Sheffield Insulations Group

Good morning, ladies and gentlemen, and thank you for joining us for this full year 2025 earnings release of SIG Group. My name is Anna Erken, CFO of the company, and until two days ago, also interim CEO. I will discuss the results with you today, and it is a big pleasure to have our new CEO, Mikko Keto, with me on the call today, who joined the company on March 1st. As always, the slides for this call are available for download on our investor website. This presentation may contain forward-looking statements involving risks and uncertainties that may cause results to differ materially from those statements. A full cautionary statement and disclaimer can be found on slide two of the presentation, which participants are encouraged to read carefully. And with that, Nico, welcome on board officially. Do you want to say a couple of words as a first introduction?

Thank you, Anne, and I would like to congratulate you and the SIG team for the strong fourth quarter. And that fourth quarter gives a solid foundation to start the work for 2026. And I began my onboarding a while ago, firstly looking at outside-in, the company and the performance, And now I have pleasure to do onboarding in the company looking at inside out. And there are some really strong points in the company when I look at it. For example, solid foundation through innovation, customer partnerships, and delivering value both to our customers and shareholders. One key aspect of the business also is customer retention. I can see that the customer retention is high. We have a long-term relationship with most of our customers. It means that the lifetime value of the customer is high. I will continue my journey in the beginning to understand the business in more detail, now being inside the company, and I'm looking forward to working with you all in the coming months and years to deliver value to the shareholders and the SIG organization as a whole. And thank you for your trust and support and looking forward to working with you all. Anne, back to you.

