Royal Unibrew A S

Good morning, everyone, and welcome to Roy Unibrew's Q3 25 trading statement. I'm Lars Jensen, CEO of Roy Unibrew, and I'm joined today by our CFO, Lars Vestergaard. We'll take you through the highlights of our performance in the third quarter and then open for questions at the end. Before we begin, please note the usual disclaimer on slide number two. It contains important information about forward looking statements, assumptions and risks that may impact our outlook. With that, let's start with a broader view on slide number three. Let's start with a look at our strategic progress and long-term targets. Our financial performance demonstrates that the strategy is working, has solid commercial execution and strong margin expansion. We continue to benefit from our growth framework, where 60% of our net revenue sits in attractive and growing beverage categories, such as no low sugar, carbonated soft drink energy, enhanced RTD cider and premium. In markets where consumer confidence generally remains low, we delivered organic revenue growth of more than 3% in the first nine months of 2025, which is ahead of European peers. Our top-line growth was supported by the new activities in Belux, but also negatively impacted by reduced private labor production in Italy and adverse currency movements. The key for Roy Unibrew is profitable growth. We focus on categories, markets and channels where we can grow sustainably and profitably while exiting or diminishing areas that dilute our margin or strategic focus. From 26, this step will reduce group revenue by around 3.5%, but have no impact on EBIT or volumes. The decline in net revenue is predominantly from snacks and will impact the northern European segment. Operational efficiency is deeply rooted in our culture and across the organization. Our teams are constantly looking for smarter ways to operate, whether it's optimizing production or logistics or simplifying workflows or improving our allocation of resources. The strong EBIT margin development in the first nine months of 2025 shows that this mindset is delivering results, not just in our established markets, but also in the newer ones. Finally, on this slide, our long-term ambitions remain unchanged, and we aim to deliver an organic EBIT growth of 6% to 8% per year, double-digit earnings per share growth, and continuous improvement in return on invested capital. Now let's turn to the Q3 highlights on slide number four. We delivered another strong quarter with reported EBIT growth of 15% and organic EBIT growth of 14%. Net revenue grew 3% while organic growth was 4%. We saw continuous strong execution in our growth categories and improved momentum in our northern European segment. Earnings per share increased by 20% and free cash flow developed in line with our plans. And with less than two months to go of 25, we now expect to deliver full-year EBIT growth at the high end of the 8% to 12% range. Let's look closer at the performance in each of the segments now. And we'll start with Northern Europe on the next slide, which is slide number five. In Northern Europe, organic volume growth was 1%, and net revenue increased by 3% in the quarter. Finally, Finland rebounded after a soft Q2 market by cold weather. that was impacted by cold weather. July was significantly warmer, which supported stronger volumes. As Finland has a more premium portfolio, the strong June tree improved our price mix for Northern Europe's segment in total. In Denmark, we continued to gain value share across most categories. Foxconn delivered strong growth, particularly in the no-low-calorie segment, and Booster maintained momentum as the leading energy drink in the market. Our beer portfolio, led by Royal and Heineken, also grew despite a declining total beer market. In Norway, we saw solid revenue growth in the quarter, which is driven by the momentum in the RCD cider category and beer. And this is despite a continued soft consumer sentiment. And overall, Norway is tracking on our plans. In the Baltics, we experienced a decline in volume and revenue in the quarter due to relatively cold summer and a more competitively pricing environment, but profit remained intact. Now let's move to slide number six and look at Western Europe. Western Europe delivered a 9% organic volume growth and 11% revenue growth in Q3. Growth was driven by Belux, which accounted for around 12% of the total segment growth. In Italy, we continued to gain market share, but growth was lower than in the first half of the year due to a colder weather in Q3. Our beer brands, Cheddars and Faxe, perform well, and the Croto soft drink range continues to take share across channels. As we have previously described, we have reduced private label production to free up capacity for our own brands. This supports the price mix and profitability, even if total volume is down in the quarter. In France, we continue to gain market share in soft drinks, which is driven by our two local hero brands, Lorina and Crazy Tiger. In the Netherlands, the business continues to track on plans on revenue and margins, and margins are up year-to-date. We focus on profitable growth as we enhance our brands and focus on introducing more options to strengthen the price pack play. This is why we have deselected some non-profitable promotions. In Belux, we estimate that we have maintained market share in 2025, Belux remains loss-making this year as expected, but continues to develop according to plan. Belux has now been part of our portfolio for a year, and starting from October 25, it's included in our year-in-year comparison. Now let's turn to slide number seven and the international business segment. The nature of the international business means that quarterly performance can be voluntary and often influenced by timing effects of inventory movements. That's why we typically look at this in a 12-month running perspective or year-to-date when we are at this time of the year. to get a clearer view of the underlying trends. When we look at sales outgrowth across our key market, it remains in the low teens, confirming a strong consumer demand for our brands. Sell-in growth declined in Q3, following some inventory build-up earlier in the year. Year-to-date volumes are up around 12%, which is now calibrated with the sales out momentum. Net revenue declined slightly in Q3, but was up 4.5% year-to-date. And besides the inventory normalization in Q3, net revenue was impacted by currency headwinds and country mix, and with faster growth in African markets where price per liter is structurally lower. Category growth was led by the foxy beer, the Crota soft drink and Vitamult. Profitability and margins remain strong in the segment. And with that, I will hand over the word to Lars to walk you through the financials.

