Royal Unibrew A S

Good morning everyone and welcome to Roy Unibrew's presentation of our annual report for 2025. My name is Lars Jensen. I'm the CEO of Roy Unibrew and I'm today joined by our CFO Lars Westergaard and Flemming Nielsen Investor Relations. We will take you through the highlights of the year, performance across our segments, the financial development and our outlook for 2026. After the presentation we will open for questions. Now please turn to slide number two. And before we begin, please note the usual disclaimer regarding forward-looking statements and risk factors that may cause actual results to differ from expectations. And with that, let's move to slide number three and the highlights of 2025. On slide number three here, we summarized 2025 in a few key points. 2025 was a year where disciplined execution really made the difference. We delivered 5% revenue growth in line with our guidance of 5% to 6%, and EBIT increased by 12% at the top end of our 8% to 12% guidance range. Our EBIT margin expanded by 90 basis points to 14%, reflecting continued improvement in operational efficiency across the organization. We also made good progress on our sustainability agenda during the year, both within our environmental and climate initiatives and within employee safety, which has been a key priority for us in 2025. At the same time, we continue to strengthen cash generation and the balance sheet enables shareholder returns, including share-by-backs executed in 2025 and a new program just launched and running until mid-August 2026. Importantly, this performance was delivered in a market environment that remained characterized by cautious consumer sentiment and ongoing macroeconomic uncertainty. What makes the results particularly encouraging is that progress was broad-based across all segments and supported by stronger quality of revenue and continued operational efficiency. Based on this solid foundation, we have provided guidance for 2026 of 6 to 10% organic aphid growth, which we will come back to later in the presentation. Now, please turn to slide number four. If we step back, our performance in 2025 rests on two key pillars, category focus and operational efficiency. Over the past five years, our growth category framework has guided how we allocate capital, management attention, and commercial resources. This focus has become increasingly important in a market environment characterized by soft consumer demands and changing consumer preferences. In 2025, approximately 60% of group net revenue was generated within our defined growth categories. No low sugar CSD, enhanced beverages, RTD, and premium beverages. This category exposure supported growth ahead of the market. During 2025, we also sharpened revenue quality by exiting certain lower margin activities. While this reduces top line in isolation, it strengthens the group's earnings profile going forward. From 26, this step will reduce group revenue by around 3.5% with no EBIT impact and with no volume impact. The revenue decline is predominantly related to snacks and will mainly affect the Northern European segment. Operational efficiency remains deeply embedded in our culture. Across production, logistics, and back office functions, we continue to optimize our footprint, simplify processes, and capture operating leverage. This is both in our established markets and in our newer markets. The strong EBIT margin development in 2025 demonstrates that this mindset is delivering results not only in our established markets but also in the newer ones. Finally, our long-term ambitions remained unchanged. We continue to target an organic EBIT growth of 6% to 8% per year. double digits earnings per share growth and continuous improvement in return on invested capital, which improved to 13% in 25. Please turn to slide five. Our growth category framework continues to guide our resource allocation. These are categories with stronger growth driven by changing consumer trends. Today, around 60% of group net revenue sits in four growth categories, and we achieved average growth of 6% across the categories. No low sugar carbonated soft drinks grew 9% in 25. We continue to see strong growth as consumers prefer drinks with less calories or no calories. Growth is driven by both local brands like Faxi Condi and our partner brands like Pepsi. Enhanced beverages grew 5% in 2025. The category includes energy drinks and beverages with added vitamins and similarly. The growth is mainly driven by our local brands like Faxicondi Booster and Saucy Vitamin Water in the Netherlands. Across markets, we continue to see strong demand for functional propositions. Ready-to-drink with alcohol grew 1% in 25. The category includes ready-made cocktails and also ciders, so in many different shapes and forms. Our portfolio includes both partner brands and local strong propositions, including Original Long Drink in Finland, Shager in Denmark, and Crayons in Norway. Premium grew 4% in 25 and includes beer brands like Cheddar's in Italy and our premium beer portfolios across markets. The category also includes malt drinks and lemonades and other premium soft drinks. The framework ensures that we concentrate investments where long-term demand trends are the strongest, and that discipline continues to pay off. Now, please turn to slide number six, and let's focus on the regional developments. Northern Europe is our largest segment, accounting for around two-thirds of group net revenue and EBIT. In 25, we delivered solid performance in what remains a relatively flat market environment. Full year revenue grew by 2%, while EBIT increased by 4%, with the strongest momentum in the second half of the year. In Denmark, we gained value market share across most categories. Faxe Condi continued to outperform in no low sugar soft drinks. Booster maintained strong momentum and energy, and Shaker delivered solid growth in ready-to-drink. In beer, both Royal and Heineken grew, despite an overall declining beer market. Finland remained impacted by cautious consumer behavior across both on and off trade. Even so, we maintained a slightly improved market position in key categories, including no-low soft drink, premium beverages, and enhanced beverages. The acquisition of Mintu and other spirit brands also contributed positively in 2025. In Norway, commercial momentum improved through the year, particularly