and as you may have read in the annual report, about EUR 450 million will support our soy performance in Q1 '26, which is reflected in our outlook. We always had a high level of confidence that we would prevail, but these numbers were higher than what we had modeled before. Third, given the positive impact, we decided to advance certain strategic measures like product portfolio streamlining together with an impact on incentives. This is largely offsetting the positive effect on licensing income in '25. It is important to note that the underlying operational targets would have been achieved without these effects as well. Our Pharma business fully delivered on its raised guidance. Nubeqa and Kerendia continued their significant growth momentum and finished the year ahead of our raised expectations. With that, the launch assets performance more than offset the expected decline in Xarelto as well as headwinds in Eylea. Our Consumer Health division delivered a resilient performance in a challenging market environment with net sales stable year-over-year and in line with our revised guidance. Nutritionals were particularly affected by difficult market conditions in China and the U.S., while softer seasonality in cough, cold and allergy led to a decline in this category. As previously indicated, our group top line was impacted by material FX headwinds of around EUR 1.7 billion, largely driven by the depreciation of the U.S. dollar, the Brazilian real and hyperinflation currencies. Let's now move to the bottom line. Group EBITDA before special items came at EUR 9.7 billion compared to the prior year negative foreign exchange effects of around EUR 500 million weighed on profitability. We also saw higher incentive provisions and growth investments compared to the prior year, while top line growth and cost savings helped to compensate. An important year for our transformation, all our divisions and the enabling functions delivered on their profitability commitments, balancing necessary growth investments with disciplined resource allocation and cost savings. Core earnings per share came in at EUR 4.91. The decline versus the prior year was driven by the expected lower EBITDA before special items and includes FX headwinds of about EUR 0.30. Our core financial results came in better than expected. The core financial result improved markedly over the prior year due to lower interest expenses and positive changes in equity results. Reported earnings per share were at minus EUR 3.68. Main drivers for the delta next to the regular amortization of intangibles, other significant litigation-related provisions and our liabilities classified as special items. Litigation-related special items amounted to EUR 7.5 billion in total, including the increase that we announced 2 weeks ago. Let me also clarify that our litigation-related provisions and liabilities are based on a comprehensive assessment. The provision liabilities of EUR 11.8 billion contain all litigation-related costs we know today and can reliably forecast. Also covering past glyphosate verdicts either settled or pending in appeals. Our free cash flow came in at the upper end of our guidance range at EUR 2.1 billion. The anticipated year-over-year decrease is mainly driven by the expected higher incentive and litigation-related payouts. Net financial debt was reduced below EUR 30 billion by the end of '25. And that was due to the cash flow contribution and about EUR 1.4 billion in foreign exchange tailwinds driven by a weaker U.S. dollar. Let's now move to the outlook for 2026. Let me start by explaining the background for a methodology change that we will implement for our core earnings per share KPI as of this year. What we want to achieve is to provide enhanced transparency around our operational performance, reflecting necessary cost of doing business and moving core EPS closer to the reported EPS. Previously, our core EPS definition only included the core depreciation linked to usual depreciation of property, plant and equipment. All amortization of intangibles were excluded. As of this year, we will also factor in the amortization of certain intangible assets, in particular, software. The change in methodology leads to an approximately EUR 0.35 step-down in '25. Adjusting for the new methodology, we come from the EUR 4.91 that I just mentioned to EUR 4.57 for core EPS in 2025. For '26, we anticipate stable core earnings per share at constant currencies on a like-for-like basis. All businesses plan to further progress in their transformation, continue to execute the strategic agenda and set the basis for future growth. This includes continued savings as well as investments in innovation and launches. Overall, expected higher earnings contributions from Crop Science and Consumer Health will be offset by anticipated lower earnings in Pharma, in line with the divisional strategies. On the corporate level, our outlook assumes higher long-term incentive provisions due to the increased share price compared to the end of '25. This also results in higher reconciliation costs. We also expect higher interest expenses impacting our core financial result. This is driven by an anticipated increase in net financial debt due to the substantial litigation-related payout and the resulting negative free cash flow for 2026. Finally, on geopolitics. Let me start by addressing the recently started war in the Middle East. Our thoughts are with the people across the region. Our focus is on ensuring the safety of our people and the continuity of our business. At this point in time, we do not see a material impact on our business, and we will continue to closely monitor the situation. We are in close contact with our people on the ground and ensure continued supply of our essential products. Regarding tariffs and FX, we are prepared to deal with a new dimension of volatility across businesses and regions. In '25, we successfully managed a dynamic trade environment and limited the impact of additional tariffs. This was achieved through a combination of mitigating measures by our cross-functional teams as well as tariff exemptions based on the relevance of our products. Our new way of working provided extremely -- was provided to be extremely helpful, handling the situation, and we will continue to build on that strength going forward. For '26, our outlook includes our latest assessment of estimated direct and indirect geopolitical impacts. As mentioned previously, we expect foreign exchange rate fluctuations to remain a major swing factor based on year-on-year spot rates, we anticipate continued foreign exchange headwinds of about EUR 0.30 to our core earnings per share, as shown on the right side of the chart. Managing our FX exposure and geopolitical context has been a major