Huhtamaki Oy Ser 1

Good morning, all. Welcome to Huhtamake's Q1 2026 results call. My name is Kristian Tammela, VP of IR. We have today released the Q1 report and are hosting our AGM later today. We will now have a presentation, first by President and CEO Ralf Wunderlich, and then by CFO Tuomas Geust. And after that, we, as usual, have time for Q&A. And with that, let's get started in handing over to Ralf.

Thank you very much, Christian, and welcome and good morning to all of you listening into this results call today. I'm, in fact, very pleased to report that we had comparable net sales growth in what you know is a very challenging market. And, of course, our growth was supported also by volume growth, which is also very pleasing. Negative currency impact, which we have seen last year in three of the last three quarters, already continued into the first quarter this year, which is giving us a negative impact both on the net sales side as well as on the EBIT side. However, our adjusted EBIT margin increased versus last year and is at 10%, so we are, again, very pleased with that outcome. Our focus on capital discipline also continued and enabled us to show a very strong cash flow in the first quarter, significantly up on last year again. We are, and that's the news of February, end of February now, asked to navigate the challenges which we are seeing from the war in the Middle East. So the team is on that, and that's clearly a very important task for us going forward. We have seen the latest changes of the management team and I'm really happy to now say that we have a very strong management team in place which will help the company going forward. Let me dive in into the macroeconomic and geopolitical situation after the war in the Middle East started. And let me first go to some of the facts. Facts number one is that, and you know this, but it's important to repeat it, that approximately 4% of our sales is coming from that region. And if I talk about the region, I really mean the UAE with our two factories in Dubai, our food service factory in Saudi Arabia, and our three factories in Egypt. So that is approximately 4% of our sales. What happened, of course, driven by the oil price increase, which was very steep and very sudden, it's today an increase of 75% of pre-war times. And we, of course, see all of that impacting our materials, be it resin, chemicals, solvents, adhesives, everything which is related to oil. But also on the energy and logistics side, we see a clear impact. So the actions we are undertaking to mitigate this. Action number one and most important is the safety of our people. Really important that we take care of our people and we are doing that and I'm really happy to report that up to now no one got hurt because of the situation in the Middle East. All our sites in the region's the six I reported before, are operating. But of course, initially, we had lots of closures, and then we started with single shifts, and then now we are back to running the operations. It is very important to report that so far we have been able to secure raw materials, but of course there is a risk of availability in the market. So our procurement team is working very hard on making sure that we are not running out of any raw material so we are able to continue to support our customers and reduce the impact to our customers to ensure that they continue to win in their respective markets. We have implemented appropriate actions to pass on rising costs, both with regards to our contractual terms, but also when needed, we had to talk to customers to make sure that we pass on earlier such cost increases. There is a possibility that the situation will have an impact on demand. We are very closely monitoring this, and we are staying on top of what it would mean to Hutamaki if demand would drop. Let me swiftly move on to the actions which we started taking last year to drive value for the company. And you remember the three value drivers which we have implemented. Profitable growth supported by all levers, capital discipline, and allocation to best projects which we find at Utamaki, and accountability with speed of execution. We have done that early last year, and I'm again very pleased to see that it's now really working in all our segments very well. Let me give you some examples of what we see. We see that we have now initiated with our strong sales initiatives growth. And as I mentioned before, we see comparable growth growing in the quarter, which makes us, of course, very pleased. We see that two of our segments continue to see also volume growth, which is again another very exciting thing for us. The mix improvement and the turnarounds actions which we did in flexibles are continuing to progress very well, and you can see this with our outcome in the flexible segment. And pretty much exactly one year ago, we bought Zellwein Farms. Integration is going very well. It's getting close to a one-year anniversary now. And again, very happy with that acquisition which we did. So we are using all levers, organic and inorganic, to drive growth for Hutamaki. And we start seeing the outcome. And yes, it doesn't happen overnight. We knew this, but we also knew that we needed to start that journey. Capital discipline. We did spend significant money before 2025 and we needed to be much more rigorous and disciplined how we allocate capital to the various segments which we have. You know that we are splitting it in three parts, equal parts for maintenance, for efficiency, and for growth. And that plays out really well. And, of course, we are always reserving approximately $10 million for what we call the license to operate, so safety, sustainability initiatives, which is very important. We are not jeopardizing any potential growth opportunities for the company, but we are much more disciplined. That is one of the reasons why we had a very strong cash flow outcome last year and, in fact, in the quarter this year, which I will talk about in a second, and then Thomas will dive in into more details later on. Accountability and speed of execution is something which was very important to the global executive team because in a market which is so volatile, which is changing so quickly, we needed to get faster. We needed to get closer to our customers and the end markets we are playing in. And we did a number of initiatives which we concluded last year, and we are again now seeing that those changes are helping our business segments to be faster, be closer to