Royal Unibrew A S

Good day and thank you for standing by. Welcome to the Royal Unibrew Trading Statement Q1 2026. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question and answer session. To ask a question during the session you will need to press star 1 and 1 on your telephone and you will hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. And please be advised today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, CEO Lars Jensen. Please go ahead.

Thank you and hello everyone and welcome to this call about Roy Unruh's first quarter 2036 trading update and our announcement about changes to one of our partnerships. My name is Lars Jensen. I'm the CEO of Roy Unibrew, and with me today is our CFO, Lars Vestergaard, and head of investor relations, Flemming Alder Nielsen. We'll take you through the highlights of today's announcement, and after the presentation, we'll open up for questions. So let's start with the usual disclaimer on slide number two. Before we begin, please note the disclaimer covering forward-looking statements, assumptions, and risk factors that may cause actual results to differ from expectations. We will skip the agenda on slide number three, and let's move to the partnership changes on slide number four. As announced today, There will be some significant changes to our PepsiCo partnership. We will walk you through the implications and underlying elements in more details on the next slides. Starting with the facts, in Northern Europe, our partnership with PepsiCo will conclude at the end of 2028. This includes Denmark, including the border trade in Germany, Finland, and the Baltics. Our PepsiCo partnership in Benelux continues beyond 2028, in line with the partnership agreements for those markets. PepsiCo has been a valued partner for decades in Northern Europe, and the collaboration has been mutually beneficial, and we are proud of what we have achieved. Our unit would have preferred to continue. However, this has not been proven possible. Importantly, this outcome does not change our strategic direction. Our multivariate strategy remains unchanged, and we continue to focus on growing both our own brands and partnerships. If we look at our recent performance in these markets, our own brands have been the main driver of growth. This reflects both underlying market trend and our ability to respond effectively to changing consumer preferences. It is critical for our Unibrew strategy that we have full control over our own brands and we can develop them to their full potential. We will have more flexibility for this going forward. The affected PepsiCo businesses represents approximately 13% of our current net revenue, and we will continue to operate the PepsiCo business for the remainder of the contractual period in accordance with the agreement. The Pepsi share of net revenue is expected to decline towards the end of 28, supported by the strong growth we are seeing in our own brands, while the cola category share of the total soft drink market generally is in decline across most markets. We will implement a range of initiatives to mitigate the negative impact from the ending of the PepsiCo portfolio, and these initiatives span commercial actions, efficiency improvements, and cost measures. At the same time, we will ensure that our multi-babies portfolio remains strong and attractive for our customers. We also see this as an opportunity to further develop our own brand portfolio and to pursue new partnerships where this creates strategic and financial value. Based on our current assumptions, we continue to expect to deliver organic epic growth of 6% to 8% by the end of 2028, fully in line with our financial targets. 2029 will be impacted by lost revenue and loss of scale, and we expect to offset this, accelerating the growth of our own brands, pursuing new partnership and wide cost and efficiency initiatives. Based on current assumptions, We expect transition costs of approximately 300 million to support the acceleration of owned brands in 29, as well as to cover potential exit-related costs associated with the ending of the partnership. From 2030, we expect our growth formula to be back on track with profitability measured as absolute EBIT exceeding 2028 levels. The financial impact from the conclusion of ending of, the financial impact from ending of this partnership involves several moving parts, and there's naturally some uncertainty related to both timing and the actual impact. Lars Vestergaard will go more into details on this. And with that, we will now turn into why our growth core remains intact. So please turn to slide number five. This slide includes key elements in our strategy and operating model. You have heard us talking about this before. We operate a highly efficient multi-beverage model across our northern European markets with strong embedded capabilities across product innovation, production, distribution, and sales of multi-beverage categories. We have a clear focus on growth categories where we prioritize innovation and commercial investments in various categories with the strongest growth potential. We have a portfolio of local brands with strong market positions across categories, and we continue to invest and develop these brands. We complement this with close customer relationship across both on- and off-trade channels, and with the combination of our strong beverage portfolio and service mindset, we aim to be the preferred choice of local beverage partner. We have always worked with trusted partners and have a strong track record of delivering growth and value for our partners. But not least, our culture and organization supports innovation and agility, and we aim to offer products that fit consumer trends and preferences. Taking together this growth goal remains fully intact, and please turn to slide number six. Our growth category framework remains unchanged, and these categories cover approximately 60% of our net revenue, with our own brands accounting for a large share of this. The partnership that we are exiting after 2028 is primarily within the cola category. And as such, it is included in the no low sugar CSD category. We have always aimed to build portfolios with partners where the outcome is positive for both parties. This applies to all of our partnerships and reflect our commitment to create win-win solutions for our partners and for our unit group. As a result, There's been situations where we have deliberately chosen to limit opportunities for our own brands in order to deliver value for our partners' brands. In 2029, we'll be able to develop our own brands freely, and furthermore, there'll be opportunities to enter new partnerships. So looking ahead, we expect new opportunities to develop our growth category framework. And now please turn to slide number seven. On this slide, we show selected examples of performance of our own brands. Historically, both own brands and partner brands have contributed to our growth, but in recent years, our own brands have demonstrated superior growth rates while also carrying significantly higher profitability. In Denmark, the Faxe Condi brand has delivered 14% net revenue growth per year since 2029, with strong market positions across the carbonated soft drink space, energy, and enhanced categories. Similarly, Jaffa in Finland has delivered growth ahead of the market, and our Italian lemonade brand range is outperforming strongly both in Italy and across markets in Europe. These brands are well aligned with consumer trends, including demand for local relevance, innovation, and new flavors. As we move forward, we expect growth in our own branch to further accelerate, supported by increased focus and greater commercial flexibility after 2028. And now, please turn to slide number eight, and I will hand it over to Lars Vestergaard.

Thank you, Lars. This slide illustrates the current management thinking around financial implications of the changes that we've announced today. Please note that these graphs are for illustrative purposes only, and as Lars already mentioned, the financial impact from ending of the partnership involves several fairly large moving parts, and there is naturally uncertainty related to both timing and the actual impact. And there is some years until they materialize. What we're illustrating here is management's current thinking and ambitions. Until 2028, we continue to expect organic EBIT growth of 6% to 8% in line with our financial targets. As already mentioned, the affected PepsiCo business represents approximately 13% of our current net revenue, and we expect that this share will decline towards the end of 2028 as our own brands, and in particular growth in growth markets in international and Western Europe, will be growing at a faster pace than in the Nordic segment. 2029 will be a transition year with some substantial moving parts. The ending of the partnership leads to a loss of revenue with an EBIT margin close to group average, as well as reduced scale effects. To mitigate these impacts, we will accelerate investments and increase focus on own brands. We will pursue potential new partnerships, and we will execute efficiency and cost initiatives. A significant part of our business is not affected by this change, as we continue to deliver growth also in 2029. Based on the current assumption, we expect transition costs of around $300 million to support the acceleration of own brands in 2029, as well as to cover potential extra costs related to the ending of the partnerships. It is important to note that the margins on own brands are higher than that of partner brands. Furthermore, CAPEX is expected to be lower than under the continuation of the partnership. From 2013, we expect organic EBIT growth to resume with absolute EBIT level above 2028. Overall, this underlines the resilience of our model and our confidence in returning to our long-term growth trajectory. Now, please turn to slide number 10 with Q1 highlights, and I will hand the word back to you, Lars.