Azelis Group Nv Unsp/Adr

Good morning everyone and welcome to AZELIS Q3 2026 Trading Update Call. My name is Louis Descourty, I am the new Head of Investor Relations and Corporate Finance at AZELIS. Today, as usual, we have Anna Bertona, Group CEO, and Boris Cambon-Lalanne, Group CFO, presenting our Q3 results. Anna will give a high-level overview of our performance and a few words on the outlook at the end of the presentation. Boris will then walk us through the financial section. Note that during the presentation, we will be referring to year-on-year changes in constant currency except stated otherwise. We'll take questions after the presentation, but until then, you will be on listen-only mode. We would like to remind you that the presentation and Q&A may contain forward-looking statements that are subject to risk. Now, let me hand over to Anna.

Thanks, Louis, and good morning, everyone. Thank you for joining us today. As always, we have structured the presentation into three parts. As Louis also was saying, I will begin with the main developments in the business for this quarter. Boris will take you then through the group and regional financial performance, including profitability and cash flow, and then I will return at the end to discuss the near-term outlook and our recently announced medium-term objectives. Let me start with the key takeaways based on our performance in the third quarter. And the most important message is the continued organic growth momentum. In Q3, all the regions delivered positive organic growth, high single-digit in EMEA in Americas and double-digit in APEC, resulting in group organic growth of 8.2% for the quarter. The improvement in the top line translated into even stronger profit growth. Organic adjusted EBITDA increased by 14.3% in Q3, and that's the highest level over the past six quarters. The strong expansion in conversion margin demonstrated positive operating leverage even as we focus on driving growth. And lastly, the growth momentum that we see in the near term is reflected in the working capital investment during the period. are positioned to support current market growth and drive it when recovery happens in other markets. Overall, Q3 provides encouraging evidence that the green shoots seen earlier this year are translating into stronger performance. But we remain attentive to continued volatility driven by the geopolitical tensions and uneven trends across end markets. Now let's have a look at the results in more detail, starting with the next slide. Boris will take you through the numbers and the most important ones I've already highlighted actually, which was the strong organic growth and the conversion margin. But what are the drivers behind these results? First, pricing dynamics remained positive across all regions and the green shoots in volume that we observed in some markets in the first half have been sustained. Second, personal care continued to show strong momentum across all regions. and that was driven by volume growth and supportive pricing. And third, we have seen improved momentum in industrial chemicals in all regions, especially in case. Although the recovery is underway in many of our markets, we continue to see some challenges. Some of our end markets in EMEA life sciences remain under pressure. We continue to see weak volumes and competitive pressure in food and nutrition, and our agribusiness is still reeling mostly from weather-related weakness. But also the Middle East conflict has an impact, and most notably on our business in Israel, where we have a significant agribusiness. And next to that, we see some slowdown in the momentum of FNF. Overall, the 8.2% organic growth we achieved is testament to the benefit of Azalea's diversified portfolio. And as I said earlier, we are well positioned to maintain our performance in the markets that are doing well and capture the growth when the recovery comes in the other markets. Now let me hand over to Boris to talk about the financial performance during the quarter.

Thank you, Anna. I will now take you through the group results and moving to the regions and finally to cash flow and working capital. In Q3 26, Group revenue increased by 8.5% to 1.1 billion euros. Life Sciences revenue grew by 1.5% to 671 million, while Industrial Chemicals delivered a strong performance, increasing by 21% to 451 million euros. The difference in performance between these two segments is essentially due to the soft performance in EMEA Life Sciences where, as Anna noted earlier, we're seeing challenges in some end markets, such as F&F, food and agri. Gross profit increased this quarter by 8.8% to €263 million, the stable margin at 23.4%, as positive pricing more than offset the normalization of our favorable Q2 inventory position. Q3 26 adjusted EBITDA reached €114 million, representing an increase of 14.6% versus prior year, and the adjusted EBITDA margin expanded by 54 basis points to 10.2%, which drove a 219 basis point expansion in our conversion margin, standing at 43.4%. This quarter, we had 6 million of change of provisions adjustments, mainly due to increase of variable compensation provision adjustments in 2026, reflecting the continued performance this year. Net of this impact and the FX Q3 EBITDA growth would reach plus 22% versus prior year, supported mainly by gross profit increase, while our 2025 cost saving programs continues to yield favorable upside in our cost line. Let's now see the breakdown of this performance in our regions. All three regions deliver strong revenue growth in the third quarter. In EMEA, revenue increased from €457 million to €499 million. Organic growth was plus 7.5% and acquisition contributed an additional plus 1.7%. At gross profit level, EMEA grew organically by 2.1%. The slower growth in the region is due to the mixed effect of higher contribution from industrial chemicals, which has a lower gross margin profile than life sciences. Within industrial chemicals, we saw a higher contribution from loops and metal working fluids. Nevertheless, thanks to continued discipline, EMEA delivered a plus 6.1% growth at EBITDA level, resulting in a 16 BIPS adjusted EBITDA margin contraction to 11.2%. In the Americas, revenue increased from €361 million to €405 million, corresponding to an organic growth of 8%. Growth profit grew by 14.9%, driven by a positive mixed effect from improved performance in North America and supportive prices across the region. Adjusted EBITDA increased by 19.2%, delivering a margin expansion of 108 bps to 11.8%, and conversion margin in the region widened by 169 bps to 48.1%. Asia Pacific once again delivered the strongest organic revenue growth at plus 10.2% with revenue increasing from 197 million to 218 million euros driven mostly by personal care and case as well as general positive pricing across most end markets. Growth profit grew by 14.2%, supported by strong top-line growth. Adjusted EBITDA increased by 26% on the back of a strong conversion margin, widening by 466 basis points to 49%. Original results show that the positive momentum was broad-based. Particularly strong profit progression in the Americas and Asia-Pacific complemented the clear improvement in EMEA revenue growth. And as usual, I will not spend too much time on that slide as it is self-explanatory. It is provided simply to make it easier for you to see the split of the progress as well as the strong revenue growth being translated to higher profitability. So turning to cash generation, the free cash flow was 67 million euros in Q3, representing a conversion ratio of approximately 59%. Out of an adjusted EBITDA of 125 million euros, the principal cash outflow came from about 46 million euros of working capital investments in the quarter. Our working capital decisions are tied to the demand evolution as reflected in the direction of our order book. The increase in inventory was targeted to support the stronger demand environment and maintain service levels to our customers as organic growth accelerated. The net position of DGSO and DPO increased by two days while remaining well within the historical level. The higher working capital intensity of 17.2% represents a temporary cash compression associated with the increased growth. We remain focused on translating profitable growth into sustainable cash generation and we expect working capital to reduce in Q4 in line with usual seasonality and with discipline supporting cash flow generation until year-end. We continue to focus on reducing our leverage ratio in line with the capital allocation framework we presented during our lab tour. While we expect to continue to reduce the net debt in the final quarter of the year, I remain confident of delivering positive EBITDA growth for the full year, thereby reducing the leverage by the end of the year. And with that, let me hand you back to Anna for some words on the outlook.