IMCD N.V.

Welcome to the IMCD 2025 Full Year Results Conference Call, hosted by Marcus Jordan, CEO, and Hans Koimond, CFO. For the first part of this call, all participants will be in listen-only mode, and afterwards there will be a question-and-answer session. If you wish to ask a question, please press pound key 5 on your telephone keypad. I would now like to give the floor to Marcus Jordan. Mr. Jordan, please go ahead.

Thank you very much, Elder. Good morning to you all, and a warm welcome. I'm Marcus Jordan, and I'm here today with our CFO, Hans Coymans, for the 2025 results, which we published in a press release earlier this morning. After a positive start to the year, with good first quarter results, the following quarters of 2025 were challenging. amid macroeconomic conditions, tariff uncertainty and geopolitical unrest. This resulted in softer demand across a number of markets, limited order visibility and continued just-in-time deliveries. Looking at our business segments, we saw pharmaceuticals and food and nutrition have the most solid performance in 2025, and our beauty and personal care and industrial segments being generally soft in demand across all three regions. Moving on to the 2025 numbers, you will find a summary of our financial results on slide 4. Gross profit at almost €1.2 billion is slightly down versus last year, but up 3% on a constant currency basis. The gross profit margin is down from 25.4% to 25%, primarily as a result of the impact of acquired companies and product mix. EBITR was down 3% on a constant currency basis to €498 million. This is a result of a slightly lower gross profit combined with inflation-driven cost growth. As mentioned in the Q3 call, we optimised our structure during the second half of the year to further intensify our sales efforts and to drive cost effectiveness throughout the company, resulting in an overall reduction in the number of FTEs. I'm happy to report that we increased our free cash flow to €465 million, leading to a cash conversion margin of 91.4%. We propose a dividend of €1.81 per share, the payout ratio being 35%, which is at the top of the 25% to 35% range of the adjusted net income as mentioned in our dividend policy. If we now look at M&A, we completed seven acquisitions in 2025, with the two largest being Tillmans and Ferrer, both in Europe, which as you know, is our most mature region. Tillmans in Italy operates across a broad range of markets, including coatings, construction, food and nutrition, and water treatment. And in 2024, had 78 people and a revenue of 143 million euros. And Ferrer, a distributor of food and beverage ingredients in Spain, with 37 employees and 112 million euro revenue in 2024. On a full year basis, the seven acquisitions completed at about 320 million euros revenue and 200 employees based on their last full year numbers before acquisition. Recently in January, 2026, we also completed a further acquisition, Don Yang FT in South Korea, a company active in beauty and personal care with 14 people and 34 million euros in revenue. With this acquisition, we strengthen our position in South Korea, which as you know, is one of the most innovative and largest beauty and personal care markets in the world. We now go to the next slide. Having defined our six strategic growth pillars, which we presented during our investor day in Milan in 2024, I'm pleased to share some highlights of our progress in these areas. I am particularly proud of the complete rollout of the sales assistant product recommendation tool, which empowers our people to easily identify the right solutions for our customers. We've seen good traction with the tool and are confident that this will improve our ability to increase our right first time product recommendation and thus our cross-sell ratio. Behind every success within our company are our people. and in 2025, our people completed more than 175,000 hours of learning, leading to a 57% increase in training hours per employee, with a particular focus on sales and operational excellence topics. We also continued our focus on developing talent from within through two rising leader programs. We also further strengthened our supplier partnerships, and I'm encouraged with the number of positive discussions we are having with both existing and new suppliers to further expand our business. In summary, we are confident in our asset life business model, which enables us to stay adaptable to ever-changing market needs and reinforce our focus on customer centricity and supplier expansion. We also continue to invest in the tools and platforms that keep us both efficient and agile with a focus and commitment to creating long-term value for all IMCD stakeholders in the years ahead. I would now like to hand over to our CFO, Hans Kooijmans, who will give you an update on the numbers.

Thank you for the introduction, Mark, and good morning, ladies and gentlemen. As you have seen earlier today, we issued a press release summarizing IMCD's financial results for 2025. On the 4th of March, we will publish IMCD's annual report. a more than 300 pages report, including more detailed financial info, non-financial info, and various business examples. In this call, I will take you through a summary of the financial numbers before we move to Q&A. On page 8 of the presentation, you could see a Forex-adjusted revenue increase of 5% and a gross profit increase of 3%. And this increase in gross profit was a combination of 1% organic decline and a positive 4% as a result of the first time inclusion of acquisitions. The year started strong as Mark had mentioned with 6% organic growth in the first quarter, followed by modest growth in the second and single digit negative organic growth in the last two quarters. And as Mark has already indicated, we saw demand softening in the course of this year due to ongoing terrorist discussions, geopolitical unrest and related uncertainty which had a significant negative impact on customer demand. Further, the weakening of currencies like the US dollar did not help and resulted in a negative impact on the absolute amount of revenue and gross margin. Then the 4% acquisition growth is the balance of the full year impact of acquisitions done in 2024 and more recent acquisitions signed and closed in 2025. And you could find an overview of the 2025 acquisitions on page five of this presentation. Gross profit in percentage of revenue slightly decreased to 25% in 2025. About half of the 0.4% decrease is the impact of the first-time inclusion of acquisitions and higher additions to provisions for slow-moving stocks. The other half of the 0.4% is the result of usual changes in product mix, changes in local market circumstances, currency impacts, partly offset by continuous internal cross-margin improvement initiatives. I skipped the operating EBITDA line, which we included for your convenience and would like to move to operating EBITDA. But you can see that Forex adjusted operating EBITDA decreased 3% to 498 million. And this decrease was a common.