customers, and then see the outcome. Let me now go into more details of the quarter. And let's start with the top line where I said that I'm really proud of seeing comparable growth growing. So you'll see the 947 million outcome for the quarter and a very, very big impact of more than 60 million, 63 million of currency. So adding those two numbers together, you can see that we did grow 1%, which is coming from the organic side of the business and a small impact still in the quarter. for acquisitions. It's the last quarter where we will see that impact. So really pleased, and as I mentioned before, North America and our fiber packaging business did see growth for the quarter again. Going to the P&L. In the P&L, as just reported, we see the 1% comparable growth, so we ended up on a reported basis at $947 million. Our adjusted EBIT margin did grow from 9.8% to 10%. You see the 94.5% reported EBIT, adjusted EBIT there. If you add back the 4.8 million currency impact, we would have been at 99.3%, which would compare to 98.5%. So we would increase our adjusted EBIT on a comparable way. Adjusted EPS landed at 0.56%. and capital expenditure with $27 million below last year, but not significantly low because we believe that we have now found the right level to continue to invest in the business, maintain the business, and get efficiency out of the business. But very pleased to say and to report that our free cash flow increased by $32.5 million and was positive in the quarter with $10 million. Let me walk you through the segments specifically, and let me start, as always, with food service. The demand in food service continued to be soft, and it's especially the smaller accounts which are very soft for us in the quarter. That's partially driven by the Middle East impact, which is an important region for our food service business, which had a very weak top line. But overall, as I mentioned, smaller customers increased. are very soft in the quarter for us. So we see a comparable 8% decline because of the weak demand, but also driven by currency on that side. So 8% comparable decline, 11% on a reported number decline. The segment did great work and continued to do good work on taking costs out. So we were able to manage our adjusted EBIT and we came in at 8% margin with 16.7 million in absolute EBIT for the quarter. Capital expenditure absolutely in line with last year, but very good work on the working capital side enabled the segment to deliver very strong operating cash flow of 17.7 billion, so 10 million ahead of the same quarter last year. Very pleasing to see the focus on the cost side, the focus on the cash side. and of course working hard to get the small customers back to Utamaki and to make them win, and then also benefit on the back of that. Let me move to North America. And you heard us saying in the last report that we had a very significant weather impact in North America in January. We had it in five of our factories for multiple days, so we saw significant cost increases there, which, of course, we see in the quarter. However, what we also see in the quarter is a very strong net sales number. We see a comparable growth of 8%. which is fantastic, but I need to be clear that this is supported by an early Easter this year. Last year, Easter was a few weeks later, so we had the impact in April. This year, we have the impact, as Easter was early April, we have the impact for us in the first quarter. That clearly did help our comparable growth, and still we are very proud to report the 8% comparable growth in North America. On the margin side, we ended up double digit 10%, of course, impacted again by currency. And the big part of the just shy of 5 million currency impact for the group is coming from North America, just shy of 4 million from a currency perspective. And of course, we had, as I mentioned earlier on, we had the impact of the weather. So if you would put those two things together, we would have ended up on the adjusted EBIT side in North America at par or even slightly ahead of what we reported last year. So pleased with the outcome of the North American business after a very difficult start due to the weather in January. Capital expenditure discipline continues. $9 million versus the $12 million last year. So again, capital discipline implemented in all of our segments, and you see it here also in North America, really strongly implemented with a positive cash flow in the quarter for our North American business, which is very pleasing to report. Let me swiftly move over to flexible packaging. And the story continues in flexible packaging that with the focus of margin improvement, that one continued also into the quarter. And we would put a lot of emphasis again on our mix. So you see, even though comparable growth was down 3%, we continue to improve our mix. We continued to win with the customers which are focused for us. And so we're very pleased with the outcome on that side. Of course, that is translating with an amazing cost management and an adjusted EBIT increase of 7% to $28.6 million, with a margin of 9.5%, so they are well in the range of where we want to see our flexible packaging business. Capital expenditure, absolutely in line with last year, but a very strong focus on working capital, which enabled the segment to end up on the cash flow side at 20.9 billion. Significant increase versus the same quarter last year. So well done to the flexible packaging team. And then we go to fiber packaging. And here we also see a continuation of what I've reported to you last year. We continue to see strong comparable growth, both driven by pricing and volume. And as you know, on the fiber side, we are running at capacity. We are investing quite a bit in fiber to enable us to increase capacity as this is a business running flat out as we speak today. Adjusted EBIT increased by $2.5 million and 15.2% margin, which is a very pleasing margin to see for that segment. In fiber, we continue to invest significantly. We did it already in Q1 last year. We continued the same number this year, so significant investment in our very well-performing fiber business. So we spent $7.4 million in our fiber packaging business. And still, they were able to deliver a very strong cash flow, just shy of 6 million, so 5 million more than in the same quarter last year, with high capital expenditure, clearly driven by a very strong EBITDA delivery of the number. Let me hand over to Thomas, who will give you more details on the financial side, please.

