Sarantis Sa

Ladies and gentlemen, thank you for standing by. I'm Vassilios, your course call operator. Welcome and thank you for joining the Sarandis Group conference call and live webcast to present and discuss the Sarandis Group's half-year 2026 financial results. With us today, we have Mr. Ioannis Bouras, Group CEO, and Mr. Christos Varsos, Group CFO. All participants will be in listen-only mode and a conference has been recorded. The presentation will be followed by a question-and-answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. As a kind reminder, you may also join the webcast by clicking on the link provided on the invitation. Please be reminded that this presentation contains a formal disclaimer with regards to forward-looking statements. The presentation and discussion are conducted subject to this disclaimer. At this time, I would like to turn the conference over to Mr. Ioannis Bouras, Group CEO. Mr. Bouras, you may now proceed.

Hello, everyone. Thanks for joining our call for happy results 2026 today. The agenda is including some highlights for myself. Then we continue with the financial performance, and then we talk about the outlook before the Q&A session. So a few highlights about the H1 2026. First of all, I would like to reconfirm that our group is keeping the focus on our strategy reconfirmed based on our categories, on our countries, on our region, and of course, the key strategic priorities, which we consistently execute as a group. The digital transformation is well on track. We have concluded a significant number of projects and go-live events in almost all countries. We have only Poland left for next year. That is what we're working on right now. On the CAPEX investment, we are on track. We have concluded the majority of the massive program, both in digital transformation, but also in our production facilities, especially in Poland. I have two days later and of course we continue letting our people developing our organization fit for purpose and of course supporting our strategic ascent. The truth is that in the H136 we have some significant geopolitical challenges related to Middle East and this has resulted a significant cost pressure in raw materials and logistics linked with the oil prices and of course the overall disruption in supply chain in the Middle East and as you remember significant investments concluded by the end of 2025 and these investments helped us to counterbalance the significant part of the cost pressure and of course all of these things are still ongoing we have challenges in a couple of countries Ukraine things are not going very very well in the country there are events that they are even harder going harder in the last few months. In Romania, there is a country that although it's one of the biggest country of the group, there are some market issues related to consumption and of course, overall market performance. The last one is the paging of our U.S. exports, affecting H1 results. Although the performance in the markets and sell-out of our carotene brand in the U.S. is doing really, really well, and I'll have later some details on that. Key focus, commercial excellence. The heroes can use remains a strategic focus for our business, the winning brands, and we focus on the key brands of the business. revenue growth management initiatives to compensate cost pressures, focusing on the right SKUs, and the promotional optimization is a key part of the market. The innovation, fewer and bigger initiatives, working with consumers in the region is still a key priority, and the international expansion remains one of the biggest growth pillars for our future. Moving on the on the on the numbers, high level numbers, we will continue with details later on, of course, from a top line point of view, 1.3% growth, gross profit similar, underlined EBITDA, plus 0.4, strong profitability. There is, of course, a pressure in the margins, there is a pressure in the market performance. And this is also reflected in our results in H1. If we move on on our zero brands, which is a major focus. The top 15 brands plus almost plus 1% is 62% of our branded business. There's a clear focus from our business to develop further our brand portfolio where the major investment, innovation, and activities taking place. Private label business is a staple. It's 11.4% of the group sales. Now, if we move to our categories, in our beauty and skin, the category is minus 2%. This is reflecting two things. One is the export patient, which is included in this category mainly because of carotene brand, and the Romania pressure as a market, which is one of the biggest markets in our skin care business. Personal care, 2.7% down. This is also reflecting two things. The promotional pressure from all the competition in the region. And there is a specific category that we are a significant player. It's a fragrance business that is affected mainly, although other categories are performing quite well, both in sales growth plus market share development. home care solutions plus 3% here all the investments, all the energy, our leadership position in the region plus the focus on our key brands and resulting in very positive momentum for our home care solutions and especially in the garbage bags category the growth is even higher and this is also absorbing the Ukrainian the Ukrainian market which is mainly home care solutions market for us great momentum here, great projects, and of course we expect things to continue in a positive way in the future. The strategic partnerships part is a good growth rate, plus 4.9% for the six months. This is because of two things. One, our focus on a fewer and better partnerships that is part of our strategy. And the relevant innovation that we have in this from out of this partnership. So innovation and focus is resulting a better performance for our business. When it comes to international markets, here there are a few highlights related to the first six months. So the majority of the business are in for the Suncare Carotene brand. And of course, there's a skincare business in the Philippines, which is also doing very, very well for our business. If I leave the U.S. last, Australia is a