priority for us in '25 and will continue to be a priority for us in '26. Overall, we will continue to monitor the situation very closely. This includes the future of the U.S. EU trade relations following the recent court ruling on our tariffs. Let me summarize with the outlook for the group KPIs for '26. We anticipate net sales of EUR 45 billion to EUR 47 billion at constant currencies, representing a gross range of 0% to 3% in currency and portfolio adjusted terms. For EBITDA before special items, we target between EUR 9.6 billion and EUR 10.1 billion in '26 at constant currencies, representing a minus 1% to plus 4% development versus the prior year. As mentioned, core earnings per share are expected to come in between EUR 4.30 and EUR 4.80 at constant currencies. Now free cash flow outlook of minus EUR 1.5 million to minus EUR 2.5 billion at constant currencies, we account for the expected significant litigation-related payout of around EUR 5 billion as we also announced 2 weeks ago. With the negative cash flow, we expect net financial debt to increase to between EUR 32 million and EUR 33 billion at constant currencies. As also announced 2 weeks ago, ultimate financing for the litigation resolutions is planned to rely on senior bonds and instruments receiving equity credit by the rating agencies and not on the AGM authorized capital increase. While finalizing these measures, please note that the current net financial debt outlook for now is conservatively reflecting straight debt financing. And with that, I'll hand it over to you, Rodrigo. Rodrigo Santos: Thank you, Wolfgang. In Crop Science, we have built a more agile organization through our DSO and strengthening our operational discipline through our 5-year framework. That discipline is already delivering tangible impacts. It shows up in three areas of our core business and the differentiated growth we see through the end of the decade. Number one, in the resilient performance we delivered in 2025. Number two, in the clear step forward, we expect in 2026. And number three, in the progress already made against our 5-year framework, laying the foundation for a stronger performance through the midterm. So before turning to 2026 specifically, let me anchor us in where we stand in the 5-year framework. Because this is the lens through which we manage the business and the road map that guides every decision we make. We are on track to deliver across the triangle, sales growth, margin and cash. We strengthened the operational foundation of the business by simplifying the portfolio and sharpening our footprint, we are firmly on course to deliver the more than EUR 1 billion margin improvement. Actions included divesting and outsourcing multiple activity ingredients exiting nearly 200 crop protection products and streamlining our global site footprint from crop protection to seed production. We are also exiting lower-return vegetable crops and the non-core seed treatment equipment business. As we advance our efforts, portfolio is streamlining and go-to-market models will largely complete by year-end. Innovation remains our engine for future growth. Protecting our proprietary traits and R&D capability is critical. Simply put it, the recent resolution with Corteva is licensing revenue for the use of our technology. It does not changes our growth outlook or license expectation. It does ensure fair compensation for our technologies today and well into the future. And it safeguards the value of our innovation engine, which advanced six projects and introduced 470 new hybrids and varieties last year. Our industry-leading pipeline position us for differentiated durable growth. Our first blockbuster Plenexos is now launched, and we will expand into Brazil this year. The icafolin submissions are complete, and the new gold Camelina is now in the market for biofuels. And the nine additional blockbusters are on track for upcoming introductions. That includes the Preceon Smart Corn introduced with biotech approach and also the Vyconic in '27 and '28. As followed closely by our fifth-generation herbicide-tolerant soybean trait, position us for double-digit share growth and put us firmly on our path to reclaim the #1 soybean trait position in North America. This is the strength of our pipeline. We have unprecedented number of market-shaping innovations on the horizon with a clear pathway for growth. So 2026 represent another step forward in delivering our 5-year framework. We expect Ag market fundamentals to remain challenging and project below average market growth. However, our resilient base and focused execution give us confidence. While we benefit from the license income, we will continue pushing hard on our 5-year framework measure. Overall, 2026 is another year of diligent execution of our strategic plan setting us for the future. Our core business growth is expected at 1% to 4% currency and portfolio adjusted. An important contributor for this growth is the recent approval of the Stryax dicamba formulation. This marks the first step in reestablishing the momentum of our North America soybean business, giving farmers the added flexibility they've been waiting for. And for 2026, we expect Stryax herbicide growth as well as pricing gains in soy and cotton. Still, we do expect -- we do not expect full recovery yet preparing for the Vyconic introduction in 2027. For corn, we expect low single-digit growth globally based on anticipated price and market share increases despite the acreage reduction in the U.S. In core Crop Protection, we anticipate softer growth on higher volumes driven by new products, offset continued pricing pressure and the EU regulatory impact, as previously expected. For glyphosate, tariffs recently have been reduced on China imports in the U.S. and the generic PRC pricing has been declining below the historical median. With that, we currently expect glyphosate sales to decrease by 2% to 6% comparing to the prior year. We will continue to monitor the situation and adjust pricing as needed to the separately managed commodity business. As we look at calendarization, the noted soy licensing revenue will benefit the first quarter. However, lower tariffs and generic price declines are adversely affecting glyphosate sales. In addition, we expect a soft start to the crop protection season on top of the continued regulatory effects in Europe. Our growth drivers, such as the Stryax sales will only emerge later in the season. On the bottom line, within our margin profile, we expect EBITDA margin before special items of 20% to 22% at constant currency inclusive of the dilutive glyphosate margins. This reflects continued cost discipline as well as pricing and mix benefits from portfolio streamlining in line with our 5-year framework. For example, in soy, we