Thank you, Ralph. Starting off with the currency impact, which still is trending negative for us. No surprise on that one, I believe, to any one of you listening in to this call. However, maybe pointing on some of the biggest moving parts here, if you look at At the average rate for the biggest impact currency, US dollar, you see that we had in the quarter last year a 1.05 average rate, while we now had 1.17. So despite the US dollar slightly strengthening, we had a significant negative impact of that currency in the quarter. You will also see that most of the other currencies are also trending negatively. But maybe focusing a bit on the impact from the U.S. dollar. So if we take a few data points out of last year, we had an average rate of the U.S. dollar of 109 in the first half of the year and landing end of year at 113. And as you said, now we are at 117. This means basically that the headwind rate will continue still in the second quarter, although then if continuing on the current level, slightly flattening out then towards the end of the year, so less currency impact in the second half of the year, hopefully. But as said, 63 million almost of net sale impact, translating to 4.8 million in overall EBIT impact. So similarly, despite the currency headwind, I'm very pleased to say that we are maintaining our margin or actually improving our margin slightly to 10% from 9.8 previous year. And that's very much supported by still the very focused cost out activities, so around both taking the accountability, but also continuing on that playbook we introduced when we ran our efficiency program, which we stopped reporting mid-last year. But activities are still going on. Also supported by a stable value add. Looking at the finance cost, you can see that we are approximately on previous year's level slightly up uh here i would say one could assume a 5 to 5.5 million uh monthly run rate costs for the for that item so uh we are still on on the low side there for the first first quarter and then on the tax rate we now reported 23.6 percent etr uh that's uh slightly below previous year when we were around 24% and year end 22%, 22.4%. So tax rate roughly in line with where we are and obviously depending on where the profits are collected, tax rate is slightly fluctuating. Then looking at the EPS with all the parameters just reported here earlier, the adjusted EPS coming in at 56 cents versus 59 previous year. Moving on to the cash flow, Ralph already mentioned that the cash flow was positive. This is not very typical actually for Huhtamäki. We are normally very strong in the fourth quarter and then coming in with a low free cash flow number in the first quarter, in many cases actually a negative number. So from this perspective, we are very pleased to deliver a positive cash flow. You will see from this graph that the main contributor here is working capital. We are slightly down also on capital expenditure. And as you see, the paid taxes are higher than previous year, which is really around the timing of when the taxes come to payment. Continuing on a healthy net debt debita level of 1.9, so our efforts to maintain a strong balance sheet has been delivered. The gearing is down slightly from fourth quarter, so also a positive development. And as stated on this slide, we have significant cash and cash equivalents available. And on top of that, we also have the unused committed credit facility of 450 million available. Despite that said, we are working on our loan maturities. You see from this slide that in 2027 we have a significant bond maturing. As you have seen from previous efforts from refinancing, we are continuously and diligently working on maintaining a healthy structure when it comes to maturity, so activities around that one can be expected. Looking at our balance sheet, on the balance sheet side, as I've mentioned so many times before, we are having translation differences on our equity, although it's slightly improved versus the year-end level of roughly 34 million. The drag is still coming through on currency. And I said... I said the working capital helped us to improve on the cash flow side. Our return on investment is still lagging our ambition, but we believe once we are getting more top line in that we will see that one improving as well. And that one, then how we progress on our long-term financial ambitions, you will see that our comparable net sales is significantly below the long-term ambition. However, given the last year's trend, we are very pleased to see a positive number on the comparable net sales in the first quarter. Adjusted EBIT margin continuing now on the double-digit level. Although we normally see some weakness in the first quarter, we are very pleased to see now the double-digit coming through also in the first quarter, similar to year-end 25 and 24. And then, as said earlier, the return on investment is still lagging our ambition. And if approved today, then we will have the dividend payout in line with our long-term ambitions. Looking forward, the outlook remains unchanged. However, on the short-term risk and uncertainties, we have added the sentence, ability to pass on increased input costs, just to highlight the importance of now managing this exceptional cost escalation situation we are seeing in the market as Ralph was so well presenting on the Middle East situation. And with that one, I would hand over for Q&A. So please feel free to address your questions.

