AmRest Holdings SE

Hello and welcome to today's AMREST first half 2026 results call. My name is Seb and I'll be the operator for your call today. If you'd like to ask a question at the end of the presentation please press star 1 on your telephone keypad or you can submit a written question using the Q&A chat box. This is located in the top right hand corner of the presentation screen. I will now hand you over to Lukasz Wolczakow from Wood & Co to begin Please go ahead when you're ready.

Good afternoon, ladies and gentlemen. My name is Łukasz Wachewko. As was said, I'm presenting Wooden Company. And I have again the pleasure of moderating the quarterly call with AMRES, the company represented by CFO, Mr. Eduardo Zamarripa, and IR and Strategic Planning Director, Mr. Santiago Camarera Aguilera. With no further ado, guys, the mic is yours.

Thank you, Lucas. Good afternoon, everyone, and thank you for joining. We appreciate your time and your continued interest in Ambrose. I'm Eduardo Zamarripa, and I'm joined today by Santiago Camarero, our Head of Strategy and Investor Relations. Before we begin, I would like to frame the first half of the year in a simple way. Thank you very much. In several markets and performance across our portfolio is uneven. We are not satisfied with every element of the results. However, this should not hide the progress we are making in the areas that define the group's financial capacity, cash generation, capital disciplines, and portfolio quality. So let's please turn to slide two. Ambrest is a leading listed restaurant operator in Europe and a trusted operating partner for some of the world's most reputable and iconic global brands. June 30, 2026, we operated 2,133 restaurants across eight brands and 22 countries, supported by more than 44,000 employees and serving approximately 30 million customers every month. Our portfolio is diversified across four complementary restaurant categories. Quick service restaurants represent 48% of the portfolio, coffee 21%, fast casual 17% and casual dining 14%. This provides exposure to different consumer locations, price points, and channels. But scale alone is not the investment case. The strategic value lies in the operating infrastructure behind this footprint. Restaurant development, supply chain, digital and delivery capabilities, brand management, and local teams with deep market experience. Our objective and effort is to utilize these platforms more effectively, directing growth towards the brands and geographies where we can demonstrate attractive economic and sustainable returns. This is a large and diversified platform, but our decision framework is increasingly focused on returns rather than a scale for its own sale. Moving to slide three, This slide summarizes the financial performance for the first half of the year. Revenues amounted to more than 1.2 billion euros, excluding the effect of business deconsolidation in the previous year. SEM revenue decreased by 0.7% year over year. EBITDA reached 177.7 million euros, representing a margin of 14.2%. However, the most important positive development was cash generation. Operating cash flow decreased by 27 million euros. At the same time, investing cash outflow decreased by almost 31 million euros. Nonetheless, we have also maintained the development of the portfolio with 29 openings in the first half of the year and 85 openings over the last 12 months. Finally, leverage remains at approximately two points times EBITDA. The key message for me is that while the P&L reflects concentrated pressure in selected markets, cash generation and financial flexibility are moving in the right direction. This distinction matters because it demonstrates the underlying capacity of our platform. Moving to slide four, please. Here we can find the reported first half performance into context. Revenue, excluding the SEM business they consolidated last year, declined by 0.7%. EBITDA amounted almost 178 million euros, and the margin was 14.4%, compared with 15% in the first half of 2025. However, the downside was highly concentrated. Excluding Chequia and the disposal, revenue increased by approximately 2% on the same basis. A VITA margin increased 0.4% to a VITA margin of 14.9%. Chequia is an important market and we are fully focused on restoring the business. Purpose is to show the isolated effect of this market. Most of our core platforms remain healthy and continue to demonstrate their earnings capacity. If we now go to slide five, please. This slide brings together four strategic developments that support our investment thesis. First, free cash flow evolution is moving into the right direction, supported by both the stronger operating cash flow and less intensive investment effort. We continue to apply a more selective approach to capital allocation with greater focus on execution, cash generation, and investment returns. Third, shortly after the reporting period, we completed the innovation, amendment, and extension of our syndicated financial agreement. Materiality increased our financial flexibility. And fourth, and the last point, We expanded our brand portfolio by announcing the launch of Taco Bell in Poland. This is not growth for growth. It is our commitment for a disciplined introduction of a new leader global QSR brand in our largest market, using infrastructure and capabilities that we have already in place. All these aspects are our key support, the group's future growth, and our long-term value creation objectives. Moving to slide six, we have information that is central to our message today because it shows the financial conversion already taking place. Free cash flow, the finance operating cash flow, excluding least payments, less investment cash flow, improved from negative 26.2 million euros in the first half of 2025 to positive 25.6 million euros in the first half of 2026. This represents a year-on-year improvement of almost 52 million euros. The improvement reflects a stronger working capital discipline, better cash conversion, and disciplined capital expenditures. Many things are moving in the right direction. Nevertheless, the direction