Thank you, Mikko. Let's start with the key messages for the fourth quarter. In line with our announcement on September 18th, our revenue growth has reflected the substitute consumer environment throughout the year. However, we were pleased to see that we saw a sequential improvement in the fourth quarter, resulting in a positive 0.5% growth for Q4. This brought full-year revenue growth to plus 0.1% at constant currency and constant resin, so to the upper end of our expectations communicated in September. On a substrate level, the septic carton grew by 1.2%. It was especially strong in the Americas, which is one of the reasons why we expand the capacity of our production plant in Mexico. The chilled cotton business declined by 5.3%, impacted by the competitive environment, especially in China. It is noteworthy, though, that the situation was improving in the fourth quarter. The bag and box and spouted pouch business was negative 3.4%, reflecting the higher comms in the second half of the year. As announced in September, following a strategic review of the group by the Board of Directors, and in light of the prevailing soft market conditions, we have recognized non-recurring charges of €351 million pre-tax in 2025. All charges relating to this review have been booked now. In the fourth quarter, these amounted to 31 million, with the largest item being restructuring charges relating to the elimination of positions as discussed at the investor update. All conversations with the affected employees have been completed in 2025, and the corresponding savings are ramping up throughout the first half of 2026. Also, during the fourth quarter, we could complete two asset disposals with land sales in China, the retired Schildkarten plant in Shanghai, and in Germany. These two divestments contributed approximately 17 million euros as a positive one-time impact to the 2025 free cash flow. Now moving to filler placements. We placed 68 new fillers in the year 2025 across all geographies and well within our aspired range of 60 to 80 placements in a year. The incremental growth of fillers in field was 14, as 54 fillers were returned or scrapped at customer sites. The average age of these old fillers was more than 15 years. Total book value was around 1 million. This was normal course of business and has been reflected in the financials as such. As discussed in the Q3 call, as part of the strategic review, we have also assessed the utilization and corresponding cash generation of fillers in field. This led to €21 million of filler impairments within the non-recurring items for underutilized fillers at customer size, respectively for fillers on stock. Please note, this does not mean that there was a reduction of available capacity in the field. For 2026, we have an attractive pipeline and expect to place a similar number as in 2025. On the innovation side, the second machine of our new NEO line has been placed in Saudi Arabia. Next to higher speed and output, this machine is also characterized by a very low waste rate of below 0.5%. The NEO line is of course also capable of processing the new aloe-free full barrier sleeves, where our roll-out continues in Europe and also in Southeast Asia. Terra aloe-free full barrier from SIG is the first aseptic carton that is recognized as recyclable under Korean regulations. In the other direction, from east to west, we see the expansion of the dome mini-formant, which was first introduced in Asia and is now coming to Europe. It is expected on shelves in Europe in the first half of 2026. And finally, we were very proud that we received for the seventh time the Ecovalis Platinum status with a record score of 99 out of 100. Now let's take a look at how our business has evolved on the revenue side. We closed the year 2025 with a revenue of 3.25 billion euros. In reported terms, this is 2.4% below the prior year due to the stronger euro. At constant currency, revenue growth was 0.4%, and at constant currency and constant revenue prices, it was up by 0.1%. The revenue share by segment, which is the region, is almost unchanged versus the prior year. Europe with a 32% share remains the largest region. Asia-Pacific and the Americas each have 27% share and EMEA is 14%. For SIG, the largest countries in the EMEA region are Saudi Arabia, Egypt, North Africa and India. By business line, Esceptic Carton is 79% of our sales. Schildkarten is 4% and the Bag-in-Box Pouted Pouch business is 17% of our revenues. unchanged to the previous year. By product, 87% of our revenue is packaging materials and service contributes 7% was last year 6% and equipment 6% was last year 7%. Moving to the results of 2025 on profit, cash flow and returns. Adjusted EBITDA amounted to 718 million euros with a margin of 22.1%. Excluding the non-recurring charges related to the strategic review, adjusted EBITDA was 788 million euros with a margin of 24.2%. This compares to 24.6% in the prior year. The adjusted EBIT was 442 million euros with a margin of 13.6%. If we exclude the non-recurring charges, adjusted EBIT was 500 million euros at a margin of 15.7%. On adjusted net income level, we recorded 231 million or 285 million without the non-recurring charges. EPS declined from 81 cents to 75 cents. Pre-cash flow landed at 191 million euros for the year 2025 after 290 million in 2024. As the non-recurring charges in 25 were almost exclusively non-cash, there is no need to discuss a number without non-recurring items here. Lastly, return on capital employed, ROSI, calculated at a 30% tax rate, was 25%, and 29% excluding the impact of the non-recurring charges. Capital employed is here defined as PP&E, right of use assets, capitalized development and IT costs, networking capital, and the non-current deferred revenues. Looking at the Q4 figures, revenue at constant currency slightly grew by 0.6% and by 0.5% at constant currency and resin. Adjusted EBITDA was €223 million, translating into a margin of 24.7%. This includes €8.4 million of non-recurring charges. Without these charges, adjusted EBITDA was 231 in the fourth quarter, with a margin of 25.7%. Adjusted EBIT was 156 million, translating into a margin of 17.4%, and also including 8.4 million euros of non-recurring charges. Without these, adjusted EBIT was 165 in the fourth quarter, with a margin of 18.3%. Adjusted net income was 78 million euros, excluding the non-recurring charges. It was 88. Free cash flow in the fourth quarter was 275 million, close to previous year's levels. Turning now to the performance by region. In Europe, full year revenue has declined by 0.8% at constant currency compared to strong prior year growth of about 6%. We were delighted to see the region showing a growth of 4% in the final quarter of the year. This performance reflects several factors, including lower availability of raw milk for aseptic processing compared to the strong supply conditions in 2024, especially in the second and the third quarter of the year. In the fourth quarter, the industry observed lower raw milk prices and correspondingly more milk going into aseptic cartons. Also, the region benefited in 2024 from the ramp-up of filler placements following wins related to EU regulations on TZ caps in prior years. Throughout the year, export volumes of UHT milk has been lower, and the juice category in the region has also declined, impacted by a weak summer season. Excluding non-recurring charges, both adjusted absolute EBITDA and EBIT increased in Europe. Also, margins extended by more