Pandora A/S Ord

Good morning, everyone, and welcome to the conference call for Pandora's full year 2025 results. I'm Bilal Zees from the Investor Relations team. I'm joined here by a CEO, Berta de Pablos Barbier, CFO, Anders Boyer, and the rest of the IR team. As usual, there will be a Q&A session at the end of the call. If you could kindly limit yourself to two questions at a time, that would be great. Please pay notice to disclaimer on slide two and turn to slide three. And on that note, I will hand over to Berta.

Thank you, Bilal, and welcome, everyone. Well, we have a lot to cover today, so I will begin with our four-quarter performance before outlining how we plan to reignite growth through a recalibration toward desirability-led growth. I will then cover the creative innovation addressing high silver cost mitigation. Now I am sure that most of you are aware that we pre-announced in January the quarter four results. So let's quickly see how the final and total results shape up. As a reminder, we ended the year with 2% life-for-life growth and Q4 at 0%. These results were, of course, below our expectation, even against a weak macro drop, and we do see clear areas where we can drive better performance. Now, on the positive side, our profitability remained very solid throughout the year, and we ended the year broadly as expected. This reflects our high gross margins, where efficiency initiatives and pricing action help offset most of the external headwinds. Now, when we combine these with very good cost control on OPEX, our EBIT margins ended the year around 24 again. 24 with the vast majority of the pressures we face. It's worth also remember how quickly the environment has changed. I mean, 12 months seems like a very long time ago now, but this time last year, our guidance assumed no tariffs and a silver price of around $32 per ounce. Now, let's move into some of the details of the quarter. So next slide, please. By collection, you will see that the core delivered 1% life-for-life growth in 2025, with quarter four ending flat. Talisman, a new collection, contributed positively in quarter four, which was very encouraging to see. Now, it remains a relatively small collection, but we are pleased both with its performance and the consumer attention and consumer acquisition it has generated. And we are going to continue to build on that momentum in 2026. In Fuel with More, life-for-life growth was disappointed at minus 3% in quarter four. I will touch later on our plans on design and how we intend to reignite growth in both core and fuel with more. In short, this is going to be about sharpening where we focus our design effort, bringing greater creative energy to the core and more confidence and scale to fuel with more. Next slide, please. Now, going forward, you also will hear me speak as much about earned media impact as about reach. And this slide actually illustrates why. Over the past year, we have increased our presence at highly relevant cultural moments, from major fashion awards to global platforms such as the Met Gala, the BAFTAs, and the Grammys. These activations have generated high quality coverage and increased media impact value, helping to build brand desire over time. Brand desirability, which is one of the most important drivers of sustained long-term growth for Pandora. In quarter four, very specifically, we aired our Christmas campaign. It relied predominantly on traditional media and delivered a modest uplift in traffic. The learning is very clear. Going forward, we need to combine paid reach with earlier and stronger earned media impact that will be enabled through PR integration and very culturally relevant activation. Now, all of these must, of course, be anchored in a strong design offering, which I will touch shortly. Let's go on to the next slide, please. While many of you are already familiar with the regional performance, so I'll just only focus on a few highlights. Let me start with EMEA, our largest region that is predominantly Europe. In quarter four, EMEA delivered minus 1% life or life growth. Performance varied by country, and while some markets performed well, the overall results reinforces the need for the targeted strategic shift that I will outline. At country level, a few markets are worth calling out. Spain continued to perform very strongly in quarter four. And this is a clear example of a mature market where sustained brand heat continues to drive customer acquisition, showing that there is no fixed ceiling to grow for Pandora. Italy, by contrast, saw a weakening in performance. Now, while some actions deliver very encouraging early signals, the outcome underlines the need for a more decisive change in how demand is activated in mature markets. I will address this later. Now, let me move to North America. Life-for-life growth was 2% in Q4, which was slowing versus Q3. We discussed in January the macro environment that weighed down on consumer confidence and in-store traffic. That said, brand strength in the U.S. remains very solid, and with only around 2% market share, the long-term growth opportunity remains very significant. Latin America growth was minus 7% in Q4. We are implementing a new pricing architecture in January, and so far we are encouraged by the initial response. Finally, Asia, we deliver positive growth at 2%, like for like growth, and Japan continues to perform very well and provides a positive reference point as we shape our future approach in the region. With that context, I'll move on to the next slide, please. Another area which will remain very consistent is the role of our stores in driving desirability and elevating brand perception. We have made strong progress over the few years and the economics of our stock network remain highly attractive. By the end of last year, approximately 800 stores have been converted to the new format. In 2026, we will continue this momentum with the rollout of new digital windows displays across many stores, which are designed to improve visibility and drive traffic. That said, like any strong brand, we will not stand still. We see further opportunities as well to evolve our store layouts, increasing traffic flow and presenting Pandora more clearly as a desirable destination. With that, I will hand over to Anders to walk you through the quarter four metrics before we look ahead to what comes next on the strategic shifts. Anders.

Thank you, Berta. And good morning. And please turn to slide 10. Berta has already commented on the revenue metrics, so I'll rather focus on some of the other metrics on this slide. And the key message from us is that despite the soft top line and the significant external headwinds, then our core P&L, balance sheet and cash metrics remain healthy. And that demonstrates in many ways the strength of our business model and agility on the cost base. In the fourth quarter, our gross margin ended at 78% and thereby it was down 170 basis points versus last year. And that's driven by a quite heavy 310 basis points of headwinds from tariffs, foreign exchange and commodity prices. So this means that we continue to offset quite a decent amount of the headwind through cost efficiencies in our vertically integrated value chain. And then at the same time, our price increases do support the margin as well. I also just want to touch on the working capital. And as you can see here, we have circled in two numbers on the slides. That's including and excluding commodity hedging. And the 4.1% net working capital includes some quite significant unrealized commodity hedging gains. So to really understand the performance, it's better to look at the KPI excluding commodity hedging. And here you can see that working capital is still in negative territory, and we are quite pleased with that. Next slide, please. Here we break down revenue growth in the quarter. Bertha has already covered the key elements. And as we think the bridge is quite straightforward, we will just move on to the EBIT margin bridge on the next slide. And the short story here is that the EBIT margin played out in line with our expectations and in line with the guidance. And even though in a way I don't like saying this, then delivering an EBIT margin which was only down around 100 basis points, that is quite a good outcome with all of the headwinds that we saw in the quarter. And those headwinds are shown in the light pink bar on the right of the bridge. the 440 basis points in miners. And being able to offset the majority of that speaks to some good discipline across the company and agility following the lower revenue growth in 2025. This doesn't mean that we don't have the ambition to offset all of the headwind, but it will take a bit of time and we will speak more about that later today. I would also like to note that the OPEX ratio actually declined on a constant currency basis, both in Q4 and for the full year as well. So we have been executing on the Silverstone cost program, and it's quite good to see that the savings are coming through to help the bottom line. And on that note, I'll hand back over to Berta to walk through how to re-energize growth.