is clear. The combination of operational cash flow discipline and lower investment intensity is translating into substantially better free cash flow. For us, This is a strategic shift. Growth will continue, returns are attractive, but free cash flow and value creation per euro invested are critical in our decision metrics. Moving to slide seven, please. You can see the continued normalization of the investment intensity. CapEx as a percentage of sales declined for almost 10% to 5.3% by the end of the second quarter of 2026. At the same time, our gross opening trajectory of equity stores has remained broadly stable, while the number of renovations has moderated following the elevated post-COVID catch-up program. This is not simply a reduction in investments. It's a transition towards better investments where we are most selective in new development, prioritizing projects with the strongest risk-adjusted returns, and using portfolio optimization as an active capital allocation tool. Moving to slide eight. Following the reporting period, we strengthened the group's financial profile of the group through the innovation of our syndicated financial agreement. The new agreement increases the revolving credit facility up to 100 million euros, changes repayments from quarterly to semiannual and introduces a two-year grace period. It extends final maturity to June 2031, with two optional one-year extensions subject to lenders' approval and reduces the applicable interest margin. It also mends selected financial covenants and provides the possibility to establish additional accordion facilities. The agreement is supported by eight bank partners across five countries. It provides a longer and more efficient maturity profile Lower Funding Costs and Greater Liquidity Hedges This addition of flexibility should not be interpreted as a change in our financial discipline. It is value that gives us the capacity to manage volatility, execute portfolio actions, and finance selective opportunities without compromising a prudent leverage profile. Slide 9 Here we show how the portfolio has evolved and how we think about short-term future growth. At the end of June, Ambrose operated 2,133 restaurants consisting of 1,891 equity restaurants and 242 franchise restaurants. Over recent years, we have combined organic development with strategic adjustments, including investments in Pizza Hut Russia, Pizza Hut Germany, Pizza Hut France, The sale of KFC Russia and other businesses with no restaurant count as SEA, but no less important from the strategic perspective. This action demonstrates that the perimeter is not static. We have been taking significant strategic decisions by actively reshaping the portfolio We are creating the capacity to introduce new, fresh, attractive businesses with stronger growth potential and compelling long-term economics. We will grow where returns are attractive, renew restaurants where investment supports customers' experience and cash generation, and optimize our exit activities where long-term value creation is limited. The planned launch of Taco Bell Poland fits this framework. The first restaurants are expected to open in the fourth quarter of 2026. Poland is our largest market, and we can leverage existing development, supply chain, digital, delivery, and operating capabilities. Our approach is control initial exposure, close monitor of unit economics, and expansion based on proven returns. This gives us meaningful upside potential while maintaining capital efficiency. With this, let's jump to slide 10, and let me share with you some of the commercial flavors from our brands. In a cautious consumer environment, our brands stay relevant through a balanced mix of innovation, value, and consumer engagement. At KFC, we combine product innovation with clear value. Double Down returned us a distinctive chicken-led platform, while the new protein shake expanded the brand into new consumption occasions. At the same time, offers such as Orient Box, Tuesday Bucket, and selected 50% promotions supported affordability and traffic across the market. At La Tagliatelle, we reinforced streaming positioning through an exclusive collaboration with Michelin star chef Pepe Dominguez. The partnership brought together the brand's Italian heritage and contemporary culinary creativity, helping refresh the proposition and strengthening customer interest. At Starbucks, the brand delivered strong results from its spring and summer beverage platforms. Protein Lattice launched in April, added close to three percentage points to the beverage sales mix, with no visible cannibalization of existing promotional activity. The Starbucks rewards also continued to build momentum, reaching more than 15% of Transactions. Together, these results show the value of relevant innovation supported by a stronger loyalty engagement. Moving to slide 11, the same formula of innovation, value, and local relevance supported progress across the rest of the portfolio. Sushi shops show a clear improvement in second quarter led by France and supported by a stronger execution across most European markets. The Adrian Cachotte collaboration became the brand's best-performing chef partnership to date. Switzerland and Luxembourg markets remained strong while Spain and Belgium improved sequentially. At Blue Frog, we launched Flavors of China, combining regional Chinese inspiration with the brand's Western casual dining identity. The platform strengthened local relevance and gave customers fresh reasons to engage with the brand. In Pizza Hut, we focused on two clear customer needs, value and excitement. But Box's offered an accessible, complete meal with a K-Wave menu using Korean and Spanish flavors to encourage trial. Both initiatives were brought together on the defeat of good times. Reinforcing Pizza Hots as a brand that combines good food, convenience, and shared locations. And finally, at Burger King, we continue to sharpen its value proposition together with attractive collaboration as it has been successful premier of the Mandalorian. With this, Santi, if you can cover the financial main highlights, please.