than 200 basis points. The margin was positively impacted by price and by a favorable customer mix due to the lower export volumes. In India, the Middle East, and Africa, overall revenue development for 2025 was impacted by a strong prior year comparison of 13% growth, leading to a slight growth of 0.4% for 2025. In the last quarter of 2025, revenue growth has been slightly positive too. Carton volumes have been impacted by lower consumer demand across the region, as well as by higher competition and the monsoon season in India. Back in Boston, spouted pouch revenue growth has been strong in the region, including in India. The EBITDA margin without non-recurring charges came in at 26.8%. slightly ahead of the previous year. Ethics hit wins in the region were more than offset by pricing. The EBIT margin was slightly below the prior year, as it was impacted by additional depreciation of the India plant following its startup. For the financial year 2025, revenue for Asia-Pacific declined by 1.7%, both on a constant currency basis and on a constant currency and constant resin basis. Continued market softness in the region and the competitive environment in Schildkarten impacted our revenue performance last year. Also, the later occurrence of the Chinese New Year in 2026 had an impact on volumes in China, particularly during the fourth quarter, making Asia the only region that did not record the positive volume growth in Q4. Still, we were able to continue to outperform the market in China with product innovation and flexibility. Southeast Asia, Japan, and Korea continued their growth momentum despite the market downturn. We recorded strong filler sales and also have a good pipeline for 2026. The adjusted EBITDA margin without non-recurring charges was negatively impacted by product mix and SG&A costs. The adjusted EBIT margin was additionally impacted by the annualization of the depreciation of the new chip plant in China. The Americas were the region that recorded the highest growth in 2025, with 4.4% at constant currency and 3% at constant currency and constant risen. Deceptic carton growth was especially impacted positively by liquid dairy in Mexico. Also, we saw price increases in Brazil, and a higher service revenue. In the back-in-box business, share gains achieved in the U.S. in dairy and in syrup could mostly offset declines in wine, the retail business, and non-systems businesses. In this segment, the margin both on an adjusted EBITDA or EBIT level was impacted by unfavorable foreign currency movements, investments necessary to enhance capabilities, and wage inflations. On this slide, we have summarized the breakdown of the full 351 million euros non-recurring charges that were recorded in 2025 in connection with the strategic review and the market softness. After the 320 million recorded by the end of the third quarter, the fourth quarter saw an additional 31 million euros. The total of 351 million euros is well within the guidance range of pre-tax 310 to 360 million euros which we provided in September. We also indicated that around 90% of this amount will be non-cash with the cash outflow mostly occurring during 2026. We expect the 26 cash impact to be approximately 25 million euros. The split by bucket of the non-recurring charges is as follows. 107 million is an impairment to the value of the bag and box and spouted pouch businesses reflecting weak consumer sentiment and business performance. This has affected the recoverability of acquisition-related assets. 86 million of impairment concern the value of the chilled carton business. This principally reflects the weak market conditions in China, which has impacted the recoverability of the assets. 82 million relate to the reassessment of the required operating capacities in aseptic cotton within the context of the current weaker market environment. This includes production capacities in India, selected equipment in China, and some filling lines across locations where, as discussed on the first slide, impairments related to low-capacity utilizations. Under the headline innovation, around 62 million is associated with the reassessment of the group's innovation portfolio, including the impairment of equipment that is no longer required and the impairment of capitalized development costs relating to projects that have been stopped following the strategy review. Finally, a charge of 14 million euros mostly covers the restructuring costs related to the elimination of a low three-digit number of positions in SG&A and R&D. Our annual report summarizes all relevant information in node 4 of the financial review and additional details are presented in the nodes 7, 9 and 12 to 14. Let me now remind you about what we discussed in Q3 on the presentation of the non-recurring adjustments. In line with our standard definition, Charges included as part of adjusted EBITDA are those where regional management is held accountable for the delivery of returns on customer projects, such as filling line investments or product launches. As you can see from the graph on the right, this portion amounted to 69 million. Charges excluded from adjusted EBITDA include non-cash unrealized derivative positions and non-cash impairments of intangible assets. In addition, we also take charges below the line that relate to footprint or capacity rationalization, as well as rightsizing of the organization. Any such booking below the line needs group approval and regularly follows our standard definition. Charges excluded from adjusted EBITDA amounted to approximately $281 million for the period, taking the total non-recurring charge recognized in 2025 to $351 million. Next, let's take a look at the EBITDA bridge for 2025. EBITDA was affected by a negative 44 million euros relating to the currency impact, which reduced the EBITDA margin by 60 basis points. Excluding FX, the adjusted EBITDA without the non-recurring charges increased by 12 million. This improvement of 12 million was mostly supported by 42 million contributions from top lines. which reflects price increases and favorable mix impacts. In addition, raw material costs were overall lower by 9 million in 2025 compared to the prior year. This was mostly due to the polymer category. On the other hand, production was negative 10 million, as the lower volumes in the second half led to unabsorbed fixed costs and lower efficiency. In addition, SG&A was up 17 million euros in 2025. This included wage inflation and growth investments in the first half of the year, which we have reduced in the second half due to the softening of the market. Turning now to adjusted EBIT. As of 2026, we will report our business performance on an EBIT level, as introduced during the investor update in October. We believe this enhances transparency and relevance, and at the same time will support our management teams around the world to take better capital allocation decisions. In the backup of the presentation for this earnings call, you can find a summary of 2024 and 2025 EBITDA, adjusted depreciation and amortization, and presiding EBIT by region. The adjusted EBIT margin 25 without non-recurring charges amounted to 15.7%, below the prior year number of 16.5%. Naturally, also here, there was a negative impact of FX on the margin 70 basis points. In absolute terms, adjusted EBIT without non-recurring charges was €511 million, with the improvements in EBITDA discussed before being offset by additional depreciation of €12 million. driven by the PPE capex in