Belimo 2025 Earnings Call - Robust 23% Organic Sales Growth Supported by Data Center and Retrofit Business

Markus, Company Presenter, Belimo: For Belimo, and you are able to significantly grow our business. If we go into the business highlight, obviously 2025 was an overall very dynamic year and not short of challenges. We had an overall quite sluggish construction market with new construction and also renovation overall still being down compared to the past. But in there, we had very dynamic and very strongly growing segments. Above all, obviously the data center with a lot of investment in the new data center driven by AI, especially in the U.S., and to a lower extent also in Asia Pacific, less so in the EMEA region. And we also not only saw strong momentum in the data center business, but also in other high-value verticals like pharmaceutical production or high-end semiconductor production. That is also a very attractive segment for us.

And then obviously we also saw an increasing momentum on our retrofit initiative with a lot of interests in upgrading buildings specifically on the HVAC system. And that also was an attractive growth element for in 2025. And then above all, obviously a lot of geopolitical tension with all of the tariffs that went into effect in 2025 and significantly causing some challenges in our business. We were focusing very much on our execution of our growth strategy and focusing very strongly on our customers, being able to deliver to the customer, being able to fulfill our commitments and help them being successful. That very much paid off, and we were able to navigate through these challenges of the tariffs and were able there to support our customers and had a good sharing of the impact of the tariffs between ourselves and the customers.

We were able to execute on our growth strategy. We’ve started with the initiation of the first variant of our new digital generation of the products that will now be introduced gradually over the next couple of years. We have very much invested in our data center organization to be able to support an industry that is truly global and has completely different expectations in terms of product introduction and cycle times. And with our DC organization, we’re very much able now to support this global hyperscalers and this industry in deploying these high-end data centers. We’re also able to further invest in our retrofit plus initiative and are being able there to increase the conversion and further increase there the growth on the retrofit, specifically targeting the HVAC system in existing building.

And last but not least, we’re also able to invest in our APAC market region and further expand there our market reach in our key markets where we are active in Asia Pacific, namely India and China. With all the growth, we’re very much on track and investing in capacity extension. We were able to inaugurate our new building in China, our CESIM house, early 2025, and we’re well on track also to increase the capacity here in Hinwil in Switzerland to increase there our production and logistics capacity. We started the expansion project across America, investing in all our locations in the Americas. Then we’re also very active on our climate target.

Our SBTi target has been validated, and we will be able to reduce our scope one and two emissions by 42% by 2030 and 90% until 2050, and the relative scope three emissions by 52% until 2030 and then 97% until 2050. With this, we come into the sales overview. It was an excellent sales growth and excellent performance of BELIMO in 2025. We were able to grow sales in local currency by 23.3% or 18.7% in Swiss francs. That was both driven by our traditional HVAC business and the data center business, both accounting for roughly 50% of the absolute growth. So it was not only a data center business that was supporting our growth, but it was broad-based and more than half of our growth stemming from our more traditional HVAC business.

When we look into the region, roughly 38% of the turnover was generated in EMEA, 49% in the Americas, and 13% in Asia Pacific. Regarding business line, damper actuators accounted for about 42%, control valves 53%, and sensors and meters already contributed by 5% to our overall sales. If you look a bit closer into the composition of our sales growth, so volume and mix was the majority of our growth, accounting for 19.5% and 3.6% coming from price. The contribution from price in the second half year was considerably higher than in the first half year. Here, obviously, was the impact of the mid-year price increases in the US to compensate part of the tariff costs and allocate that over to customers. This gives us the local currency organic growth of 23.3%, and then we had a negative FX impact of 4.5%.

Also, that a higher impact in the second half year with the weakening of the U.S. dollar and the euro against the Swiss francs, giving this 18.7% overall organic growth. When we look into the mix, there the main contribution came from on the control valve side towards the higher value products, mainly the pressure independent products and the energy valve that was considerably stronger this year compared to last year. With this, we look a bit closer into our three regions, so all regions were able to achieve double-digit growth and excellent performance.

