AAK AB (publ.)

For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Today's event will last for 45 minutes. Now I will hand the conference over to the speakers, CEO Johan Westman and CFO Tomas Bergendahl. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us today. And thank you for your interest in AAK. As you heard with me today is also our CFO, Thomas Bergendahl. So with that, please turn to slide number two. What we will cover today is quarterly highlights, selected events, business and financial update, and followed by some concluding remarks from my end. We're scheduled to do this for about 40 minutes, including a Q&A session at the end. And with that, please turn to page three. Just a reminder, this presentation includes forward-looking statements that come with risks and uncertainties. These are our views on future events and financial performance, but actual results may differ. So please keep that in mind when we go over the material. With that, please turn to page number four, starting with the quarterly highlights for Q3 2025. As you've seen in the Q3 report published earlier this morning, we delivered a solid quarter overall, broadly in line with the previous one, with strong operating profit despite somewhat soft volumes. Operating profit in the third quarter increased by 9%. This excludes the year-over-year impact of the hillside divestment, as well as the CEC 85 million currency headwind. When including the effects of currency translation, operating profit grew by 2% compared to the corresponding period last year. Thomas will go over the main drivers behind the FX impact a bit later in this presentation. Volumes declined slightly, 2% year-on-year, but increased 4% sequentially. Looking at the year-on-year comparison, the volume decline was mainly driven by an 8% reduction in chocolate and confectionery fats. Food ingredients, excluding the hillside divestment, was flat, while technical products and feed decreased by 1%. Just as a reminder, the hillside divestment refers to last year's sale of our North American food service business. That business accounted for roughly 5% of our total volumes and is therefore weighing on the reported year-on-year development, an effect that will continue also in the fourth quarter. Profitability was strong, with an operating profit per kilo reaching CEC 2.47 in the third quarter. This represented an increase of 5% or 12% at fixed exchange rates, both excluding the hillside divestment. This improvement was driven partly by continued internal optimization, including productivity and procurement improvements at our oil refining plants, as well as our Fit2Win cost optimization program, and partly by better portfolio and price management, with continued high sales of speciality solutions. Favorable market conditions for cocoa butter alternatives further supported the third quarter profitability. Turning to cash flow. Operating cash flow was positive at SEC 542 million, driven by strong underlying earnings, partially offset by a negative contribution from working capital. Our net debt to EBITDA stands at 0.61 and return on capital employed reached a solid 21.6%. Both numbers excluding the restructuring cost we recorded in quarter two. All in all, a solid third quarter result with a 2% absolute growth in operating profit despite the significant headwind from currencies. And with that, Please turn to next page. Before we go into the business and financial updates more in detail, let me briefly cover some highlights, few events since our last call. I'd like to start by acknowledging a very sad loss. As previously communicated on September 21, a tragic incident recorded our facility in Louisville, Kentucky, USA, resulting in the loss of one of our dear colleagues. Emergency services responded immediately and the affected part of the plant was shut down as a precaution. Since then, our focus has been to support those impacted, ensuring access to appropriate assistance and honoring the memory of our much valued colleagues. We are cooperating with authorities in ongoing root cause investigation and have engaged both internal and external experts to understand exactly what happened. Safety and care for each other remain our highest priorities and we are committed to learning from this incident and taking all necessary steps to prevent a reoccurrence. Turning to our strategic development. AEK has entered into a joint venture with Kuala Lumpur, Kepong, Berhad or KLK to build a specialty palm fractions plant in Pasir Gudang, Malaysia. The joint venture, which we've named Nura Speciality Oils and Fats or Nura, will strengthen our upstream access to sustainable, high-purity specialty fractions used in, for example, the production of cocoa butter alternatives, one of the key growth drivers within chocolate and confectionery fats. For AK, the total investment amounts to roughly SEK 300 million to be implemented over the next three years. And the plant is expected to ramp up in 2028 and reach full contribution in 2029. By broadening our supply base and reinforcing upstream integration, Neura will complement our longstanding supplier partnerships in the region, increase resilience and support the long-term profitable growth of chocolate and confectionery fats. Moving on to shea sourcing and the development in West Africa. Shea is one of AEK's more important raw materials and a key input in the production of cocoa butter equivalents or alternatives. Each year we source Shea kernels from across West Africa, where hundreds of thousands of women are engaged in the collection process. In recent months, Several countries have introduced export restrictions on raw shea kernels. We are closely monitoring that situation and remain in dialogue with local authorities, industry associations, as well as suppliers. While these restrictions have created a short-term uncertainty in the supply chain, AEK has long invested in the direct sourcing. local partnerships and traceability programs across the Shea Belt. These initiatives strengthen our resilience and help us adapt quickly to regulatory changes. At this stage, the export restrictions are not expected to have a material impact on our ability to serve customers. Our diversified sourcing model combined with long-standing local relationships help us ensure continuity of supply. And finally, as we entered the fourth quarter, AAK reached a milestone, our 20-year anniversary as AAK. 20 years ago, on October 1st, 2005, Aarhus United and Carlsson merged to form Aarhus Carlsson, today known as AAK. The merger combined more than a century of expertise in plant-based oils and fats, laying the foundation for the global leader we are today in high-speciality fat solutions. This anniversary is a meaningful reminder of our strong heritage and the power of combining technical excellence with global reach, with innovation and sustainability focus, strength that continue to define and drive AEK today. And with those events, we turn into the next slide, starting with business area highlights for food ingredients. Overall volume performance in food ingredients was mixed, excluding the impact of the hillside divestments. Volumes were on par with the same period last year. While this represents an improvement compared to the second quarter decline, Performance is still somewhat soft in bakery. All other key segments were stable or slightly growing. Operating profit per kilo came in at SEC 2.40 compared to SEC 2.33 in the third quarter last year, excluding the hillside. That is an increase of 3% despite the currency headwind of SEC 0.18 per kilo. If we look at this at fixed exchange rates and again, excluding Hillside, operating profit per kilo increased by 11%, which is a very, very solid improvement. In total, operating profit excluding Hillside increased by 3% to SEK 766 million, including a negative currency translation effect of SEK 57 million. On a constant currency basis and excluding hillside, operating profit was up 10% year-on-year in food ingredients. With that, moving over to business area highlights for chocolate and confectionery fats. Slide seven. In chocolate and confectionery fats, volumes decreased by 8% year-on-year, following a very strong 12% uptick in the third quarter last year, so also worth keeping that in mind. Compared to the previous quarter, volumes were up 7% sequentially, mainly reflecting normal seasonality in the year. Overall, the challenging market environment and elevated chocolate prices have continued to weigh on consumer demand. At the same time, the sequential improvement, both compared with the previous quarter and within the quarter, may point to somewhat more stable development. Operating profit per kilo remained strong, increasing to 4.3 compared to 3.95 a year ago. Currency translation had a negative impact of CEC 0.23 per kilo. So at fixed exchange rate, operating profit per kilo was up 15% in the quarter. In total, operating profit came in at SEK 525 million in line with the same quarter last year, but at fixed exchange rates, operating profit increased by about 5%. With that, moving into business area highlights for technical products and feed on the next page. Volumes declined by 1% compared to the same period last year, with higher sales in technical products partly offset by lower volumes in feed. Operating profit per kilo increased to SEIK 0.67, up 5% from SEIK 0.64 last year. In total, operating profit reached SEIK 46 million compared to SEIK 45 million a year ago, an increase with about 2%. With that, we have now covered the three business areas. I will now hand it over to Thomas to provide a review of the third quarter financial results.