India and China, as well as by the filler placement. In this slide, we show our usual reconciliation between reported EBITDA and adjusted EBITDA. For 25, you can see the impact of the non-recurring charges on the relevant line items, with the right-hand side aligning to our definitions, as discussed on Flight 30. Same as in Q3, other includes costs for the renewal of the group's IT systems and consulting charges for the strategic review. Under the column for non-recurring charges, other reflects penalties related to the delay in the further expansion of the group's production facilities in India and the charge for the CEO separation. The gain on sale of PP&E and other assets of 5 million euros primarily relates to the asset sales in China and Germany. Following the methodology presented on the previous slide, here we show the impact of the non-recurring items on net income and adjusted net income. Profit for the period without non-recurring charges was 208 million. In 2025, including all non-recurring charges, the group recorded a loss of 87 million for the year. On adjusted net income, as stated in the last quarter, the ONIX PPA amortization, which arose from the acquisition accounting when the group was acquired by ONIX in 2015, was fully amortized as of the end of Q1 2025. As such, this line will be zero going forward. We have added for your reference a slide to the backup of this presentation that summarizes the amount of the ONIX PPA and all other PPA by year and also shows the impact on gross margin SG&A and EBIT. Please note that also all other PPA is expected to be lower in 26 following the impairments in 25. As a disclaimer, the 26 estimate is of course subject to FX fluctuations throughout the year. In summary, the data between the reported and adjusted KPIs will be smaller going forward. Net capex, including lead payments in 2025, amounted to €200 million, or 6.1% of revenue. While capex for the plant in India following the completion of the first phase was lower, we continued to invest into the expansion of our Mexican aseptic carton factory, given the strong growth that we have seen in the region America Northwest. Please also note that the cash inflow from the sale of land and buildings in China and Germany of 16.9 million per the group's definition is included in net capex. For the 68 filler placements, 173 million capex were spent. The upfront cash ratio has been slightly lower at 71% in 2025, but still at a good level. Net filler capex as a percentage of revenue was 1.5% after 1.1% in the previous year. Free cash flow amounted to 191 million euros in 2025 after 290 million in the year before. This was driven by the lower adjusted EBITDA versus prior year, which included a significant FX headwind of 44 million as discussed before. The other significant negative impact lied in the higher payments for customer volume incentives in 2025, which were a result of the very strong volume growth of 6% in 2024. As an approximation, in the balance sheet, the provision for customer volume incentives decreased by 39 million in 2025. On the positive side, tax payments were lower by 11 million in the period. Additionally, two favorable impacts that were of a one-off nature supported the cash flow. One, the already discussed 17 million for the asset disposals in China and Germany. And two, lower interest payments as for the new bond of 2025, interest payments only occur once per year. Overall, interest payments were lower by 27 billion euros. Net working capital as a percentage of revenue improved by 100 basis points as accounts receivable were lower. This was offset in the operating working capital by the lower liability for various customer incentive programs. Turning to debt and leverage. Net debt at the end of 2025 was €2,144,000,000. The stronger euro helped to reduce the reported net debt by €43,000,000. However, the free cash flow earned in 25 was lower than the dividends paid in 25. Our interest expense was lower by 15 million euros versus previous year. This was driven by more favorable underlying market rates and an on average lower utilization of the revolver, partially offset by the higher coupon of the new bond. The net leverage ratio at year-end stood at three times after 2.6 times in the prior year. The net leverage ratio was influenced by the lower adjusted EBITDA and also by the non-recurring charges. As per the determination rules of our debt agreement, which, for example, excludes the impact of impairments, the net leverage ratio stood at 2.8 times. In line with the initial guidance that we had provided at the investor update in October, we expect a similar market environment as in 2025, resulting in an outlook for revenue growth on a constant currency and constant resin basis of flat to 2% for the year 2026. We feel encouraged by the sequential improvement and return to growth in the fourth quarter. We said in October that we would see the 26 EBIT margin improve versus the 25 margin, excluding non-recurring charges. And we expect to land in a range of 15.7% and 16.2% this year. In line with our usual seasonality, adjusted EBIT margins and free cash flow will be higher in the second half of the year. As always, our guidance is subject to input cost changes and foreign currency volatility. The guidance for the adjusted effective tax rate is 26% to 28%, and net capex, including lease payments, is projected in the corridor of 6% to 8% of revenue. On the dividend, as highlighted in our communication of September, the Board will propose to the AGM to pause the payout in 26 for the year 2015. Our midterm financial guidance is laid out as follows. Revenue guidance for constant currency, constant revenue growth is in the 3% to 5% range, reflecting a normalization of market dynamics in the midterm. The EBIT margin will reach a level of above 16.5%. Guidance for net capex, including lease payments, remains at 6% to 8% of revenue, and there is no change to tax expectations. We will focus on cash flow generation and deleveraging to improve our balance sheet. In the midterm, the group targets a net leverage ratio of around two times, and we have set ourselves an important milestone of achieving 2.5 times by the end of 2027. The company remains committed to returning cash to shareholders and expect to reinstate dividend payments in a corridor of 30 to 50% of adjusted net income in the coming year. In summary, SIG has a clear path forward for value creation. With our strong business model and innovation capabilities, we can build on multiple growth drivers. We have executed the cost adjustment program that we described in October, and there are plans in place to further improve our best-in-class margins. Rigorous capital allocation discipline will improve our balance sheet and return profile and foster a robust cash generation. This concludes the presentation. 2025 has been a challenging year for SIG, but a year that ended on a more positive note. We would like to thank our customers for their trust in our systems and solutions, and our shareholders for their continued support for the company. And finally, a heartfelt thank you to the SIG teams around the world for their hard work, dedication, and commitment. And we are now happy to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Webcast viewers may submit the questions in writing via the relative field. Anyone who has a question may press star and one at this time. The first question is from Ioannis Matvoulas, Morgan Stanley. Please go ahead.

