Davide Campari-Milano N.V.

But can't nobody with my... I drink and she drink Aperol Spritz Girl, I promise you I ain't at it like this There's a whole lot of girls up in here But can't nobody with my... I promise you ain't at it like this. There's a whole lot of girls up in here, but can't nobody fuck with my bitch. My favorite hobby is probably getting rich. I see them talk, but they hardly don't fit. There's a whole lot of girls up in here, but can't nobody fuck with my bitch. And I know you up with friends, but I promise, baby, you ain't changed. Ain't nobody... Ain't nobody, but my girl i promise you i had it like this there's a whole lot of girls up in here but ain't nobody with my it's my favorite hobby it's probably getting rich i see them talk but they hardly there's a whole lot of girls up in here but ain't nobody with my and i know you up with friends but ain't nobody Ain't nobody but my it's a whole lot of girls up in here but ain't nobody with my it's my favorite hobby is probably getting rich i see them sorry but they hardly there's a whole lot of girls up in here but ain't nobody with my and i know you up with friends we promise baby ain't changed But ain't nobody I drink and she drink. Girl, I promise you I had it like this. There's a whole lot of girls up in here, but ain't nobody fucking with me. There's a whole lot of girls up in here, but can't nobody fuck with my bitch. My favorite hobby is probably getting rich. I see them talk, but they hardly don't. There's a whole lot of girls up in here, but can't nobody fuck with my bitch. And I know you up with friends, but promise, baby, ain't gonna change. But ain't nobody

I drink and she drink.

I promise you I like this. There's a whole lot of girls up in here, but ain't nobody. There's a whole lot of girls up in here, but ain't nobody. My favorite hobby is probably getting rich. I see them talk, but they hardly. There's a whole lot of girls up in here, but ain't nobody. And I know you up with friends. but ain't nobody My favorite hobby is probably getting rich. I see them talk, but they hardly don't. There's a whole lot of girls up in here, but ain't nobody fooling my head. it's a whole lot of girls up in here but ain't nobody with my it's my favorite hobby is probably getting rich i see them sorry but they hardly there's a whole lot of girls up in here but ain't nobody with my But it ain't nobody's fault

Good evening, this is the Coruscall Conference Operator. Welcome and thank you for joining the Campari Group Fulia 2025 Financial Results Conference Call. As a reminder, all participants are in listen-only mode. And after the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. Today's call will be hosted by Simon Hunt, Chief Executive Officer, and Francesco Mele, Chief Financial Officer. At this time, I would like to turn the conference over to Mr. Simon Hunt. Please go ahead.

