Dksh Holding Ltd Ord

Thank you Sandra and good morning everyone and welcome. It's a pleasure to see so many of you here again in Zurich at the Metropole. I'd also like to extend a very warm welcome to all of the participants joining via our live webcast. It's great to have the opportunity to connect with such a broad audience across the globe. I'm Till Eisner, Head of Investor Relations, and I'm delighted to be joined today by our CFO, Ido Wallach, and our CEO, Stefan Butz. Before we begin, the general reminder to look at the presentation and the including disclaimer, which you find on our webpage in the Investor Relations section. For those who are attending virtually, again, you find that on the webpage at dksh.com. With that short introduction, I'm very happy to see all of you again and I hand over to Stefan to get us started. Thank you so much.

Thank you very much, Till. Hello everyone, good morning and welcome to the presentation of our 2025 full year results. Joining me here today is our CFO Ido as well as our investor and media relations team. Mark the first day of the Chinese New Year. I wish especially all our Asian colleagues a happy Lunar New Year. So today's agenda foresees a short recap of our highlights of the past year. I will then continue with the review of the business units in 2025. After that, Ido will follow up with a more detailed financial update. And to conclude, I will provide an outlook before we then open the Q&A session. We are very pleased to report that DKSH achieved another year of improved results, with an even better acceleration of growth in the second half of 2025. We continue to translate our strategy into consistent execution in 2025, delivering growth, increased margin and high cash generation in a muted market environment. As in previous year, I will primarily be commenting on our results using constant exchange rates as this better shows the operational performance and ensures better comparability with previous years or results. Despite a very challenging environment, net sales increased by 2.9% at constant exchange rates to 11.1 billion Swiss francs in 2025. In the second half of the year, net sales grew even faster at 3.6%, with a pickup in growth in the business units healthcare and consumer goods, thereby achieving GDP growth. Core EBIT amounted to $349 million, 6.7% higher than in 2024. Core EBIT margin increased from 3.1% to 3.2%, in line with our midterm goal to expand core EBIT margins by at least 10 basis points year-on-year. On average, in the second half of 2025, we delivered improved profitability with a core EBIT increase of 8.1%, faster than the first half of the year. Our free cash flow remained high at 215.5 million with a cash conversion of 95.2%. This marks the sixth year where we achieve a cash conversion above our target of 90%. We also delivered on our mid-term roadmap regarding capital allocation as we announced nine accretive M&A transactions in 2025 and proposed to increase the ordinary dividend by 6.4%, which corresponds to 2.50 francs per share. This resilient performance in challenging times once again demonstrates DKSH's ability to consistently create value for our clients customers, employees and shareholders. Based on the acceleration of growth in the second half of 2025, we will continue to deliver on our MITUM roadmap in 2026, driven by our focused strategy execution and resilient business model. Let me now focus on the highlights of 2025. We executed our accelerated M&A strategy and announced nine transactions across the business units technology, performance materials and consumer goods in various markets. We continue to drive our business development by enlarging our client portfolio across all BUs and various markets. We signed strategic partnership with Bayer for their pharma business in Singapore, Malaysia, Thailand and in the Philippines. In Singapore, we began collaborations with Eli Lilly, started working with Nestle in Malaysia, Thermo Fisher in Japan, and PolyGal in Europe and the United States. Additional highlights include the achievement with respect to our high-performance culture. Being recognized as a great place to work in even more markets and as one of the Fortune 100 best companies to work for in Southeast Asia 2025 highlights our continuous ambition to create an excellent work environment We remain committed to talent development and diversity as reflected in our representation of women in leadership roles. We achieved several milestones in our sustainability efforts. We have been recognized as an industry leader in the ISSS ESG Corporate Rating 2025. The science-based target initiative validated our targets, and we are on track to achieve net zero greenhouse gas emissions across the value chain by 2050, having already reduced our CO2 emissions by 65%. With these achievements across multiple areas, we demonstrate our diligent strategy execution and commitment to creating value for our clients and customers in Asia, Europe, and North America. We also create sustainable value by implementing AI initiatives across all our business units and key areas such as M&A, finance, IT, and supply chain management. To support these efforts, we