are focused on pricing to value and improved utilization rates over top line growth. We will monitor currency closely as sales seasonally in the soft currency markets like Brazil can create volatility in both top and bottom line results. Taken together, these factors underpin a realistic execution-focused 2026 outlook and underscore the momentum we are building for the years ahead. Our sharpener portfolio, leaner footprint and increasingly resilient earnings model gives us a strong confidence in delivering our midterm targets and navigating x cycles with a greater consistency. With that, over to you, Stefan. Stefan Oelrich: Thank you, Rodrigo. In the Pharmaceuticals division, we continue to make really great progress on our strategic agenda. We have now entered the last year of what we are calling our resilience phase. We're well on track in renewing our top line and our strategy of balancing expected declines for our mature products with growth from new products, which is well working out. I will shortly provide more details on our expectations for 2026. However, I want to also highlight that we're well set for our next wave of growth into the next decade. This is driven by significant sustained growth momentum of Nubeqa and Kerendia, a very successful launch of Beyonttra, the first launch of Lynkuet in the U.S. as well as very positive data presented for Asundexian only a few weeks ago. We've also demonstrated great successes in our efforts to grow our pipeline value and nourishing our foundation for future growth. Driven by our new innovation model, we have progressed 16 clinical programs across the development phases and achieved approval for five new key indications or products in 2025. I already mentioned Asundexian, but I do want to reiterate the genuine excitement we witnessed among attending physicians at ISC in New Orleans just a few weeks ago. Not many were expecting such groundbreaking results. With this potential new treatment option in secondary stroke prevention, we may have an opportunity to truly rewrite the future for stroke survivors and their families. In addition, we're continuing to leverage our new operating model for increased performance. And we have consequently been able to sustain our margin in the mid-20s range. All of this despite facing continued loss of exclusivity and pricing pressures, while we continue to invest in our launches and also in our pipeline. Moving into 2026, we expect an unbroken growth momentum for Nubeqa and Kerendia, amounting to an expected growth of approximately 50% at constant currencies. This will be driven by continued market penetration and indication expansions such as the upcoming EU approval for Kerendia in heart failure, following the recent positive CHMP opinion. This growth momentum will be further supported by the continued launch dynamics of Beyonttra and also Lynkuet. While we were able to defend Xarelto well in 2025 overall, we experienced the expected increased generic pressure towards the year-end. We, therefore, also expect a slight acceleration of relative declines in 2026 in comparison to last year, being in a range of minus 35% to minus 40%. Given the accelerated pricing pressures we have seen for Eylea with the entry of 2 milligrams biosimilars since Q3 2025, which we may have slightly underestimated, we will focus our activities to build on the strong clinical profile and unparalleled label of Eylea 8 milligrams. We plan to significantly expand Eylea 8 milligrams contribution to the Eylea franchise to approximately 70% and sustain our market-leading position in volume shares. Despite these efforts, we will likely see declines for Eylea franchise in the range of approximately 20% to 25% at constant currencies in 2026, with the pricing pressures somewhat leveling out thereafter. Since 2 milligrams biosimilars only entered the market fairly recently, we will continue to closely observe and evaluate the evolving situation and will provide updates as we gain more clarity as per our usual reporting practice. In line with the stringent shift of resources to focus our activities on our current and future growth drivers as well as our continued pricing pressures and declines in our mature product portfolio, we expect a modest contraction of our base business in 2026. In sum, we're expecting growth of 0% to plus 3% at constant currencies for this last year of our resilience phase before returning to mid-single-digit growth as of 2027. And we're hovering over a prior year during which the pricing pressures increased over the quarters and Nubeqa and Kerendia will continue to grow as this year progresses. We expect the top line for the second half of 2026 to come in stronger than in the first half. Looking at our 2026 margin, we would expect that the impact of a changed product mix and increased growth investments throughout the year will only be partly balanced by cost savings from efficiency measures. We, therefore, expect a 2026 EBITDA margin before special items of 23% to 25% at constant currencies as we keep working to expand our margin as of '28 towards 30% by 2030. And with that, over to you, Julio. Julio Triana: Thank you, Stefan. As we review our performance and set our priorities, I want to begin with the progress we're making on our Road to Billion strategy. Last year's market environment was challenging for two reasons. First, market dynamics in the U.S. and China; and second, the continuation of seasonal softness in cough, cold and allergy. Despite these obstacles, we have stayed committed to our strategic approach focusing on areas where we can create the most value and actively respond to evolving market conditions. By focusing our efforts on the highest potential categories, we continue to advance our goal of reaching billions of consumers and creating sustainable value for our business. Across markets, consumers are more deliberate in their spending. They compare, they seek more, and they have more ways to shop. E-commerce continues to scale quickly, while traditional retail consolidates. Retailers and pharmacies, particularly in the U.S. and China have reduced inventory levels to manage working capital more tightly. Despite this backdrop, the fundamentals of our business remain attractive. A growing middle class, rising self-care, adoption and constrained health care systems continue to support durable demand for our categories. In the near term, we expect continued volatility in China and the United States with performance likely to contract. Over the long term, we expect both markets to return to a sustainable healthy growth pattern. While allergy, cough and cold have been soft for 2 years, the fundamentals underlying our categories remain very solid. As one of the top 3 global players in fast-moving consumer