Great. Thank you very much. Good afternoon, everyone, and thank you for joining us to go through our 2025 results and our perspectives for 2026. Francesco is here with me. As always, our IR team will be available after the call to deep dive with you in coming days. So let's start with a summary of our results. 2025 was a year in which we delivered a solid performance supported by the strategic priorities we'd put in place at the beginning of the year. We navigated one of the most complex operating environments our industry has faced in decades. And a key message I want you to take away is that we are growing. We are growing top line, we are growing margin, and we are growing profits. And while we continue to grow, we've increased our investments behind our strong portfolio of unique brands because we are confident in building long-term value. In fact, we've done everything we had said we were going to do. First, our outperformance in sellout continued in a very challenging backdrop, and this is exactly our key focus. Organic top-line growth was plus 2.4%, driven by growth across 24 countries, a clear testament to the relevance of our brands, matching consumer trends across geographies, and reinforcing the potential going forward. At the same time, we further strengthened our gross margin profile with 100 bps organic accretion through our efficiency program. At one point, we've been very clear on is that we see this environment as an opportunity to strengthen our position and gain market shares. And therefore, we're not shying away from investing behind our brands, leveraging the efficiencies we have achieved to increase our A&P to sales up to 17.9%. And this strategy will continue. Our cost containment program is well on track to achieve 200 bps organic benefit on sales by the end of 27. And in 25, we already recorded 70 bps improvement as guided. You can clearly see that all these efforts paid off, and we recorded strong profitability with plus 60 bps organic accretion on EBIT margin. On the balance sheet side, we made significant progress. 73% recurring free cash flow conversion shows the solid cash generation of the business. And as you all know, we put in place a major extraordinary CapEx program a few years ago to build our production capacity for our future ambitions. We're now nearing the end of these investments with a tail end in 2026, primarily focused on finalizing our distillery expansion in Kentucky. Our leverage is down to two and a half times from the peak of 3.6 after the closing of the Kavazi acquisition in September 24. And we reached this level a year ahead of what we had guided, led by solid cash generation, our disposal program, and effective working capital management. Now, some of you may remember this chart from our Capital Markets Day presentation, adding the 2025 figures to it, shows acceleration in the underlying growth. Excluding the impact of the hurricane in Jamaica, we recorded plus 3% organic growth. Achieving this result, despite a significant volatility in the operating environment, shows the strength of our brands and the great work by our team of camparistas around the world. This pace of underlying growth is expected to continue going forward, supported by our confident investment behind our brands And we are on track to reach mid to high single digit top line growth in the medium term, assuming a stable environment. The drivers will be the five areas that we highlighted in our CMD. First, sharper portfolio focuses with fewer bigger bets. Second, winning the first shared drink with new formats for new occasions. Third, accelerating our geographic expansions. Fourth, leveraging our investments to work harder against our new strategy. And finally, fifth, driving efficiency across each line of the P&L to allow us to invest more behind our brands. The top line growth that I mentioned was broad-based across all of our regions and all of our brand houses. In fact, as I said, we recorded growth in 24 countries and we gained share in nearly every market globally. showing the results of our focus on fewer bigger bets and our geographic expansion. On the next page, you can clearly see the momentum that we achieved during the year with the accelerating quarterly progression across our main regions. I'm not going to spend too much time on this as we'll go through this in detail region by region. But what I will say is that our aim is to achieve sustainable and progressive evolution of our top line growth going forward. Now let's have a look at sellout, which ultimately is our main focus. As I mentioned at the beginning, we recorded outperformance and share gains in sellout in almost all markets, despite the really challenging backdrop, with overall shipments and sellouts relatively aligned across the US and EMEA. In the US, we outperformed in the strategic on-premise channel with plus 8% growth, showing a six percentage point beat compared to the sector. becoming the number one supplier for value growth in 2025. This was led by our priority brands with plus 15% growth in tequila and plus 15% in Aperol. And this momentum continued in Nabca with a growth of plus 10% in these brands. In EMEA, we also outperformed in each of our main markets with growth of plus 1% versus a market of negative 2% in the region despite the pressurized context. And our main aperitif brands, Aperol, Campari, and Sati, significantly outperformed and contributed to our growth. Germany was impacted by the delisting we'd already flagged earlier in the year, and some retailer disputes in Q4. So now, let's have a look at our top-line growth region by region, starting with the Americas. Americas grew plus 2%, driven by resilient trends in the U.S., ahead of the market. and solid growth in the rest of the regions, more than offsetting the impact of the hurricane in Jamaica. In the U.S., each of our brand houses recorded plus 2% growth in 2025, but this was offset by the softness we saw in Sky. As I mentioned, our aim is to have fewer bigger bets, and we see the positive results of this focus on our prioritized brands. Jamaica recorded a plus 1% growth despite the significant impact of the hurricane in Q4. Ray and Nephew and Magnum Tonic Wine continue to lead the growth in this region, where our brands truly are part of the DNA of the country. Given our production sites are only temporarily impacted, we expect to continue to benefit from the strength of our brands in the local market as consumption starts to return to normal. The rest of America, which makes up 12% of our group sales, recorded a solid plus 8% with broad base growth across most of the region except for Canada, where our performance was impacted by the tariff volatility. Geographic expansion will continue to be a key focus going forward. Now moving to EMEA, we recorded plus 2% growth with resilient trends and market share gains across our main countries, despite the challenging backdrop. At the same time, geographic expansion continued. In Italy, Q4 benefited from an excellent execution of our winter campaigns on April, delivering a plus 1% growth. And we see our portfolio approach in aperitifs bearing fruit, especially with solid trends in Campari, Cordino, Sati Rosa, as well as the spirits portfolio. In 2026, we will support growth by the spread of apparel on tap during key events in peak season, as well as the launch of new formats for new occasions, such as Campari Spritz, ready to serve. In Germany, the backdrop is very challenged, as you know. This is also leading to pressure from retailers regarding promotions, as consumers' disposable income remains challenged. We're also cycling the impact of the D-list that we previously told you about. All of this led to a negative three top line change in 25. But if we exclude the impacts I mentioned, we would have recorded plus 3% growth, mainly driven by the ongoing success of Satyarosa, which now accounts for more than 10% of net sales and continues to consolidate its position in the market. Again here, the benefit of our portfolio approach and Spritz leadership is evident. In France, our solid performance is continuing, mainly driven by Aperol and the successful launch of Sati in that country. In the UK, we recorded plus 7% growth, mainly driven by Aperol and Courvoisier. And this is another country where we launched Sati in 2025, and we're already starting to see the positive uptake. Credino and the newly launched Apple Spritz Ready to Serve are also accelerating, going from less than 1% of our UK business to more than 3% in just one year. In the other countries in EMEA, which contributed 18% of our overall sales versus 15% the year before, we saw broad-based growth across almost all countries, especially GTR, Greece, and Belgium. and the bulk of the growth is coming from Aperol, Sati Rosa, and Covozier. Moving on to APAC, growth was plus 4% in 2025, mainly driven by the outperformance and share gains in Australia. In Australia, we grew plus 7% with acceleration during the peak season in Q4, leveraging our increased focus in the on-premise. This growth was supported by double-digit growth in both the Aperol franchise and Esplanade, our focus brand in the country. In the rest of APAC, we recorded plus 1% growth, mainly driven by Russell's Reserve and Courvoisier. In this region, we have made some significant changes to the management teams and organization, headed by the appointment of Sash Sharma as the MD of the region and new MDs in three of our Asian markets. Going forward, we believe we can consistently enlarge our presence in the region, leveraging the route to market investments that we have already made. Now let's talk about the brand houses, starting with the House of the Perseids. Here we recorded a resilient growth of plus 2% in 2025, primarily driven by Aperol, Sati, and Credino. As of this earnings release, we have started to report Aperol as a franchise, given the new formats for new occasions that we will progressively introduce, as we told you in our CMD, such as tap that we tested in 25 and ready to drink in the current year. For now, these figures primarily include Aperol bottle and ready to serve, which is 6% of the total. In 2025, Aperol performance was impacted by challenging operating conditions in its larger markets of Italy and Germany. But despite that, we recorded growth of plus 1%. U.S. shipments were flat in the year, despite the volatility, though. Apple still achieved a plus 15% growth rate in these all-important on-premise channels. Outside of these three countries, there was a solid plus 8% across the other countries, reinforcing the global potential. Especially in Q4, as I mentioned before, we recorded a very strong performance, supported by the largest ever de-seasonization activations with excellent execution across the holiday and ski seasons. For Campari, the main impact on performance is coming from Brazil, where we had a very high comparison base from last year due to rapid growth and price increases. In addition, our sales were impacted in Jamaica due to the hurricane and Germany due to the delisting. Outside of these three countries, the performance remains solid with plus 2% growth across our main geographies. The remainder of our Aperiti's portfolio is growing double digit with positive trends across the regions. Saati continues its solid growth in its core German market and also progressively benefiting from the rollout into other European markets as well. Credino, our non-alcoholic spritz, is also performing strongly across all markets with plus 7% growth, including the U.S., where it was recently launched. So let's move on to the next page. Whiskey was relatively resilient, supported by wild turkey in the U.S. with plus 2% growth, benefiting from the new campaign. However, this was offset by demand-led product shortages in a premium variant from Russell's Reserve in H1, a point we've already flagged in previous calls. Jamaican rum showed a solid growth of plus 9%, benefiting from positive underlying trends until the hurricane in Q4 and in the core US market. In the House of Agave, Esplong grew 3% in 25. Growth was supported especially by Reposado at plus 8%, where we still under-index the category, while Blanco was negative 1 due to our focus on price discipline in a very competitive backdrop. Within the house of cognac and champagne, Gramania was impacted by focus on pricing in a highly competitive market. Courvoisier recorded 157 million euros of sales and was included into our organic growth as of May. As we already highlighted in previous calls, we are piloting some brand marketing in the U.S. and in the U.K., which is showing initial positive results. And we will come back to you regarding the future plans as they become more concrete, but with some very good progress made so far. For the rest, I won't comment too much, just to note that 22% of our overall portfolio is currently classified as local brands, given their geographic concentration. Sky remains an important part of our portfolio, and great to see it back in growth, showing a very positive performance in Q4, driven primarily by Argentina, which is now 27% of the total brand sales. following a highly successful launch of Sky Cosmic, more than offsetting the ongoing softness in the core U.S., in line with the other players in the vodka market. As we share with you at our CMD, Apple is identified as our champion and will therefore receive the highest share of A&P investments. As part of this, we already start to implement this strategy in Q4 with the strongest ever holiday activations across the U.S., the U.K., and Italy. As of the beginning of the year, we're also activating proactively across the slopes of winter locations, as many of you have probably seen. In the UK, white Christmases are overrated, as a campaign took over Tube Station, covered buses and walls across London. It was supported by visibility in key off-premise locations, and we doubled the spend versus the previous year, reaching 92% of spirit drinkers in London alone and 21 million consumers nationally. and connecting Aperol with iconic winter moments of the famous Somerset House ice skating rink in central London. In the video, you can see some of the key achievements of Aperol throughout the year in the UK, but a highly successful year with plus 11% top line growth. In the US, we launched our first ever Aperol holidays campaign with Vampire Diaries star and Aperol Spritz fan, Nina Dobrev, at the forefront. Results show 600 million earned media impressions and a 78% increase in app role mentions in social media versus the previous December. We continued our pace of activations with Esplanade to continue to drive awareness and trial across key cities in the U.S. and via social media, influencers, and PR. We were present at ComplexCon in Vegas at the New York City Halloween Parade, as well as the Latin Grammys and Dia de la Muerte celebration in L.A., We also activate our impactful drone shows in Austin and LA with over a million impressions. As I mentioned before on Courvoisier, we're now finalizing the new strategy and the planned relaunch. In the meantime, in key markets like the UK, we are running interim campaigns. And these campaigns already started to have an impact showing the brand has the potential to carve out its rightful place in a tough category, especially in recruiting the next generation of cognac consumers. In fact, we record a seven percentage point increase in penetration amongst 18 to 35-year-olds in the UK. I just remind you all that Courvoisier is the most awarded cognac house since 2019, based on the top 20 spirits competitions. Okay, I'm now going to hand over to Francesco, who's going to take you through the P&L and the balance sheet. Francesco.

