Barry Callebaut AG

Hello and welcome everyone to the Barry Callebaut Group 9 Month Key Sales Figures Fiscal Year 2025-26. My name is Becky and I will be your operator today. All lines will be muted throughout the presentation portion of the call, with a chance for Q&A at the end. If you wish to ask a question in this time, please press star followed by 1 on your telephone keypads. I will now hand over to your host, Sophie Lang, Head of Investor Relations, to begin. Please go ahead.

Good morning, everyone. Welcome to Barry Callebaut's nine-month key sales figure at Brompton School for 2025-2026. I'm Sophie Lang, Head of Investor Relations, and today's meeting will be hosted by our CEO in Financing Marketing and our CSO, Peter Vanneste. As usual, at the end of our presentation, we'll have a short Q&A session for analysts and investors. Before we start, please take note of the disclaimer on slide 2. I'd also like to remind you that the webcast and conference call are being recorded. And with that, I will hand you over to our CEO, Andrew Marcus.

Thanks, Sophie, and good morning, everyone. And thank you, of course, for joining us for our 9-month training update. I will start with some key messages, followed by an update on our focus for growth action plan and strategic priorities. And then Peter will take you through our self-performance in more detail, and I would like to come back at the end of the presentation. Let me start with a brief overview of the key messages. While peak sales volumes decreased for the nine months, the group has returned to positive volume growth in the third quarter for the first time in more than two years. This was supported by elevated demand in our global cocoa business following the sharp correction in cocoa product prices earlier in the year, alongside no base of comparison. Our global chocolate business and early progress in restoring service levels in North America. And while we are encouraged by our return to growth, the chocolate market remains challenging overall, as Peter will elaborate on later in the presentation. And our improvement at Barrie Callebaut will be gradual. We still have a lot of work ahead of us. And that is why we have launched our Focus for Growth Action Plan last month, to strengthen our fundamentals, and I will come back to this in a moment. Taking all of this into account, we now expect full-year volumes to decrease by around minus 1% while maintaining our profitability and our leverage guidance. And before going into the details of the 9-months performance, let me start with a reminder of our Focus for Growth action plan, and first reiterating our ambition. At Barraclava, we are already the global leader in cocoa and chocolate, with a uniquely integrated business model and leading capabilities in R&D and sustainability. and our mission is to build a strong foundation through two clear, deliberate shifts. First, we are evolving towards a more solutions-oriented business, scaling targeted specialties in attractive, faster-growing segments where we can differentiate and create more value for our customers. Second, we are focused on protecting and strengthening our whole volume base while shifting more decisively towards premium segments and accelerating the growth and all of our important gourmet business. Delivering this ambition will be underpinned by a strong customer-centric culture, the right talent and increased empowerment of our regional teams. Now let's turn to the action plan itself. We are accelerating five key enablers that are critical to restore our fundamentals and stepping up execution across the business. The enablers span the entire value chain and are all anchored in a clear customer-centric approach and supported by digital capabilities. and in parallel we are prioritizing five selected growth priorities where we see the greatest potential for value creation. Global cows, regional food manufacturers, gourmet, specialties and cocoa powder. And this disciplined approach ensures that we allocate our resources where they have the highest impact, ultimately driving attractive financial performance and results for our shareholders. But we have significant work ahead of us to fully restore our fundamentals. I'm happy that we are starting to see early signs of progress in a number of key areas. In footprint and quality, we are implementing selective network enhancements. And importantly, we have recorded zero critical quality incidents or product recalls year-to-date. In planning, we are strengthening our sales and operations planning processes with new demand planning tools and with new planning forums that focus on gourmet and specialties. Our early steps are starting to translate into improvements In our core customer processes, simplification efforts are on the way, reflected in a meaningful improvement in customer response times of close to 20% year-to-date. And while these are encouragingly early trends, I want to be very clear, this is really just the beginning. Restoring our fundamentals will require sustained execution, and continued discipline for the months and years to come. Now turning to our five growth priorities, where we are taking action to drive commercial progress. First, on global accounts. We have formed a dedicated team reporting directly to you, and the objective is to unlock the full potential of our largest global customers, with clear growth plans for each account as we move into our new fiscal year. Second, for our regional food manufacturers. We now have a much clearer view of the growth opportunities by region. And this was helping us to prioritize our commercial focus and ensure that planned investments are directly linked to the markets where we see the highest potential. Third, in gourmet, we continue to double down and invest. We are preparing for the launch of new innovation. by a strong commercial campaign, but also securing safety stocks for key STUs, a key core STU list actually, to support future growth. And then fourth in specialties, we are addressing capacity in selected focus sites and working to integrate these offerings more deeply into our core business and commercial processes. And finally, in cocoa powder, we are taking action to unlock premium powder capacity and accelerate sales efforts in higher value segments. So across all these five priorities, while still early steps, we are moving from strategy into execution. And the common denominator across the five is focus. Focused market segments and regional food manufacturers. Focused core set of SPUs reducing complexity in gourmet. Focused in specialties with focus of around four to five core specialties by region. And focusing cocoa powder on premiumization. Since the launch of Focus4Growth last month, we've also taken two concrete steps to move closer to our customer and strengthen execution in our regions. First, we are refining our global chocolate regional setup with the Middle East and North Africa and South East and West Africa clusters transitioning to the CEE or Central and Eastern European region. Historically, these clusters were part of ALEA. and commercial go-to-market approach. And this will allow us to be more responsive to local market dynamics and better serve our customers in these clusters. And as a result, from the 1st of September 2026, our area region will be renamed AZ Civic or APAC and the current CE region will become Cilia. Second, we are evolving selected functional capabilities and teams to be closer to regional business execution. To select the teams within functions such as customer supply and development, finance and HR that are closely linked to regional execution will start to report directly into the regions, while obviously continuing to be anchored in strong global functional expertise and alignment where that really matters. This is about empowering our regions to act faster and with greater accountability. We're also shifting towards a more horizontal way of working and bringing teams together across regions and functions to drive impact. Now, let me hand over to Peter to talk more about the NIDILS performance.