health, we're well positioned to capture this growth. We hold leadership positions in categories such as dermatology, digestive health and cardio. Our balanced portfolio across seven treatment and prevention categories pairs global mega brands with very strong local heroes. This mix gives us resilience in the short term and significant room for expansion over the long term. A Road to Billion strategy is designed to convert this foundation into sustainable value creation. At its core, the strategy aims to increase household penetration by reaching billions of consumers through both online and offline channels as well as through our strong presence in pharmacy and health care professional settings. In the medium term, this support consistent sell-out growth and more predictable sell-in. Looking ahead to 2026, we expect continued macro geopolitical volatility. Given our geographic footprint and the segments where we compete, we expect our relevant market to grow by about 2% to 3%. This is about 100 basis points slower than the total Consumer Health market. Category dynamics, geographic mix and elevated volatility underpin our net sales growth outlook of 0% to 4% in currency and portfolio adjusted terms. Building on our 2025 base, we aim for continued value recovery. In the United States and China, our two biggest markets will play a crucial role in our overall performance, slowing growth and market volatility there could heavily influence our results. Consumer confidence remains soft. If consumer spending picks up and seasonal categories see higher incidents, we might achieve the higher end of our growth forecast. If not, growth could be toward the lower end. Given the volatility and its impact on our top line, our EBITDA margin outlook before special items for 2026 is 22% to 24% on a constant currency basis. Savings from our new operating model and active cost management are expected to offset annual cost increases. We continue to reinvest portions of these efficiencies to strengthen brand equity and gain market share. We will continue to accelerate investment in e-commerce and AI across brand building and activation, customer engagement and product supply. Prioritizing self-care and empowering people to take control of their health has never been more important. Through our Road to Billion strategy, focused on building trusted brands we're uniquely positioned to meet needs of consumers, creating lasting impact and long-term value. And with that, over to you, Michael, for the Q&A. Michael Preuss: Thank you very much, Julio, and thank you to all the Board members for the presentations. And let's now start the Q&A session. [Operator Instructions] So we have the first question coming from Annette Becker from Borsen-Zeitung followed by Antje Honing from Rheinische Post. So first question, Annette, over to you. Annette Becker: I hope you can hear me. Michael Preuss: Yes, we can hear you. Annette Becker: Okay. I have two questions. First, I'd like to know why your Q4 results are in operating version, so extremely weak? The EBITDA reduced to 16%. And then the second one, what does the negative free cash flow for this year mean for the dividend you're paying out next year because your shareholders have now 3 years of minimum dividend. And I think that's not so good for time lasting. William Anderson: Yes. Let me comment on the second one first, which is that the dividend decision will be taken at a later date when we have results of the year. But -- so we'll be making a recommendation regarding that in due time, but we don't have any comment on that right now. I'll turn it over to Wolfgang for a little more perspective on the Q4 results. You have to remember that because a large part of our business is in agriculture and agriculture is seasonal, that the EBITDA margins go up and down accordingly. But maybe Wolfgang, you could provide a little more color. Wolfgang Nickl: I think you're absolutely right. I mean, as a matter of fact, we also don't look at quarterly results too much. We were really focused on the annual results. And as we said, we fully achieved everything on every KPI. And there was nothing extraordinary in Q4 worth mentioning. William Anderson: Yes. I think we have to say we increased our results -- sorry, we increased our expectations in August of 2025. And we fully delivered on those increased expectations. So I think we feel quite good about our Q4 results. Just some historical perspective, if you go back a year to what the expectations in terms of profit for Bayer were 1 year ago, we over-delivered that by about 9%. So I don't think we would characterize it at all as weak, but rather strong. Michael Preuss: Okay. So the next question comes from Antje Honing, Rheinische Post, followed then by Jonas Jansen from Frankfurt Allgemeine Zeitung. Antje, you are next. Antje Honing: I have two questions. One to Heike Prinz. How many jobs have been cut by DSO so far? And when will the cuts be completed? And how many jobs will then we have in totally? And to Bill Anderson, Bayer will sometimes have to repay the debts incurred in settling the wave of lawsuits. Will this lead to a cost-cutting program efficiency program and further job cuts? Heike Prinz: Yes. Thank you, Antje, for your questions. As I shared with you earlier today, DSO, our new operating model has been implemented in all parts of our organization. And I think right now, really the focus is on leveraging this operating model to drive performance in our businesses. Now you will see in our publication that we are at 88,000 employees across the world. But we've also shared with you previously that DSO is not about having a head count target or a job cut target. So really, the focus, as you've heard from also the divisional heads is on driving performance in our businesses. William Anderson: Yes. And Antje, our big focus is our mission. You see it here behind us, but this is what we and the 88,000 people of Bayer come to work for every day. And we're really committed to do that in the best way possible. And we are generating a lot of cash. Every year, we're generating cash from our operations, and we plan to continue to do that by getting more productive. But whether that productivity is going to be mostly driven by revenue growth, or whether there's going to be additional cost savings, we've announced cost savings that we plan to achieve by 2029 in Crop Science. We already announced that. But I think we've got a team that is really focused on driving this mission forward. And we've got exciting opportunities in Pharma, in Crop Science, in Consumer Health. And I think we will have no problem repaying our debt. I think our main question is how high can we go, and we're determined to go really far, really fast. And we've got an operating model