the RTD and beer, but also Fraksekondit that has been launched in 25 is showing promising rates of sales out of the stores. We completed key integration milestones and production has now been consolidated in Bergen, supporting long-term efficiency. In the Baltics, The market was affected by a relatively cold summer and an intense price environment. Despite this, we gained share in premium beer, energy drinks, and enhanced waters, while maintaining a strong cost discipline. Overall, Northern Europe continues to demonstrate the strengths of our multivariate model, supported by strong execution from our local teams. Now, please turn to slide number seven. Western Europe was our strongest performing segment in 2025. Revenue grew by 12% for the full year. Bilux contributed 9 percentage points to that growth, reflecting that it was not included in the comparable base for the first nine months. EBIT increased by 55%, driven by operating leverage, efficiency initiatives, and strong profitability improvements in Italy and France. In Italy, we continue to gain market share with cheddars and foxy beer and with Croto in soft drinks. As previously communicated, we have reduced the private label production to prioritize our own brands. This supported price mix, while higher local production also helped reduce logistic costs. Underlying growth of own brands was about 6% in volume terms. In France, Lorena and Crazy Tiger delivered continued value share gains supported by focused brand activation and expansion into new consumption occasions. In the Netherlands, margin improved through price pack and promotion optimization. And despite exiting unprofitable promotions, we delivered net revenue growth for the year. With a strengthened sales organization and enhanced production capability, the business is well positioned for continued progress. Finally, in Belux, execution is progressing in line with the plan, and we estimate that we increased value market share. As expected, Belux was loss-making in 2025, but we remain confident that our strategic initiatives and strong local engagement will drive long-term value creation. Western Europe illustrates the operating leverage in our multi-niche models when scale makes and discipline align. Please turn to slide number eight and let's have a look at international where growth accelerated strongly towards the end of the year. Volume grew 33% organically in Q4 and 16% for the year. Net revenue increased by 15% in Q4 and 7% for the year. Full year volume growth was slightly ahead of sellout as we built in market inventory to support the higher growth. As a reminder, this business is inherited more voluntary, with quarterly volumes influenced by shipping timing and distributor inventory movements. U.S. tariff developments drove inventory buildup in late 24 and for the first half of 25, followed by inventory reductions in the second half. Price and mix in 25 was negatively impacted by strong growth in beer in African markets, most notably in Q4. Africa remains a structurally attractive growth region, but carries lower net revenue per hectare liter due to our distributor-based model. Net revenue in 25 was also impacted by unfavorable currency movements and tariffs. Growth in 25 was driven by Faxibir, soft drinks including Croto, and the malt beverages with brands such as Vitamalt. For the full year, EBIT increased by 14% to $239 million, with a 100 basis points margin expansion to 15.5%, which reflects a solid underlying performance. EBIT declined in the second half, driven by earnings phasing related to the Tavish-driven inventory buildup earlier in the year and subsequently unwinding in the second half. And with that, I will hand over to Lars for the financial review on slide number nine.

Thank you, Lars, and good morning to all. First, I will briefly walk you through the group P&L. Net revenue increased by 6% in Q4 and by 5% for the full year. Growth accelerated into the fourth quarter, and importantly, Q4 was on a fully comparable basis with B-Logs also in the comparison number in 24. Cross-profit grew faster than revenue, up 9% in Q4 and 6% for the year. This reflects our continued focus on profitable growth with mixed improvements and efficiency delivering solid margin expansion. Gross margin increased by 120 basis points in the quarter and by 50 basis points for the year. The cost base developed in a disciplined manner in 2025. Cost growth reflects the impact from deluxe and recent acquisitions, while the underlying development demonstrates continued focus on efficiency and cost control. As we have seen during the year, efficiency 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. Admin cost is increasing compared to 24 as we are investing in digital and have added Belux to our footprint. The level in 25 is a good baseline for your modeling This needs to be looked at on an annual basis, as there can be some quarterly differences. EBIT increased by 9% in Q4 and by 12% for the full year. The EBIT margin expanded by 90 basis points to 14%, driven by operating leverage and ongoing optimization initiatives, with Western Europe contributing strongly, as discussed earlier. Net financial expenses amounted to 254 for the full year, fully in line with expectations. Tax rate was 20.7, impacted by the capitalization of tax loss carry forwards. Our normalized underlying tax rate is 22%. Overall, this delivered a 25% increase in adjusted earnings per share in 25. This excludes the impact from the sale of shareholdings in 2024. Now let's move to slide number 10 and look at the cash flow. Let me start with a few key messages on cash flow and capital discipline. We delivered strong cash conversion in 2025. Financial gearing remains in line with our targets, and ROIC continues to improve. Cash flow from operating activities increased by 9% to 2.4 billion, driven by higher earnings and continued discipline in our net working capital management. CAPEX amounted to 1 billion, or 6.4% of net revenue. This was below our expected level, mainly reflecting the delay of certain investments into 2026. Free cash flow for the year was 1.4 billion. While this is broadly in line with last year, it is important to know that 2024 benefited from the proceeds of sale of shareholdings in Poland. Adjusted for this, underlying free cash flow increased by 12% in 2025. Net interest-bearing debt ended the year at 