Thank you, Simon, and hi to everyone on the call. Let's start looking at the drivers of our adjusted bid margin in 2025. I'm happy to say that we have recorded solid results with 60 basis points organic adjusted bid margin accretion, supported by gross margin gains and cost containment benefits, while we accelerated brand building investment as planned. In terms of gross margin, we recorded 100 basis point organic accretion in 2025, supported primarily by input cost benefit, especially driven by agave. Within this number, the impact of tariffs was 11 million. This was lower than we originally expected due to ongoing benefit of the pre-tariff in-house inventory position we were holding also in the last quarter of the year. Given the challenging backdrop, pricing provided minimal contribution in 2025, but can prevent opportunities going forward as market conditions normalize. AMP to sale closed the year at 17.9%, up 100 basis points organic from 16.7% in 2024. As Simon mentioned before, we are fully committed to reinvesting efficiency behind our brands in line with our new portfolio strategy. This means that we are concentrating our investment on fewer bigger bets and supporting the brands that we believe have the highest growth potential going forward. You saw some of these investments earlier in the presentation. On cost containment, we have a clear roadmap that we share with you at the beginning of 2025. Our aim is to achieve 200 basis points as G&A organic benefit on sales by the end of 2027. In 2025, we already achieved minus 1% organic decline in SG&A, leading to 70 basis point benefit, which is rightly higher than our initial guidance of 50 basis points, as we accelerated savings initiative. Accordingly, adjusted EBIT landed at 637 million. Within this, there was a limited net impact of minus 1 million with perimeter and effects offsetting each other. Let's now move into full P&L. In 2025, we recorded the adjusted net profit of $386 million, with 3% growth mainly driven by positive evolution of EBIT. Reported group net profit was up 72% due to the high base of operating adjustment in 2024, which was $213 million, mainly including accruals related to the three-year cost containment program. This year, operating adjustments were $69.3 million due to asset impairment of $90 million and settlement payments of $31.1 million, which were partly offset by $55.3 million business disposal capital gain. Total financial expenses before exchange effect was $101 million, with increase versus 2024 driven by higher average net debt, $2.3 million versus $2.1 last year. and base effect of high cash position ahead of Courvoisier closing following the capital increase. Average cost of net debt is at 4.4% versus 3.8% in 2024. Under the earn-out income expenses and upper inflation effect line, we had operating adjustment of 49.6 million, driven by the reduction of earn-out on Courvoisier. Lastly, under the profit loss related to joint ventures and other investment line, There were 54.6 million non-recurring impairment of investment related to Capvin for 59.4 million, net of 4.9 million gain from Tandico Business Disposal flowing through the Dionysus JV. The recurring tax rate was realized at 30.2%, up 40 basis points versus 2024, due to unfavorable country mix. Recurring cash tax rate is at 27.7%. Lastly, I will cover the key balance sheet indicator on the next page. We achieved a positive trend in operating working capital as a percentage of sales, down to 44% from 47% in 2024. This was driven by effective cash management, which was partially offset by an organic increase in maturing inventory of whiskey, cognac, and rum. This means that maturing inventory increased to $1.2 billion, which is in line with the guidance that we provided in our CMD and at a comfortable level to support our future long-term growth. Finished food inventory, on the other hand, remains stable. On CAPEX, we are maintaining the trend in maintenance CAPEX at 4% of sales, in line with our historic and InVisa general rate. Extraordinary capex was 143 million, driven mainly by our production quality and capacity enhancement program, as well as ongoing IT investment with finalization expected in 2026. The remaining part is primarily related to the distillery expansion in Kentucky. We also achieved solid cash flow generation with a current free cash flow conversion of 73%, 571 million euros, again in line with our guidance and plans. On leverage, as Simon mentioned at the beginning, we reach 2.5 times a year ahead of plan, supported by solid business momentum and financial discipline. We expect this ratio to remain a sustainable level in 2026, with some potential saving considering the finalization of the extraordinary CAPEC. Now, I will hand back over to Simon for the rest of the presentation. Thank you. Great.