in place that allows us to do that. And if you look across this company, whether it's in Consumer Health, where we're launching products now in well under a year that used to be 2 to 3 years of a life cycle to launch. We've got that under 1 year. If you look in Pharma at the progress we've made in the pipeline, but not only the progress in the pipeline, but how we're doing on launching those products, on bringing those to patients around the world. We've accelerated that dramatically by putting the power in the hands of our people. And in Crop Science, the work is really amazing what's happening throughout our world in product supply, in R&D just amazing stuff in terms of our people, having the power to make gains. So you hear about AI and productivity gains, and you hear about job losses. What we're looking to do with AI is put it right into the hands of every Bayer person to extend their impact to make them more effective every day for the mission. So I think we see an opportunity to dramatically increase productivity. But we want to do that a lot through growth. Michael Preuss: Right. The next question comes from Jonas Jansen, Frankfurter Allgemeine Zeitung, followed then by Sonja Wind from Bloomberg. Jonas, please go ahead. Jonas Jansen: Hello. Good morning, and thank you for taking the time. In the outlook, you have a China tariff effect on glyphosate sales expectation. Can you maybe explain this a little bit further because I thought there's kind of a Buy American movement right now in the U.S.? Or is that still a price topic. And then regarding to the White House, glyphosate letter, could you maybe explain what that could mean looking in the future with the plans you have there for the phosphate? And do you think that the latest efforts you had surrounding glyphosate and regulation and litigation, that will have an effect on the Supreme Court or is that not directly related at all? Thank you. William Anderson: Yes. Thanks, Jonas. I'm just going to try to answer these both really quickly. So in terms of the tariff effect on glyphosate, imports into the U.S. So last year, the rates of tariffs were generally 25% to 35% even, I think, for brief periods a bit higher. As a result of the IEEPA ruling from the Supreme Court recently, that rate has dropped to 3%. So it basically has a corresponding drop in the price of generic glyphosate in the U.S. And so that results in price or volume losses for us, and we just have to deal with it. So we're dealing with that. I would say that tariff rate remains kind of uncertain for the future, but at the moment, it's about 3%. So we have to deal with that by offsetting it with gains elsewhere, and we plan to do that. In terms of the letter, the White House letter on glyphosate production, yes, this has nothing to do with the Supreme Court and it actually has nothing to do with the settlement either. This is basically the U.S. government recognizing the vital importance of glyphosate to the American farming system. Frankly, the vital -- glyphosate is vital to farming systems outside of the U.S. as well, but the administration is taking a position and not wanting to be dependent on foreign sources, for something that's essential for food security and national security. So we've received the letter. We intend to comply with it, and there's not much else to say. So thanks for the questions. Michael Preuss: The next question comes from Sonja Wind, Bloomberg, followed then by Jens Tonnesmann, Die Zeit. Sonja, over to you. Sonja Wind: Bill, you said that you're ready for any scenario regarding the judge's decision for the settlement proposal. What is your plan in case it gets denied? And do you have a rough time line of when you expect the decision? And then also coming back to a broader question, which you said in February that you will look at the company's structure in the future. Will that be in 2026? Do you expect after the U.S. Supreme Court's decision? Or is that even further in the future? William Anderson: Yes. Thanks, Sonja. So we have plans for every scenario. I don't think we're going to speculate on a denial scenario, but I would say the time line is days. So you won't have to wait long for an answer there. In terms of the company structure question, basically, what it comes down to, and you've heard that from our division heads and from Heike and Wolfgang. I mean, we just -- we have so much going on. We have five big issues we're tackling. We've made remarkable progress in 2025 and 2024, we got more to do. So we're not going to be distracted by talking about structure right now. But that said, we are -- we remain very much committed to tackling that question in due time, but I couldn't give you a particular timing. So, thanks for the question, Sonja. Michael Preuss: Next question comes from Jens Tonnesmann, Die Zeit, followed then by Bert Frondhoff from Handelsblatt. Jens, you are next. Jens Tonnesmann: Yes, you can hear me. Well, I've got two questions that may sound like beginners questions to you. Bill, you were emphasizing how much support you feel in the U.S. regarding glyphosate. And the glyphosate has been proven safe by regulators of more than 50 countries, including the U.S., of course. So, can you please once more explain why then did you even agree to the recent settlement with the plaintiffs that are putting quite a strain on Bayer financially? And doesn't that contradict your commitment to focusing on the facts and your criticism of the litigation business? And second, would it be possible for Bayer to withdraw from the settlement partly or fully if the Supreme Court rules in Bayer's favor in June. William Anderson: Well, Jens, I think those are very reasonable questions. And I wouldn't categorize them as beginner's questions. But I think we can all recognize that the litigation situation in the U.S. is very complex. This is not a true phenomenon. I remember as a boy sitting at the dinner table here in a conversation about the tort system and some of the strange results that it could produce. So this is not a new thing. But the fundamental issue that's before the Supreme Court is whether the scientific endeavors of hundreds of scientists can be basically overturned by a jury of non-experts based on a very small set of facts as opposed to an exhaustive decades long set of facts. That's kind of what's at play. Nevertheless, the system is quite challenging for companies, and we believe that this settlement offer -- this settlement agreement is the right approach at the right time, because the company needs to move on. This has been a huge drag on Bayer for almost a decade, and that needs to stop because we have a mission that's more important than a court flight. And so we got to get on with it. But yes, the Supreme Court case and the