Thank you, Johan. And good morning, everyone. Please turn to slide nine. Let me take a moment to explain the FX impact we're currently seeing affecting our assaults. The effect we refer to here is primarily a translation effect, meaning it arises when we convert profits generated in other currencies, for example, the US dollar or the Mexican peso, into our reporting currency, the Swedish krona. As the SEC has appreciated against most of our key currencies throughout the year, the value of those foreign earnings becomes lower when translated into SEC, even though the underlying performance in local currency terms remains strong. So it's important to stress that this is not a reflection of weaker operations or lower margins, but rather a year-on-year comparability accounting effect linked to currency movements. As you can see on the slide, we faced a strong FX headwind, mainly coming from the US dollar, the Turkish lira and the Mexican peso, against which the Swedish krona has strengthened during the year. That the effect comes from these specific currencies is a result of the magnitude of earnings for AAK in each country, combined with the respective currency movements versus the Swedish SEC. For the year-to-date period, this has resulted in a total FX headwind of 251 million SEC, representing a year-over-year negative impact of roughly 7% on the EBIT result, mainly driven by the weaker Mexican peso, but also heavily impacted by the US dollar and the Turkish lira. In the third quarter alone, the headwind was 85 million SEC, also representing a year-over-year negative impact of 7% on the EBIT result. with the US dollar being the largest driver, followed by the Turkish Lira. Moving to the next slide, slide 10. Operating cash flow amounted to a positive 542 million SEK in the quarter. Working capital increased, as Johan mentioned before, mainly driven by inventory, as well as accounts receivables to some extent, which had a negative impact on the cash flow for the quarter. Inventory increased with roughly 700 million SEK in the quarter, driven by Higher volume levels of POM, partly driven by the preparation for the introduction of EGR at the end of the year. Accounts receivables increased by roughly 200 million, driven by sequentially higher sales. The impact in the quarter on working capital from accounts payable is very limited, as it remains stable during the quarter. CapEx amounted to 321 million SEC in the quarter, comprised mainly of investments related to maintenance, productivity improvements, as well as capacity increases and deep bottlenecking. For the full year, we continue to estimate the CapEx spend at around 1.25 billion SEC. Free cash flow amounted to a positive 221 million SEC in the quarter. Turning to the next slide, slide 11. Return on capital employed for the quarter is slightly down from the 22.4% achieved in Q4-24, ending up at 21.6%, adjusted for the one-time restructuring cost recognized in Q2-25. This was driven by an increase in capital employed and, as previously mentioned, mainly driven by the increase in working capital. When we look at the next slide, the net debt to EBITDA ratio was reduced slightly to 0.61 in the quarter compared to Q2 25, but up slightly from the low of 0.29 in Q4 24. The increase from the end of 24 is mainly driven by the dividend that we paid in May of 25, as well as an increase in the previously mentioned working capital. The ratio remains at a level that provides us with continued financial stability and flexibility. With that, I will hand back to Johan for a summary and concluding remarks before we open up for questions.