Good morning, Mikko and thank you very much for the presentation. Mikko, congratulations on the new role and I'd like to address the first question to you if I may. SIG has already done a lot to reposition the business and cut costs over the past several months. Where do you see the biggest opportunities to go even faster and deeper on the self-help journey? And what could this entail for additional cost counting or potential changes to the business mix? And I'll stop here for the first one.

So, of course, I started on Monday. And I've been looking at, as I said in the beginning, firstly, outside in. I've been looking at the benchmarks, the KPIs from outside. And I think we can still improve our competitiveness. And I'm trying to look at the value creation short-term and longer-term. And, of course, the idea is that the long-term we build a stronger foundation for the coming years. And, of course, the areas what I'm looking at is still organizational efficiency. I'm looking at the performance culture. I'm looking at the purchasing procurement and also opportunities to simplify the business and how business is done and developed. When looking at the benchmarks, how we compare against other companies and peer group, I'm typically targeting best in class. But I'm just in the process of doing that, and I think I will be working with the SIG team to look at all these areas. But basically, the target is to be extremely competitive in terms of efficiency, performance cards, purchasing, and looking at ways to simplify the business.

That is helpful. Thank you very much for that, and good luck with the new role. Then the second question is just on the guidance. When I look at the EBIT margin that you managed to achieve for 2025 at 15.7%, excluding the 1-0s, and then looking at 2026, a guidance where the low end is pretty much at the same level, but then you are indicating top-line growth of 15%. between zero to 2%. So worst case, the top line is not going to be worse. And then you have taken some costs out in 25 that should really fit through in 26. So what would get you to the bottom end of that range, assuming you're still able to maintain the revenue at least stay below over the next 12 months? Thank you.

Yeah, Yannis, thank you for the question. And I understand your view on this guidance, and I think it makes perfect sense. I would also call it cautious guidance, but we also have seen, especially in the last couple of days, that the world remains very volatile, and let's first start the year, and then we see how this develops.

Okay, that's clear. Thanks very much, and I'll join the queue.

The next question from Joran Efert, UBS. Please go ahead.

Thank you very much for taking my questions. And would be two to three, please. The first one also for Nico, if I may. You were saying you want to focus on to improve competitiveness. What do you mean with this exactly? And what are the action points to do so? Because we thought that SRG is gaining market shares over the last couple of years. So what exactly do you think needs to improve here? This would be the first question. Second question, if I may. on the competitiveness. You said in the 2025 release that you are facing more competition in some regions. Can you say from where this is coming from? Is this coming from your key competitor? Is this coming from non-system suppliers? And the third question, just technical one, please. Can you help us? What do you expect on average selling prices for 2026 and on the raw material price situation? What's your budgeting? Thank you.

Maybe I will start and then hand over to Anne. And when I talk about competitiveness, our track record is good. If you look at the customer retention, we don't really lose customers. And the lifetime value of the customer, if you think that we place a filler, the lifetime value of then the packaging material and the services is really high. So in that sense, we are competitive. And, of course, the foundation is piece of equipment or technology, which is absolutely unique, and there's nothing matching that one. So the kind of starting point is good. But, of course, we are facing all the time competition, so it's part of the performance culture that you always need to look ahead. You can't be complacent at any given time, despite our position is good. And when I talk about competitiveness, I would look at, Still, the organizational efficiency. Are we at a good level in all the KPIs? And I'm just started, so I will be diving into details in the coming weeks and months. Are we efficient organization, how we run the business? And then, of course, looking at competitiveness in products, looking at competitiveness in packaging material, looking at competitiveness in service. And all those three areas, they have slightly different kind of how you measure competitiveness. One is the technology, one is the product cost, and therefore also the purchasing program is very important factor to us. And then, of course, as a part of the overall competitiveness has to do with organization efficiency. Is there ways to simplify how we run the business? because typically simple is more effective and efficient. But I will dive into all KPIs, and I think it's more, as I said, creating that we are competitive also long-term, because as Anna may explain more, we are facing, of course, competition from non-system suppliers for the packaging material. We've been defending that well, because... We are not losing any customers, but of course, long-term, it's a race that we need to be competitive with a piece of equipment. We need to be competitive in packaging material. We need to have a value-add services so that customers see the value of our technical support and spare parts, so it's going all across.