settlement are distinct. They accomplish different things. The Supreme Court case is asking of the fundamental question about whether the EPA has the authority to govern pesticide labels and questions of pesticide safety or whether that gets played out in hundreds or thousands of courtrooms. So that's really important, not just for glyphosate or for our past verdicts, but it's also very important for the future of new and innovative tools like new crop protection products that we want to launch that are important for farmers as they continue to struggle to basically put affordable food on the table. So that's very important for that. The settlement is something that's important for Bayer in terms of moving on. So thanks for your questions, Jens. Michael Preuss: Okay. Next line is Bert Frondhoff from Handelsblatt, followed by Elisabeth Dostert from Suddeutsche Zeitung. Bert, over to you. Bert Frondhoff: I hope you can hear me. No, you can't hear me? Michael Preuss: Yes, we can. You can just go ahead. Bert Frondhoff: Okay. Good. Yes, Bill, can you give us another assessment on how Bayer views the conflict in the Middle East. I guess you source many intermediate products from Asia and the pharmaceutical business, the business via hubs in the Middle East. Are you concerned about problems in the supply chain? William Anderson: Yes. Thanks, Bert. I mean, first off, as Wolfgang mentioned, and I think we all share this. Our first concern is for the safety of our employees in the Middle East region and for all the innocents there. And we hope and pray a rapid cessation and a lasting peace. And there needs to be a solution for a lasting peace there. The short answer though, regarding your question, we're not particularly concerned about our supply chain. We're not heavily dependent on Middle Eastern hubs for our supply chain. So we don't anticipate any interruptions in supply. Michael Preuss: Okay. And next question then comes from Elisabeth Dostert, Suddeutsche Zeitung, followed by Isabella Bufacchi from Il Sole. Elisabeth, over to you. Elisabeth Dostert: Bill, what was your trip with Friedrich Merz to China and which role does China play for Bayer? Is it more for your Pharmaceuticals division or do you sell Crop Science products like glyphosate in China? William Anderson: Yes. Thanks, Elizabeth. Yes, it was a very eye-opening trip. Very interesting to see continued remarkable progress in China in building out infrastructure in the strength of various innovative industries. And I think, yes, it was very useful dialogue. And we have about 7,000 people in China working in Pharmaceuticals, Crop Science and Consumer Health. Our biggest division in China is Pharmaceuticals. And we have production there. Well, we have production for all three divisions in China, but it's an important market. It's an important innovative hub. And we have very good relations with our Chinese partners. And this is, again, we have a mission of Health for All, Hunger for None. That takes us pretty much to every corner of the globe. We see, yes, the need to feed the world in a way that is environmentally sustainable as something that's everybody's business. It's sort of every citizen of the world has a stake in that, likewise with medicines and every day, human health products that we have from our Consumer Health division. So we've got -- I think we've been in China for about 150 years. And we are very pleased with our, again, our great colleagues in China and the importance of continuing to drive innovation and access to these important, yes, tools for producing food and medicines. Michael Preuss: Okay. From China to Italy, we have next in line, Isabella Bufacchi from Il Sole, then followed by Andrew Noel from Chemical ESG. Isabella you're next. Isabella Bufacchi: Good morning. Thank you for the opportunity. I have two questions. One is on your net financial debt. It went below EUR 30 billion in 2025, and it was down a lot, 8.5%, but it's going up again in 2026. Now I was looking at your ratings. You have three ratings from S&P's, Moody's and Fitch, with a negative outlook. And the level that you are a downgrade would be quite painful because you would get to the last rate before speculative grade. So I've seen that you want to avoid that. I mean, you're looking for an upgrade. But I also saw that you were a solid A rating before the Monsanto. So I was wondering whether do you think that a good solution, final on litigation would have an impact on your ratings with the possibility of going back to A? And my second question is on Europe. As Europe as in a way it's own momentum, there are flows of capital coming back to Europe. Here in Europe, the growth is weak. But do you see any potential? Are you looking at Europe to increase your investments here? Wolfgang Nickl: Yes. Thank you very much for your questions, Isabella. I'll take the first one on the net financial that -- first of all, thanks for recognizing we came below EUR 30 billion. That was significantly better than the Street expectation. It was really driven by free cash flow performance, and we had a bit of a translation effect there as well. I think you have seen that we will be up slightly because we have a negative free cash flow expected for this current year, and that's largely driven by the EUR 5 billion expected payouts for settlements and defense costs and so on. So we could be higher up. But I also said in the script that will depend on the final takeout financing. This is all simulated based on straight debt. And like we said before, we will likely use instruments that receive at least partial equity rating by the rating agencies. That brings me to the rating agencies. You should expect that we have a very, very solid dialogue with the rating agencies on an ongoing basis. That's very valuable for us. And we keep them abreast of all the developments in particular as it relates to the financing as well. And of course, like every other stakeholder, they look at the developments on the litigation front as well. And as Bill said, hopefully, over the next couple of weeks and months, we see things going the right way there. And lastly, yes, the company has always been focused on A category kind of rating, so meaning leverage of something around 2.5 or less. We like that rating from an accessibility viewpoint from a flexibility viewpoint. And that's our midterm target. And probably the last thing is '26 will be the brunt of litigation payouts. We also said that, that EUR 5 billion will reduce to EUR 1 billion per year for the subsequent 5 years, and then it will be going down significantly. And if you pair that with the growth outlook that my colleagues have specified in particular for '27, you should see the company making significant progress in that regard, and that will