Thank you, Francesca. So, look, I'm going to briefly touch on our ESG-related initiatives and position, and you can find much more detail in our annex or the summary 200 pages in our annual report, which has all of our key figures and targets in it. In terms of ratings, we have continued to make good progress and are positioned at leading levels in our industry and have also achieved upgrades in 25, for example, on the MSCI ESG ratings. As you can see on the page, there have been significant developments in our key metrics. As you know, we publish our ESG initiatives and figures in four key areas, which are the environment, responsible practices, community involvement, and our people. In the area of environment, we've recorded significant improvement compared to our 2019 baseline in emissions, water consumption, and waste to landfill. In 2025, we also set new targets on absolute scope one and two emissions, and circularity. In terms of our people, we've achieved a fair pay certification for the second consecutive year and also set new targets in this regard in 2025. Responsible practices is also a key focus area, and here we not only hold awareness campaigns on responsible consumption, we also work to ensure our procurement practices embed all aspects of ESG. In addition to these initiatives, we continue to work on making our production plants more sustainable. Accordingly, we've invested over 40 million euros in sustainability-linked capex this year, of which 16 million was related to water and 24 million related to energy efficiency. Lastly, and very importantly, following the severe hurricane that took place in October in Jamaica, we showed our support to the local community with a donation of 250 million Jamaican dollars a contribution that was very much appreciated by the community and the Jamaican government. So let's have a quick look at the evolution of our strategic priorities in 25. In terms of cost containment, Francesco already mentioned in detail that we are on track with our plans. In the last two quarters, we actually had a year-on-year decline in SG&A and closed the year with negative one. On the business streamlining, we announced the disposal of Averna and Zeta Pitas in Q4. for a total consideration of 100 million euros, with the closing expected in Q2 2026. Including the previous disposals, we will have disposed of 3% of the portfolio so far. We still have discussions ongoing, and the timing of further potential disposals will be based on the optimization of proceeds with no rush, given the robustness of our business. And I want to be very clear on this. We don't have to sell anything. but we are choosing to if we can see a sensible value and balance that value with the benefits of the focus it can bring to executing our new strategy. As we mentioned in the CMD, we put in place a new four-business unit structure as of 2026, including Europe, North America, APAC, and developing markets. And just as a reminder, this is how we will be reporting the business going forward. We've given quite a lot of reference to our strategy day during this call, which was our first ever. And thanks again to all of you that connected or joined us in Milan. So now let's take it a little further. As we talked about in the CMD, our mission is very simple and execution focused. To win the first shared drink every day, everywhere. To win the first shared drink every day, everywhere. And our new strategy is being rolled out across the group. In fact, so far, I've met with nearly 2,000 Camparistas this year. And I'm aiming to meet every person in the team by the end of the year. We are embedding the new strategy across everything we do and grounding it in our unique Camparista culture. And this will be the leading light in ensuring we reach our ambition and our midterm guidance. Now, as a reminder, our midterm guidance is also clear. Basically, no change. but that is assuming a stable environment. We are confident in achieving cash-generative and margin-accreted growth without performance. Focus on the areas we took you through in the CMD. So let's have a look at what's new. Well, innovation is a key focus for us this year. This means new formats for new occasions, like the launch of our new Aperol Ready-to-Drink and Campari Spritz Ready-to-Serve, in line with our portfolio strategy. It also means expansion of Aperol on tap that we piloted for the first time in select markets in 25. Sati, Rosa already saw significant expansion to new markets in 25, and we will continue to support its growth in 2026 with further reach. Bolder investments. What this means is continuing to invest behind our brands, both in terms of A&P, but also commercial strength. For Apple in the U.S., we have already hired and put into the market 21 brand activators across 11 states and cities to drive the acceleration in growth. We are also further stepping up our NP spend on key brands, as outlined in our portfolio strategy, with our focus on fewer, bigger bets. In terms of execution, we have a new governance to accelerate decision-making, a new business unit structure to drive our expansion, and a renewed and energized team. We're also driving revenue growth management actions, which will ensure we are effective in the market with a clear playbook across the various regions. And while we do all of this, we also continue to be extremely disciplined on our costs, our COGS, our AMP, and our SG&A, as we mentioned at the CMD. On COGS, we have initiated our end-to-end supply chain optimization, focusing on our input costs, our operating efficiency, and leveraging our extraordinary CapEx program. On AMP, we are driving our efficacy and effectiveness and targeting a meaningful reduction in our non-working cost base to target a 10% to 15% efficiency in AMP to reinvest behind our brands. That's equivalent to about 50 million euros. And this is a significant increase in consumer-facing investment. On SG&A, we remain on track to deliver the 200 bits by the end of 27. Now lastly, we will maintain strong balance sheet focus. You've already seen the progress we've made on leverage, and we will continue to keep a comfortable level, also with less relevance on bolt acquisitions for now, while we continue to streamline the business. Now having talked about what we will focus on, I'll also comment on what that means in terms of our financials for 2026. Assuming a challenging but stable operating environment, our industry outperformance with the pace of underlying growth is expected to continue in 2026. On track to reach mid to high single digit top line growth in the medium term. Clearly, we are seeing an elevated volatility currently, which we're going to have to continue to monitor. Next, contained organic accretion in EBIT adjusted margin with a skew into the second half due to the front loading of A&P investments and the base effect of tariffs, which affected the second part of 2025. Gross margin and moderate COGS tailwinds offset by U.S. tariffs impacts, assuming a stable outlook again, with an estimated impact of about 30 million euros. Further increase of A&P investments while focusing on ensuring affected mix to support continuous enhancement in on-premise execution in line with our new portfolio strategy. Ongoing benefit of SG&A containment, circa 70 bps in sales in 2026, reaching a cumulative impact of 140 bps in two years out of the 200 bps we've guided by the end of 27. As a perimeter impact of about 70 million due to disposals on top line and roughly 30 million on EBIT adjusted margin, and FX will be subject to currency evolution. Leverage should be maintained at sustainable levels considering the tail end of the extraordinary CapEx program and operating working capital dynamics. Discipline capital allocation with focus on sustaining growth momentum, portfolio streamlining where about 3% of our net sales already disposed, and less relevance on bolt-on acquisitions for now. And finally, a step up in our dividend payout, with DPS up from 0.065 to 0.1, indicating a 54% increase, with a payout of 35%, leveraging strong cash conversion, accelerated deleverage, while still maintaining financial flexibility. Now, while business growth remains our biggest priority, there are several reasons why we've made this decision on dividends. Our new strategy of focusing on fewer bigger bets means there is a new capital allocation rationale. We are deleveraging faster than planned, and we are very optimistic about future further deleverage as our extraordinary CapEx program comes to an end with the current year. And we expect to remain disciplined going forward, given the fact we have everything in place that we need to be able to grow. We want to reward shareholders with a more balanced TSR, also through an increased contribution from dividends. Given that our peers are already significantly higher than us in terms of payout, we believe this will be appreciated by the market and reinforces our belief in the strong fundamentals of our business and our cash generation capabilities. Going forward, based on the evolution of our business and balance sheet, we will evaluate the path for dividends and potential additional increase on payout ratios. Before we close, I'd also like to note that as of 2026, we will be moving to a top line only reporting in Q1 and Q3. This is a norm for our industry and actually even more widely adopted across many companies. It's going to allow us to ensure we keep investors updated with the developments of our business while simplifying our reporting, ensuring we can focus on executing our strategy and consistent with our focus on a longer term horizon. As always, we'll continue to hold our analyst calls and give you updates on our guidance in case of any revisions. Okay, so that's the prepared remarks. I'm now going to open up the floor for any questions.