Maybe if I can add on increased competition, I have mentioned that on the slide for Asia, specifically on the chilled carton business, where we said additional capacities have been placed in that market in the last two years, and that's also why we think it's not the perfect place for us to be active in the future. Assuming that probably a follow-up question will then be where we stand on finding a strategic partner, let me also comment here the process is well underway. And we would update as soon as we have something to say. And Jan, you have also asked on sales price development and raw material cost development. So on the price side, as always, we will have regions that will see price increases driven by inflation especially. And we will see others where it's probably more stable. And on average for the group, I would not believe this plays a major role in following now really four years of increasing prices, I think that has also demonstrated the value that we capture with our customers. And why is that at this moment considered also to be absolutely the right thing? Because the raw material situation for us this year is not so much a discussion topic, but of course we also monitor that situation carefully now with the situation evolving in the Middle East. I would also like to remind you that we have fixed long-term contracts on the paper side, so we know what the price outcomes will be on that front. And we apply hedging for the aluminum and polymers. But of course, there's always an unhedged portion, which then fluctuates with the market. But at this moment, you don't see us overly excited on that front.

Thank you. And one clarification question, please. You mentioned one of restructuring cash costs in 26 of around 25 million, right?

Yeah, overall cash impact of the non-recurrent charges, 25 million for 26. Thank you.

The next question from Alessandro Folletti, Octavian. Please go ahead.

Yes, good morning, Anne. Hello, Mr. Ketton. Thank you for taking my questions. I also have a couple. one by one, maybe on the market in the Americas, or maybe more specifically the US, you mentioned that you saw certain categories up, more related to dairy, in bag in box and spotted pouch, with others down. Can you give an indication of what's the size of these two categories, so we can sort of understand, I imagine one is growing faster than the other one, Old category is going down, new category is coming up. So we can have a view on when this whole business can become positive. And same question on the system, non-system slate of sales.

Yeah, thanks a lot, Alessandro. So good morning. On the America's bag-in-box spouted pouch, indeed, as we said, and also as we have described in the investor update, there is different product lines below. So going into food service, going into retail, and also more industrial applications. And although the market overall for food service is not yet super exciting and picking up, we believe that we have held up very well and also improved our – we had share gains in the food service segment, especially in dairy but also in syrups. But then the retail business, which is largely the wine business, has been soft. Wine as a category is a little, or alcohol in general, is a little under pressure. And also non-system applications that we still had in the US have not been very much growing in 2025. But overall, on a net basis, I think this came out slightly positively for the Americas, and that's why we are okay with the development in this year in the given markets. And overall for the U.S., I think also the growth of ASAP Decathlon, again coming back to why we are expanding the factory in Mexico, has been very satisfactory.

Okay, but is it fair to assume that sort of the old declining category still represents 80% of your business and the other one, the new and growing has more, 20% or am I far away from this?

No, so I would say overall the food service business is clearly more than half of the bag-in-box spout-to-pouch business, absolutely, yeah.

Right, and then I have a question on your fillers. You mentioned you will install at about the same number as this year. Now you have made some impairments last year. Can you use some of those fillers that you have impaired now for the growth that comes this year? And does it have an effect on your CAPEX then?

Yeah, of course. I mean, we will not scrap anything that can still be used. That is normal practice also. We have always done that that way. And we will continue to do that, absolutely. So, yeah, and if that reverses, we will, of course, also call that out specifically.

Okay. Okay, maybe one final one on the free cash flow. In the bridge, you mentioned already a couple of parts, but maybe can you give an indication of what can be expected from the working capital in 2026?

Yeah, so if I should build a bridge for the EBITDA of 2026, I would assume that the EBITDA in line with the earnings guidance should be broadly the same, considering that we will have one quarter of FX overhang because the appreciation of the euro only started basically in April last year. I would believe that working capital definitely will not see a negative contribution again in 2026. And then on the other hand, you also need to consider that the land and asset sales, of course, won't repeat and that we will have the one-off of the restructuring or reorganization that we have called out with 25 million. And I think all of this should make you land slightly above 200, probably.

All right, thank you. That's very helpful. Maybe one very final addition. When you speak about the working capital not see another contribution, you speak about the net working capital or the all included operating net working capital?

Sorry, all included operating working capital.

Okay.

Thank you. The next question is from Benjamin Tillman, Varenberg. Please go ahead.

Yeah. Hey, good morning, everybody. Hey, Anna. Welcome on board, Mikko. Two questions from my side, if I may. We can take them one by one. First one is on the filler placement. You mentioned, Anna, that in 26, we can expect a similar number of fillers being placed than in 25. 68 new fillers in 25, 54 were replacement and scrapping. I was just wondering can we assume a similar mix in 2026 as well in terms of how many new fillers are coming on top and how many are being replaced for the customers? That's the question, thank you.