Thank you, Hein, and good morning, everyone. Before turning into numbers, let me start with a brief update on the market environment. Local bean prices have increased in recent weeks, and especially this week, but overall remain in line with our expectations. Looking at supply, the current crop, which is now coming to an end, is expected to result in a significant surplus, marking the second consecutive year of service. As a result, the industry is entering the 26-27 growth cycle well-stocked and with more than 10 months of price cover. At the same time, the market is closely monitoring the development of El Nino for 26-27, which has been confirmed as a strong event by the UN. Typically, El Niño is associated with below-trend cocoa production, while La Niña tends to support above-trend crops. However, this is not a hard rule, as the impact really depends on how El Niño influences regional weather patterns and ultimately crop development. Generally, El Niño-associated weather risks are higher-than-normal rainfall in Ecuador and higher-than-normal temperatures in West Africa. These weather dynamics are therefore key. and we're closely tracking developments with our teams on the ground. Importantly, based on what we've seen today, we do not expect a repeat of the extreme market conditions experienced in 23-24, even in the case of a strong El Nino influence. Because the context today is fundamentally different. At that time, in 23-24, El Nino coincided with the main crop and marked the third consecutive year of deficit. In contrast, today we're coming from a position of a strong surplus, with ample Google stocks entering the new co-op year. In addition, we're significantly better positioned to manage this potential volatility at Bayer-Calebaut than we were two years ago. We've strengthened our resilience through greater origin diversification, increased sourcing flexibility, and enhanced beam blending capabilities, as well as and several financial measures, including the less of credit and borrowing-based facility that we talked about in previous conversations. Now, turning to the end-consumer environment, main message is the chocolate market remains challenging. In the most recent quarter, Nielsen data showed a decline in market volumes of minus 4.4%, with a 9% year-on-year increase in pricing. So, while the overall consumption remains under pressure, the rate of decline is easing, with some early indications of stabilization. From a demand perspective, we continue to see that also through our forward bookings. As you know, we contract several months in advance with our customers, and we've seen our customers more willing to book further in advance again, which is a positive statement. So while average market pricing remains approximately 9% above last year, absolute price levels for Kilogram have started to come down in recent months, as you can see on the right-hand side of this chart. Every pricing typically shows some seasonality, with higher promotion intensity around Easter, followed by a normalization after that. What we've observed this year is a more pronounced decline in net pricing over recent months, partly driven by increased Easter campaigns, with price adjustments occurring somewhat faster than in a typical seasonal pattern. Overall, we are seeing early signs of moving into the right direction, but it will take time for the markets to recover progressively. Moving now to our line 1 performance. In the third quarter, BC Group volumes returned to positive growth for the first time in more than two years. This was primarily driven by a strong demand in global cocoa, following the cocoa market correction early in the year and reduced cocoa product prices. Cocoa powder saw particularly strong momentum in Latin America and Asia, supported by some customer restocking, while the business also benefited from one of cocoa butter opportunities. At the same time, global chocolates returned to growth in the quarter, driven by a second consecutive quarter of double-digit growth in AMEA and early progress in restoring service levels in North America. It is, however, important to put this Q3 performance into some context. As just discussed, both customer and end-consumer demand are only gradually recovering and are recovering at BC, as Hein has also mentioned, will take some time. As such, the 5.7% growth in the third quarter should not just be extrapolated. The recovery of our absolute volume should be gradual, and as we recently outlined with the Focus for Growth Plan, we expect volume growth in the range of 1-3% over the next 12-18 months. Let me go into the 9-month numbers in more detail now. Overall, the group saw a volume decrease for the first 9 months of the year, of minus 2.8% turning positive in Q3 as just discussed. Looking at the left of this chart by segments, food manufacturers were impacted over the year by declining market dynamics with our customers adapting behaviors in context of high prices and we also saw supply disruption in North America earlier this year returning to growth in Q3. Gourmet volumes were temporarily pressured by a high price list in a sharply declining bean price environment. And Global Cocoa over the year declined as a result of a negative market demand with a very strong bounce back in Q3 as we just discussed. Moving to the right hand of the chart, Global Truffle. These volumes on Global Truffle declined by 2.3% for the 9 months ahead of the 5.6% decline on the market after Nielsen. Western Europe saw a 2.5% volume decline as demand continued to be impacted by market dynamics related to pricing. Central and Eastern Europe declined slightly by 0.7% over the year, significantly better than the markets as local and regional accounts saw a continued momentum. North America went down over the nine months by 7.6%, impacted by declining markets as well as, as you know, network supply disruption in the first half of the year. Importantly, North America turned positive in Q3 and is seeing monthly improvements as the business rebuilds inventories and meets growing customer orders. And in America, decreased by 1.2%. We were really impacted there by phasing effects in the third quarter, yet still well ahead of the market. Finally, volumes in Ameya grew by a strong plus 10%, driven by market share gains in China, Momentum, Continued Momentum, with key customers in India, and additional business secures in Australia. And before handing over to Hein, let me also briefly cover the recent Euro bonds buyback, which has been an important step in our ongoing journey to deleverage and reduce the financing costs. During the quarter, we completed a total bond buyback of €849 million across three maturities. 400 million of the 228 volts, 99 of the 229 volts and 350 million of the 231 volts. We are using available liquidity to reduce growth debt, optimize our maturity profile and lower our finance cost in the future. This transaction comes with an upfront cost of around 15 million Swiss francs, which will be recognized in the net financial items in this fiscal year but importantly, of course, we'll reduce our cost of financing in the years to come. Taking the portfolio back into account, we now expect a net finance cost of around 330 million for this fiscal year. And let me now hand back to Hennie for the guidance section.