Thank you, Eduardo, and good afternoon, everyone. Before moving into the detailed financial section, let me place the second quarter results in the broader strategic context. The quarter does not present a uniform picture. At group level, revenue was really stable, but the headlight results combines resilience performance across most of the portfolio with significant pressure concentrated in a limited number of markets. This distinction is important, not for looking away from the areas requiring improvement, but to understand where earnings capacity remains intact and where decisive actions are needed. In this environment, our priority is not to pursue volumes at any cost. is to recover profitable traffic, to tell restaurant-level economics, and to ensure that every euro of capital supports sustainable returns. The quarter should, therefore, be read through three lenses. The first one, the quality of the underlying portfolio. Second, the corrective actions in underperforming markets. And finally, The stronger conversion of earnings into cash. At the same time, it's important that we remain realistic. Same as our sales were below last year. Consumer demand remains cautious and weaker traffic reduce operating leverage in selected markets. Restoring that operating leverage is the key management priority that we have. So let's now move to the slide 13 with the financial highlights of the quarter, please. Here, you can see the sales were stable and the portfolio development continued, while profitability reflected weaker operating leverage. At the same time, capital deployment was materially lower. With this backdrop, sales reached almost 642 million euros, broadly flat compared with the second quarter of 2025, while the semester sales index was 98. IRBIDA amounted to 101 million euros, and the non-IFRS IRBIDA was 50.6 million euros. The operative profit reached about 22 million euros, representing a margin of 3.5%. And net profit was almost 4 million euros. We opened 17 restaurants during the quarter, including 13 equity restaurants and four franchise units. CapEx was 24 million euros, compared with almost 39 million in the same period of last year. Moving to the page 14, we find the recent trajectory of revenue and semester sales. Revenue increased sequentially from 539 million euros in Q1 to 642 million euros in Q2. This is supported by the normal seasonality of our business. However, on a year-on-year basis, sales were rarely flat. The semester sale index improved from 96 in the first quarter to 98 in the second quarter. This sequential movement is encouraging, but we should remain cautious. Comparable sales were still below last year and the recovery was uneven across different markets. Therefore, the appropriate conclusion is not that the challenges have disappeared, but the group sales stabilized during the quarter and the gap versus last year narrowed. If we go to the slide 15, please, this page summarizes the evolution of EBITDA and EBIT and how margins progress into the second Q. EBITDA decreased from 107.7 million euros in Q2 2025 to almost 101 million euros in Q2 2026. and they did a margin decline from 16.8% to 15.7%. The operating profit amounted 22 million euros compared with 34 million last year and the margin was 3.5%. The main driver of this decrease in profitability was lower operating leverage in markets affected by weaker sales and transaction volumes, particularly Czechia, Romania, and Germany. These effects were partially offset by a strong performance in Hungary and also by improving profitability in France. In this situation, our operational priority is to recover traffic while improving labor productivity and maintaining rigorous control on every semi-variable cost line. In this regard, we bring you, in the slide 16, how to translate the margin movement into its principal components. The starting point is Q2 2025 TDA margin. Put on merchandise costs were almost flat year on year. However, the pressure was concentrated in payroll and social security costs, together with pressure from occupancy, depreciation, and other operating expenses. General and administrative costs remain disciplined, but together with other operating items, partially