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Yes, hello? Can you hear me?

Yes.

Okay, perfect. I have a few questions. I wanted to start with North America and on currently the volume growth outlook in the different segments. Because if we look at the Q4 reports from different food service names from Q4, I think the data was quite mixed. So if you could educate us a bit what you are currently seeing in the different segments in terms of volumes in North America. So that was the first question.

Hi, Maria. Thanks for the question. So we were very, very pleased to see that in North America, in fact, all our three different segments did show volume growth in the first quarter. So retail, food service, which you are referring to, and consumer goods as well. So we see that very strong trend, of course, especially driven on the retail side by Easter. But in general, we see this continuing. Our customers, most of them certainly are winning in their markets. So we are very pleased on the food service side. You do remember that we are in North America on the food service side, serving especially Tier 2 customers. So, yes, there is a mixed outcome for our customers in general, but in particular for us, we had a strong quarter, and we don't see any signs that that would go in a different direction at the short term in North America on the volume side for food service in particular.

And then was there anything specific on the volume development in the retail side?

Yeah, the retail side is very much driven by holidays in general. So if you think Easter, you think Thanksgiving, Christmas. So there are certain parts of the year where the retail side for us in North America has very significant peaks. So as I was trying to explain in the beginning, North America, Maria, we had Easter last year a few weeks later, so it clearly had an April impact for us last year. This year it was much earlier, so it was early April, so we had a March positive impact there. which of course helped us specifically on the retail side. But that's very normal. That's our seasonality in North America, and of course very much depends on when those dates fall. We see the impact either in Q1 or Q2 for Easter specifically. And then in general, you see that our China products are keeping a very good position in North America. So we are really fortunate that we have a strong brand. We're fortunate that consumers like our brand a lot. So we see China still traveling really strongly. And again, Q1 specifically, of course, driven by early Easter on the retail side, if that helps.

Yes, perfect. I had two more questions if I take them one by one. The first one of those is still on the food service, but more on the European perspective, which were declining in Q4 and we saw declines now in Q1 as well. So if you look at month by month, I mean, do you see now the trends still deteriorating or are we currently seeing like some type of a bottom here?

No, we clearly see that this trend continued now for a few quarters. So there is not a specific month impact for food service. It's more like the initiatives which we started last year of really going to the smaller, more local regional accounts is something which we needed to do. And you could say we should have done this much earlier, but we started it last year, and we start seeing that we have good discussions, promising discussions, but we need those discussions to come to fruition. So this will not happen overnight, but it will happen. We are absolutely confident that it will happen and that we will get back. to growing smaller and regional accounts. On the big account side, so take our largest customers, we're doing very well. In fact, you can see that we got the Supplier of the Year Award from our largest customer that was published just, I think, a few days ago. So we're doing extremely well with our largest customer in Europe and Asia Pacific. So very happy about that. Look, the one caveat I need to tell you is we've got to see how the Middle East crisis will play out, how long this will take. As I mentioned, we have approximately 4% of our net sales, of Hutamaki's net sales in that region, and we clearly had an impact of the Middle East after the war started on the 28th of February in March. So there was an impact. To be seen how long that war and that impact will take, we clearly... I currently believe it will take some time. And we are making supply chain arrangements that we can supply from other plants into the region. And we are, of course, making also lots of agreements with suppliers to ensure that we get raw material. So that one is more difficult for me to tell you any timing on. I am confident that we will get the regional and smaller customers back to be supplied by Hutamaki. But I'm not telling you that this is going to happen overnight. It's a journey which we started and we will play it until we will win this.