Thank you, Thomas, and please turn to the next slide. Before we move to the Q&A session, I'd like to take a moment to outline how we are approaching the current environment and the actions underway to strengthen volumes. First and foremost, we will not compromise our margin discipline or our leadership in advanced product solutions to chase short-term volume gains. Our focus remains firmly on profitable growth. As we've demonstrated over time, AEK continues to deliver strong profitability even at lower capacity utilization, proving the resilience of our model and a cost base that remains well covered. That said, parts of the end market remain challenging, with high food prices continuing to weigh on consumer spending. To address this, we are executing a focused commercial push to capture pockets of growth opportunities, We are working plant by plant to identify and drive volume opportunities, using the spirit of AAK in a decentralized structure. Our focus is clear, prioritized regions and key customer segments where we can leverage AAK's broad portfolio, our co-development capabilities and plants with available production capacity to create value for our customers. A strong co-development example is our recent Ilexao EN10 launch that we did. It's a next generation CBE super compound that not only offers a high performing, cost efficient alternative to cocoa butter, but also reduces material loss for our customers, improving their throughput time. and minimizes maintenance time in enrobing, all while maintaining excellent end product quality for our customers' products. This is a great illustration of how we combine innovation, co-development to strengthen partnerships and help our customers succeed. We will maintain our leadership position supported by a simplified pricing mechanism that improves our ability to close EBIT positive deals faster and more effectively. That's where our focus is. Finally, we have a strong pipeline of commercial opportunities that our teams are actively pursuing across different markets. In summary, we are acting decisively Staying disciplined on profitability, leveraging our commercial strength and positioning AK to deliver on the 2030 aspiration that we have earlier communicated. With that, I move into some concluding remarks and then we're happy to take questions. We saw continued profitability gains with several actions on the way to strengthen volumes. Excluding the impact from the hillside divestment, operating profit increased by 9% at fixed exchange rates. Volumes were up 4% sequentially, but down 2% year over year, again excluding the hillside divestment. Profitability remained strong, with operating profit per kilo reaching 2.47%. Looking ahead, we remain prudently optimistic about our long-term potential and we are fully committed to deliver on our 2030 aspiration. Here and now, we are executing targeted initiatives to strengthen volume performance with a clear focus on commercial excellence and deeper customer engagements. With that, I hand it back to the operator and we are happy to take any questions from the audience.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Johan Fred from SEB. Please go ahead.

Good morning, Johan and Thomas. Thank you for taking my questions. A first one on your actions to drive volume growth. Could you provide maybe some more specific details on which regions and customer segments you are prioritizing in the short term? And what is the realistic timeline to see measurable volume improvements from these initiatives?