Thank you. This is the Coral School Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star. Star N2. We kindly ask to use the handset when asking questions. Anyone who has a question may press Star N1 at this time. We will pause for a moment as participants are joining the queue. First question is from Andrea Pistacchi, Bank of America.

Yes. Hi, Simon and Francesco. I have a question on the U.S. and one on Italy, please. So in the US, the industry clearly remains challenging, but you're clearly outperforming. In Q4, the outperformance, I think, was mainly driven by Aperol and Espolon, which are back both to pretty strong growth. I think, I mean, both brands seem to be growing faster than they were six, 12 months ago, at least based on the data we see. So I want to ask, what do you think is driving this acceleration? Is it the increased focus that you were referring to that you're putting behind the brands and how In particular, Espolon, how do you feel about it in a crack category, which clearly isn't getting easier? I'd include there Diageo's comments about potential price reinvestment. And then Italy also had a strong end to the year. Sales, I think, plus five, sellout plus one. The comparison base wasn't easy. You referred to good execution there. Could you give maybe a bit more color on this? Is it the rollout of your Spritz portfolio? Is it cracking down on April Me Too's? And would you expect this more positive momentum in Italy to continue, also given that you'll be starting the rollout of the new apparel formats? Thank you.

Great. Thanks, Andrea. Yeah, good questions. Look, I mean, I think ultimately on this, I think you'll see this isn't just on the U.S. and on Italy. I'd probably answer both markets with quite a similar answer. I think what we've managed to do with the new portfolio strategy is focus the entire organization about the most important brands. And as a result, that has improved our planning through Q4. It's improved our execution in Q4. And having been out in the market during Q4, I was absolutely delighted with what the team managed to do. They got out, the execution was great. Our displays look great. We look better than I think we've ever looked before across all of the markets. I think the combination of the focus of the team, the fit with the portfolio strategy, I think we are more aggressive in terms of displays than we've been before. And I think ultimately on this, the performance in the US on Aperol and Esplan stands up to it. Plus 15% in the on-premise, plus 10% in NABCA. We were more competitive in the tequila category than we had been on Blanco in the final quarter. As we know, it's a key time of year where we can bring consumers into the franchise. But all in all, it was just better execution, better plan, and passionately executed by the team.

If I can then just squeeze one in, please, for Francesco. On gross margin, you had a year of very strong gross margin expansion, 100 basis points in 25. Q2 was better than I think the street was expecting. Q3 was better again. Q4, another beat. You mentioned that the tariff turned out to be less of a headwind. Now, for 26, though, you're suggesting a more muted level or probably a couple of things sort of offsetting each other. So I read it as probably not much gross margin expansion. So could you provide a bit more color on these gross margin drivers? And is the 30 million tariff impact that you're talking about for this year, is that incremental? I mean, you had 11 million impact at 25, and for 26, it's a 30 million incremental. All incremental, thanks.

Thank you, Andrea. So 30 million is the total tariff expected for 2026 to clear. So essentially, that's compared with the 11 million we had in 2025. In 2025, we were able to compensate with some strategic management of our inventory positions. I would say that you are right. We expect that 2026 to still have some benefit in terms of cost on the co-op side, but this will be more than offset. by the full effect of tariff. However, we expect to compensate it with good mix impact coming. So all in all, we expect to have a positive impact in terms of cost. Clearly very different from what we have seen in 2025, but still we see a positive aside. And to be fair, we are still working to improve further our efficiency on the manufacturing side. Clear. Thank you.

question is from Sanjit Awela, UBS.

Hi, Yavinga, Simon and Francesco. A couple from me, please. Just going back to your outlook for 2026, I kind of interpret that as sustaining the underlying growth you achieved in fiscal 25 of around 3%. What are you embedding into the U.S. within this? Do you think the U.S. can achieve that piece of growth for the year ahead, just given some of the challenges we still see in the market? And I guess just tied to that, how are you thinking about the pricing environment in the context of what we observe to be a negative pricing environment in the US, still weak in Europe? You spoke about minimal pricing in 2025. So I guess your outlook is just entirely predicated on volume growth. Is that fair?