Thanks, Peter. Moving on to the outlook for this fiscal year. Following a stronger-than-expected Q3, we have updated our portfolio outlook for the year. We expect around a minus 1%. and the upper end of the minus 1 to minus 3 percent range that we have previously guided for. At the same time, we are maintaining our guidance for a mid-teens decrease in EBIT or recurring basis in local currencies, and I will talk more about that on the next slide. Given the 15 million expected at all costs for the recent low buyback that Peter just shared, we now expect to recover around We also reiterate our deleverage submission for net debt over NBDA recurring to be below three times. And this assumes a 3,000 cocoa bean price. Now, today, as you may have noted, prices are more or less at the 4,000 level, and assuming stable bean prices at this level, where we are today, we expect leverage to be around three times. So, we are maintaining our profit guidance as the stronger policy Let me share three. First, as we said at the beginning, we are taking short film actions to prioritize Second, we indicated that the half-year as well, that cocoa profitability would normalize in the second half, following an exceptionally strong first half. And while cocoa business delivered strong volume growth in the third quarter supposed by elevated demand, following the cocoa market correction, the profit contribution from these additional volumes is not expected to increase at the same rate, given that normalization. Third, as Peter outlined, the recent bull buyback will result in an incremental cost of around 15 million in profit before tax this year, while generating benefits, obviously, through lower financing costs in the future. We have incorporated these headwinds into our guidance. At the same time, we see a few additional risks, which we are monitoring very closely. and that takes time to price through. While market conditions overall are gradually improving, the operating environment does remain challenging and sees signs of financial pressure across parts of the European customer base. In addition, in Turkey, an important market for us and a priority market for us, we are closely monitoring developments in hyperinflationary environments and potential implications for us going forward. So overall, We reiterate our guidance while recognising that the external environment remains dynamic with so uncertainties. And with that, thanks for listening and I will now hand back to the moderator for Q&A.

Thank you. We will now begin our Q&A session. We ask today that you limit yourself with two questions. If you wish to ask a question, please press star followed by one on your telephone keypad. If you feel your question has been answered or for any reason you would like to remove yourself from the queue, please press star followed by T. When preparing to ask your question, please ensure your device is unmuted locally. Our first question comes from Joanne Ifrit from UBS. Your line is now open. Please go ahead.

Good morning and thanks for taking my questions. The first one would be please taking... Take Morning. Taking an early view into 2027, what do you currently observe or what do you expect from your customers? I mean, do you expect customers to lower price points, to material step-up promotions, or do you expect customers to use the lower beam price to repair margins just because the retro would be so important for your volume prospects? This is question number one. And question number two is, and I zoom in a little in gourmet, can you tell us what is happening currently on the market shares, on competitive dynamics, and also if you're still pursuing your own direct online shop initiative? Thanks a lot.

Thanks, Jeroen. Let me talk a little bit about the cost of behavior, and particularly around pricing. So, you know, what we're seeing globally is that in the third quarter, we've seen generally we've seen prices come down in the market with the exception of North America where prices have still increased and that's of course a very important market for us and what you may have seen or spotted is that with increasing prices in North America you know the chocolate confectionery market funding-wise in North America is under more pressure than what we would see elsewhere in the world so in general there is a correlation obviously between pricing and volume developments and that's what we're seeing in the third quarter even stronger than probably before now with the decrease in prices that we're seeing across the globe and we have as you can see in our revenue our prices have gone down double digits and this is something that we expect as well for Q4 we expect that reduction in pricing for ForzaNet could probably roll into the next fiscal year as well. With those developments, we would expect volumes to recover a bit. The current market is still single digit down and single digit down overall. So there's still definitely room for improvement. We see customers investing at this point. We see customers investing in innovation. We see customers investing in media. That's a good development, and we've highlighted that as well during the Focus for Growth presentation. So we're seeing that from important big customers, whether it's Mars, whether it's Hershey, they are coming up with new things, exciting things, that will help the category, I think, to grow, and that's a positive sign. We're also seeing that around our future bookings portfolio, by the end of Q3, is 30% higher than what we saw last year. and of course, you know, what we saw last year at the same time of year. Just for your information, by February, that was only 17% higher. So, you know, there is increasing confidence from that number. You can see increasing confidence from customers that volumes might recover in the future. So, yeah, it's a bit of a longer explanation, but hopefully that will, you know, that paints the landscape a bit for you. And look, Yeah, maybe one more remark, by the way. It's important that I think we talked about this with Focus for Growth. You know, the chocolate confectionery category, as we mentioned, you know, measured by Nielsen, is down. As a company, we're also increasingly exposed to adjacent category, so think of category like ice cream. There, we see more positive developments, right? So, It's very important not just to look at the chocolate confectionary markets. You need to get a feel for where we operate and also our volumes. It's important to look at the biscuit category, ice cream category, chocolate categories. I think that probably gives a better reflection. So let me leave it there. Then on gourmet... Yeah, as we've said before, we have a long position that has, of course, had an impact on our profitability, but also gets pricing at a relatively high level. We have invested in that in the third quarter, but only towards the end. We feel that with changed price list which stands for us to be collected every half year so we've just issued a new price list for the 1st of July and we believe there's a lot of reason besides excellent taste of course for customers now to start stocking a bit and we're seeing some early indications on that and therefore overall we're quite confident on our projected growth in the 4th quarter that you can calculate given the guidance of minus 1% per year and Thank you very much. Thank you. Our next question comes from Alex Sloan from Barclays.

Your line is now open. Please go ahead.