No, Ben, thanks for the question. Good morning. So first, I would say when we talk about filler placements, really the number of new placements is always the more important one because that is placement for customers that have a clear plan to sell something. Otherwise, they wouldn't put out the money for this filler. And capacity of newly installed fillers, of course, is always higher than capacity of old fillers that we take out of the market. So on a net-net basis, It's an estimation that net increase of fillers, but the capacity added is always more. So what do we expect as replacements or retirements for 2026? It's always difficult to quantify in the beginning of the year, but I would not expect that it's going to be a zero or a very low number. So it's normal cost of business. You always have some coming back. And the longer the company is successful in the business, of course, also the more likely it is that some of our fillers placed in the market are aging and are being replaced by new fillers of our group.

Okay. And then maybe a follow-up on the filler placement. You know, we have seen a very strong run rate in the last couple of years if I look back to 2018. The filler placement in 25 and 26 are below the average run rate in the last couple of years. And there was an impairment partly because of underutilized fillers on the customer side. Is that something that worries you as of today that customers maybe have invested a little bit or over invested in particularly the years around COVID and shortly after and we should get used to a lower run rate or do you think this is a temporary lower run rate?

Ben, I think we always say 60 to 80 new placements in a year is the corridor that helps us to continue our market share gain trajectory. And yes, the number has been elevated a couple of years ago, but that also was on the back of the introduction of new EU regulation, where customers, especially in Europe, had to revisit their fleet and then made more often a choice for SIG than normal. And also considering the fact that we have a USP with the flexibility on sizes that we produce on a given filler, that also attracted significant attention of customers, of course, and continues to do so during the time of shrinkflation. So I would rather explain it with positive one-off that we have seen in the last couple of years than with we now see a negative environment. It's within 60 to 80, everything is good enough to sustain our pace.

Okay, perfect. And then maybe a last one, if I may, would be on competition. It seems that pricing is not a big issue for you guys in 2026, which is clearly good. I was just wondering, has anything changed in the competitive landscape recently? We have seen that, for example, LamyPak has launched a tabletop carton. Is there anything that you would flag? It seems like you continue to gain market share if I look at the numbers of your peers, any pressure on pricing from any new competitors? It doesn't seem like it, but I'm a little bit surprised. Any color on how you view the competitive landscape as of today compared to maybe last year?

Yeah, I think the competitive landscape overall hasn't changed. The non-system suppliers have been around for many years. They basically provide roll-set systems, not sleeve-set systems. So, But that said, we always need to, of course, be vigilant, make sure that we remain competitive and that we drive innovation in the market so that customers want to choose SIG also for the future. And that is exactly what we do. So we're never going to become complacent or stop innovating and driving our system forward. But at this moment, I wouldn't see any reason to be looking at the world differently than before.

Okay. Perfect. Thank you very much, Anand. I'm going back into the queue. Thanks, Ben.

The next question from Pallas Mittal, Barclays. Please go ahead.

Good morning. Thank you for taking my questions. I'll take it one by one. So firstly, you highlighted America was strong, and one reason was the growth in Mexico. Given the environment in Mexico at the moment, we have seen some staples companies highlighted as a tough environment. So how should we think about that for SIG in 2026? Are you seeing any impact on your operations so far?

Good morning, Pallas. No, our operation in Mexico is running stable. And, of course, we monitor also this one very carefully because the safety of our teams It's the most important thing for us, but we don't have any disruption there or any problems to report at this moment.

Sure. And then secondly, sir, I mean, at the top end of your margin guidance, EBIT margin for this year, 15.7 to 16.2, you will be quite close to the 16.5% guidance that you have for your midterms. And given that you're not expecting any significant market improvement this year, is it fair to think that the margins could be much higher than that 16.5% that you've indicated in the outer year?

Yeah, as we have discussed in the investor update in October, we see this midterm guidance really as a midterm guidance and not as a long-term guidance. And, of course, as Miko has indicated, the company – It's biased to get better every year and of course we also would target a higher number. But we will update once we get there. I think until then, the 16 and a half is a nice yardstick to use for the time being as a midterm kind.

And I think of course there's still a cost inflation in the cost base every year. Depending on the market, 4% plus inflation on the SG&A, which is coming to all the companies, so it's putting pressure. Of course, we are looking at competitiveness long-term, and I think we will detail that maybe later in the year with our long-term plans. But I think it's good to understand that there's also cost inflation, of course, in the cost base of the company, which is putting some pressure.

Sure, thanks, Miko, and congratulations. And lastly, if I can just squeeze one in, is there any update on the litigation, any updates on the court? How should we think about that?

No, there is no update on the litigation process that is running as per the timeline, and we also have not come to a different assessment of the case, and it's still considered to be a contingent liability, and you find it disclosed in Note 33 of the annual report.

Thank you.

Welcome. The next question from Manuel Lang from Tobel. Please go ahead.

Yeah, good morning, Anne. Good morning, Mr. Cato. I have a question regarding the midterm outlook as well. We're on the growth side. There you see some growth returned in the last quarter to positive territory, but you still expect new to growth this year. So what's the current indication or let's say run rate if you will, that you see on the end markets in the different substrates and regions. And then maybe a second question more specifically on India. You mentioned the region was impacted by weather effects last year, but what's your view on the utilization of the plant in India currently and also, let's say, midterm? Thank you.