Hi, Sanjeev. Yeah, look, good questions. I mean, I think, look, in the current environment, I'd be crazy if I didn't say it's definitely dynamic. I think everyone is responding to that situation. So we're going into it cautiously on the underlying growth, and we think we have different levers to focus on. We think our portfolio really plays to the aspiration of yet accessible price point. We think the focus and execution that the team is putting behind it gives me a lot of confidence. And also, remember, we have opportunities that other companies don't have. And so you put all those things together. I think that's what we're looking at in the U.S. More specifically, your question on pricing, I think in terms of frontline pricing, it's going to be quite a tough environment to see that coming through. But there are still opportunities on revenue growth management, as we talked about. It's an area where we probably have a bit of catch-up to do, which gives us a few levers. But also in terms of that, I think the environment we're seeing, there are still opportunities for us to go after. I'm not going to give specific numbers for our targets in the U.S. I think we have to wait and see what comes out. But one of the overriding messages is that we've got really good plans. We could just deal with it being a bit of a stable environment for the whole balance of the year.

Can I just sneak in a follow-up on Germany? Clearly some disruption from retailer disputes in 2025. Have those been resolved? and how you think about the setup there in 26.

Yeah, Sanjay, I'm not going to comment too much on our European retailer conversations at the moment, because I think you know they're still pretty live, and normally on these things, what happens in one year forms a big part of the negotiations. All I can say is I'm positively encouraged by what I'm seeing so far. I'll leave it at that for now.

Thank you very much.

Next question is from Lawrence Wyatt Barclays.

Morning, Simon and Francesco. Thanks very much. A couple from me too. Just wondering if you could just give us a status update of the 21 people you've hired in the U.S. to do Aperol marketing. It's quite a substantial increase in the marketing team there. How have they landed? Have you seen any immediate impact? Is there anything unexpected from having such a large number of people doing that one brand? And then secondly, on the increase in dividend, when we go to a 35% payout ratio, is that the sort of level that we should expect going forward? Or would you expect to continue to step up as the balance sheet continues to strengthen? Thank you very much.

Hi, Lawrence. Yeah, absolutely. I mean, since there are 21 people, Francesca and I were at the U.S. conference last week, at which point we met them. So it's not a number on a page. They're already part of the team, varying stages of getting going with it. So it's very early stages. But what we want this bill to do is to really go out and tell our story of Sprint's leadership. Yes, it's led by Apple, but we have a great story to tell. And doubling down, as I said, at the CMD on the key markets where we already are, but we know we've got further opportunities to go. In the current environment, getting out into the trade, really making our brand come to life is a big, big opportunity because a lot of people are not doing that. So we see a competitive advantage of having those people already hired and hitting the street literally this week. So I think that's great. I think in terms of dividends, I think we'll continue to evolve. And I'll pass that one to Francesco.

Thank you, Lawrence. On dividend, I think we decided to move considering the different phases of our development. We actually think if we look at any criteria or KPI in terms of dividend deal on one side or payout, there is still room to grow. We will monitor our ability to grow dividend depending on our requirement and our ability to deliver it, so we remain flexible. We think there is room to grow even more. Dividend deal, we are probably at 1.5%. So if you look at the other peers, they are 2%, 3%, 4%. So they are pretty different. And payout varies. And so there are different payouts also depending on the different situation of the company and the different capital structure. So I think we now, because of our pause on M&A, I think we have flexibility. And so we decided that was something that would enhance our total shareholder return also with the contribution of dividend. Super, thank you very much.

Next question is from Mitch Collette, Deutsche Bank.

Hi, Simon. Hi, Francesco. Two questions, please. Just coming back to the commentary on margins in 26, I think you said gross margin, including the tariff impact, likely slightly up or maybe flattish, and you're going to increase... So I guess would it be sensible to assume all in a similar level of organic margin expansion in 26 to what you achieved in 25? And then perhaps more for Simon, clearly there's some uncertainty about industry pricing. In a scenario where you did see competitors take a much more aggressive approach to pricing, particularly in key cascades for you like tequila, what would be your response? Would you hold your price where it is, or would you follow them in order to remain competitive? Thank you.

Great. Hi, Mitch. Yeah, listen, I'm going to pass the margin one over to Francesco, and then I'll take the one on pricing.

So on margin, clearly we are seeing some improvement, but not to the level you have seen in 2025. There will be essentially strong contribution from SG&A. That's for sure. The increase in dilution in investment in NP would be lower, but then the contribution coming also from margin due to the tariff, essentially, is going to be lower. Also, in general, we see less opportunity or less visible opportunity in cost-benefit. But in general, so we see an accretion coming at TB level, but to a lower level compared to what you have seen in 2025.

Okay, great. Thanks, Francesca. So, Mitch, I think there's a lot of speculation on price at the moment, and the benefit is we've done this for a long time. I've never seen price readjustment build long-term equity. So, from a short-term basis, yes, there may be some headwinds, but actually our focus is getting our team to execute in the strategic on-premise, is investing in establishing equity and making sure that our brands, equity and in the consumer's eyes, match our pricing. So I think we'll continue to see it, but we take a longer-term view of building the equity that we think it takes a long time to get these prices up, at which point I'd rather invest behind the equity, make sure the consumer sees the value, versus getting a short-term price fight.

Understood. Thank you both.

Next question is from Trevor Sterling Bernstein.

Hi, Simon and Francesco. So, I mean, a couple of times you talked about a stable environment and quite a few talked about medium term. And I'm wondering just to be slightly more, don't expect me to be precise, you know, how would you define stability? Are we looking at a world where just the pricing environment is stable or the industry is back to mid-single to do top line growth? And likewise, medium term, is that sort of two to three years or is that, you know, one to five? Just give me a bit of a range on medium term.