Yeah, hi, morning all. Thanks for taking the questions. The first one would just be around the cocoa bean price and the leverage guidance. So obviously you're not changing, if I understood correctly, you're not changing the leverage guidance for the year. You're still working off kind of the medium term assumption of £3,000 per tonne. bean price. Obviously we are above that level today so I mean does that imply that you don't necessarily see the current cocoa bean price as sustainable or is there kind of more balance sheet flexibility to kind of absorb this higher price and is that Thank you very much. with, you know, what you were expecting and, you know, thinking about, you know, back in April, just thinking about kind of the potential recovery and profitability in gourmet next year, which I think you had kind of talked about, like you had framed the sort of issues in gourmet profitability being temporary in nature. Is that still the case? Can we still assume, you know, gourmet profitability recovers next year as sort of price and cogs Thank you.

Let me probably start with question two, and then I'll hand over for, you know, the bean price and the impact on leverage to Peter. Coming on gourmet and the new prices, yeah, I would say, you know, the new price list does reflect, you know, what we had in mind, and it will, given, you know, the long position it will result in a higher profitability for us. Now that's all factored in, by the way, in our guidance and therefore that will also have a positive impact as expected in the new fiscal year, of course, you know, without further external disturbances and so forth. But in itself, yes, that's a return to levels that we feel is more in line with historic averages. At the same time, as I said before, we're not doing this for volume for volume but where we lost some share and where we feel that we need to make a step in our way to create customer intimacy but also to start selling solutions including specialties and so forth we will of course be competitive we're not alone in the market we want to make sure that we are the supplier of choice with that said overall I in the next year as well. All leverage and beat price.

Yes, so leverage and beat price, let me go one by one. On leverage, we're indeed confirming no balance for August around three. There's a few points to mention there. First of all, we're in a low harvest cycle, so there's no lot of beat buying going on. Secondly, there's a, you know, the rule of thumb is likely still valid, as we said before, but of course there's A short-term and a mid-term effect. We are protected somewhat more in the short-term because of a letter of credit, for instance, as an example. So that's one reason why we are not going to see immediately that impact. But also overall, as we discussed in previous calls, we have a better protection, not only because of the financing that we've done, but also because of our procurement agility, buying from different sources, buying at different moments. and being able to keep especially our open futures lower, which means that the less impacts and less sudden increase in the green price. On the bean price itself, so net yes, we stay around three at even today's bean prices for August. On the bean price itself, we've seen quite a spike linked and driven by some, you know, speculative activity around the annual impact, potential impact on the sector and some articles that have appeared over the course of the last weeks. again, we are in the low part of the crop season and that's often where we see a lot of market volatility and market moving fast in function of one or the other direction we are in that context also carefully watching the Q2 26 grinding data coming out soon when our expectation is that will increase but that demand is going to take time to recover so that's something to keep an eye on and as I mentioned in my part of the presentation, we do not expect a repeat of the extreme market conditions we've seen in 2023-2024. Industry is well covered, we have a strong surplus and we've got as well stocks, so that's why we believe we're in a very different situation than we used to be. Thank you.

Thank you. Our next question comes from Ed Hocken from JP Morgan. Your line is now open. Please go ahead.

Morning all, thank you for taking my questions. My first question, in the press release you noted on restocking in cocoa. Are you seeing restocking more broadly in chocolate as well, conscious that It's been a period of quite low cocoa prices during the quarter, so have you been seeing customers taking the opportunity to restock on chocolate at lower price points? And whether, more broadly, you could help quantify what magnitude of support to your group volumes in the quarter restocking may have contributed? And then my second question, please. It may be a bit premature, but you've given already guardrails on 2027, so I wanted to come back on those guardrails for 2027, clearly still pointing to 1% to 3% volumes over the next 12 to 18 months, but wanted to come back on EBIT and PVT, the magnitude of some of the blocks that we should be considering in the EBIT process. Thank you very much.

Thanks, Ed. And I'll do the first question and hand over to Peter for the second question. On restocking, just a few words. You know, first of all, I want to dissect it a little bit. You talk about chocolate, but let me just give a bit of the landscape. The overall growth in Q3 was, of course, primarily driven by an elevated demand in global cocoa, so that's 18% up. As the cocoa market correction earlier indicated, and Cocoa Powder. So particularly strong momentum in the quarter in Latin America and Asia and that was supported, we believe, by some customer restocking. So that's happening in Cocoa to some extent and in some regions. But the power business overall also benefited from one of Cocoa Butter opportunities. And as I said before, the basic comparison on Cocoa So, that might be some restocking taking place in certain regions, but I wouldn't want to make it too big of a theme. Then on chocolate, the growth in the quarter 3.2%. And, you know, also here, I think, you know, we need to go a little bit in detail. So, we saw a second consecutive quarter of double-digit growth in Avea. That was 14% in Q3, and that is as a result of higher demand in China for us, market share gains in India, where the business continues to drive double-digit growth for already quite a long time, so really strong business overall there. And we secured some additional business in Australia because of a more commercial drive there. So that's an important part of the overall growth. I also talked about improved service levels in North America, you know, just by stepping up service levels when I talked about 6% earlier on, that will, I think, just help us to get back to levels where we, yeah, need to be. In fact, it's still not where I want to be. I think there's more for us to do. But overall, that helps us in driving a positive volume. We are increasingly exposed to some categories outside of chocolate that are, I would say, better placed. We saw an enhanced demand in ice cream overall, at least better than what I would say a chocolate confectionary will give particular numbers on ice cream, but it was certainly a better picture and that benefits our specialties and some of our business there. And then finally, as I mentioned, by the end of May, our future booking portfolio was at a level around 30% higher than at the same time last year. And it was also higher than what we saw by the end of February. And that suggests that could be some customer restocking. Now, I'm a bit elaborate, but the reason I am is because I don't want to point it all to restocking. It's not. It's a much more nuanced view. and there might be some of that happening, but certainly not the overall drive of the chocolate world.