First and foremost, I would like to mention that I said in the call, the AEK spirit. I think those of you who follow AEK have seen how we try to be very systematic, hands-on. Practical, if you will, whether that is optimizing our cost base or running factory optimization. This is another example where we are leveraging our decentralized structure, being out there in the different countries of the world, close to our customers. So we are again using, call it an AAK, very practical and pragmatic model. to kind of strengthen in the connection between how we source and how we run our plants and then with the go-to-market teams trying to strike a deal that is positive for a specific plant not just by by lowering prices across the board i'm happy to hand it over to thomas for for maybe one or two examples and lastly from my point of view we already see traction in these activities yeah

And I would also say, as Johan said, I mean, we are a very decentralized company. And these efforts, like most of the other efforts that we run in AIK to improve our operations and bottom line, are very locally focused. And so is the case here as well, where we look at the applicable markets. So the focus, back to your question, is different in different markets, depending upon how the markets are developing and what opportunities we see. What we can say as well is that we've strengthened the approach on the margin calculation on these type of deals to be more precise and be more competitive in the market, knowing exactly how that will hit our bottom line in a positive way as we take these additional volumes.

Including shorter and faster decision lines in order to strike deals when we have them in front of us.

Okay, got it. Thank you for clarifying that. And another question, if I may, on the Shia or Shia export ban. I understand, of course, that you have a strong position locally, but you state that there is currently no material impact. But still, if there's an export ban, there is an export ban, right? So regardless of local relationships and whatnot. So my question really is, are there any countries that have not implemented an export ban that you're able to source from? currently or do you have enough inventory to not be affected initially? And if so, how long can that inventory suffice?

Thank you. Great question. And it's a bit of both or all of it. So let me first say that, yes, there are countries where we can still export. uh so so that's what we are doing but also that we are not only dependent on kernels per se we can also work with with crude uh she oil if you will so we also have local so what we have is we have sourcing presence in most of the countries in West Africa. So that's one strength of AK. We've been working with this for many, many years. So we're absolutely present in many of these countries. That includes having relationships and partnership with local producers that could crush locally. And with that, we can still use oil and then refine all the steps, call it downstream from the crush, if you will. So what we are doing, we're executing a couple of activities to, one, secure as much kernels as we can, two, where that's not possible, we then try to do local crushing and export oil or semi-refined oil, and then we refine further. So that's how we are approaching it. And yes, we also have and had stocks of kernels.

But just to be clear, I think the export bans where they do exist are on kernels, not on crude oil if crushed locally, right? So just to be clear on that.

The target by these countries seem to be to get companies to invest in local crushing and so forth. So it's not to stop shale from being extracted, if you will, shale oil.

That was my impression as well, and that makes much sense. Thanks so much for taking my questions.

Thank you. Thank you.

The next question comes from Setu Sharda from Barclays. Please go ahead.

Yeah, hi. Thanks for taking my question. So I have got three questions. The first one is on your CBEs. So you have highlighted the favorable market conditions for cocoa butter alternatives as a margin driver. but cocoa price and butter prices have fallen sharply Y2D. So how exposed are you to the further price normalization in this? My second question is again on related to CNCF margins. You have seen volume pressure and FX headwinds, but still your margins have improved meaningfully in Q3. So can you unpack the key driver behind this resilience and how sustainable are they into Q4N? next year. And my third question is on the share kernel export ban. So as you answered that you are procuring the oil. So if the ban continues longer term, what does it mean for your crushing capacity in Europe? Would you need to impair that asset and invest in local processing in Nigeria?

Thank you. We'll take the questions one by one. So first on the CBE market, I'll go back a little bit to detail out the market dynamics. So we offer a cocoa butter equivalent that replaces cocoa butter in the formulation of chocolate and confectionery products. In chocolate, that is in many countries restricted to only replacing 5% of the ingredient mix, which means that the rest is including cocoa butter. And as you know, the sharp price increases have led to those products leading to higher inflation on these products, higher prices because of cocoa butter mainly. And in other products, it's a higher degree of inclusion. So I think all in all, you have seen that the consumption of chocolate and the inflation have weighed on consumer demand, which has a negative impact on the underlying volume for the total chocolate and confection market, which we have also highlighted in our report. Now the question is, so I think it's actually positive that prices come down, because that means that it releases pressure on the end product price, if you will. Now, the question is, with further stabilization or further price reduction, would that come to a point where we would not have a benefit with a CB versus cocoa butter? Then the prices needs to come down significantly because we have in very, very long history, even when prices were lower on cocoa butter, we have had a cost competitive alternative to cocoa butter with our cocoa butter equivalents. And that's worth keeping in mind. And for those that have now, due to high calcua prices, reformulated into a well-functioning CBE, I see very little logic while you would go back to calcua butter if calcua butter is still more costly than a CBE. uh because you have already proven the reformulation and the quality of the product so i think it's worth keeping in mind that just because they come down doesn't mean that the opportunity for cbe falls off but we have been helped and we have articulated what is for your favorable market conditions But when the Kauka price has been high, we have been helped probably more in the way that customers are reformulating, now taking the chance to maybe use a Kauka water equivalent in products where they did not use Kauka water equivalents before. So when speaking about favorable market conditions, it's not all about price and margin versus Kauka, but it's also about driving volume for our product range, which has been favorable over the last years.

