Royal Unibrew A S

Good morning, everybody. My name is Lars Jensen, and I'm the CEO of Roy Unibrew. And with me today, I have our CFO, Lars Vestergaard. And we would like to welcome you to this webcast where we will cover the release of our fourth quarter and annual results for 2024. And afterwards, we'll take your questions. Now, please turn to slide number three. We will walk you through the business highlights of 24 and our growth drivers as well as our financial performance and outlook for 25. Now please turn to slide number four. We will start by looking at the most important highlights from the annual report. Over the past four years, we have almost doubled in size. We have expanded our multi-beverage platform in Northern Europe, and we have now full coverage of all countries in the Nordics and the Baltic countries. Also, we now have significant footprint in Western Europe and with multi-niche positions in Italy, France, Benelux, So effectively, we have step-changed the business and unlocked additional growth opportunities through our multi-beverage and multi-need strategies in an industry where growth is otherwise limited. We delivered a revenue above 15 billion Danish kroner and a total EBIT growth of 20% in 2024. We have made considerable investments in capacity and capabilities, and we have made several acquisitions underpinning our strategy. Integrations of acquired businesses are on track, and in the coming year we will focus more on harvesting scale benefits and reducing complexity to increase our operational efficiency. In 2024, we have revised our sustainability goals to ensure they remain relevant in relation to our material impacts, risk and opportunities and support our sustainability aspiration. We continue to make good progress within sustainability and with the approval of ScienceBank's target, we have in fact increased our ambitions on ESG and in particular around the CO2 reduction. As a result of the strong free cash flow generated in 2024 and our solidified financial positions, we are now relaunching a share buyback program of up to 250 million Danish kroner. And the program will run from now and until mid-August this year. Finally, we have published our new guidance for 2025, where we expect revenue growth to be 5-7% and EBIT to grow 7-13%. These are ambitious targets and a testament to the strength of the company. As 2025 is above our objective of 6-8%, you should count the 6-8% growth as from 2026 and beyond. We believe we are well positioned with a substantial part of our business in categories with growth potential and with investments both commercially and in CapEx that will facilitate strong performance in both top and bottom line in the coming years. Now please turn to slide number five. If you look at the development in our individual business segments, Northern Europe is by far our biggest segment, accounting for more than two-thirds of net revenue and EBIT. We performed well in a difficult market and consolidated the strong performance from 2023. We achieved 2% and 3% growth in volume and revenue, respectively. And more importantly, we were able to protect our margins through efficiency improvements, which offset promotional pressure and adverse channel mix. In Northern Europe, we have a nearly 50-50% split between alcoholic and non-alcoholic beverages. In Denmark, we had a volume record year and we are gaining market share in most of the categories, notably in carbonated soft drink led by Foxy Condi and Pepsi Max, but also strong performance in energy drinks. In Western Europe and international, we saw strong developments and solid execution with no capacity constraints. Both delivered record results on both top line and bottom line. In Western Europe, volumes increased by 122% in total and by 7% organically, while organic revenue increased by 14% and by 91% in total. This is predominantly due to strong performance in Italy and France, led by our strong brands, Cheddars and Lemon Soda in Italy, and Lorena and Crazy Tiger in France. Non-alcoholic beverages account for roughly two-thirds of our revenue in Western Europe. In international, we saw a strong rebound in volume, revenue, and profitability, with organic growth above 20% in both volume and revenue, while EBIT margin improved by 8.1 percentage points to 14.5%. Our performance was positively impacted by East's supply chain constraints on group level and improved pricing in general. Like in Northern Europe, the split between alcoholic and non-alcoholic beverages is close to 50-50, with a slight overweight to alcoholic beverages in the international segment. We saw especially strong demand from Africa, the dark countries plus Albania, as well as from our malt beverages business in Americas and Caribbean. Now please turn to slide number six. Even though the European beverage market is not really growing by volume, we are focusing on and are playing in categories that are growing. Let me just highlight a few examples to this. In enhanced beverages, we saw organic growth of 14%. This development reflects a general trend towards healthier products with higher quality and better functionality. As an example, we have seen the volume of Saucy vitamin water in the Netherlands growing strongly and the launch of Foxy Condi Pro taking almost 30% of the sports drink market in Denmark. In no low sugar, organic growth was 11% in 24, and overall, we have more than doubled in size in this category since 2019. Success is driven by strong execution and combination of strong own brands, like Faxi Condi Zero Calories, and strong performance with Pepsi Max, and we do a lot of innovation in this category. In the premium category, organic growth was 9% in 2024. As an example, we have grown our malt business and the cheddar strong ale in easily significantly. This is supported by strong in-market execution and marketing campaigns. In no low alcove, our volume has only grown slightly as the market growth in this category is also low in the Nordics, where the demand is the highest for this category. We still expect the category to grow, however, at a slower pace than what was our previous thinking. On the back of our analysis of further trends, we have slightly updated our growth category framework. Now, please turn to slide number seven to illustrate the update. Our strategy remains the same, but from 25, we have fine-tuned our growth categories, and now we have taken the six categories down to four. Energy enhanced is now one big category as these two categories are getting closer together or closer to each other in terms of content of the liquids. For now, we do not see a strong enough growth in no low alcohol to qualify for the framework. These products remain an important part of our portfolio, but with lower expected growth rates from now on. Hence, it doesn't qualify to get overinvestment, so to speak. To summarize, we intend to play an important role in our defined growth categories through a mix of own brands and partner brands. We will drive a fair amount of resources towards these categories in the form of sales, marketing, innovation, manpower, based on an assessment on where we get the highest return on the invested capital. And now I would like to hand over to Lars, who will go through the details with the financial numbers.