have established a dedicated team. AI acts as an enabling factor that seamlessly integrates with our existing processes. By continuously leveraging our extensive data resource through AI, we create additional opportunities for growth and enhance operational efficiency. AI on the one hand enhances demand forecasting or optimizes pricing, which drives top-line growth. On the other hand, AI enhances our operational efficiency. For example, in our consumer goods business unit, we utilize a modular commercial excellence AI platform. This enables us to perform forecasting and segmentation, gain additional customer insights, obtain route optimization data, and plan shelf layouts more efficiently, effectively, sorry. As a result, we achieved Salesforce excellence through increased customer revenue, improved client acquisition and retention, and optimized cost to serve. Our business benefits from high entry barriers. By leveraging our strong Salesforce, extensive distribution network, and robust cash collection processes, together with advanced AI initiatives, We further evaluate these entry barriers, giving larger distributors like us a competitive edge. As in previous years, we continue to invest our capital in business with above average margins. We follow an accelerated high impact M&A strategy. backed by leverage, had room for approximately two times net debt to EBITDA. Last year, we explored major transactions that ultimately did not materialize. Despite the volatile M&A environment, we announced nine transactions, surpassing the average number closed annually in previous year. Over the past six years, we accelerated our M&A activity as we have more than doubled the number of transactions. From 2012 to 2019, we completed 16 acquisitions, whereas between 2019 and 2025, the total rose to 35. As a result of these acquisitions made in 2025 and our existing deal pipeline for 2026, we expect increasing EBIT contributions from M&A in 2026. Looking ahead, our strong balance sheet allows us to pursue a wide range of strategic options. We remain committed to accelerating our M&A strategy, including the potential for expansion beyond Asia Pacific in our business unit performance materials, healthcare, and technology. Our strong cash generation not only allows us to accelerate our M&A activity, but also to continue our progressive dividend policy. Therefore, our board proposes an increase of the ordinary dividend to two Swiss franc 50 per share, which is equivalent to a growth of 6.4%. For U.S.-based investors, this represents an increase in dividends, by the way, of more than 25%. This proposal marks our 13th consecutive year of dividend increase, confirming our dividend aristocrat status. Notably, our ordinary dividend per share has achieved an average growth of 5.1% in the last five years. Let me now provide you with an update on the progress in our business units, starting with healthcare. Our largest business unit, healthcare, maintained its track record of profitable growth in 2025. We continued our development above GDP grades as net sales increased by 4.6% to 5.8 billion. Especially in the second half of the year, we accelerated organic growth. Core EBIT achieved 174.2 million with a core EBIT margin of 3%, an improvement compared to the previous year. This marks the fourth consecutive year of margin increase on our full year results. These strong results were driven by a broad-based growth across multiple markets and by new as well as existing clients. We entered new partnerships with notable companies like Bayer, Eli Lilly, Racket, etc. Patrick Render, a well-seasoned leader with more than 20 years of experience in the global pharma industry and part of DKSH since 2022, has been appointed as the new head of the business unit following BJ Singh's planned transition into retirement. Under this new leadership, the business unit will continue to focus on higher value segments and services. We will increase the share of commercial outsourcing while maintaining a strong focus on our own brand's business. Moving to the business unit consumer goods. Business unit consumer goods achieved net sales growth of 1.2%. with a marked acceleration of 2.8% in the second half of 2025. This growth was driven by strong performance in Malaysia, Vietnam and Singapore, alongside improved business development, especially in higher margin business with new clients such as Nestle and Del Monte. Core EBIT increased to 89.7 million, reflecting a growth rate of 5.4% and resulting in an approximately 10 basis point margin expansion. While core EBIT declined by 4.3% in the first half of 2025, growth recovered strongly in the second half. In the past six months, we achieved core EBIT growth of 14%, and a core EBIT margin of 3%, reflecting improved earnings momentum and operational leverage. The exit of our business in Indonesia, as well as the acquisition of Zilcon Swiss Fine Foods in Singapore, which delivered performance ahead of the business plan, further supported those results. In our business unit performance materials, net sales grew by 1.4% to 1.4 billion Swiss rangs. The Asia-Pacific region, which accounts for around 60% of the business unit net