Perfect. Thank you so much. And then finally, I wanted to touch upon the raw materials, mainly on the plastic prices that have doubled within the last month. And here I wanted to see what kind of effects you will have on the profitability on doubling of the plastic prices and how quickly you can transfer these prices onto your clients. And if you see any availability issues when it comes to the plastic raw material prices, please.

Very relevant question, Maria, from where we currently sit. So you're spot on with your assumption. We have a 75% increase in oil. prior war and today. And of course, everything which is related to oil, and that's not just resin, but it's also for solvents, adhesives, inks, but then it goes into transport, logistics, is impacted. And it is impacted in such a strong way that we could not just wait to tell our customers that we go with the normal leg and the normal contractual which is typically a three-plus-month lag. But we went to our customers immediately, and we clearly had a very good and partnership discussion with them to say, number one, it is important for us to secure, that was part of your question, secure raw materials. So we are out talking with our customers and then our suppliers to ensure that we get the raw materials, that we don't have shortages. So task number one. We are secured for the next couple of months, but this is really a month-to-month work now. This is not that you can secure for the long term, as even our suppliers don't know exactly how to forecast and allocate volumes then at the midterm. So that's a day-to-day work. We are on it. We were on this one from day one. Second one is, of course, then the pass-through. We want to make sure that the impact to our customers is minimized. We want to make sure that they continue to win in their markets. And that has first and foremost to do with ensuring that we have availability of our materials for them. So that's what we are working in partnership with our customers on very hard. But we were clear from day one on, because it was an unprecedented steep increase. It was not a small partial increase. It was an unprecedented steep increase on a very short time frame that we told our customers from day one, we have unfortunately new prices for you, which we have to pass on to you immediately. We can't just wait for the leg, which we usually do. So we are on it. We were on it from day one. This is especially for our flexible business relevant. That's where we have most of those materials. In fact, 80% of the impact is for our flexible business. I'm very proud of what the team is doing. They are on it daily. We have daily calls. They are daily in contact with customers and suppliers. So the procurement team on the one side, sales team on the other side, and then business team overall is on this. I have a very good feel about the activities they are doing on that side, Maria.

Thank you very much. I'll let my colleagues ask second questions or next questions.

Next question comes from Hai Huynh from UBS. Please go ahead. Hai Huynh from UBS, your line is open. Next question comes from Cole Hawthorne from Jefferies. Please go ahead.

Good morning. Thanks for taking my question. I have three on my side. The first is just trying to put some quantifications at the EBIT level. You've been very clear that you're passing on prices faster than normal to offset the polymer costs. I'm just wondering, are you giving any kind of rough guidance? Is this kind of a 5 million or so EBIT impact into 2Q before it's recovered and margins are sustained from 3Q onwards. And then similarly in North America, you had a few different impacts. You had timing of Easter, which was positive, but you also had the weather. Is there any way that you could kind of quantify how those move into the second quarter, just so we can think about a run rate for the second quarter. And then the third one is more of a difficult one to answer, but the cost increases for polymer are clear, but we are seeing logistics costs increasing globally. And I'm just wondering how you are discussing with your commercial teams to try and recoup that from a pricing perspective, because we haven't necessarily seen you know, the folding carton prices move, but, you know, logistics are a cost that you will need to recover or at least get some efficiency. So I'm just wondering how you're thinking about pricing for the business from here. Thank you.