Yeah, Trevor, you know me well enough. I'm not going to pull out a crystal ball because I found in this game it's not a winning strategy. But I think, look, there's a couple of things I was saying in terms of stability. In the last six days, we've seen the world change again very, very quickly. On top of that, the geopolitical challenges we saw last year, some of the activities in the marketplace we had to respond very quickly to. We had natural disasters of hurricanes and various other things coming through. So I think when I talk about stable environments, It's actually having confidence in what the tariff situation may be, having confidence in the geopolitical situation. Clearly, the weather we can't do much about other than respond the way we do, which is going to bounce back and get our numbers back to where they need to be. So I think at the moment, it's more, I think, probably caveating our ambition a little bit on what we can't control. Based on what we can control, we're confident of getting to our midterm guidance. And I'm not going to be drawn into kind of where that is at the moment, but I think you see the progression that we're making of 2.4% last year, underlying of three this year. We're heading in the right direction. And as I shared at the CMD, we're very clear that we've got the plans, the geographic expansion, the opportunities, and the team to be able to actually deliver against that. And I think 2025 is a great example of us managing to show that in what was a very, very tough year.

Super. Thanks, Simon.

Next question is from Celine Panuti, JP Morgan.

Thank you. Good evening, everyone. My first question is on apparel performance, which clearly accelerated. Is it possible to understand what's the difference in growth on on-premise versus off-premise? And you mentioned that 60% of the business is now the non-bottle. Can you give us some examples where you've trialled the apparel on tap and what are the ambitions or the plans for 26 on that development? Same, I would say, on RTDs and RTS. So that's for apparel. My second question is on the outlook for the year. You mentioned H280 profitability. In terms of top line, I note that you have quite an easy comparative in Q1, but could you help us understand whether there will be any, I mean, is H1 more weighted on top line growth or is there activity through the year that will make a difference? And maybe just squeezing another one is, I think you did very well in emerging markets. Is there, you think, durability of that momentum as we look into 26? Thank you.

Iceland yeah, I think look in terms of April as we said look six percent of our franchise at the moment is ready to serve and What we are seeing is a really positive uptick of the convenience that offers Consumers in all the markets have been in so we're seeing it think it gives us a lot of confidence that by expanding into more convenient formats It opens up new occasions that at the moment we haven't be able to tackle So I think what we saw is that coming through in q4. I think the other part as I said in the presentation is We saw a bigger de-seasonization push. So we saw some positive lifts coming through where we saw consumers enjoying Aperol over the Christmas holiday period and actually not relying on the sun to be shining to be able to do that. So I think that was a big part of what we saw in the off-premise. The difference between the on-premise and the off-premise is on-premise is where we put most of our focus. So as I quoted the numbers at plus 15% in the US, that's a big area where we believe we've got to build the brand and build the equity for the long term, which is why we're focusing more on that than we are on the off-premise performance. And that was reflected in the numbers. I think in terms of your question around first half, second half, I'm not going to comment on Q1 at this stage. What I will say, though, is that if you look at the investment profile that we have on our aperitivi, we are heavy heading into Q2, Q3. And as a result, we see the benefit of not being so heavy on ANP running through in the latter half of the year. I think that was more the focus in terms of the split. And I think the final question was on, sorry, I can't read my notes here.

Emerging markets.

Emerging markets, that's right, thank you. Sorry, I couldn't read my own writing there. I think on the emerging markets, you look at the whether it's across the Americas or EMEA or even APAC, you see the performance of the smaller markets. You know, we've mentioned before on other calls that we have double digit growth in a number of these. And that absolutely continues. And we are very confident, as I said, of the CMD. We have a significant geographic expansion opportunity for the portfolio. APROL is leading the way on that, but we continue to see significant opportunities. The new structure we've put in place of a dedicated team in APAC and also the team in the developing markets means that we can really now go after that with the right resources and the right team.

Thank you.

Next question is from Chris Pitcher, Rothschild & Co, Redburn.

Good evening all. A couple of questions for me, sort of partly linked. In terms of the Courvoisier performance, it was much stronger than certainly I'd expected, but it's obviously still down quite a bit on what you acquired. It looks like that was a big chunk of your growth in the fourth quarter. How much of that is real growth and how much of that is just lapping some very soft comparatives? And then in terms of the investment behind the brand, you talk about building brand equity. You've got good operating leverage in all of your regions, obviously, apart from Asia, where you put in what looks to be about 15 million extra cost. Is that the cost in Asia now that you think you need to build those markets you were just referring to, Simon? Or is that an area we should just expect not to be profitable for a while yet? Thanks.

Hi, Chris. Yeah, look, in terms of Courvoisier, yes, there is an element of a perimeter coming into that, but actually what was encouraging is that we are seeing a positive uptick on Courvoisier in a number of markets. So in the UK, it hasn't really had much going on for quite a while. So the fact that we're now starting to get listings into the UK on promise, we're starting to have activations around the key holiday periods, and also the interim campaign that we've used is bringing some new consumers into the category. So, yes, there's a bit of perimeter in there, but there's also, I think, a positive movement in the fact that, to be honest, there hasn't been much on the brand. So the fact we've started that is giving us a bit of lift. In addition to that, when we can leverage 27 in-market companies around the world, it also allows us to then start building more of the geographic footprint for the brand. So that's the second drive, Robert. But as I said, we're finalizing the strategy now. We'll come back and we'll share that when we're ready. We're not rushing. As you rightly said, it's a tough category. We want to make sure we get it right. But I'm very encouraged by what I've seen so far. I think the second question on APAC, if I understand, it was more on the cost-based. I think we've invested in our in-market companies, whether it be in China, South Korea, Japan, or even the structures in Australia and New Zealand. And at this stage, the key thing we're focusing on with Sashama coming on board is is re-looking at all of the strategies. He's been in the business now for a few weeks. He's getting round. Both Francesco and I are out with him in three weeks' time, meeting with the team to see kind of what we think will be the fastest way for us to get that cost base really delivering against the strategic ambition we have, which is to build more of the portfolio more successfully in APAC. We're definitely under indexed. So I think in terms of cost base, I don't see it significantly increasing. What I do see is an ability for our revenues to start accelerating off the back of the investment that's already been made.

Thank you very much.

Next question is from Olivier Nicolai, Goldman Sachs.