5.7 billion, with leverage at two times EBITDA, fully in line with our capital structure ambitions. Finally, return on invested capital improved to 13%, supported by higher earnings and improved capital efficiency. As previously communicated, Norway and Benelux remains on track to deliver around 10% cash flow by the end of 2026. Overall, the number reflects strong cash generation discipline in our capital allocations and continued progress on return. Now, please turn to slide number 11. Our capital allocation priorities have been the same for a number of years. We want to maintain financial flexibility gearing below 2.5, investment in organic growth with attractive returns, pursuing value-accretive acquisitions when relevant, and finally, return excess capital through dividends and share by bank. This disciplined approach continues to support both growth and shareholder returns. The last couple of years, we have been running a CapEx program above normal level. For 26, we expect CapEx around 7% of net revenue and some delays into 27 as it looks at this point in time. In other words, the lower CapEx in 25 will impact 26 and 27. Same projects, same costs, but a slightly different timing. Proposed dividend per share is 16 kroner per share, and today we start a share buyback program of 400 million. This runs until mid-August, so this is not a full year number. Please turn to slide number 12. Our growth and value creation formula is unchanged and straightforward. We aim to deliver volume growth ahead of underlying markets, value growth through disciplined mix and price pack management, continued operational efficiency and cost control, and disciplined capital allocation, including M&A and share buybacks. Together, these drivers support our long-term organic EBIT growth targets of 6% to 8% and 10% to 14% earning per share growth. Naturally, each year is different. The relative contribution from volume, value, and efficiencies will vary over time, depending on market condition. And as always, the timing of M&A is inherently difficult to predict. Please turn to slide number 13. So if we look, if we should conclude on our performance on organic EBIT growth, then we have delivered solidly since 2022, the year where inflation impacted earnings. The drivers of high organic EBIT growth is to a large extent the growth framework that delivers volume growth. The teams have also been good at value management and focusing on the parts of the portfolio with good margins. And finally, cost efficiency is a substantial contributor. These numbers also reflect good progress in acquired companies. Our guidance suggests that our plans for 2026 are solid and we continue the strong trend we have had in the recent couple of years. ROIC is also on a positive trajectory and we expect this to continue in the coming years as we harvest the benefits from acquisitions in the past years and solid organic growth and earnings. Please turn to slide number 14 and the 2026 outlook. We continue to expect a challenging consumer environment across our markets and our guidance reflects a cautious and disciplined approach. For 2026, we expect organic EBIT growth of 6% to 10%. This is ahead of our long-term target of 6% to 8%, building on the strong margin and efficiency improvements delivered in 2025. We no longer guide on net revenue, but if you model net revenue for 2026 to be broadly in line with 2025, then that would be a fair assumption. This reflects continued underlying growth in our beverage business offset by the exit of lower margin activities. As previously communicated, these exits are expected to reduce reported net revenue by around 3.5%, impacting mainly the northern European segment with no impact on volumes or expected EBIT. Net financial expenses are expected to be around 250 million, excluding currency effects, and the effective tax rate is guided to be around 22%. CapEx is expected to be around 7% of net revenue, including repayments on leasing facilities. We expect limited commodity inflation, which we plan to offset through efficiencies and improve net revenue per hectolitre. Profitability in 2026 may, as always, be influenced by changing consumer sentiment, channel mix, the competitive environment, and weather conditions during the peak season. And with that, I'll give you the work backlog.

Thank you Lars and let's move to slide number 15 for sustainability, which remains an integrated part of how we run the business. It supports our efficiency, our resilience and long term value creation. On this slide we have listed some of the most important targets. We will not go into details with those now, but there's a comprehensive 70 pages in the full year statement for the ones that are interested in the details. Now please turn to slide number 16. Looking ahead to 26, our management agenda is clear and a continuation of 25. We continue executing on growth strategy across our markets. Innovation remains a key priority as we expand and refresh our beverage portfolio to stay closely aligned with the consumer trends. At the same time, we will maintain a strong focus on operational efficiency. Sustainability remains firmly embedded in how we run the business, and we will continue to make progress on our agenda here. And finally, everything we do is geared towards delivering on our long-term financial targets. The picture here shown, the Norwegian Uno-X mobility cycling team we just announced a partnership with. Looking forward to see the effects for our Faxe Condi Hero brand on that one. Now, please turn to the final slide. which is slide number 17, and let me wrap up with the key takeaways. We delivered a solid financial performance in 2025, fully in line with our guidance. Performance was strong across markets, supported by disciplined execution and continued growth in our priority categories. Operational efficiency remains a key driver, and this is clearly reflected in the margin expansion we delivered during the year. At the same time, strong cash flow generation and a robust balance sheet gives us the flexibility to continue investing in the business and returning capital to shareholders at the same time. Looking ahead, we expect organic EBIT growth of 6-10% in 2026, reflecting continued focus on profitable growth and efficiency in a still challenging environment. Thanks for your attention, and we are now ready to take your questions.