Especially strong is the EMEA performance with 12% growth in an overall very challenging market, with many of our large markets having a decline on the construction market, but we were able to generate in all our markets in EMEA positive sales growth, which is an excellent performance, especially in markets like Germany, with still a very difficult overall market condition. We saw there two main drivers. First of all, it’s the retrofit and the renovation initiative and the further increase of the renovation of existing building. We also saw strong demand in the revitalization of the OEM segment. There we saw an increasing business activity, and there was also some restocking involved with ramping up the supply chain at our main OEM.

Apart from that, we saw robust growth also in there in high-end verticals like health education and the general commercial building there, mainly on the retrofit side. Switching over to the Americas, obviously the main growth engine this year with a growth of 32% in local currency. There again, about half of the growth is coming from data center and half from the rest of the remaining business. Also there, we saw favorable market condition in other high-end verticals such as life science, pharmaceutical production, or also healthcare and educational building with very high demand and a lot of our products.

And also there, we see an increasing traction of our retrofit initiative, a lot of buildings being renovated, not so much because of environmental concerns, but also due to the need to reduce energy there with the high energy demand also for data center and the grid stability that is increasing, calling also for upgrading and renovating existing building. And then switching over to Asia Pacific, also a very strong growth with 29% growth in local currency or 23% in Swiss francs. And there really the main driver was the data center and other high-end growth verticals, both for the domestic market, but also a significant portion of export business into the remaining world for cooling equipment that was built in APAC and afterwards shipped to the rest of the world. Looking into our business lines, so also there, all our business line generated double-digit growth.

Our most traditional business line, damper actuator, with growth of 14% in local currency or 10% in CHF. There, obviously, the strong OEM ramp-up was helping with a very strong demand for fire and smoke and VAV application, a pure OEM product that was benefiting there from a restocking and also an acceleration of the demand there for fan coil heating application, and there also some retrofit momentum with an improvement there of also on the damper actuator side, then over to control valve that in absolute terms was our main growth engine with growth of 31% in local currency or 26% in CHF, and there, obviously, a strong support from data center with a strong need for liquid cooling, and that was especially strong on the control valve and in there on our very high-value products on the Energy Valve.

What we also saw is a continuing shift from pressure dependent to pressure independent, and there is strong contribution from a better mix and an overall increase there of the value of the products we are selling. And then last, going over to sensor and meters, very strong growth also, so there with 25% in local currency or 20% in CHF. And there we see an increasing shift of customer buying also the sensor from us. And we were able there to gain significant traction both in our contracting and also early wins in the OEM segment, where we see the switch over also to the sensor as our sensor products. And with this, we were able to generate now already over CHF 50 million sales contribution from sensor and meters. And this business line is becoming increasingly contributing to overall sales and supporting the overall sales growth.

If we’re looking a bit closer into the contribution from data center, I’ve mentioned already roughly half of the sales growth stemming from data center and half from the remainder of the business. Overall, the data center contribution was about CHF 190 million in absolute terms for the full year. That translates to about 18% of sales in the second half year and 16% of sales in the first half year. Overall, about 17% of sales with data center. There we see an extremely strong demand for our advanced application. They’re obviously mainly on the liquid cooling side, where we have got a unique position and can deliver the solution for cooling these high-end data center applications.

If you look back, so over the last 20 years, so a continuing strong growth trajectory with an increasing momentum in 2025 with 23% growth in local currency following the 13% in 2024, and looking back over the last 20 years, there are 10.3% compound growth rates over the last 20 years of this 10.3%. Now, what we see is there an overall very strong market support and also from the mega trends, not only in the data centers, but in the high-end segments where we see on our application and the very strong execution of our growth strategy that helps there supporting this growth rate. A bit of the outlook on our data, we’ll publish our full year results on February 23rd together with the annual report.