Thank you, Lars, and good morning to all of you. Please turn to slide number eight. I'll walk you through the main highlights of our financial results in Q3 and the full year of 2024. On this slide, we show the key financial highlights for 2024. We delivered 5% organic volume growth, while organic net revenue grew slightly more as a result of positive price mix. We also highlight our absolute growth of 23% in volume and 16% in revenue, which include the effect of previous year's acquisitions. Organic EBIT growth was 15%, with efficiency being a strong contributor to the EBIT growth. As a result, the EBIT margin increased to 13.1. This includes a dilution of 60 basis points from acquisitions, as the acquired companies operate with a lower margin than the group average. Free cash flow increased to 1.4 billion Danish, leading to a reduction of our financial gearing to 2.2, which is below our long-term target of a maximum of 2.5. This is the reason why we're now relaunching share buybacks. Please turn to slide number 9. The strong momentum seen in previous quarters continued into the fourth quarter. However, with differences between markets. In Northern Europe, we still see a challenged consumer sentiment. While our multi-barrierage platform provides a certain level of stability, it also limits our ability to grow simply because we already have a strong position in the market. In Western Europe and internationally, we are still a relatively small player, which allows us to grow even in a soft market. Overall, we saw solid organic growth in both volume and revenue in the fourth quarter of 5% and 4% respectively, while EBIT growth was 2% compared to a strong Q4 in 2023, with a positive impact from a one-off income of 30 million from a sale of a building in Norway. Additionally, we increased our marketing spend and invested 14 million more in marketing in the fourth quarter and incurred costs of 10 million kroner related to the start-up of Belgium in connection with the takeover of the PepsiCo beverage and snacks portfolio in Belgium and Luxembourg. All in all, this explains a delta of 18 million at an EBIT level compared to the same quarter last year. Adjusted for one-off income in Q3 2023, organic EBIT growth was 9% in Q4 of 24. But with a higher level of marketing investments, so the performance is stronger than the headline numbers indicate. If we look at the full year numbers, we delivered significant growth in volumes, net revenue and earnings because of both organic and acquisitive growth. Revenue reached 15 billion kroner as guided, and organic EBIT growth was 15% in line with the low end of the guided interval, impacted by the performance in Q4 as described. Net financial expenses for the full year of 2024 was positively impacted by 201 million kronor of tax regained from the sale of the Polish shareholdings. Adjusted for this, net financial expenses were at the level of 300 million for the full year of 2024, reflecting higher debts and interest rates. Tax came out higher than what we guided at Q3 due to some tax losses in Sweden that we have, for prudence reasons, decided not to capitalize and permanent differences. Net profit and earnings per share increased by around 34%. Adjusted earnings per share, excluding the one-off gain on the sale of the shares in Poland, increased by 15%. Please turn to slide number 10. On this slide, we show the impact of M&A on revenue and EBIT. Net revenue increased by 16% in total, of which acquisitions accounted for 10%. In the middle, we show the EBIT bridge acquisitions contributed with 84 million to EBIT in 2024, equivalent to 5%, while organic growth in EBIT amounted to 246 million kroner, equivalent to 15%. On top of the acquired net revenue and EBIT, we have also acquired access to extra capacity on a group-leveling connection with both acquisitions, which have contributed to the organic growth as well. The two new production sites in Netherlands and Italy have delivered volume to the group and have freed up capacity in Northern Europe, which has supported the global supply chain and mainly the international markets. The EBIT margin expanded by 40 basis points to 13.1. Acquisitions have diluted the margin impact by 60 basis points. Adjusting for this, the EBIT margin expanded by 100 basis points in 2024. Please turn to slide number 11. Free cash flow amounted to 1.4 billion in 2024. This was an increase of 25% versus last year. The cash flow was positively impacted by positive development in the operating result and a decrease in working capital of 216 million kroner. As percent of net revenue, net working capital was unchanged at 6%. In total, cash flow from operating activities was 412 million higher in 2024 compared to last year or the previous year. Cash from investing activities and lease payments came to 956 million and included the gain from the sale of shares in Poland. This resulted in a free cash flow of 1.435 million Danish. One of the key focus areas in 2024 has been to re-establish our financial flexibility, which we have now achieved, primarily driven by the strong operating results and cash management. Net interest-bearing debt decreased to 5.7 billion at the end of 2024 from 6.4 the year before. Consequently, our net interest-bearing debts to EBITDA improved to 2.2 at the end of 2024 and is now well below our financial target of a maximum of 2.5 times EBITDA. And as announced yesterday, we have launched a new share buyback program of 250 million kroner. On this side, we have also included ROIC, which increased to 12%, including Goodwill. Please turn to slide number 12. Our priorities for capital allocation remains unchanged. Our first priority remains to maintain our financial flexibility and to have a financial gearing measured at a net debt to EBITDA below 2.5. Secondly, we prioritize investments in organic growth with high return on invested capital. We are still interested in value-accretive acquisitions in the form of bold-on brand platforms or asset acquisitions. remain committed to paying out 40 to 60 percent dividend and the board of directors have proposed a dividend of 15 kroner per share to be distributed for 2024 equivalent to a payout ratio of 51 percent lastly we have now launched a share program of 250 million kroner i will now hand over the word to lars who will dive into the sustainability growth and value creation framework