Thanks, Cole. Look, so three questions. Let me start with the first one on the raw material impact for the quarter. So we are really looking at this from a full-year perspective. And if you go back to 2022, so post-COVID, where we had a very similar issue, the difference was it was not as steep and maybe also not as big. But we have the system in place. We have a very systematic system in place to ensure that we are passing on, on the one side. On the other side, as I mentioned also to Maria before, we are making sure that we have the raw material available. And number three, we make sure that we are not upsetting customers. If we always take those three points as our target here to make sure that we deliver, we have a very, very strong feel that for the year this will clearly help. The reorganization of our procurement organization last year to have a global organization. is also extremely helpful here because they have an overview not about just one region or certain suppliers, but they have the global overview, and they are well aware and well trained on how to do this on the supplier side as well because it's not just that we are accepting any price a supplier is giving us. Of course, we are making everything we can to, number one, get the materials, and number two, make sure that we have the lowest negative cost impact as we can. So that's a general answer, so I'm very positive for the year. And I'm also positive, I have to say, that there will not be a short-term significant hit for us, Cole, because of the daily work the team is doing. Because of the daily work the team is doing, and they did not wait after the 28th of February for a few weeks, but they went on to it immediately on all fronts, as I said before. So I am very confident, number one, with the experience which we have after COVID. Number two, with the experts and professionals we have in procurement and in sales that we are able to do it. a good job in passing on and making sure that we are making our customers continue to win in their markets. That's point number two. Point number two, I think you asked me about North America and how Easter plays in. And let me start by giving you a bit more flavor about Q1. So if you think about our reported number, for Q1 in North America, I would encourage you to add what I said in my presentation, the approximately $4 million of currency impact into North America. So if you do that, you go from $34 to $38 million. And then I mentioned to you without giving a number that we had a significant impact of the weather in North America in January. And I mentioned to you, I don't give you a number for that, but I give you a flavor that we would have ended up the quarter ahead of last year's quarter. So you can make your assumptions that it was a good quarter, which of course was positively driven by additional volumes from Easter, which we will not see in April. But then we will see in May and June, we will see 250 years North America coming, and we will see a World Cup coming. So for the quarter for North America, we see, of course, an Easter which is gone, but we see a couple of things at the end of the quarter which should help our retail business, which is the one which is most impacted by Easter seasonality. So overall, North America Q2, I think, of course, we will have the April-Easter impact, but I see a May and June impact, which with the two factors I mentioned, 250 years North America and World Cup, which should help our business there. So that's my answer to your second question. And the third question is also very relevant. That was all about logistics, transport, other raw materials, impact there. And first thing first, other raw materials, yes, you're right, we don't see that impact yet. We stay tuned if it comes that we are, again, like we are doing on the resin, adhesive solvent side, ink side now, that we will be on it very early on and... in a very clear way to make sure that we get availability, that we satisfy the customers, and that we pass on our costs. Logistics, transport, that's happening. And it's happening in two fronts. One front is it's partially very difficult to get logistics and to get transports because of the streets still being closed. Even though there's a ceasefire, the streets are still closed, and there's a lot of logistics and transport currently not available. That's one, and the other one is that those costs, as we see ourselves when we go to a filling station, prices are going up significantly, or book a flight ticket today, prices are going up significantly. So we see that. And what we do, of course, also, like on the raw materials side, we talk to our customers that we need to have surcharges and to pass on those costs as much as possible, as there is a clear increase, very visible call. Hopefully that was answering your three questions.

That was very helpful. And on the logistics side, that includes actions on, you know, just the fuel charges even for kind of North America. You know, are you doing kind of surcharges there on any of that too? Absolutely. Absolutely, Corey, we do. And then I've got one from an investor just asking on potential for M&A considering, you know, the world is more uncertain. You do have a good balance sheet. How are you thinking about opportunities if they arise and someone's under pressure here in an uncertain world?

Yeah, thanks for asking that one very relevant question, and absolutely yes. So when we talk about our value drivers, I always, and I know that Thomas and Christian do the same, we make sure that we are very clear that we are looking at organic and inorganic at all levers. And we are very active on the M&A side. It doesn't look like that because we did only one deal last year. or more or less exactly one year ago, but it's because we are so disciplined and we do not want to fall into the trap of doing a deal just because we want a deal, but we want to do it when it fits, when it's financially value-equative to our shareholders. and then we can actually run it with the management team, which we know and which we have in place with a culture which fits Hutamaki's culture. Only then we do it. We could have done a number of deals, but we didn't do it. We choose not to do them because of either one or more of the factors I just mentioned wasn't fulfilled. So we are very clear on that. We are still out there actively looking at that. And to your specific point, we believe that the uncertainty which we currently have might help us to get deals which are going to tick the four boxes I just mentioned. So we are working on it. We continue to be disciplined, but it's high on our agenda, and our strong balance sheet will enable us to do it. Thank you.