We’ll have an annual general meeting on March 23rd, and then the ex-dividend date on March 25th and the dividend payment on March 27th. With that, we are at the end, and I’ll hand back to Stefan for the question and answer.

Stefan, Moderator/Host, Belimo: Great. Thank you, Markus, for the presentation. Now it’s time for Q&A. If you have questions, please raise your hand and wait until you’re invited to speak. Once invited, kindly unmute your microphone, introduce yourself, and ask your question. After asking your question, please mute your microphone and lower your hand. With that, we start the Q&A, and the first question comes from Martin Husler, ZKB. Please go ahead. Martin, can you please repeat? Sorry, Martin, we can’t hear. Maybe Sebastian Vogel, do you want to take the next question?

Sure. Can you hear me?

Yes, we can hear you.

Great. I’ve got three questions. I would ask them one by one, pretty much all of them on the data center side. Sorry for that. The first one, as you mentioned, CHF 190 million of revenues in 2025. It seems there are some estimates out there that around like 19 gigawatts of installed capacity came online, including new and as well as replaced ones. So if I would divide the 190 by 19, then I would say that would imply some CHF 10 million revenues per gigawatt installed. Is that right? Is it wrong? Does the number add up, or what’s your thinking there?

Well, I mean, we’ve disclosed that the overall potential is about 60 million for a gigawatt, and that is all our products, not only from ourselves, but also from our competitors. And that includes not only the white space, but also the old investments into the gray space. And that was obviously a big question. What has actually been really then installed and commissioned of this capacity? So what was commissioned in terms of server? What was commissioned in terms of the electrical power? There are obviously a lot of differences in terms of when actually the servers are installed and when the rest of the equipment is installed. So we estimate the installed capacity on the server slides slightly below the 19 gigawatt.

Got it. Second point is on the liquid cooling side. As you mentioned, exposure is growing there for you. Can you give us a bit of a ballpark of what is your current exposure to liquid cooling, if possible, in terms of revenue, at least rough ballpark?

I mean, a large part of our data center revenue is in liquid cooling, but there’s still also a lot of the traditional ones. So mainly the accelerated growth comes from liquid cooling, while the rest of the business is about constant compared to 2024.

Got it, and the third and last question on my side, a bit of an outlook, if possible, for 2026 nonetheless, with regard again to your data center exposure. Do you think that there’s material further revenue growth for you in for 2026, or do we think that, or do you think it will be sort of at a current run rate and a bit more, or any source what you can share there that would be helpful?

I mean, obviously, we will share our full year outlook in February, but certainly we expect the data center business to continue to grow and support our overall growth also in 2026.

Got it. Many thanks. Happy to go back to the queue then.

Thank you. Great. Then the next question comes from Fabian Haege. Please go ahead.

Yeah, thanks. Good morning. Congrats on the start. Also got one additional on the data centers. So what we understand, 19 gigawatts have been added. What do you expect for 2026, 2027, or 2028, maybe some sort of phasing? The second question is on your platform overall. You mentioned that some variants of the base actuator have already moved to the new platform. Maybe you can give us some more granularity of how many of that is of the overall percentage and how many you are expecting to add over the next three years, basically moving from the old to the new platform. Thank you.

Okay. Thanks, Fabian, for the question. So I mean, we don’t disclose numbers what we expect in terms of data center additions, but we expect also there an increase of the additional capacity that is being installed, especially on the server side. And therefore, we expect there the further deployments will also continue to support the growth on the data center side. Now, with regards to the new addition of our products, that was the first actuator we’ve implemented now in 2025. That was the GM. It’s a relatively small part of our business. And now, over the next couple of years, we’ll now replace the higher volume products and gradually then move the entire portfolio onto the new platform. Great. Then the next question comes from Martin Flückiger. Please go ahead.