Thank you, Lars. And now please turn to slide number 13. In 24, we have revised our sustainability goals to ensure they remain relevant in relation to material impacts, risk and opportunities and support our sustainability aspiration. We have added goals for water, which is our most important raw material, and we are targeting regenerative agricultural practices for 50% of our major ingredients, barley, sugar, and hops, by 2030. We have also raised the bar for packaging material and are now targeting 100% circularity for packaging materials by 2030. 95% of our packaging materials were either recyclable or reusable in 2024. We have also raised our ambitions with respect to marketing spend on products with a sustainability position to 60%, as we have opted for more demanding goals on consumer engagement and sustainability, transitioning from being a perception-driven preferred supplier to implementing concrete sustainability plans and actions. All in all, and due to the science-based target approval, we have increased our ambitions. Now, please turn to slide number 14. If we take a closer look at how we intend to grow and create value, you have probably seen this model before. We remain committed to delivering profitable earnings growth, and we drive the business to maximize long-term returns on invested capital and earnings per share. Organic EBIT growth is our most important short-term value driver in that formula. In 2025, We believe that most of our earnings growth will come from value growth and operating efficiency in Northern Europe, while in Western Europe, volume growth will be the main contributor to grow the profitability. International is assumed to be a mix of both volume and value, but likely more volume than value. Finally, share buybacks will also increase earnings per share in 2025, and we believe from our flexible strategy that we can adopt through the market conditions, whatever they may be. Two years doesn't look the same, and there's very different parameters between what is happening in the markets. And I'll now hand the word back to Lars, who will dive into the outlook and financial targets.

Yeah, so if you turn to slide 15, please. For 2025, we expect net revenue growth of 5% to 7%, including contribution from structural changes in Belgium and Luxembourg and Finland, which is assumed to be around 2.5% of the 5% to 7%. We expect EBIT growth of 7 to 13%, meaning that the reported EBIT is expected to be in the range of 2.1 to 2.225 million Danish, including contribution from structural changes, which is expected to be marginal. Net financial expenses are expected to be around 250 million Danish, and we expect that the effective tax rate will be around 22%. CAPEX is expected to be at the level of 7% of net revenue, reflecting our investments in both capacity and capability. The financial outlook assumes a stable demand in our markets and that we can outgrow the underlying market. We expect the market trends we saw in 2025 to continue. This means that growth in on-trade will be modest and off-trade consumers will remain highly focused on promotions. This will vary between countries and we are ready to adapt and pursue growth opportunities. We expect that both our EBIT margin and ROIC will increase as we grow and continue to optimize operational efficiency. Please turn to slide 16. Our long-term targets remain unchanged, so you have most likely seen this slide before. We still target an annual EBIT growth rate of 6-8%, and as you have just seen, our 2025 target is above this, so you should see 6-8% growth as a target for 2026 and onwards. We expect that we will be able to increase the EBIT margin in the coming years and pursue operational leverage and achieve full synergies from the acquisition. The proposed dividend for 2024 and our shareback program are both fully in line with our targets. And with that, I will turn the word back to you, Lars.