All right, and your second question ends on 27, profit. Obviously, we will go back on that as per the right timing and put it in answer for the full use of. But it's obviously a good question. The main message I want to bring is We need to be balanced on that because there are different components playing in different directions. First of all, the volume that we talked about already that we expect to be between 1% and 3% leads to obviously the market, which today still is at minus 4.4%. And technically also the service levels for us that are improving, but still have some way to go. With that or next to that, we will see some of those things that you're mentioning in chocolate, especially some margin recovery on the Boubens side after the investments we had to make and we made this year. Not expecting a full repeat of that. And some of the disruption costs as we improve service levels and stabilize should also get better. On the other hand, and we have talked about it before. We've seen exceptional results in cocoa linked to the pressing margins and supported by the absolutely crazy volatility that we've seen into the markets. So there will be some normalization. We're seeing it happening already right now in this half year and in Q4. So you have to balance that out versus the chocolate mining side with the normalization on the cocoa side. And the final also important element is on on the deleveraging agenda and therefore the reduction of the financing costs. We do expect a significant reduction of the financing costs also next year, which is great. Now, that also means that there's less pass on supporting EBIT. So EBIT will mechanically go down because of the reduction of the financing costs next year. That obviously does not make a negative on the profit before tax. but it's something to keep into account when you look at your EBIT line. There's a mechanical negative impact of the low rate financing cost. I hope that identifies with this and obviously we'll come back with a lot more detail in due course.

Thank you. Thanks.

Thank you. Our next question comes from John Cox from Kepler Chevrolet. The line is now open. Please go ahead.

Yeah, good morning, guys, and congratulations for the figures, which were probably better than most of us expected. Just on the sort of volume outlook for FY27, if you're already growing above 3% in chocolate, which is, you know, everybody thought that that business would remain under pressure, you know, with your big customers maybe still having to refill their own factories because of lower capacity utilization. It looks like maybe some other players are coming in and already ordering. Why shouldn't we expect top-line growth next year to actually be 3% and maybe more in terms of volume? What do you see that maybe we don't? Or any sort of colour you can provide on that would be useful. And then just to come back to profit before tax this year, you were mentioning that... There's an extra $15 million on the financing. It will be about $330 million this year, that net financials line. But you're also saying at the PBT line, it wouldn't be as bad as that mid-teen decline you're going to see in your EBITs recurring in constant currencies. I struggle to get there when I'm mucking around with my figures. I still see a pretty substantial decline in PBT because of that financing line. And maybe as an ad, if I can, any early indication of what that net financial line will look like in FY27. Thank you.

Thank you, Joel. I'll go for the first question and hand over to Peter for the second one. And probably, yes, we'll go in there. Okay. You know, I mean, first of all, you're right, you know, so what we've indicated for 12 to 18 months was a volume of around 1 to 3 that is slightly below the medium term guidance of 2 to 4% in the focus for growth plan. And, you know, yeah, we're obviously happy that we have a return to growth right now, so that's good, and that's for all the reasons that I just mentioned on the previous question, right, so I will not go back on to that. But what it leads to The growth in Q3, as well as the implied growth for Q4, is a higher base for where to grow. And if you take that higher base, and if you then, you know, think about the overall chocolate confection category, which is still negative, very single digit, I mean, North America, around minus 7%, you know, we are, that means we really, you but they're not in growth yet. So it means for us better service levels, it means for us taking more share gains, and it means for us some effect of, as I said, on restocking because of the future portfolio increase. So, look, I definitely, you know, I don't want to give the gloomy view here, but I'm very keen, or very well about overall to set realistic expectations and I feel that the guidance that we have given there for the next year based on the, I think in combination with the higher base that we will be getting to towards the end of this year is the right guidance for us to play with. Now, in addition, as I said, we will continue to, and that's a bit of a basic, boring message, but I think it's super important for us that we continue to focus on Restoring Fundamentals, making sure that I'm happy with the progress we've made in North America, that there's absolutely more to do, making sure that quality remains at the level where we are, and in fact, that we truly embed it in our operations much more sustainably than what we did. Continuing with the approach of more differentiated sourcing, not just for West Africa, but as you know, we're creating flexibility there, also that comes with Investments and R&D and so forth. So we really need to make this an investment company. I'm super excited about that. I think the opportunity out there is very significant for us, but I want to be quite realistic about the sequential progress that we're making and therefore the volume out for next year.

John, on your second part on the EBIT and then BBT and how it relates, yeah, we are, well, instead of the EBIT, we are, as you heard Hen say, we are maintaining our, maintaining down the EBIT guidance for the full year because of the short-term impact of some of those actions to prioritize growth and stabilize because of the mix, because of the cocoa normalization, and because of some additional risks that we're still facing regarding Middle East and Arab inflations. so that's how we maintain the EWIT guidance now PPT for this year will also still be declining however less now the recovery on PPT depends on maybe that's why you're right your question is coming from if you look at absolute level the decline on PPT will be significantly lower about half versus what we see in absolute decline in EBIT simply because our finance costs will go down significantly year on year. It does not necessarily mean that percentage-wise it's a slower decline because, of course, you're looking at an absolute amount of a smaller base. But essentially, you know, we will be recovering about half of the absolute loss of EBIT on the PPP line. For next year, I'm not going to dive very specifically on the OSB, we'll come back to that. The only thing I can say beyond what I gave in the answer to Ed about the moving parts on EBIT is that we will be reducing further our finance costs for next year. It will go below 300 for the full year, but we'll come back to that at a later stage.

I want to just have a little ad. You talk about how actually other categories are doing better than chocolate. Can you just give us a rough split? Is it still something like 70% chocolate, 30% other confectionery, whether it's biscuits, ice cream, you know, you'd use it in other applications as well?