hopefully also be realized and recognized by the rating agencies. Bill, I think you do the Europe piece. William Anderson: Yes. Yes, thanks for the question. I think Isabella, I think it's a mixed picture, the question of investment in Europe, and it's simple. We need basically more energy. We need lower energy prices in Europe and less regulation. And I think the experiment that's been run over the last decade the idea that sort of Europe could lead out in regulation and that, that would provide a competitive advantage, I think that's a failed experiment. And I think that's becoming more and more obvious every day. So I think those are some of the things that we would be able to invest more if we had better access on energy, less regulation, less bureaucracy. That being said, we're making major investments in Europe. So for example, in Monheim, very close to Leverkusen, we're building a new state-of-the-art chemical research facility that is going to be a base for crop protection, research and development for decades. We have cell and gene therapy production that's rapidly either being built or expanding in both Berlin and in San Sebastian in Spain. In Italy, I was in Italy, I can't remember, maybe 1.5 years ago, and I got to see some production we have there in the Milano vicinity that's sending really innovative healthcare products to the world. We also -- it's one of the few countries where we launched our short stature corn system, which is going to revolutionize corn production around the world and Italian farmers are some of the lead innovators there in adoption. So I think there's amazing potential for future innovation in Europe, but there's more work that needs to be done. Michael Preuss: Right. So next question comes from Andrew Noel from Chemical ESG then followed by Yonglong He from Xinhua. Andrew, you're next. Andrew Noel: I've got two, please. I understand now it's not the time for a decision on a split. But is the work that you're doing on Crop Science portfolio in line with getting the business ready for an IPO and making it more attractive to investors? I ask because BASF and Syngenta have been doing M&A in biologicals and that makes it more attractive to the sort of investor crowd. And the second question would be probably one for Rodrigo. Is there any interest in the new molecule opportunities at FMC, the partnerships they're talking about and perhaps the same for Corteva split, I guess? Thank you. William Anderson: Okay. Maybe I'll make a comment on the first one and then hand it over to Rodrigo. I think our basis for proceeding with all of our work at Bayer with respect to our divisions, our businesses, we need to be the best home for every business, and that means we have to be the -- yes, the most innovative, the leanest, the fastest. And so, I think all the measures that Rodrigo and his colleagues are taking in Crop Science, would be a benefit to Bayer Crop Science as part of Bayer or as a stand-alone entity. I don't think there's any kind of tension there. But that's the mentality we have to have with each of our businesses is we got to be the leanest, fastest, most innovative, simply put. Rodrigo, any comments on... Rodrigo Santos: Sure. Thank you, Andrew. And again, we are -- this is part of our 5-year framework. And I think the discipline that we are on the execution of that 5-year framework is very important. That includes, Andrew, that we have a very robust pipeline of crop protection, right? We talk about Plenexos, the first one that we launched. We have icafolin coming, Conventro, Stryax, and many other products that we have in our portfolio. We are always open for collaborations and with different companies on biologics. We have an open collaboration work that we do. No specifics to the two companies that you mentioned, but -- we have a strong portfolio coming in the next years. And I'm very excited about the work that we are doing on R&D on crop protection using AI to really move faster on the invention of new molecules. So I feel that we are -- we're going to be focused on launching these new technologies to the farmers in the next years, and this is really exciting and keeping the discipline on the execution that we lay out last year. Michael Preuss: Next question comes from Yonglong He from Xinhua, then followed by Anja Ettel, Die Welt. Yonglong, you're next. Yonglong He: I have two questions for Mr. Bill Anderson following the previous questions on your latest trip to China with German Chancellor. Well, the first one is, do you have any special impressions from this visit like an impressive moment or observation then stood out to you this time? And how have you observed the living and working conditions of people there in China? And the second question is, well, this year, China started its first year of the 15th year plan underscoring openness and innovation, which is also the innovation, which is also Bayer's core strategy. So would Bayer see this more opportunity and alignment or pressure competing with other international companies, there? William Anderson: Sure. Yes, I mean there were a lot of really impressive things to see. It was great to see, for example, the partnership between Mercedes and the local companies on autonomous driving. And so the Chancellor got to actually make a tour in the car that was basically driving itself. You just put in the destination and it goes. So that's obviously pretty cool to see. We were at Unitree. So we got to see the robot demonstrations, the humanoid robots which is -- yes, that's kind of cool to experience them up close and personal. I think the -- with respect to living and working conditions, it was a short trip. But I know that our 7,000 people at Bayer are -- yes, they're very excited about the innovation that they're doing. They've implemented dynamic shared ownership also in China, which is sort of unprecedented levels of empowerment for the individuals. It's not perfect yet. It's not perfect anywhere in the world, but I know they're excited to continue to work on that. And yes, we're -- I think we have five innovation hubs now in China. And so we're excited about the opportunities to continue to innovate together with many partnerships in China. I think we have over 100 collaborations with universities in China on various projects. But what they all have in common is they're all about Health for All, Hunger for None, which is why we exist at Bayer. We have 88,000 people in the world. We have 7,000 in China. We're all working on one mission. Thanks again for the question, Yunlong. Michael Preuss: So next, we have a question from Anja Ettel, Die Welt, and then we have a final question afterwards from Akash Babu from Scrip. Anja, over to you. Anja Ettel: Just a quick follow-up to Isabela Bufacchi's question. You