Thank you, Lars. Now, please turn to slide number 17. And let me just go through the key items on our agenda right now. We have announced ambitious financial targets for 2025 and will continue to drive efficiency improvements across all operations to deliver on the targets and drive further margin expansion. We have come to a long way with integrations. Most recently, we have gone live with our SAP platform in Norway. The main integration focus for 2025 is on Belux and Finland, so the acquisition from Pernod Ricard, where we look forward to welcoming our new colleagues only a few days from now in Finland. We continue to invest in our growth markets and categories, and we have illustrated on the page previously with our growth framework. We have been successful in bringing focus on the right product categories, and this will continue into 2025. At the start of any year, we highlight, mention macro and geopolitical uncertainty. This is certainly also true for 2025, and we will monitor the development closely and react to the changes to ensure solid in-market performance and profitability across our markets. Last but not least, sustainability is an integrated part of how we operate and invest in our business, and this will also continue to be high on the agenda in 2025. Now please turn to slide number 18. To summarize, our financial performance has been strong across the group with the best financial result ever for the group. A strong free cash flow allows us to bring down debt and solidify our financial position, and we have now started a new share buyback as of today. Being in the right categories with the right offering has made us much more robust and enabled us to gain market shares across most of the markets where we operate. And when customers remain focused and while customers remain focused on price, we will remain focused on cost and drive efficiencies out of the business. However, we will also continue to enhance our product portfolio and high quality innovation as we have done both this year and in many prior years. We have set ambitious targets for 2025, reflecting that our investments over recent years have placed us in a strong position, and we believe that we are well positioned to deliver strong performance in the years to come. And with that, we are ready to take your questions. So, Operator, please take it from here.

Thank you, dear participants. As a reminder, if you wish to ask a question, you will need to slowly press star 11 on your telephone keypad and wait for your name to be announced. To answer your question, please press star 11 again. Please stand by. We'll compile the Q&A roster. This will take a few moments. And now we're going to take our first question. And it comes from Andrea Pistacci from Bank of America. Your line is open. Please ask your question.

Yeah, good morning, Lars and Lars. I have three, if I may, please. The first one is on no low alcohol, which I mean, which is at category level, it's growth has slowed a bit, as you were saying. And I think you said that you've de-emphasized it a little in terms of your resource allocation priorities. So does this mean that you see the slowdown here as more structural rather than related to the sort of weaker current environment? And if so, why do you think it has slowed structurally? Is it just because it's larger now? So is the scale or is there anything else there? Second question, please, is an update on Belgium, on BELUX. which has been in your perimeter now for a few months. So could you give a bit more color on what you're doing to integrate the business here and the commercial priorities for the Belgian part of the business in the next 12 months? And the third question, please, is just a clarification on the EBIT guidance and the M&A contribution there. You're saying that the structure changes contribute about 2.5%, I think, to your sales growth, but negligible impact on EBITs. Now, I understand the Belgium part. There's a lot of reinvestment there. But I thought the Mintu brands would be probably higher margin, also considering that you would be just plugging these brands into your existing platform with limited additional costs. So just to clarify maybe there, please. Thank you.