mitigated the decline. Moving to the slide 17, these tables put the income statement and the cash flow side by side. Revenue was bravely flat, while it beat a decline reflecting the operating leverage dynamics that we have just discussed. On the other side, The net cash performance was considerably more constructive. Net cash from operating activities increased by 17.5 million euros. And investing cash upflows decreased by 15 million. Finally, the net equity restaurant count increased by 31 units over the last 12 months. showing that the groups continue to develop while reducing investment intensity. Moving to the slide 18, we find the debt and liquidity evolution. First, the balance sheet remains prudent and with a high liquidity buffer. At the end of June, Net financial debt was 505 million euros, compared with 580 million euros at the end of 2025. On the other hand, liquidity reached 162 million euros, and other available credit lines amounted almost 91 million euros. The leverage ratio was 2.5 times, which remains consistent with a prudent financial profile. This position, combined with the financial innovation explained earlier, gives us additional capacity to absorb volatility and execute selective portfolio decisions. The objective is not to use flexibility indiscriminately, but to preserve optionality while maintaining financial discipline. Going into the slide 19, we can find the breakdown of revenue, EBITDA, and the number of restaurants that we have in each geography. These segments comprise businesses in 22 countries where, once again, We have observed very different commercial dynamics. Turning to the slides 20 and 21, we present the key metrics for Central and Eastern Europe, our largest segment. CEE remained the group's largest region, representing more than 63% of the group's sales. Revenue increased by almost 2% to 470 million euros. EBITDA declined to 76.4 million euros with a margin decrease by one percentage point to 18.8. The region combined strong underlying growth in selected cut markets as the case of Poland or Hungary with a material concentration of downside in Czechia and Romania. The restaurant portfolio reached 1,282 units at the end of the period, following the gross opening of 20 restaurants during the first half of the year. Moving to slides 22 and 23, we bring you the information of our Western European business. Western Europe generated revenue of 212.5 million euros in the quarter, down 3.2%, and generated an EBITDA of almost 31 million euros, with a margin of 14.5. While the reported EBITDA was below the previous year, the comparison was affected by some one-off gains recorded in Q2 2025. Again, this comparison in the region shows signs of improving underlying momentum, especially in the case of France that performed slightly ahead of expectations. The improvement indicates that the operational and commercial measures implemented are gaining traction with the recovery increasingly visible in profitability even before a full normalization of sales has been achieved. The restaurant portfolio closed the period with 759 units following the gross opening of eight restaurants during the first half of the year. And finally, in slide 24 and 25, We bring you the numbers of China. China generated quarterly revenues of €22.5 million, broadly stable compared with Q2 2025. Nonetheless, despite this stability, the underlying sales environment remained challenging during the quarter. 4.4 million euros compared with 5.3 million euros in the last year. Consequently, the EBITDA margin declined from 22.8% to 19.8%. Nevertheless, the business continued to deliver a solid level of profitability with an EBITDA margin Close to 20% despite a soft demand environment. The results were recorded against an still challenging consumer backdrop. China's economy continues to be supported by policy easing exports and industrial production. However, consumer demand remains subdued, with retail sales growing at a considerably slower pace than Headline GDP. Finally, the number of restaurants managed by Blue Frog in the region at the end of the quarter was 82 units following the opening of one restaurant. And with this, I pass the mic to you, Eduardo.