spoke of the goal of less regulation in Europe as a failed experiment. And just to clarify, if you were to decide what would then be your top one priority in terms of less regulation in Europe. So what should be improved first here in your view? And a personal question, because Mr. Anderson, you have now been in office for about 3 years. Time is running fast. If you were to take stock of your tenure so far, how would you assess your performance? Where are you satisfied? And where maybe have you fallen short of your own expectation? William Anderson: Yes. Thanks, Anja. Well, I'm going to give you an answer that maybe is a little different than some that you'll hear on this question of less regulation in Europe and how do you fight this bureaucracy. And I think, by the way -- at Bayer, I think we're well, we're an interesting case study in how you fight bureaucracy, because -- let me give you an example. When we started our work almost 3 years ago, we had a rule book for Bayer that was -- I think it was 1,362 pages or something -- some number like that. And we could have said, "okay, we need to cut that back," right? And we probably would have spent the last 3 years taking that 1,300-page rule book and making it 1,100 pages, that would have made zero impact. You cannot fight bureaucracy with bureaucratic methods. Like, "Hey, let's form a bunch of committees, and let's see if we can write shorter rules or let's see if we can take the 26 rules about, I don't know, office furniture arrangement and make it 20 rules." Okay? That never works because by the time you would cut back 20% of the rules, the system would have generated another 30%. So I have to say, and I give this advice when I'm asked to policymakers, politicians, you've got to create kind of some sort of safe harbors for innovation. Because the amount of rules that exist -- and by the way, I'm not blaming -- some people blame Brussels and maybe Brussels blames Berlin and Berlin blames the state. Hey, there's too much everywhere. There needs to be some innovation zones created where whether large companies or new entities can come in and get going on things. I think AI is a fascinated example because everyone is racing to regulate it. We don't even know what it is yet. We're trying to write rules for things that haven't been done yet is the biggest folly. So I think there is a real rewiring that needs to be done. And I think there's there's a big wake-up call right now on that. So again, we could talk about that a lot, but I think this is something we have to get real about. We're never going to fight bureaucracy with bureaucracy. You got to make a clean sweep. What do we do with our 1,362-page rule book? We killed it, and we replaced it with a 14-page code of conduct that everybody needs to follow. All right? And so that is how you deal with bureaucracy. You have to basically clear it out and start over from scratch. And I think there's some real thinking that needs to be done on that. In terms of assessing 3 years, first off, I don't think of it as about me because when I arrived at Bayer, I sat down with some of these folks right here as well as a whole bunch of our other leaders and we basically said, "Hey, what do we want to do? What do we want to achieve together?" And we said, we identified four and then basically five things. We said we need to rejuvenate the Pharma pipeline. We need to really build up the productivity and profitability in Crop Science. We've got to get debt down. We've got to deal with the litigation situation. And we've got to tear out bureaucracy. And I think we've made tremendous progress on all five of those things. So I think we all feel really good about that. But when I talk to Bayer people, whether they're senior leaders or frontline workers, I always ask them, so how do you feel about the progress we've made and people say, yes, good, more than we thought we could do. Almost everyone says, "Wow, we've changed more than any of us thought we could do." But then I always ask, so how much more work do we have to do? And you might think people would say, "Oh, I'm tired. Can we just take a break?" But people tell me consistently we have more to do than we've done so far. And I actually find that exciting because I think we have a lot more gains to make, and I know my colleagues feel very similarly. We're going to -- we've made tremendous changes at Bayer in the last 2.5 years. We got a lot more to come, and we're excited about what those mean for our mission, for our customers and for our shareholders. So thanks for the question, Anja. Michael Preuss: So, and we have a last question coming from Akash Babu from Scrip. Aakash Babu: Perfect. I have two actually really quick ones. So in the past, you mentioned that you would be willing to walk away from the glyphosate business if things don't really improve or get handled. Especially, since you mentioned that it has been a drag on the business. So if everything doesn't go well in the next few days and weeks, is that something that still remains on the table for you? And secondly, I know you mentioned the 88,000 employee count right now. But I just wanted to understand if there was a to-date figure in terms of job cuts specifically as part of DSO, because I think you mentioned around 12,000 job cuts as part of the program back in August. William Anderson: Yes. So Akash, we -- what we said about glyphosate is that we've been dealing with litigation over claims that are historical claims or from historical use of glyphosate. And -- but we're still providing it because of its essential nature and because basically, the verdict of, from farmers and regulators is that this is a really important option. And we said, hey, but we -- there needs to be some sort of protection or some sort of change in the legal status. So we certainly see the settlement and SCOTUS are important topics. The recent executive order from the White House is also important on that. So we have to take that all into account. I think that it's important for these tools to be available for farmers and certainly, our actions will reflect that. I think what have we said -- I think we're saying, is it 14? There've been about 14,000 job reductions since we began implementing the new system. Some of those have to do with the new system explicitly. Others are things like facilities that we closed or things that we exited that aren't specifically related to DSO, but just have to do with the changing economics of different product lines. So thanks for your questions, Akash. Michael Preuss: Okay. So thank you very much for your questions and for your interest. Thank you very much also for your answers. This concludes our financial news conference for today, and we all wish you a great day. Thank you very much.