Yeah. If I start with the category discussion, so we still see beer in structural decline in Europe. It varies between countries, but, you know, between zero and minus two percent. And it doesn't you know, there might be fluctuations between months and quarters. But the long term trend is that that beer is a bit challenged. We still see no low sugar going significantly up in just just as an example. If you look at the Pepsi Max. product in the old Roy Unibrew market. So that's excluding Bilux and Netherlands. But the old markets, we are growing that franchise by 6% on a volume basis. So that's still, even though the carbonated soft drink is not really growing, it's something that is... with a conversion into no sugar is really strong. And when we put the no low alcohol into that kind of metric, we need to look at all the categories next to each other. Then the growth rate of this category is not high enough to qualify for the same ambitions as an example on the no low sugar or on energy drinks or on enhanced beverages. It doesn't qualify for that. So we will still try to continue to do what we do. But as it is small already in the portfolio, it's not going to move the needle in absolute terms for Unibrew. So that's the view that we have right now. We still have generally a stronger position in low alcohol than we do in mainstream beer. And obviously, we want to protect that, but not with an overinvestment, so to speak. On Belux, we have taken over a business that has been in, I would say, in constant decline on a volume basis for quite some time and where PepsiCo also during 24 had some challenges with the delistings or partial delistings in some countries. So the flight attitude of the business is the first priority for us to turn around in the Bilox business. It's a very strong team that we have taken over. We have supplemented the team with some new hires in some areas that has been covered more by Central in the PepsiCo system, but where we rather want to move it to local. So the first month, two, three, four months here have been on getting the business to function, so to speak, and get the re or the hirings in place to fulfill all the positions. and to build a plan that we are discussing with the customers as we speak on how to create more value in the market. So when it comes to the details of that, I would refrain from giving all the details as we are still in discussion with the customers, but you can assume that most of the thoughts that we have or the thinking that we have around bringing value into these two markets is some of the same parameters as we have been working on for many, many years in the Nordic countries and are also putting into the gameplay in the Netherlands. But I must really praise the organization. It's really a strong group of people that we have taken over. So we are pretty happy about that. And then I'll leave the number question on Mintu to Lars.

Yeah, so in terms of the guidance, then we've included what you can say organic and inorganic in the guidance for the year because at a total company level, the impact from acquisitions is pretty low. And if you look at the – we've given pretty precise guidance on how we expect it to impact net revenue for the year. And it's clear that, as Lars just mentioned, that the PepsiCo business, we are building a business for the long term, and we need to make certain that that is getting the right flight attitude. So don't expect too much from Belgium. If you look at the Mindo portfolio, you are absolutely right that that is a very strong brand. But remember, we haven't taken over the organization yet. So we need to make certain that we integrate the company and we are expecting some one-off cost related to the integration of that business. But even so, it's a relatively small acquisition. And that is also why it was not announced as a stock exchange announcement, but as a press release in Finland. So I think that's how you should think about it.

Got it. That's clear.

Thank you.

Thank you. Now we're going to take our next question. And the question comes to the line of Thomas Lind Pettersen from Nordea. Your line is open. Please ask your question.

Hi Lars and Lars, hi everyone. Two questions from my side, please. The first one is regarding the integrations in Fremona and Norway. You're saying here that synergies from acquisitions, they will be materialized over the coming years, so in 2025, I guess. Back in June or May at the CMD, you raised the ROIC target to 10% on both these acquisitions. And I believe it was by 2026, at least, that Promona was supposed to deliver that. Can you please give us an update on these integrations? Are you at a 10% ROIC here with these companies? Also, given that you're stating now that the long-term EBIT growth of 6% to 8% is in effect from next year, from 2026. So that would be my first question. And then the second question is regarding Western Europe volume growth, 8%, very, very strong. Can you maybe split that up into how much is Italy, how much is Fremona, France, Pepsi Belgium? Any help there would be nice. Thank you.

So when it comes to the integration and what we showed at the capital markets day on the return on invested capital, we are on target. So what we put in in 24 as the bridge to move towards a 10% return on invested capital has been fulfilled. So we are on plan. Are we on 10 now? No, we are not. And that was not the plan either. That was not what we showed at the Capital Markets Day. But we are following the plan that we showed back in May. When we look at Western Europe, I would... I would say that that's also what we write in the yearly book here, and that is that the performance in Italy and France has been super strong in 2024, whereas the Dutch business has been hold back by the excise increase that came in on the 1st of January. and have taken volume away from brand owners. And, of course, we are also subject to that exercise that the government took into gameplay. Italy, to give you maybe a few numbers on that, so the lemon soda franchise in Italy is growing by – about 10% on a volume basis. So that is a really strong development and gaining share in the market. By the way, Lemon Soda is growing more than 40% internationally. So it's not only in Italy that this is a strong part of our portfolio. And Chedos has, for the first time ever, reached 100 million euro of revenue in a year. And so and it's most of it is driven by on trade. And remember that on trade is a channel where consumers are asking for a specific brand. So the health of our Italian businesses is really, really strong. And when we turn into France, France overall as a business grew nine percent in revenue last year. And Crazy Tiger had a very strong year, growing 14%, so more than the lemonade business. But really strong performance, I would call out both in Italy and France. And then, I would say, a solid turnaround year in the Netherlands. And yes, we are still in negotiations in all of these countries in terms of what will happen in 2025. But I think we get a very positive response on our approach to creating value in all of these markets with the customers.