No, I think we're obviously looking I can't give you an exact split here to be very honest between the different categories but I think for us adjacent categories as I said ice cream, biscuit categories, bakery overall is larger than what you just suggested that's not 20-30% that would definitely be more So 60-40 say? No, I think it's around half.

Oh, okay. Thanks.

Well, I can come back later on with a more precise number, so let's hold this. Because, again, sometimes the category lines are blurry a bit, but we're definitely more exposed to other categories on top of the confectionary. Again, I'm not going to let you say it.

Thank you. Our next question comes from David Roo from Morgan Stanley. The line is now open. Please go ahead.

Morning. Hi, Peter. Two questions from my side. Just coming back to the guidance and at the risk of labouring on the point, could you perhaps unpack in more detail Why the upgrade to volume guide for FY26 did not drop through to an EBIT upgrade? I mean, given the fact that Barry runs a cost plus model, this would suggest there's additional price investment somewhere in the business that you had not anticipated, I guess, in June when you last confirmed the guidance, or there's some under recovery of costs. So any additional color on those contributing factors would be appreciated. and then just a more sort of broader question. I mean, if we look at the business on a PVT per tonne basis, I think we're probably sort of 30% to 40% below 2019. I mean, do you think we are now in an environment where possibility per tonne for the business will be Structurally lower than it was prior to the pandemic. Are you fairly confident that you can return to those levels, if not exceed those in coming years? Thanks very much.

Thanks, David. A few comments on the guidance overall. So, we start and Peter will ask where he sees fit. You know, we are in 10, our profit guidance, indeed, for mid-teens decrease in EBIT. And as you may have noticed But what it means is that the mix, the overall mix in sales is not yet contributing to the extent that we would like. And that's something that will evolve and that will improve for sure over time. But it's not yet the historic average. Secondly, we indicated that at half-year, the cocoa profitability would normalize in the second half, and that's actually what's happening. And as I mentioned, you know, yes, we had significant cocoa volumes, but they do not provide sort of that same level of profitability. So, very important on processing margins, et cetera, where, you know, we have seen very significant profitability in the first half, as well as in the second half of 25. We're not, you know, Third, and we talked about this the recent one right back, so I'm not going to repeat that one. And then fourth, you know, we did incur significant extra fuel costs in the last couple of, you know, last months, and we saw an easing again. You know, obviously very curious to see what's going to happen in the next couple of weeks. In some European countries, and I saw this morning the latest in Northern Europe, for example, prices are up again, for a reason, to 2.5 euro levels, you know, so, you know, that of course leads for us to quite some additional costs, and even if we would pass on some of that, as you called out, some of that will come with a time lag, because you have existing contracts, and the situation is so volatile that we would have to swallow part of that for the short term, and obviously that, you know, again, on the longer term, I feel that we're well protected there. I also talked about Turkey. We're seeing an important market for us, although volume-wise it's probably around 2% of our total, but an important market for us overall and with strong hyperinflationary environment there, it means that we need to apply hyperinflation accounting and that leads to charges in the PML if that would continue at a very high level that we've seen in some parts in Q3. So, look, we want to be realistic here. We want to make sure that we do the right thing for the company and strengthen the company overall. And, you know, that leads me to the second question that you asked, you know, which is the possibility for tolerance in the longer term. And there I'm much more optimistic. I feel that with the measures that we are taking first of all to drive the mix much more positively and do that really intentional so that for me is super important we talked about focus for growth and about premiumization and the determined shift in that direction if I now look at the capital expenditure program if I look at the resource program digital investments to connect to chefs and buyers if I look at all of that I'm very convinced that we have very clear prioritization on the gourmet and on the most profitable areas. Secondly, we talked about top 10 countries. You know, we didn't only choose the top 10 countries and the priority countries based on volume alone. We also, you know, we had profitability considerations in there as well. And then finally, it's the investments behind specialties and so forth. So I feel that, you know, whilst it has to go, you know, quarter by quarter, I'm optimistic on the return to much higher profitability levels that could be there, you know, in the same level as Pico and Peter.

Yeah, I mean, just to complement all that, also when we look back at some of the drivers of why we saw this depressing lowering net PVE per ton, you know, obviously there's a volume element and a market element impact on cost absorption. We've talked about that. We expect the market to gradually go back to growth. Our own volumes to go back to growth next year. That, of course, is going to help that. We've also been making some bold commercial investments but also some cost investments to stabilize the network which again is not a miracle thing that suddenly by August that will turn around but it will gradually improve so that's another reason why this is not going to be sticking over the midterm. and there's a few other elements there. We've been talking about the Middle East impact, some of the financing costs that were mostly passed on but not 100% that we'll be reversing. So all of that together is what Hayne said about the focus we have and focus for growth will bring those really difficult levels back up.

That's very clear. Thank you very much.

Thank you. Our next question comes from Matteo Lindauer from Fontenot. The line is now open. Please go ahead.

Yes, good morning, everyone. Thank you for taking my questions. I've got two. Could you remind us quickly of your next work in capital sensitivity to a £100 change in bean price and second on outsourcing and your customer relationships? Do you have any updates on your key account relationships? and is there any large contract at the risk in the short term?

I'll start with the second one and then Peter will turn to working capital in relation to the bean price. On outsourcing, I just want to reiterate what we said before. We feel that overall that will bottom out for our largest accounts in next year. We've seen insourcing over the last years and again, we are quite confident that after 27 that we will go back to a growth pattern here. But, you know, some of them have made those insourcing decisions and so forth. So it's a fairly logical response. But at the same time, hey, what we're doing is we're innovating fast at the moment. And I come back to that previous question from David. Our plan with innovation, with all the things that we're doing, we feel that we could reverse that trend and my conversations with customers confirm that. But again, I want to be realistic for this year as well as next year. We don't recommend on particular individual deals, Matteo, so I want to be careful there. But I am I would say I'm very satisfied with the recent progress that we are making not only with our global accounts but actually also with the large regional accounts which you've seen in the volume growth I can definitely see an increased confidence with our larger customers in our performance in our quality performance, the uptake in our service and those are really the best indicators Thank you very much.

for the midterm earlier in business calls, simply because we have gotten better in flexible lending, flexible sourcing, low inventories, which allows to have less open futures structurally, but especially also, as I mentioned earlier, in the short term, it doesn't necessarily mean the 60, or it doesn't mean the 70 million, because we are protected, for instance, by with our level of credit or sometimes our payment terms.