Good morning, Manuel. So on the midterm, sorry, on the guidance that we see right now, 0 to 2%, indeed, I said that we saw a strong sequential improvement in the fourth quarter gives us confidence to be in this guidance range in 2026. And if we should discuss this by region, I think... We should expect that Europe continues to be on this normal level that you should expect from a mature market. America's ahead of this, of course. Asia, I think we have reached something like a bottom level. So let's see how that continues in China. And then India, Middle East, Africa, I would have said up until Friday, of course, they will return to growth and will be our strongest growth region. And the team in the region is very familiar with disruption and lumpy development. So we're very confident that they will handle the situation also under these circumstances in a decent way. So, and then, yeah, I think that's the outlook on the growth side. And on India, indeed, last year, we have discussed, like many companies, quite a lot, the longer monsoon season, which impacted revenue growth I can't give you now the weather forecast for in two months or so. But at this moment, we see a slightly more positive development from India, but definitely behind the expectations that we have had a couple of years ago. But it will be definitely a positive contributor to growth.

Okay, thank you. Very clear. I have maybe one follow-up on the fourth quarter growth. How much do you think, if you can share that, was driven by the volume incentives for clients? And what's really, let's say, the underlying improvement in volume growth?

I would say that wasn't really driven by any incentives. And that also you see, I think, if you look at the development by region. So really the strong 4% that we had in Europe was driven by lower raw milk prices and really more milk being packed in a septic carton. And also in Asia, the negative number, I mean, that is a function of the occurrence of Chinese New Year. So I think the rebates really didn't play a role too much. That said, of course, the fourth quarter remained our largest quarter and probably also will continue to remain our largest quarter in the future.

Okay. Thank you very much.

We have a follow-up question from . Morgan Stanley, please go ahead.

Thank you for taking the follow-up. Just looking at slide four where you showed growth, the revenue growth in bag-in-box and spotted pouch at negative 3.4%. Could you give us an idea what the underlying revenue growth would be if we were to exclude the non-core parts of bag-in-box, especially wine, just to get a sense on the earnings power of what you consider or revenue growth power of what you consider a score. Thank you.

Yeah. I don't want to now kill you with all the details, but it's very clear that the core segments within that portfolio, of course, have performed much better than the minus 3.4% that you see for the overall. Still, we need to consider the market environment in food service, especially in the U.S., which has not yet been growing significantly again. But I think you see the clear spread in the growth rates between the two boxes, if you want. So the core business was slightly positive.

Very helpful. Thank you.

We have some online questions, so if I could address those, please. Your guidance, does it include the guidance for revenue 2026? Does it include any perimeter changes you anticipate as you look to exit non-core operations from Charlie at BMP Paribas?

Yeah, so our guidance for 2026 on the growth side is an organic growth guidance. Should we achieve any divestment in the year, of course, we will exclude that from the perimeter.

And an additional one for Charlie. What depreciation and amortization charge do you expect in 2026, including or excluding amortization of acquired intangibles?

Charlie, I would point you to the backup slide that we have provided. I hope that that would be helpful for you also.

Then Christian Arnold from Odo. Could you quantify the negative effect of the later timing of Chinese New Year compared to the previous year? And does it mean that you will have a positive impact on Q1 2026 in the same magnitude?

Christian, thank you very much. So it's, of course, impossible to perfectly quantify it. But indeed, as we saw, a weaker Q4 in Asia-Pacific, we should expect a slightly better Q1. That basically builds on the positive seasonality here. Overall, let me again come back to how do we expect the growth for 26 to play out between the different quarters. Please continue to bear in mind that we had a bit of a special seasonality in 25 with a much stronger first quarter and also stronger second quarter. So I would expect that the comps also play a role in the seasonality of 25, but there's this positive one probably from Chinese New Year running against it.

And also from Christian, could you tell us to what extent you are changing, increasing your prices in 2026?

As I said, we believe that price increases doesn't play a big role, also on the back of not too much inflation on the raw material cost side for 2026.

And then from Ashish at Citi, how do you think about restructuring charges in 2026?

Yeah, so all the restructuring charges relating to the measures that we have announced at the investor update in October has been recognized in 2025, and we will just see the cash outflow relating to this still in the first half of the year, probably. That's all. Very good. Okay. Operator, do we have any more questions on the line?

At the moment, I have no more questions.

Wonderful. Then thank you very much for your questions, everybody, and for your time this morning. So I hope you take away SIG has a clear path forward for value creation underpinned by a resilient business model and strong customer relationships. We remain firmly focused on disciplined and consistent execution, and we appreciate your continued interest in the company and look forward to updating you on our progress over the coming months and quarters. Have a wonderful rest of the day.