market that is coming up in the second half of the year. We are listed in a big retailers there, and we're continuing with Carrot and Gram. Middle East, we have much bigger plans for the first half of the year that have been affected by the situation in the Middle East. so it's putting the whole H1 for the region under pressure. However, Middle East for us is a long-term shot, so we expect things to improve as the situation progresses in the region. The good thing also, you have a new country joining in the second half of the year. This is not in our numbers in the first half. This is Chile in South America, which is part of our expansion strategy of carotene brand to Latin America. as the next step for growth among other countries that we are working on. In the U.S., there is a lot of positive developments in the first half of the year. However, operational reasons and, of course, stock holding in the customers in the U.S. and our distributors resulting in this facing issue for the first half of the year. On the U.S., Carrefour now is another one tanning brand in Amazon U.S. and Target, which is the one retailer that we are working on it. And, of course, as we are speaking right now, we are preparing next year significant upside in our distribution footprint. especially in Brigham Mota stores, in physical stores, because online we are still very strong in Amazon and we continue to be like this. One thing is the extra distribution, the other thing is the expansion of the assortment, where we are in a very good shape right now and we are preparing the 2037 season with a lot of positive feedback and reaction from the customers and the consumers in the U.S. So Carlton is progressing and and we're expecting a lot of good things coming out in the near future Coming now to two geographies So this is a split between the different countries that we are monitoring Greece a positive year and positive first half Greek market in specific areas is doing very well and we are waiting over other companies selected international markets minus 14 is what I explained about the US Poland very positive Romania is having the impact of the market performance Czechoslovakia and Hungary this cluster of countries continue performing very well West Balkans is also having a tough 6 months However, we see signs of improvement from a market conditions point of view because 2025 and the first period of 2026 was quite difficult. Bulgarian is positive, and of course Ukraine, reflecting the impact of the market situation. The transformation agenda, as I said, this transformation, all the new SAP implementation is in place. As we speak, We have implemented the majority number of the countries. There are two countries left, one for next year, which is Poland. We are very near to the final goal. It is going to be in January 2027, and Ukraine will follow later on. From a planning point of view, we have completed all the investments, improving our planning accuracy, and of course all the digital tools, enhancing our digital capabilities have been implemented in the business. Manufacturing and break, we have concluded almost everything in our Stella Park Regeneration business and we are now we are getting the benefits in 2026 but of course benefits will even further improve as we're moving on in the second half of the year and 2027 as well. Our Inocita plant in Greece the expansion is also also in progress by the end of 2026 we expect to complete also the investments there related to our skin care and sun care expansion, both in the region and the international markets. And of course, all these CAPEX supporting also the sustainability agenda for the group. From the ESG point of view, we are improving our ratings. We are in line with our commitments for reduction of ESCOPE 1 and ESCOPE 2 emissions 42% by 2030 by using 11.5% for this year. And of course, we have improved the ratings all the races, including the scores on our sustainability agenda. So this is this is the intro from my side. I will pass over to Chris right now to give you more details about the financial performance.

Thank you, Yanni. Let me now provide some details behind the key numbers Yanni described. As you will see, we share underlying and reported numbers. The difference between the two relates to a one-off event, the sale of the old non-operating factory holdback. The difference from the value, the brokerage pitch and other expenses relevant to this was 0.8 million. Thus, the underlying P&L is the ongoing one. The difference between underlying and every quarter is only this one, so this influences all lines from EBITDA down to EBITDA all the way to net profit. We should note here that maintaining the operating factory had annual expenses of almost half a million. Thus, after the sale, we will save this going forward, starting from the relevant portion in half a year too. Our net sales grew by 1.3% compared to 2025. We focused on our four categories, especially on our branded business, which influenced fairly early the mix of sales. Majority of our geographies did well with decline, though, in Romania and Ukraine, which influenced the performance. Also, we have a basic element on our sales of U.S., which influenced the first half, but will be normalized in the second half. In terms of price increase, these were minor cap year one, and the action pricing is expected to be effective in Q4. Our gross profit margin remained flat after the 8.6%. We started seeing the improvement in cost of goods sold as a result of our investments in our production capabilities and the regranulation in Poland. However, this can balance the pressure in the supply chain from the ongoing mid-lift conflict, leading eventually to the same gross profit margin. Underlined EBITDA grew marginally to $48.5 million, with pressure also on the cost of transportation, despite, as mentioned, the mixed performance and the cost benefit from our investment. Underlined EBITDA margin was flattish at 15.7%. Underlined EBITDA at $36.7 million posted a 2% decline compared to prior year, with a margin of 11.9%. Financial expenses in 2026, although improved in terms of interest expense, following the repayment of loans, especially the second