Elopak A S

Good morning and welcome everybody to this fourth quarter and full year results presentation for 2025 for Elopak. My name is Christian Herde and I'm head of treasury and investor relations. Today's presentation will be held by our CEO Thomas Kermendi and CFO Bent Axelsen. The presentation will last for around 30 minutes followed by a Q&A session where the people here in the audience and the people following us online will be able to ask questions. So with that short introductions, Thomas.

Good morning. Thank you very much, Christian. And a warm welcome to all of you here in wintry, beautiful Oslo morning, and pretty cold one as well. Today we're going through Q4. And on a personal note, let me just say it is a great pleasure to present you for closing off what has been a really, really strong year for LOPAC. And I think on behalf of all of the LOPAC team members here, my colleagues, we are incredibly happy about the result we are about to present. First things first, and just to remind everyone, What is it actually we're doing? We are on a mission where we are offering sustainable packaging and that we do in commodities, we do it across the world, we through this enable nutrition and also all the time thinking and considering how we impact and how we enable the reduction of plastics. Let's then go to the performance. And as I start off by saying, it's been a very strong quarter, and it actually rounds off what has been a momentous year for us, both in terms of results, but also in terms of the strategy execution that we have executed during this year. Now, firstly, we're seeing a quarter of very solid growth around 15%. That leads to an increase in EBITDA by more than 5 million and a margin level of around 14.6, which is a strong result. And it's also driven essentially by And a number of elements, including evidently the growth we're seeing, but also the pricing initiatives we have, also the operational excellence, the cost controls we've had, all of that has led to this result. I'm coming back to that. America's clearly... With Little Rock now in place, line one producing, it delivers 28% growth. And also, very importantly, the Little Rock plant is now, for the first quarter, accretive to the group. You remember we said in Q3 that we were now cash positive. in Little Rock and now we are with in this quarter also accretive to the group. We also record the highest ever cash from operations more than 63 million and that leads us to propose a dividend in the range of 0.102, a total of 59% in terms of net profit. I think it's fair to say that it's been a year where we have strengthened our strategy, particularly of course in US, but also in other areas that you will see throughout this presentation. Let's firstly think about the revenue side. And this is the first year, actually, where we are breaking the 1.2 billion mark. And we're doing that thanks to clearly the growth in US, but also very solid growth in commissioning of filling machines, which all give you, as you know, is a good indicator of coming sales. It's a very strong indicator of how our customers look at the offerings we have, the equipment we have, the services we have. Looking at the APDR level, we are delivering roughly 9 million more on a full year basis. And as you can see, increasing margin levels to about 15.3, well in line with our midterm targets. And also throughout a level in Q4, which is driven by essentially growth in America, but also growth outside of America, like India. Let's go to the strategy, and a couple of words around this, and some of you will have seen it before. But it is important to highlight that what we have seen throughout the last few years, 25 not being any exception, is that we are following these strategy points pretty disciplined, in fact. Clearly, it's about the realizing global growth where America's is growing. the number one priority for us, frankly, in terms of capital allocation and also in how they now deliver the growth. But it also includes MENA in India. We have the strengthening leadership, which is all about our core business in Europe, our developments around delivering sustainable packaging, delivering on regulations, up and coming regulations. And then lastly, the plastic to carton shift. which we have talked about a number of times, and I'm going to highlight examples of that now. What we haven't talked about very often throughout these quarters are the efforts that we're doing around the operational excellence. And we do that often. Across the group, we do it in our manufacturing facilities, reducing waste, improving our waste figures, increasing our OE figures, getting more out of our assets. But we also have a number of other examples on that. And let me just go through three. Firstly, and this we always take because this is also part of our mid-term targets, and that relates to safety. And while all incidents obviously are too many, any incident is one too many, we are seeing a development in the right track. We are down now to four, which is for us historically significant. a low level, in fact. This is a TRI level of four. And if you go a couple of years back, we would have been at a lot, lot higher level. It's thanks to a discipline in the organization and a very high level of commitment in the team driving the safety awareness and the safety culture in ELOPAC. The