Yeah. Morning, gentlemen. Thanks for taking my questions. I’ve got two remaining. Markus was talking about the strong market position in the premium segment in liquid cooling for data centers. Just wondering whether you’re seeing any peers entering the certification processes for liquid cooling with hyperscalers recently, and what are your expectations with regards to your very strong market position there for 2026 and beyond? That’s my first question. My second question refers to new building regulations that are expected in 2026 and beyond. Just wondering whether you could highlight the most important changes to building regulations here, globally, of course, but with a focus on Europe and the U.S., please. Thanks.

Okay. Thanks, Martin, for the question. So with regards to our positioning in liquid cooling, we don’t expect there to be very much challenged on the existing technology. So there, it’s really important that we have something that is working and where we are able also to deliver. There, the speed of the execution, also the speed of the development is very high, and there everybody is focusing on installing. And as long as the solution is working, there’s very little appetite to change something and increase the risks in the data center. The global hyperscaler also has a very strong interest in harmonizing and standardizing the solution in their global data center, which makes then also the operations a lot easier and the maintenance. And that obviously helps us a lot.

Therefore, we very much focus on being able to support this industry, able to support our customers and make sure we are able to deliver and satisfy there also the needs from the development side. From this end, we see little challenges from new entrants. Now, with regards to regulation on new buildings, as usual, the regulation of new regulation is not a major driver for our business due to the fact that new buildings are anyway always built according to the latest or ahead of the actual specifications. The de facto standard is usually higher than what is required. What we see there as a benefit is that the regulation and the needs to install HVAC control in building is extended to smaller buildings, and that is increasing our market access.

But, on the other hand, also those projects are extremely small and then are challenging also with how it can be executed with certain shortages also on the capacity. So, overall, we don’t see a huge impact from new regulation. It’s just helping increasing the de facto standards and gradually increasing there also the overall setup of the buildings. And that again is then mostly helping our retrofit initiative. We’re still only 1% of the buildings is new, and 99% of the existing building that can then be upgraded towards better solutions and higher standards.

Great. Thanks.

Thanks a lot.

Great. Then the next question comes from Cedar Ekblom from Morgan Stanley. Please proceed.

Thanks very much. Good morning, gentlemen. I’ve got two questions. You’ve spoken a little bit about new products and changes. Is there any way to quantify how we think that filters through into your margins over the medium term? Are these higher margin products than what you’re selling today? So if you could talk to mix. And then secondly, we’ve seen some, well, we’ve seen a lot of sort of design initiatives and changes from the hyperscalers, the 800-volt DC. Then we’ve also seen new introductions on the chip side, Vera Rubin, etc. Does this mean anything for your products? Does it increase the requirements for your products? Does it reduce it? Just trying to get a handle for how you see your exposure to what is a very dynamic customer base. Thank you.

Okay. Yeah. Thanks a lot for those questions. So if you look at the new products, I mean, it’s twofold. On one hand, it’s a one-to-one replacement of our existing products and at a slightly lower cost. So that has a positive margin or supporting margin effect. And on the other hand, it’s a fully digital platform, which allows us then to also increase the share of digital products that are obviously higher value, and they have a positive effect on the mix. That requires certain changes on the installation process and also the use of those products. But gradually, we expect that also our industry is increasingly installing digital products, and that will have then also a positive mix effect. Now, with regards to your second question, so you highlighted all of those changes on the chip application. So that is not fundamentally changing our application.

Still, the issue is always there’s a very high heat production at the chip level, and this heat needs to be removed. This is so high that only liquid is able to remove that heat. As long as the chips are producing this high heat density or this high heat dissipation, our products are required. A bit independent of how the electrical setup is and also how the heat transportation within the chip is. How do you extract the heat from inside the chip to the surface? From there on, it can then be removed with water where our valves are required. All those technologies, they’re all based on these high energy density chips, and they all need liquid cooling, and they all need our products.

So from this aspect, we don’t see there a major challenge on the cooling side for those new applications.

Great. Then I see we have two follow-up questions. First one from Sebastian Vogel. Please go ahead.