Thank you, Santi. Before we move to questions, Let me close with our outlook for the remainder of 2026. When we presented our expectations for the year, we anticipated single-digit growth in both revenue and profitability. Based on the first half performance, the slower recovery of consumer traffic in selected markets, and the continuing pressures on operating leverage, we now expect revenue and profitability growth for 2026 to be slightly positive. rather than growing at a single digit rate. This is a consequence of a more cautious view of the pace of commercial recovery, particularly in the markets currently under pressure. At the same time, the view does not alter our confidence in the quality of our core platforms or the strategic actions already underway. With that, Santi and I are ready to take your questions.

Thank you. To ask a question, please press star 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. You can also submit a written question using the Q&A chat box in the top right hand corner of the screen. We'll pause for just a moment while any questions are registered.

While we're waiting, maybe I will use the privilege of moderator and ask a couple of questions from my end. First would be about Taco Bell. If you could shed some light, how many restaurants shall we expect this year, next year? What are your goals for the project?

Well, Lucas, this is something very relevant, as we were mentioning previously, launching a new brand in one of our strongholds. We consider that is a key priority for us and this will reinforce the portfolio that we have over there. So the idea is that before year end we could be opening three restaurants in Poland and a higher number next year. So every year we will increase number of openings over there but what I can advance you is that this year we should be having These three openings.

Okay, thank you.

And I have a question regarding free market, first market for Czech Republic. You have some issues for the BetPRS College this way since autumn last year, and it's still continued. Sales were down 16% in the second quarter. Do you see that the third quarter is bringing that to an end? When should we expect

Thank you, Lucas, for raising that topic. As you mentioned, in the check market, the sales remained under pressure, impacted, as you were saying, by this negative publicity. The customer traffic has been affected. Despite the execution of AMRES of a comprehensive KFC growth plan during the first half of the year, we are reinforcing the brand's operational excellence, food quality, food safety standards, leveraging digital tools, employee training, and restaurant-level initiatives. Sales have not been recovered to private levels, as you were mentioning. These are very important strategic initiatives and focusing on the regulatory, on the recovery of the market. So we expect that with the new topics that we, and new activities that we are performing in the market, the plan will allow the recovery of the customer traffic and sales. Timing, difficult to tell, Lucas.

Okay, thank you. What about Romania? We are seeing from all the peers of yours that the market is slowing down. How do you see the dynamics within this market?

This is a challenging one. Lucas, as you said, we are suffering in that market, but that's something that is happening to some other peers. So hopefully everything is a cycle. So we expect that this cycle ends soon and we can go back to the pad recovery as soon as possible.

Thank you. And the last minor of this batch, food prices. Do you see the pressure on the food prices in the region or seeing deflation? How does the food costs look from your perspective?

In this sense, I mean, you have seen that in the latest quarter, we have been benefiting by some easing in terms of the cost pressure. But it's true that although it's still not reflected in our books, expectations for next year, if the conflict in the Middle East continues, it's going to put some pressure. What I can tell you is that steel is not something that is affecting us, and in the short term, we don't expect any affectations due to the long-term purchases that we have for the year.

Okay, thank you. Do we have any questions from the room?

I don't want to monopolize the call.

But just another reminder for any questions on the line, you can press star one on your telephone keypad and you can also submit a written question using the Q&A box in the top right hand corner of the screen.

We currently have no questions waiting on the line.

If we don't have further questions, thank you very much for your participation in the conference call and hopefully we see you soon in one of our restaurants in Europe. Thank you very much and have a good weekend.

Thanks.

Thank you.

This concludes today's conference call.

Thanks everyone very much for joining. We hope you enjoy the rest of your day.