sales, delivered the strongest performance with growth of 5.5%, demonstrating a clear outperformance in an overall declining market. The resilient performance of the business unit was reinforced by strong business development with key clients such as Suntima, Kronos, alongside three M&A acquisitions and a very strong pricing discipline supported by gross margin expansion. Core EBIT increased by 1.9%, with the core EBIT margin improving to 8.2%. The core EBIT-R reached 120.4 million Swiss rangs, driving the core EBIT-R margin to 8.9%. Looking ahead to 2026, streamlined leadership With Natale Capri as the sole head of the business unit, cost optimization initiatives and already signed M&A transaction will provide additional growth momentum in 2026. Last but not least, let us focus on our business unit technology. against the macroeconomic backdrop characterized by short-term uncertainty and delayed investment decisions the business unit delivered resilient results around 2024 levels the business unit further focused its portfolio we completed five strategic acquisitions within the scientific solution segment the share of our business line semiconductor and electronics increased highlighted by the integration of CLMO in Malaysia and Taiwan, while the business line precision machinery also grew, driven by the strong performance with key clients. We also divested our cable business in Australia and Taiwan, focused more on consumables and services, and achieved very strong digital sales growth. In 2026, the business unit will continue to capitalize on consolidation opportunities in Asia Pacific and other regions. With a promising business development pipeline, the business unit is well positioned for a stronger year ahead. Now I hand over to Ido, who will guide you through our financial results in more detail. Thank you very much.

Thank you, Stefan. Thank you, Teal. I would like to extend my warm welcome to all of you also from my side, especially for those of you who were able to join us today. I know that your time is valuable and thank you for spending it with us. I am very pleased Stefan was to share more details about our 2025 results. As always, to best reflect the comparability of our operating performance, I will also focus on our results at constant exchange rates. The global economic environment in 2025 was marked by heightened uncertainty, particularly in the first half of the year. Against this backdrop, we are particularly pleased to have once again demonstrated the resilience of our business model and our ability to navigate challenging conditions. We have proven this during the pandemic shutdowns, in the post-pandemic inflationary environment, and we confirm it once more throughout 2025 as reflected in our key financial metrics. Net sales growth amounted to 2.9% at constant exchange rates. Core EBIT increased by more than twice the rate of net sales at 6.7%. Core EBIT margin increased of 0.1 percentage points to 3.2%. This represents the fifth consecutive year of core EBIT margin expansion. Core profit after tax stood at 226.4 million Swiss francs. an increase of 3.3% at constant exchange rates. Building on our asset-light business model, we generated 215.5 million Swiss francs in free cash flow. This represents a cash conversion of 95.2%, the sixth consecutive year above our target of at least 90%. To sum up this section, we have once again delivered, as predicted, top and bottom line growth, margin expansion, and substantial cash generation. Let us now examine the composition of our net sales and core EB development in more detail. Organic net sales growth reached 2.5%, marking a growth acceleration in the second half. The step-up from 2.1% in the first half to 3.6% in the second half was particularly evident in business units healthcare and consumer goods. M&A contributed 0.4% to our growth. Combining organic and M&A, our net sales growth at constant exchange rates totaled 2.9%. The appreciation of the streets fund negatively affected net sales by 3.1%. This figure, however, is slightly smaller than 3.8% negative impact recorded in 2024. Let us continue with the development of our core EBIT. We are pleased with our continued core EBIT growth. We grew our core EBIT organically by 5%, twice the rate of our organic net sales growth, and driven by our intentional focus on high margin businesses, cost efficiencies, and the scalability of our business model. M&A added 1.7% to core EBIT growth, also ahead of its contribution to top line growth, and the validation of our strategy to acquire higher margin businesses. All business units contributed to core EBIT expansion throughout M&A, and we are confident that profit contribution from M&A in 2026 will exceed that of 2025. Net sales growth, combined with continuous strong focus on value-added services, operational excellence, and resource optimization, deliver an overall core EBIT margin improvement of 0.1 percentage points. Similarly to net sales, the translational effects had a meaningful and negative impact on our core EBIT, amounting to minus 5%. The investment materials that we published on our website today include details of the items that we consider non-operational, of a