Yeah, many thanks. So just quickly coming back again to data centers. As you were mentioning in the past, these 40 to 60 million TEM per installed gigawatt, do you have a sort of rough estimate what sort of market shares we can attribute to these sort of TEMs, at least for the time being from the moment? And do you think these numbers will be materially changing going forward?

So it depends on the application. So I mean, in the general gray part of the data center, we have our normal market share, which is probably around 20%-25%. And then if we come really to the high-end part on the cooling side, so onto the Energy Valve that is required to cool directly the chip, there we have got an almost dominant market share. So it highly depends on what part of these 60 million is addressed to.

Got it. Many thanks.

Good. And then the last question for today comes from Fabian Haege. Please go ahead. Okay. Maybe.

Fabian, can I hear you?

Can you hear me now?

Yes. Now it’s better.

Okay. Apologies. Another question on data centers. So when we think about the difference between the U.S. and Asia-Pacific, just maybe key takes, are we talking about the same chips, same technology, and similar and same customers? Or are there major differences in the regions? Second one would be how contractors have reacted on price increases, particularly on the lower value end of products. And the third one would be whether you will have to shift capacities, locate capacities to higher value applications, or is there sufficient headroom on your capacity side?

Okay, Fabian, it was very hard to understand you. I hope I got the questions right. Otherwise, probably Stefan can also help me. So the first question was regarding the differences on data center customer in Asia-Pacific and the Americas. We have to very much differentiate on Asia-Pacific on China and the rest of Asia-Pacific. In China, we have got domestic hyperscalers with their own technology, and that’s a completely different market. While in the rest of Asia-Pacific, also there, the main data center investments, especially the high-end data center investments, are done by the global hyperscalers, which are all US-based companies. So there we see similar technologies that are being used. And at the moment, we still see the majority of the data center being installed in the US, and therefore the largest business is in the US.

And that is also a supporting part of the Asia-Pacific business where there’s a lot of export of equipment into the US. But going forward, we expect now also the data center investments in the other regions to increase, and therefore also a higher share there also of new data centers in Asia-Pacific.

I think the second question was about price growth, right? Do you want to repeat it?

How has the contract person particularly reacted on the price increases?

Yeah. I mean, that’s probably the question. I mean, we had to increase prices as a consequence of the tariffs. And I mean, nobody likes price increases. That’s clear. But we were able also to explain the reasoning behind it. And then also with our approach, we gave a three-month notice both for the in-year price increase and then also for the price increase we’ll implement now as of January. Obviously, there we were able then to share the pain, and there our customers understood and accepted those price increases. And then the last question was, I think, regarding the value-add or the production capacity. And there, I mean, we continue our strategy.

That’s also from a natural hedging point of view that we increase also our production capacity and customizing capacity in the Americas to also have there a more natural base and also from a supply chain security production and customization that is very close to our customers. That is something we have done before the tariffs, but obviously is also supporting then the exposure to potential new tariffs and is increasing there also the autonomy of the different regions within Belimo.

Great. Now I see.

Thank you very much.

Now I see we have one really last question. It comes from Tobias Fahrenholz from Odo. Please proceed.

Yes. Hi, gentlemen. Good morning. Question on restocking. Could you quantify the additional support you’ve seen here in the second half? Maybe give us a percentage figure. Could you speak about the regions? And has this basically been the reason that you surpassed your provided typically conservative 15%-20% outlook?

I mean, the effect was mainly in the EMEA. We didn’t have this effect in the other two regions. There we also didn’t have such a slowdown of the OEM business like in the EMEA region. And there, I mean, it’s difficult really to quantify what is restocking and what is genuine demand that is also going to customer. But we expect that the overperformance in EMEA is mainly coming from the restocking effect.

Okay. Thank you.

Great. Then thank you, everybody. This concludes today’s presentation. If you have further questions, don’t hesitate to contact us in IR. Thank you for your attention today, and goodbye.