And maybe just a small follow-up on the ROIC here of these acquisitions. So is it still the target of 10% ROIC by 2026 or...

The timeline hasn't changed. No. Okay, thank you.

Thank you. Now we're going to take our next question. Just give us a moment. And the question comes down of Richard Withergun from Kepler Chevron. Your line is open. Please ask your question.

Yeah, good morning, Lars and Lars. I have three questions, please. First of all, you mentioned focusing a lot more on efficiency in 2025 and in reducing complexity. Can you perhaps give some examples and in which markets you have the biggest opportunities to reduce complexity? Second question is on Denmark. What benefits did you realize in the supply chain in 2024 as some of the production was moved to other countries? And how will you be able to realize more benefits in Denmark in 2025? And then the last question on Italy. I mean, the business is gaining market share and you will have additional capacity available, I think, in San Giorgio in 2025. So can you discuss maybe which commercial initiatives you plan to keep growing the business? Thanks.

Yeah. So if we start with efficiency, then clearly it's mainly in Northern Europe that this is very high on the agenda because we see a market where consumers are holding a little bit back in terms of how much they spend in on trade and they are. chasing bargains. So some of the examples we have is number of SKUs we have, number of innovations we have, number of product upgrades. So we're really running through everything with a tooth comb just to make certain that we take out efficiency and makes it easier for the supply chain to deliver on on what the markets are requesting. So it's all about making certain that we have lower complexity in the Nordic markets where, what do you say, the channel mix is not good currently, which it hasn't been for quite a while due to the consumer sentiment. So that's where we have the key focus on efficiency. If you look at the supply chain in Denmark, the main benefits of releasing the capacity in the Danish supply chain, you can see in the numbers for international, where we have been holding back the sales in the past years. So I would say a lot of the efficiency that we actually get in Denmark doesn't sit in the Danish, in the Nordic segment, it sits in international.

And on Italy or capacities in general, I think Italy, the acquisition of San Giorgio has been, I would say, a stellar example of how to create value on an asset where the previous owners have not been able to create the same amount of value. Italy is growing and we are expanding the capacity in San Giorgio. We still have quite some private label production in San Giorgio, and obviously as the branded business is growing, the threshold for qualifying to continue to deliver large-scale private label, of course, changes similarly. I think when we look at our capacity mass, assuming that we continue to grow volume, And that the conversion into more single serve will require more capacity. We would need to add a new line somewhere in the grid every six, seven months or so. Of course, depending on where it happens, how fast it happens and so on. And that also means that we will still utilize the network that we have now created. with, I would say, 10 sizable production units that can help each other. We will still use that as the first step because it's cheaper than to do the CapEx. And then as the capacity gets up to a utilization rate, which is closer to the 85%, which is the threshold where you start to become inefficient, then we would move into using CapEx to... to cover up for what is needed. Or if we can find assets like San Giorgio, that can help us in building out the grid and thereby avoid larger cabex, but get, I would say, the capacity faster and often at a lower entry cost.

Okay, Richard. Yeah, that's very clear. Thanks a lot.

Thank you. Now we're going to take our next question. And the next question comes from Andrea Thornmann from Danske Bank. Your line is open. Please ask a question.

Yes, thanks for taking my questions. I just have two. First, it's just coming back to this EBIT effect from Benelux and Pano Ricard. in 2025. I just wanted to be sure, is it less than 2.5% in 2025? That's the first question. The second question is in terms of Norway. And I think you have said a few times that the profitability is normalized in the Norwegian market compared to when you acquired it. Just to be sure, what does normalized mean? Is it compared to history or compared to the normalized numbers you gave when you acquired? And is it also the case that profitability is normalized in the fourth quarter? That's my question.

Thanks. When it comes to Norway, so what we have said is that the ambition for 24 was to get back on the profitability that we acquired. And that is what we have achieved. And then we can start growing into 25 from there. On the 2.5%, that is the net revenue that is expected to come out of nine months of BELUX, not BENELUX, but BELUX, and 10 months of BELUX. Mintu portfolio, so the portfolio from Pernod Ricard, out of the total guidance of 5 to 7.5, sorry, to 7. And that means that the organic growth will be sitting in the range of the 2.5 to 4.5. That's how you should consider it.

Yes, so I get the top line effect. It's just to be sure, is the EBIT effect less than 2.5%?