Okay, perfect. Thank you very much.

Thank you. Our next question comes from Anton Prabat from Bank of America. Your line is now open. Please go ahead.

Morning. Hi, morning, Peter. I have a question for me, please. First, I mean, in Global Cocoa, I mean, last year you discontinued some contracts, weaker and better. I had to focus more on powder because I had better return, better use of your balance sheets. Now, I mean, it's not that you didn't win some better again. I mean, first, could you speak up maybe the growth for powder versus better, please? And, I mean, why are you going back into better? Was this a bit of a one-off? Or is it kind of like a changing trend? Is it because you have less pressure on your balance sheet? I mean, yeah, just trying to understand a bit more here. And the second question, so on the gourmet philosophy investments, I mean, considering cocoa price going up again, what's This really needed to do some, let's say, bigger investment into Canada in July and so on to be more competitive, or by nature of cocoa price going up again, we would already somewhat be more competitive.

Thanks, Anton. On the power growth versus power growth, so I'll hand over to Peter first and then I'll add some words to that, as well as on the prices.

Yeah, so the growth in Goku, first of all, has been exceptional for the pointer, we talked about that at length. But both for the pointer, as structurally, the growth in Goku is driven mainly by power. It's also the strategic priority that we have, and that will continue like that. Thank you very much. We have seen some wonderful opportunities this quarter, which has helped also the quarter sales for Opel. But we continue to look at it in the same way. It's not a strategic as powder. We look at the margin and also we take into account the working capital impact.

Agreed. And I think I wanted to add on that, you know, in the plan, the Focus for Growth plan, we talked about cocoa powders and about premiumization opportunities, investments that we're doing in that space. That's not in the budget area as such. And we've seen that come down over the last couple of years. And, you know, we will continue on that strategic shift. So just to amplify what Peter says. On Gourmet, Peter? Because I wasn't sure I fully got the question on the prices, but maybe you can just... Can you ask me a question once again?

Yeah, no, I mean, it's just like you were doing price reinvestment for gourmet, as you flagged, for July and so on. But considering the recent month, coca prices have been going up a lot again, Like, how needed were this kind of like price reinvestment compared to just by nature of the markets, probably, I mean, prices going up there?

I see what you mean. Yeah, so, look, you know, we've seen a sharp, obviously, decline in growth prices, but as I said, we turn to all the price listed business in our domain. We have price lists approximately every half year, at least for our main markets, North America, Europe. You know, there's new price lists for the 1st of July that reflects the market reality when we set the prices for a number of countries one or two months ago. But please remember, you know, we contract that business already quite a bit before that. So the very latest moves in the cocoa market are not always immediately reflected in these price lists. but that shouldn't also impact us financially to that extent because again these are very long contracting periods and we are actually flexing our hedging there to avoid situations that we've had this year with very long positions where we need to compete with companies that are much shorter so I think we've become more flexible but I want to caution a bit that on gourmet in itself that our pricing to customers will reflect the daily reality of the cocoa market. That wouldn't happen.

Understood.

Thank you. Our next question comes from Samantha Derbyshire from Goldman Sachs. Your line is now open. Please go ahead.

Good morning. Just want to say thank you for the detail around the cocoa market and underlying retail market trends as well. That's super helpful for us. I have two questions like everyone else. The first is kind of, you know, we kind of touched on the non-chocolate confectionery categories that you sell into. But I think what we started to see as cocoa prices were going up was that, you know, some customers were maybe choosing other flavors beyond chocolate that were perhaps cheaper for them to use. I'm just curious to see whether you've seen any shifting demands there with people coming back to chocolate flavors. and kind of pushing that chocolate innovation again now that it's potentially a better return for them. And then the second question is, you know, you've mentioned the improving service levels in North America and you've quantified that. Can you give a bit more color about the other regions as well? I think Western Europe was an issue as well, so it would be good to get an update there. Thank you.

I mean, first of all, on chocolate as a flavor, actually, we're very bullish about that. We're not seeing that effect, as you mentioned. We're not seeing consumers moving away from that flavor. And the interesting thing is, if you take a little bit of distance from it, there's already quite a bit of flex, right, that our customers can offer. We have, of course, the traditional cocoa butter solutions. At the same time, There are compound solutions that have grown substantially also for us. Within the compound solutions or the cocoa coating solutions, we have offered a real premium solution there. Cocoa Max innovation is on the way there. Super coating solutions are on the way. So customers can play with that and we have become a lot more flexible. And importantly, that is not a negative in our profitability mix. and as you may recall from the Focus on Growth program, and as I said, what we want to offer is everything chocolatey. So we're saying cocoa butter, yeah, that may be traditional, but we also want to be the absolute leader in cocoa coating solutions, in both the premium side as well as what the customer needs, as well as in cocoa replacement opportunities. We see in particular... Thank you very much. and that's particularly happening in Western Europe. So we will keep you, of course, updated on that as soon as when it becomes much more meaningful for the total portfolio, but this is something that we're absolutely pursuing. So if you look at all of that, it comes at different price points. and therefore we feel that chocolate is as relevant overall as ever. And it is the preferred flavor for consumers, whether that's in ice cream, whether that's in fillings and so forth, and inclusions in bakery. No, I'm very positive about that. I got actually very excited, so I forgot your second question. Yes, on Western Europe. Look, I mean, as I said, you know, North America was under pressure. We saw increasing prices still in North America, and that was... Was it a question on the market, or was it a question on our performance on service?