one-off nature, or in short, non-core. The main items that fall into this category in 2025 are restructuring costs of $7 million, one-time project costs of $3.9 million, and disposal of trademark licenses to the tune of $1.8 million. To wrap up the core EBIT section, it stood at 349 million Swiss francs, representing another landmark achievement in the 160 years history of TKSH. The sustained long-term effects of our diligent strategy execution, the attractiveness of the business we're in, and the resilience of our business model become very evident when we review performance metrics over a five-year period. We successfully and consistently convert our operational achievements into financial value creation for business growth, cost controls, and return on invested capital. Since 2021, in the cost and exchange rates, our net sales increased by compound annual growth rate of 4.2%. This is higher than the average annual weighted GDP of our markets. Our core EBIT rose at an even faster upward trajectory of 11.6% CAGR. Consequently, our core conversion margin, defined as core EBIT as a percent of gross profit, increased sequentially. Having exceeded the 20% mark in 2024, we lifted it by further 70 basis points to 21.4% in 2025. Furthermore, our core EBIT margin followed a similar upward trend The 3.2% core EBIT margin 2025 correspond to a total of 60 basis points margin that we deliver sequentially over the last five years. I would also like to highlight to you today the significant improvements that we have achieved over the past five years in the area of logistics and distribution. By diligently focusing on operational excellence and leveraging digital tools, including AI technologies, we decreased our logistics and distribution costs by around 35 million, thereby supporting our core EBIT margin by 30 basis points over the past five years. A key source of our resilience and agility to respond to ever-changing market conditions lies in our low-risk, asset-light business model. We operate primarily with leased offices, leased distribution centers, and leased transport fleets. This becomes apparent when looking at our capital expenditure. It's still between 0.3 and 0.5% of net sales across the last five comparative periods, with a very lean level of 0.3% maintained over the last three years. Building on our ongoing efforts to drive efficiencies across the organization, we are proud to report that we optimize our working capital even further in this reported period, matching the 8.6% of annual sales recorded two years ago. Subsequently, over the same period, we deliver constant and high free cash flow, exceeding our objective of 90% conversion in each one of the last five years. To sum up, our year by year results demonstrate once again, the high quality and predictability of our earnings. Sustainable in nature, repeatable in execution, and mirror by strong cash generation. Let us now move on to our balance sheet. Bidding on the financial performance achieved in 2024, we further enhance the quality of our balance sheet and returns in 2025. Core return on equity increased by 30 basis points year-over-year to 12.4%, reflecting stronger profitability and very disciplined capital allocation. We continue to operate with a positive net cash position, supported by an efficient and disciplined deployment of liquidity. At the same time, we maintain a high core RONOC, close to 20%, evidencing our sustained focus on value creation and capital efficiency. We operate a low-risk asset-like business model that drives a high and consistent free cash flow for our capital allocation. In 2025, we funded nine acquisitions while distributing a higher ordinary dividend to our shareholders, all with existing cash. 2025 was the 12th consecutive year of progressively higher ordinary dividend. We also reduced our gross debt position by almost 50 million Swiss francs. which resulted in more than 4 million savings on interest expenses in 2025. With an improved equity ratio of a one full percentage point to 33.1%, we maintain a significant leverage headroom to grow our platform through industry consolidation. As we already shared in the past, we continue to carefully assess deals and only acquire if we find them value-accretive, scalable, and available for a reasonable price. Let me also provide you with some additional financial indications before we return to Stefan to elaborate on future prospects. In terms of M&A, we estimate that our recent acquisitions will contribute around 0.8% to net sales in 2026. This is based on acquisitions which we have closed until now. We expect more deals to materialize in 2026, and naturally those will provide further growth upside. While the currency development remains volatile, we expect a slight negative FX procession impact assuming December rates prevail for the remainder of the year. Tax rates. Our 28.7 tax rate on core earnings in 2025 was at the upper end of our mid-range of 27 to 29%. We continue to guide this range for 2026. Capital expenditure is expected to remain between 0.3% to 0.4% of net sales for the full year. With that, I would like to thank you again for your attention today, and then over back to Stefan.