The next question comes from Hai Huynh from UBS. Please go ahead.

Hi, just checking if you can hear me now.

Yes, hi, hi.

Sorry, I ran into some trouble earlier. So my question is on working capital. Q1 was much less negative than last year. So can you unpack what drove that improvement, especially on the payables and whether this is mainly timing, does that change anything in the cashflow dynamics seasonally for 2026?

No, look, we are with our three value drivers and the second one, so we just talked with Cole about the first one, growth, but let me then talk to the second one, capital discipline. We are continuously making good progress on that value driver. So for us, cash delivery is super important in all times, but specifically in times like now. And we are also here looking at all the various drivers for cash, and CapEx is one, and that's the easiest one to see. But working capital is another one which is super important for us. So we believe that if you specifically talk payables, we always look at payables and receivables together, and we believe that we should have similar days outstanding for either the payable or the receivable side. And, of course, you know, we will have to ensure when we talk raw materials, Maria and Cole had questions about the impact of raw material. Of course, there's the one work, which is the passing through and making sure customers win, but there's the other side of it, which is that there will be a negative impact on our working capital because of the increase. I think that's obvious and understood by you, Hai, but I just wanted to make sure that I make this point and not to confuse you when we have Q2, Q3 calls going forward. So if that continues, we will see that impact, that will be a negative impact on the working capital side. But generally, if you take this onto the side, Generally, we are clearly improving our working capital management. It's high on our agenda as CapEx is and as other points in our capital disciplines are.

Thank you. I have two left, if you don't mind. One on flexible and one on fiber. And apologies if this is repetitive as I have been dropped off the call a couple of times. But firstly on fiber, how sustainable is this current growth strategy? in fiber, egg, and food packaging? What does the order book look like? And are there signs that pricing may normalize after the recent run?

So look, on fiber, we feel very good about our position. We have a really good quality, very good contact with our local and regional customers. We were on, if you think about our operating model, and again, when I talk value drivers, the third one, so I answered Maria really well, and coal on the growth. So the first bucket of it, I answered then coal specifically also on the second bucket, and also for you on capital, second bucket, capital discipline. And now if I think about the accountability model, of course the fiber segment was the first one on into growth. into that bucket, working really on making sure that the local and regional accounts are served very diligently, and we have made significant progress on that side over the last 12, 15 months. So kudos to the team on that one. That is why we are so strong on both the volume and the pricing side on the fiber part. I make sure that in every call, and I did it today, but let me stress that one high again, we are investing quite a bit behind our fiber segment. We've done it last year. It was the only segment where we increased capex last year significantly. We have again matched our capex in the first quarter to last quarter, so again we are investing behind fiber because we need more capacity. We are investing in a number of regions. We are investing in Egypt. We are investing in the U.K. We are investing in Czech. We are investing in a number of our regions to ensure that we get more capacity because our fiber business is traveling strong, and more capacity would enable us to get to even more exciting growth numbers for our fiber business. If you think fiber, and maybe a point, I'm sure you know this, Hai, from former discussions, but I can't resist telling you. Of course, for us, that's mainly egg, but it's not only the egg business. We are starting to really focus also on fruit, and a lot of our investments and a lot of our activities are going also into fruit packaging, which is going to use the same raw materials, the same machineries, but it's a market where we are currently very small in, and we believe we can grow the food packaging market with our rough-molded fiber products nicely as well. That's on the fiber side. Did you have a question on flexibles? Maybe I missed that question. If you wouldn't mind repeating it, hi.

Hi. Yes, sorry, I got drafted again, but I managed to catch your answer. And they're just on flexible, you mentioned, you know, if your big contract wins a few courses ago, when does that start to meaningfully add? Is that within this year or that's more of a longer term point of view?

We are pretty confident that it will start happening this year. So we have successfully trialed. We are successfully now qualified. So we will start seeing this in 2026 already. Hi.

Amazing. Thank you very much.

Thanks for your questions.

That was all we had time for today. Thank you so much for attending. And again, as normal, should you have any further questions, please feel free to reach out. With that, we wish you a great day. Thank you.