It was the service levels.

Yeah, so the reason for calling out North America on service levels was mainly because, you know, that's where we had seen the biggest decline. and also because North America is at a single market, the U.S. is at a single market, it's our most important market, and therefore it was absolutely critical to restore server cells there first. We were also reading, you know, from some quality incidents in the Sennheisen factory that happened by the end of last year, you know, and again, I was very keen to prioritize and put focus and therefore we talked about North America. If you look in Europe, service levels there are also at a higher level than what they were before. We wouldn't talk about the same level of improvement, but again, it wasn't as bad as North America was. Our service levels in Asia Pacific, what we call the new region, are at a significantly higher level, so I feel much more positive there. But again, Europe is improving. but overall at a higher level than North America. I'm very encouraged by the way that all the progress that we're making in the focus on our gourmet business. You know, we talked about the core range of SKUs reducing some of that complexity. Our gourmet business is being produced primarily in Belgium with the Calabaut brand and France on the de Carcabarri proposition. You know, if we focus there on the high-runners bring that clarity on what is really important for us. I see the organisation responding to that very fast and therefore inventory levels that were at a very low point by the end of last fiscal year will be at a much more healthy level towards the end of this fiscal year. So I'm really encouraged by that progress.

That's really helpful, Carla. Thank you.

Thank you. Our next question comes from Tom Sykes from Deutsche Bank. The line is now open, please go ahead.

Morning everybody and thanks again for the detail, probably the longest Q3 call you'll ever want to give. Firstly, it's a little bit difficult to disaggregate perhaps what you're saying to the organisation versus saying to the market. Appreciate that volumes have improved but you're trying to push through some fundamental changes. to the business and so you're sounding cautious but if we take it from the point that you last spoke would you say that your caution over market growth has at all changed either for the better or worse? Maybe it's possible to disaggregate a little bit the growth outlook in gourmet by sort of type of customer or region. Is it the smallest customer's Thank you very much. Volumes at 1-3%, knowing what you know about your finance costs, I appreciate it's the focus on PPT, but do you think at 1-3% your EBIT would be down, or is that just not something to read into? Please, thank you.

Thanks a lot, and I mean, interestingly, as you say, this is a long queue of people, but we see with your questions, you're adding quite a bit of that time to it, but it's my pleasure, of course, and and as you said since the last time I spoke I guess that was during our fireside chat that we had at the virtual conference so thank you by the way still for that one but hey a few things first of all have we changed our view on the category overall and with the volume growth that we're now seeing are we more bullish on the overall growth of the category the answer is I haven't changed you know as I said you know we were at mid single digit decline I think when we spoke last and that's really still where we are what is relatively new you know the latest information and that's why I talked about it today was that prices were still increasing in the US overall and we saw a higher than global average volume decline in North America which we were able to withstand so that is something that I was keen to get across today and that's a result of again higher service levels us playing in other categories than chocolate confectionery alone in the to ice cream, for example, and we're having a very healthy specialty business there. So I feel that that's a positive message that I want to give, but there's no change in our perception of the global market. That is what it is. So I think that's number one. Then secondly, on gourmet, you know, I talked about insourcing and outsourcing, but in general, we see that regional customers are in the developed regional customers as well as private label are growing faster in the developed region. So in Europe as in North America. I don't think that's a surprise for you, but I just wanted to call it out. And, you know, our focus, as you know, with the market segments that we've chosen in Focus for Growth, you know, I feel that we are well positioned to benefit from that. At the same time, we believe that in the medium term, you know, working with our global accounts more intensively on innovation, on, you know, working together on consumer insights and driving the right platform, something that I particularly enjoy, by the way, that will give us a longer-term base that I'm very excited about, but I am subdued on the volume developments on those accounts for the near future, for us in particular. Then, on the region, we saw very healthy growth in APAC, and whilst the category in APAC is actually down, so it's not up, but I think we are positioned in a couple of markets where we're also putting priority that are some exceptions. So, you know, I feel good about India. I feel good about our China business at the moment. You know, I think that will continue to grow for a bit. That's partially because of the comparable, but also how we're positioned. So that's good. And we are playing increasingly in that premium sector, you know, and within the country, the premiumization is still happening. So while the overall category is having some headwind, premiumization is helping us. Finally, on your question on EBIT, and I told you a few times in different ways during the fireside session on guidance for 2027. I have to be honest, I'm not yet in a position to provide guidance for 2027. You know, we talked about a volume growth of 1-3% and we will come back with guidance of course at the beginning of September. That's what we will do. But, you know, I just want to leave it at the moment where we are. I feel that we will continue to deleverage and that will, as Peter talked about, that will lead to reduction in financing costs So that will of course help our PPP overall versus the EBIT equation, but maybe Peter you want to add a few words to that?

Yeah, just to complete, I mean, we are confirming that we are talking still about 1-3% volume growth. It does not mean that EBIT will go down next year, because that was part of the question. I just mentioned in my answer before that there is a balanced mix of elements. I don't want to point towards an even increase, absolutely not, but I just want to say I'll stick to what Peter said in his bridge earlier and a precise guidance, I don't want to get into that with the network today.

Thank you very much. Thanks for all your answers. Much appreciated.

All right. Thanks a lot, Paul. I think that concludes the overall looking here. Thanks, everyone, for joining. As I said, it was a lengthy call, but thanks a lot for your interest. It's always much appreciated. And I look forward to engaging with you in the number of sessions in the weeks to come. And for those who want to speak to you, I wish you a very good summer holiday. Thank you. Bye.

Thank you all. This concludes today's call. Thank you for joining us. You may now disconnect your lines.