half of prior year, were impacted by more than $1 million negative, mainly due to the devaluation of their own. Following this, our underlying earnings before tax declined to $34.8 million from $36.5 in 2025, with EBIT earnings before tax margin of 11.3%. Underlying net income of 37.7 million, down by 5% versus 29.2 in 2025, leading to underlying earnings per share at 44 cents. Moving now to our product category so you can understand more about the dynamics in the first six months of the year. Only private label is impacted by the shape of the old factory and the difference between underlying and reported. Starting with duty skin and suncage. is a key pillar important for our organic growth plans. We have year 1226, net sales declined by 2% to 54 million, impacted by the phasing of our US exports in Harrier 1, which will be normalized in Harrier 2 and by performance in Romania. However, despite the net sales pressure, category grew by 7.4% and debit margin grew by 280 piece, almost 32% affected by the mix within the category. Personal care. In terms of personal care, this was a category with the strongest promotional presence from the competition and with decline in the sub-segment of fragrances. We had a decline of 2.7% of net sales compared to prior year, with EBIT being impacted further by 17%, to reach 7 million EBIT with EBIT margin of 14.2%. Home care solutions. On-care solutions grew by 3% to 95 million, with EBIT growing ahead of internet sales by 3.6 million to 10.8 million, with EBIT bargaining stable. Private sale label sales were flat at 35.2 million compared to prior year with break-even EBIT. We remind you that we use private label on a tactical basis to absorb costs from branded business and will over time increase branded business and decrease the private label portfolio. Finally, strategic partnerships. We had an increase of our sales by 4.9%, mainly driven by mass distribution, which rose by 12%, while selected business declined by 9% in the period. The EBIT declined by more than 30%, 1.9 million, driven mainly by selected distribution, especially in Romania. As mentioned, the total group, we have a solid net sales performance, reaching 308.2 million, and we have underlined EBIT at 36.7 million, with EBIT margin of 11.9. Turning now to our geographies. The underlying imported classification only affects Poland. For Poland, we are also splitting between branded products and private labels to allow for better understanding of the dynamics. Greece domestic market grew by 1.9% to 81.6 million, with EBIT being flat at EBIT margin moving by 30%. Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa In other territories, we had a mixed picture driven by statistics in each country. Romania continues the declining trend, started on the second half last year, with 44 million of net sales, a decline of almost 5% versus prior year. In terms of EBITDA, Romania sees 5.7 million, representing a decline of 16.8%, with EBITDA margin of 13%, declining close to 100%. We expect this trend to continue the second half of the year as well. Czechoslovakia and Hungary accelerated growth by adding 11.5% more net sales, reaching almost 35 million, with a debit of 4.5 million, which is a 22% increase prior year. In terms of public margin, this improved by 109 bits, reaching 12.9. West Balkans saw the decline in the net sales of 4.9% to 18 million, mainly parted by the Serbian market. In terms of public delivery, West Balkans declined a big 1.2 million from 1.6 million 2025 and then the epic market drop to 6.8%. West Balkans are expected to improve in a year or two. For Ukraine, this is another year of pressure in the results as identified already from our full year results discussion. The net sales drop by almost 10% to 9.5 million and then it continues in the negative territory, declining further to 0.7 million loss. As the geopolitical conflict in the area continues, and as we witnessed lately, it accelerates, we expect additional pressure from Ukraine in the second half of the year as well. Moving now to our healthy and strong balance sheet. As we have also discussed in the past, we maintain a strong balance sheet which can support our organic growth, the next stage of our transformation agenda and M&A's activities. As of 30th of June, we had net debt of 29.6 million compared to 32.8 million net debt on 30th of June, 2025. In 2025, Alusor also received the 20.8 million from a sale order, which, while in 2026, we did not have a similar amount received. I remind you that due to seasonality, our worst net debt positions on 30th of June were at the base of 30th of December. Already today, as we speak, net debt is largely improved versus June, standing at 19 million. Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Sa Finally, as of today, we have committed loan facilities of $120 million as a word says for future acquisitions. Enhancing our shareholder value is key for us. Underlying earnings per share is 44% from $0.46 last year, declined by 4%. During the first half, we paid dividends of $25 million or $0.39 per share, a reduction of 25% increase compared to $10 million paid last year. This represented a 47.1 payout ratio versus 43.5 payout ratio last year. I would like now to provide an update on our capex for this year. Our new capex expectation for 2026 is for 22 million. From 20 million we will communicate earlier this year, which will complete most of our big process. 18 million was deployed already. Now, coming to our outlook. The group continues to monitor the ongoing geopolitical volatility to mitigate as far as possible the resultant pressure on raw materials, energy, and logistics costs. Pressure continues in terms of cost in Q3, while the price increases are expected to be largely placed from September late and mostly in Q4. Complexity is further amplified by local pressures, mainly within the Romanian-Ukrainian markets. Our strong brand, disciplined execution, sharp focus on cost control, and commitment to our strategic priorities provide confidence to continue safeguarding healthy profitability. As the current environment is pretty liquid, we will be able to provide updates on the outlook later in the year if needed.