But it's back to what Lars answered just before, that we are taking over a business where... where the revenue of the business, when you do the math on the 2.5%, you would see that the revenue of the business is not very big, and where we need to get an integration done very, very fast. We are taking over, as we did with Lemon Soda back in the days. It's a carve-out, so it's a production unit with brands, and we get one brand manager, And then that needs to be put into our organization. And there's obviously always one-off costs that you need to deduct to get it up and running. And I think the track record that we have from the Finnish organization in terms of onboarding these type of assets is super, super strong. And thereby, I would say, we would bite the bullet on the cost that we need to take Whatever that may be, and as Lars also said, that we haven't taken over the business yet, so we cannot give you all of the details. We need to talk to the employees first in terms of how we are going to do this. But it is a strong brand with Mintu that we are buying, and we expect that that will be very regenerative, but not in 2025. That is a 2026 discussion.

Okay, so then the effect is less than 2.5%.

I'm not commenting, André, on your 2.5%. I'm not commenting on it. Okay. It's a number that you pick out of the blue.

Okay, thank you.

Thank you, André.

Now we're going to take our next question. And the next question comes from the line of Philip Spain from JP Morgan. Your line is open. Please ask a question.

Good morning. Thanks very much for taking my questions. My first one was just thinking about the price mix development in 2025 and how I suppose you're thinking about firstly in terms of channel mix to develop versus what we saw in 2024. Do you expect that to get any better or worse? And similarly, if the promotions as well, what you're seeing in the market, whether you expect that to get any better or worse. And then I suppose just to round out the discussion, what you can do in terms of pricing that's planned as well as package mix that could help to offset some of those mix headwinds. So that was my first question. And then my second question was just on the – you've spoken before about you seeing better growth prospects for the non-alcoholic beverages overall, not just – non-alcoholic, you know, talking about soft drinks as well. I just, I guess, given as well that you talked about seeing slower growth in non-alcoholic beer specifically as well, is there any change in kind of consumer behavior that you're seeing? Is that gap between non-alcoholic and alcohol, Bev's growth, widening at all? Just interested to see what you've kind of seen with consumer behavior recently as well. Thank you.

Yeah. On the channel mix side, we do not really expect a lot of changes, to be honest. We still think that consumer sentiment, in particular in the Nordic countries, is going to be lower than what we saw two or three years ago. But it's not something where we expect dramatic changes compared to what we have seen in 2024. The same when it comes to the way that we are playing our price pack promo strategies. We always bring something new to the market every year. But no major changes, I would say. We will continue relentlessly to improve. to work on that agenda to try to create a right pack for the right occasion at the right place, because that can drive sales and it can also drive the net revenue on a per liter basis upwards. When it comes to pricing, I would not be commenting on that specifically, and many markets are not, I would say, settled yet because it's a part of a wider discussion around the input and the output together with our customers. But the view that we have is that we are back to the same – A way of looking at value generation as as before the inflation started to kick in. And if you look at what happened during that period of time, you would generally see that pricing, real pricing would be more like zero to one and a half percent ish. And not as we saw during the high inflation period, where price increases were more between four and six percent and even several times of the year. So we are back to this. Our view is we are back to the same gameplay as before, before COVID. On your last question around the categories, we generally, and I think you can also see that from our growth category framework, you would see that we see more opportunities in non-alcoholic beverages organically than we see it in alcoholic beverages. And that is even... taken into consideration that generally we have lower shares in alcohol beverages and we do have in non-alcohol beverages. We have seen, I would say that the healthy living is something that every year is moving consumers towards less calories and less alcohol. And we do not really think that that trend will stop. We have seen that innovation can drive a lot of consumption towards brands, but also towards different and new categories. And we see that as a big opportunity for us as a beverage player playing in so many categories. And as we mentioned on the call, we have never played in sports drinks in the Danish market. It's more than 10 years ago that we last did it. We enter with a Faxe Conti Pro and then we get to a 30% share in the category. And basically... I would say wipe out one of the competitors in the market because of the good work that we do both from a marketing point of view and the execution by our sales force. So the category movement here is where you need to find the growth. If I gave you some of the numbers on France as an example, there's only basically two companies in Paris that grow. And one is Red Bull and the other one is us. The rest is basically losing business in 24. And the reason why we are growing is because we are sitting in two categories that grow. Lemonades is growing slightly as a category, and then energy drinks is growing as a category. If we would have been in all other categories, we would probably also have been up for a decline in volume, even though that we had the Olympics in France. then that was the case. And this is, I think, the difference between us, at least the way that we look at it, the difference between us and most other beverage companies, that is that we are really, really focused on trying to find the growth pockets, irrespective of our heritage of being either a brewer or a soft drink company or a water company. We need to live the categories of today and not the categories of yesterday.