other one, which we're very happy about because this is a strong indicator of why, how we're going to grow in the future as well, is we maintain our fixed cost base while increasing our revenue with about 6%. Clearly, this is a testament to the fact that this is a very scalable industry. We do see the possibilities of driving more business through our organization and then hence increase our effectiveness and productivity. And finally, on a very important point relating to our working capital, we are now seeing efforts that are finally paying off, I can say, on inventories, reductions by 17%, and also an overdue collection, which is down quite significantly. So all of that is, I think, is a sign of health, how we are driving and building the the operational efficiency while driving growth and securing the profitability. Now, on a completely different topic, but related to plastic to carbon, very often we talk about non-food, we talk about areas outside of our core categories, but we also focus on the business that is very close to us, the dairy business, and not only in milk, in this case also in cream. And interestingly, and this is not something you would necessarily see everywhere, but in Germany, as an example, you will have a significant amount of cream packed in plastic cups, essentially. You can look at the slide and you see these classical plastic cups which are used for cream. Now, together with one of our close customers in Germany, Nordseeming, we've been working on a project on replacing some of these plastic cups by cartons. This actually results in somewhere around 65 to 80%, 85% less plastic for the retailers, so clearly very interesting from their point of view. But also and very importantly, It also results in higher efficiency in transportation, logistics costs go down, and overall TCO, total cost of ownership, which is in favor moving it from plastics into cotton. It's something that is only just beginning, it was the end of last year when we started it. It's something we believe strongly in, can be rolled out to more customers. A lot of that is of course private label in Germany, but as you will see also on the quote, We think this is a really, really good example of, even in smaller parts of the, in core categories close to our heart, how we can work on the plastic to carton replacement. Right, and I think with this bent, I will hand over to you and join you in a second again.

Thank you, Thomas. Let's jump straight to it, starting with the EMEA segment. For EMEA, we reported the revenues of around 222 million euro. That is a growth of 8%. That growth is mainly driven by the increased sales of filling machines, which was at a really high level in the quarters. That being said, this is compared to a rather softer quarter last or the year before. for filling machine and back then we also had a higher share of rentals so that is also exaggerating the growth level to some extent. The carton business and the closure business is rather stable year over year. What we are seeing is that there is a decline in the juice segment. This is very much driven by the high citrus prices that is depressing demand. That is then compensated by growth in the UHT segment where we have customer wins and they also grow with selective customers. The closure business is basically following the carton demand. In MENA, the business is stable. We have a resilient demand in an environment that is quite competitive these days. When it comes to home and personal care, this segment is developing slower than expected. It takes more time to develop a new category, but we still believe in the long-term potential of this segment and the global megatrend. If we look at Rolfed, as we have reported before, we see a decline in Europe. But the rate of the decline is lower. So we are hoping that the tide will turn to some extent. And we will look forward to how that will develop in the following quarters. In India, on the other hand, the Rolfed growth continues to be strong. We report revenue growth of around 6% in India. And that is despite a weak economy. season for juice where adverse weather has dampened the juice demands and we also continue to see over capacity and very strong competition and price pressure in the overall India market. When it comes to profitability, we are reporting 31 million euros, slightly below last year. The margin is 14% versus 15%, and that margin reduction is due to the fact that we are growing at a high rate in India. and we are selling a lot of filling machines in the quarter and both those two factors dilute the average margin for the segment. On the operating cost side, what we are happy to see is that improved efficiency, weight reductions are offsetting inflation and the continued increase R&D activity level. If we move to Americas, we are reporting around 100 million euro, that is 18% growth, and on a constant currency basis, that is 28%. This is obviously the impact of the successful ramp up of the Little Rock plan, where we are steadily onboarding customer throughout the quarter. In addition to Little Rock, we have very strong performance in the Canadian assets, and that enable growth in the fresh dairy segments. All in all, this is also supported by a continued trend, where dairies are prioritizing supply security, and they want to have a dual sourcing strategy, and here, Elevapak