Hi, good evening. First of all, free cash flow was much better than expected. Could you perhaps help us how to think about it in 2026? And we should expect similar working capital improvements, similar capex and cash tax. And then second question, I know it's a little bit early to assess the situation in the Middle East, but what kind of impact on duty-free you would expect there? Thank you.

Okay, the first one, Francesco, you want to take the free cash flow? Absolutely. So if you look at the free cash flow in 2025, we have a recurring level of 571. This included an improvement of operating working capital of 35 million. So if you exclude that, we are at 536. So what's going to be different in 2026? You consider that we have, indicatively, 100 million of extraordinary capexes, including the finalization of our capacity in Kentucky, the headquarters, some IT upgrades. So this is part of the last part of Extraordinary CapEx. This will be offset by the proceeds coming from the Averna closing, which is more or less the same. So the remaining parts will have to do with the increase of the inventory, okay, which is something on which we are trying to optimize. But we expect, in any event, cash flow to remain solid. So essentially, if you look at the level of 500, that's before any change in operating working capital. As you have seen, last year we had 100 million of increase in maturing inventory. This was offset by improvement on the payable and receivable. We keep working on both in order to minimize the impact.

Okay. And just answering the question on the Middle East, a big caveat up front. Look, we're six days into this. As a result, if we hadn't been having this call last week, we wouldn't be having this question, to put it in context. So I think what we look at is we break it into three areas. We break it into domestic impact in the Gulf states and some of our business there. We then look at the impact on duty-free and what that may mean in terms of traveler numbers and airport penetration. And the third area is we look at what the impact may be on input costs through oil or gas. So at this stage, we've had a quick look at that, given the fact it's only just really happened. We don't see any material impacts at this stage. We think they are manageable. We do not have a big business in the Middle East. We do not have a big business that skews heavy on duty-free in the Middle East. The bulk of our travel retail business is in Europe. And so I think we'll continue to monitor it pretty closely. From an input cost point of view, look, we've got some long-term contracts that I think give us a fair degree of protection through this year. But the key thing is that the business has been around since 1860. We've been through disasters and wars and various other things, and I'm very lucky to have an extremely experienced team. So I think we'll navigate that as we come through.

Thank you.

question is from Alessandro Tortora, Mediobanca.

Yes, hi, good evening to everybody. Just let's say three questions. The first one is if you can elaborate a little bit more on let's say the Crodino side as you recently introduced a bigger format and also if you see any other possible new brands in this let's say zero ISO space or basically is Crodino your full bet? So this is the first question. The second one is on the perimeter change impact you see in 2026. Can you help me to understand if you're including Averna into these or let's say this is just, let's say, excluding Averna because I see this 70 million but also 30 million EBIT which looks, let's say, a little bit high. And the third question is... Just on financial charges, considering that you were able to cap that close to 100 euro million, so if you can give us some kind of indication on these things.

Okay, I mean, I think in terms of Credino, what I'd start with, as I said at the CMD, is look, I think any other company would bite your hand off to have a viable non-alcoholic play. It's got 60 years' worth of amazing Italian heritage. So I think we're in quite a good position to be able to leverage that. And I think there are probably two parts to it. One, we saw good performance in the home market in Italy. And in addition to that, in the markets where we've launched it, we saw double-digit growth in most of them. So I think the underlying opportunity with Codino is significant. We're still working on how quickly we can roll with that. But the increase in size worked well. We managed to manage the pricing through the Italian market and really encouraging signs so far from the international markets. In terms of Averna, I'll pass it over to Francesco.

Yes, Averna is included in a 70 million net sale impact and 30 million EBIT impact. Clearly, the vast majority has to do with Cinzano, but there is a portion also attributable to Averna, which we expect to close in Q2. Moving to financial charges, as you've seen, we have 101 million in 2025. We expect the numbers to be similar in 2026.

Next question is from Paola Carboni, Equitasim.

Yes, hi, good afternoon everybody. I have a first question about your AMP budget. If you can guide us a bit on what you expect in terms of commitment to raise your AMP budget for the current year. Second question is about the test you had started for canned Aperol. So you have spoken about Aperol in tap, but I was wondering whether you have any update on the project for Aperol in can. And secondly, just trying to reconcile your indication of a 3% organic annual growth, excluding the hurricane impact, which would imply, if I'm not wrong, about 7% organic growth in Q4 alone, adjusted for that. So I was wondering why, I mean, to what extent you see this as non-replicable at the start of 2026. So what you see as non-repeatable, let's say, in this Q4 performance, which is driving you to a more subdued guidance for revenues in Q in 2026. Sorry, thanks.

Okay, great. Yeah, I think, look, in terms of the ANP, the guidance will give a really two things. Yes, we intend to continue to increase behind the opportunities that we have. As I said before, you know, we've got some brands where we think we can really invest behind it and get a great return. We also have the opportunity of taking our brands into new geographies, which means we want to take up the ANP. I think also in the current environment, just going back to Trevor's point, as I said, I passionately believe that investing now, when other people are pulling back on their A&P, gives us a disproportionate return on the investment. And I think the proof of that is what we managed to pull through in 2025. So I think what we're guided is that we'll see that going up, but perhaps more importantly, going up would be the consumer-facing A&P as we make our existing A&P more efficient by reducing our non-working. And the team is working hard in terms of that. In terms of your second question, any update on the can? Yes, the can is progressing at pace. We will be launching into five countries, and no, I'm not saying which ones. So watch this space over the summer, and hopefully you can enjoy one. The third one was in terms of the 3% underlying. Yes, the math is correct. It would have been close to 7% in Q4, and I think in total we've estimated the hurricane impact about a $21 million impact. Correct. So in answering your question, why can't we have it again this year, it sounds like you were in one of my budget meetings. I was asking the same question. Look, we're keen to see what we can do, but we recognize, as I said earlier, it's still a pretty bumpy market out there. So I think we're cautiously optimistic, but we've got to see how the year plays out.

Okay, perfect. Thank you very much.

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Okay, great. Well, listen, thank you to everyone that joined. As usual, any questions, please follow up with the team, and we look forward to seeing you over the next couple of weeks in many cases. Okay, thanks for your time. Bye-bye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

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