Thank you very much, Lars. And please turn to slide number eight. Net revenue has increased by 5.3% in Q3 or 4.3% organically. Gross profit grew by 5.9% in the quarter. The higher gross margin growth compared to net revenue reflects both our focus on profitable growth and efficiency improvements. The cost base increased by less than 2% year-on-year, which mainly relates to the impact from Belux and recent acquisitions. The underlying development in cost reflects our strong focus on efficiency and cost control. The efficiencies have mainly been achieved within sales and distribution expenses, while we continue to invest in sales and marketing to support our growth ambitions. We are seeing clear benefits from our improved production footprint and initiatives to streamline logistics and distribution operations. EBIT increased by 15% in Q3 and 13% year-to-date. The EBIT margin expanded by 160 basis points in the quarter and by 110 basis points year-to-date. Tax and financial expenses are developing as expected, with an effective tax rate of 22% and net financial expenses in line with our guidance. Net profit is developing as per plan, but declined year on year. Please note that in Q3 2024, we have benefited from a tax-free gain on the sale of the shareholdings in Poland of 204 million. Adjusted for this, net profit was up 18% year on year in Q3 and year to date. Earnings per share adjusted for the extraordinary gain in 2024 increased by 20% in the quarter and 19% year-to-date. Let's move to the cash flow and balance sheet on page 9. Cash flow is tracking in line with our plans. Operating cash flow amounted to 1.724 million year-to-date and up 18% from last year, supported by stronger operating performance. Year to date, free cash flow reached 973 million compared to a billion and 32 million last year. The decline reflects the one-off proceeds from the sale of our Polish shareholdings in 2024. Furthermore, we are running higher CapEx in 2025 and this will also continue into Q4. CapEx is according to plan and we expect full year level of around 7% of revenue. Net interest-bearing debt was 6 billion at the end of September, and the gearing ratio was 2.1 times EBITDA in line with our targets. Our ongoing share buyback program of 300 million runs until the 19th of December 2025. Finally, return on capital employed is improving, supported by higher earnings, and Norway and Billux are on track to deliver 10% cash flow by 2026. Let's move to the outlook on page 10. Based on our performance so far and our expectations for the remainder of the year with less than two months to go, we maintain our full year guidance range. However, we now expect EBIT growth to be in the high end of the range of 8 to 12 percent, supported by our continued focus on efficiency and margin expansion across the organization. We still expect full year net revenue growth of 5 to 6 percent. This reflects an acceleration in Q4 compared to the first nine months, and this is consistent with trends observed so far in the quarter. The consumer environment remains challenging, but stable compared to 2024. This is also in line with our previous expectations. Other assumptions for guidance are unchanged. And with that, I'll hand the word back to you, Lars.

Thank you, Lars. And let's move to slide 11. Our management agenda remains consistent with what we have communicated earlier. We are continuing to execute our growth strategy with focused efforts across growth markets like Italy, France and international. New markets such as Norway, Netherlands and Belux is now about fueling the commercial momentum. And the more developed markets like Denmark, Finland and Baltics is where the efficiency and cost discipline remain high on focus. We'll keep driving operational efficiency across the organization and optimize resources used to strengthen margins further. We keep our focus on delivering on our sustainability targets as well as our long-term financial targets. Now let's move to slide number 12 for the key takeaways. And to sum it up, we deliver a strong Q3 with revenue growth above industry average, a 15% EBIT growth, and a solid margin expansion. Our strategy is working. We are growing in our key categories and markets while exiting low margin business. And as a reminder, this will reduce net revenue by 3.5% in 2026, mainly in Northern Europe, while there will be no impact on EBIT and volumes. Our cash flow and balance sheet remains robust, enabling both investment and shareholder returns. And finally, we now expect to deliver the full-year EBIT growth at the high end of the 8% to 12% interval. And with that, we are ready to take the questions. So, operator, please go ahead.