comes in. In addition to the volume growth, we also have carton price adjustments in America, following the higher raw material costs. The EBITDA is 23, that's up from 19 million the year before, and the margin is improving to 23%. This is driven by the volume growth, obviously, but in addition to that, we have attractive mix effect in the business. And we're also very happy to report that Little Rock as a plant is delivering margin accretive margins to the group, in line with what we have talked about when we talked about this investment for the first time. So very happy to see this development. Also in America, we are seeing benefit from improved operational efficiency, and that also includes improvements in waste. So that is good to see, that we can grow and have operational efficiency at the same time. On the other hand, when it comes to our joint ventures, the results, the share of the net profit from these joint ventures have declined to 1.9 from 2.7, and that is reflecting a softer demand and changing consumer pattern in Mexico and Central America. If you go to the bridge from 41 to 46, we start off with the revenue mix. As I mentioned, this is obviously driven by the American expansion with a strong growth. And it's also a result of price increases initiated throughout the year in Europe. And these two in combination are the main factors for the effect of 9 million euro. The raw material cost base is stable and below that we see higher board prices that are almost offset completely by reduced LDPE prices. As you see on the chart here, we're very pleased to see that the operating costs, if you adjust for inflation, they are actually down compared to last year. And that is a result of a systematic initiative in the company, where we are reducing the use of external services, stricter travel policies, and generally improved efficiency in the way we are spending our money. The last bridge element, we have already talked about the joint ventures, but we see we have a currency impact of 1.9 million euro, and that is a result of the weakening of the US dollar. If we then move to the quarterly cash flow, we are very happy to report that not only this is a quarter with strong profitability, but it's also a quarter with good working capital turnover. So if we start with the left, we start with the EBITDA, and we see we have a reduction of working capital of around 28 million euro. Thomas talked about improved inventory of packaging material, reduced overuse. The high rate of commissioning of filling machines have also reduced the inventory of the filling machines. We do have inventory increases in the US, naturally, because that comes with the growth. So the structural part of it is around seven, eight million euro and in the quarter we have a unusually high account payable of around 20 million and we believe that 20 million increase will reverse in the first half so of this reduction there will be a reversal which will be close to 20 million euro sometimes in first half because these account payables, they are going up and down with the business cycle and the settlement of our raw material contracts. In addition to that, we are paying in the nine million of taxes. The other is basically a reversal of the share of net profit because that is not a cash flow item. Giving the 63 million euro cash flow from operation, which is the highest figure we have seen in a quarter so far. Cash flow from investing activities is 23 million. We see the investment of 2028 and that is eight and a half million related to the US plant. We do have our normal maintenance programs in our plants. Filling machine capex is lower than normal because we are selling more of the machines versus renting them out and that reduces the capex. The cash flow from financing activities is minus 32. That reflects the dividend of 22 million and lease payments and interest. As you can see from the chart, we have a reduction of of around 8 million in net bank debt if you compare Q3 and Q4. We want to talk about the year as well. And also for the whole year, we are happy to report that we are generating enough cash flow, both to pay dividends. We are for the year of 25, we are paying one and a half year of dividends because we changed from one dividend payments per year to semi-annual payments per year. So we do that. We have the investment program in Little Rock. And despite that, the bank debt year over year is stable. So we are very pleased to see that. With that combination, that also brings the leverage ratio to 2, exactly on 2, which is our mid-term target. And that is a result of the profitability, the improved working capital that we have generated throughout the quarter. And I think what is good to see is that the leverage ratio as such is coming down from Q3, but so is the absolute level of debt, which is going from 272 to 264. If you move to the return of capital employed, it's still ticking up and getting closer to 16%, now 15.7%. And then we see the effect of the growth and operational leverage from our American assets. We still have some investments to do. We have invested $96 million so far in Electrorock and we have $32 million to go for the investment in the third line that we announced in the previous quarter. So a good year with good profitability and very strong cash flow. So with that, I will give it back to you, Thomas.