That's really helpful, Coler. Thank you. Maybe I just had one third question, if I may, please. Just on the international development in Q4, if you could give some colour on the difference between the shipment volumes and the sell-out, and if we expect any reversal of that trend in Q1 that we should be thinking about for shipment phasing. Thank you.

Yeah, so I think we've said this for many years. The shipment part is very lumpy in the international segment. So if you look at one quarter in isolation, you can get some fairly odd numbers that does not really reflect the performance of the business. So look at the international in 2024 at the full year, and you will see that it's actually performing very well. Nothing has changed in the fourth quarter where you saw revenue being okay but volume being significantly down. If you look at the other three quarters, it was the opposite. So I would just encourage you to look at the full year in international because it is – a more volatile business. So look at the full year and it's performing very well. And when you look at how much is being consumed of our product, we see good high single digit growth rates across the portfolio. So the international portfolio is in good shape and don't read anything into the into the volume revenue development in the fourth quarter, because it is driven by shipments and not by underlying consumption.

That's very helpful. Thank you.

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now we're going to take our next question and the question comes line of soren samso from scb your line is open please ask a question uh yes good morning last and last um yeah just to follow up a question on the international just just to sort of uh if you can give an indication of what's the normalized growth rate then in the international business with 25 um I mean, it's probably going to be somewhat lower than 24, but also higher than the guidance 5 to 7%, but just to give us an indication for the model. And then also elaborate on the margin progression here, because you reach a margin of around 14.5%, EBIT margin 24, but you're still some way from the 20 level of about 20%. So do we expect a further progression in the margin in 2025? And what sort of increase should we look for?

Yeah, so when we look at the sales growth, as Lars also talked about just a minute ago, and that is that we are high single-digit sales outgrowth. And that is the rate of sales from our distributors, our importers, the ones that we work together with in the international markets, and what they sell out into the market. And, you know, you need to do the spreadsheet on what you then believe for 25. But that's the current flight attitude of the business. And it's as we have said earlier on, it's driven by a strong, strong development in Africa. It's the soft drink part of our business. So the lemonade export, it's the it's the lemon soda proposition. that is growing well and then we have the mall business that has had i would say a phenomenal year in in 24. so those are the the main the main growth drivers when it comes to the margin um Depends on where it should come from, right? Because as also Lars said early on, it's the same supply chain as we use for the Danish market, the border trade. And the synergies that we are creating in that part of the business will also help international in earning more money because then COX will be lower. If there's volume changes between these two segments, then it either hurt or help, depending on the allocation, because there's an allocation of indirect production costs between the units. So when we are running more efficient, it will also help the international business. And then there's a I would say there's a piece which is about the logistic cost. So we do expect logistic costs to come a bit down in 2025, but it is not down to the level of before the transportation companies really started to increase prices. So there's still a little bit of a backlog on that one. But I would say overall, I would expect our margins to go slightly up in international, but not to the level of 20% in 2025.

Understood. And then just the other question I had was on the CapEx level, which increases from 25 from 26. Maybe you already said it, but maybe just repeat what exactly to expect this extra CapEx to be used for. Thank you.

So when we acquired the Italian brewery and Formona, we also announced at that point in time that they were needing investment. So we are... spending money on these to get them up to group standards and make certain that they have, in particular in Holland, to ensure that they have packaging capabilities so we can have a relevant offering to to the market. So that's one piece of it. Then we have been constrained in terms of capacity in other places. So we're making a PET line in Denmark and in Italy we have made a can line. So it is very much to secure that we have capacity and capabilities to grow across the network. And then the final big thing we are doing is we're making a big warehouse expansion in Denmark. Right now we have lots of external storage. We use external storage, which creates a lot of complexity and inefficiency in our setup. And that leads to roughly 77 percent of net revenue in capex in 25. We will also have elevated the capex in 26. And then we expect that we are like we have a capacity that is more in line with what we need. the capex level will start to move towards the depreciation to sales level that we have. So two years of higher capex, but that will also give good returns. So it both helps the bottom line and then, of course, it's a cost.

Okay, thanks. That's clear.

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We'll just give a moment for our analysts.

So, dear speakers, there are no further questions at this time. I would now like to hand the conference over to your speaker, Lars Jensen, for any closing remarks.

Thank you very much. Thanks, everybody, for participating. You know where we are if you need us for any further questions. And please enjoy your day.