So continuing with your second question regarding the improved CCF margins in Q3 and how that's maintained, it goes in line a bit with what Johan mentioned on the first question in response to that one. The fact that if you look back before the sharp increases in cocoa prices, we were still able, of course, to generate good margins. It has increased over time. We see our internal efficiency programs delivering on a continuous basis, as we've mentioned before as well. And it's not just price that we're talking about here either. The CBEs, for example, as a replacement of cocoa butter is not just a replacement. It's also adding a lot of good functionality into the end product. And that's something that's valued by our customers and something they're prepared to pay for as well. Yes.

All right. And then if we go to the third question, which was related to, so what about, what is it with our shake rushing assets if we can't get kernels? Let's be sure. We do crush, but only in one site of our 19 sites we do crush. And if we could not get kernels, yes, that's right, we wouldn't be able to crush. And that could potentially lead to a small write-down of asset in that camp. But keep in mind that crushing is only the first step. in refining shea oil to the component that we then blend into a solution for CB or for skincare, by the way, that we sell into skin solutions in the cosmetic industry. So that is not a significant impact. So we are evaluating, we've done this over many, many years. We're looking at make buy and where to have our assets we have invested a lot in our own crushing and refining of shea that's for sure but we are continuously looking to source and we have been sourcing crude shea oil from West Africa also in prior years now we might do that to a higher extent or larger extent and going forward we are obviously looking at where to invest going forward it might be that we would end up investing more in West Africa or strengthening partnerships in West Africa but we're Crushing is only the first step in a value-adding chain to arrive to Kakaobar equivalent at the end.

Thank you. That's great help.

The next question comes from Priya Patel from UBS. Please go ahead.

Hi, thanks for taking my questions. I have three. So firstly, you alluded to some softness in bakery. I was just wondering if you could comment on how much they could define by. And then in CCF, I just wanted to ask if you could comment on how volumes developed by product. So how did the CBEs perform versus fillings and spreads, for example? And then finally, just on the fit to win savings, how much impact did you see in Q3? And are you still targeting 50 million by the end of the year? Thanks.

Thank you. When we talk about bakery and the softness there, we see in the quarter, I would say single digit year or quarter over quarter reduction that continues with at the same sort of pace that we've seen throughout 2025, improving slightly, I would say, in Q3, but still negative. And it's the same markets that we've seen the weakness and softness before. We're talking primarily Mexico, but also Turkey and China, where we see softness. And we see support from that, particularly in China, from Nielsen data of bakery and the segment coming down quite significantly, actually.

right second question was on ccf volumes by product so when you when we click down a level on on ccf volumes it's uh mainly within spreads the spreads and and filling fats uh where we would see the decline and the decline um cocoa butter alternatives doing relatively better So one could argue that even within the portfolio, it is a weaker demand in the lower value-added products and more stable in the higher value-added products, if you look at it from a mixed perspective.

And the third question around Fit2Win, it's actually progressing very well. We are implementing the program across the organization. We have, for example, seen a 30% reduction in travel so far, which is very encouraging. We're also moving forward on the headcount reduction that we mentioned before, up to 5% of our 4,000 employees. We have seen better traction in Q3 than expected. And the 50 million that we expected to have for the full year of 2025 will likely be closer to double what we've seen there. But when you look at the overall cost reduction of 300 million, that's still the expectation by mid-year 2026. The pace is just picking up a bit quicker than we expected initially.

Great, thank you.

The next question comes from Joan Lim from BNP Paribas Exane. Please go ahead.

Hello. A couple of questions from me, please. So in theory, with lower cocoa prices, it should help chocolate volumes recover. Can you help me understand how long it typically takes to see the benefits of this on end demand? And based on your conversations with customers, have you seen innovation activities start to pick up, especially for the holiday season and into Easter next year? My second question is on pricing. So pricing has been a significant contributor to top-line growth in the past quarter. With vegetable oil prices now coming back down, how much price can AAK hold on to in the more specialty areas like your CBEs? You mentioned simplified pricing mechanisms to increase your ability to strike eBit positive deals. Maybe you can help us with an example there, please. And the last one is to pick up on previous questions on volume expectations. So you talked about favorable market conditions for cocoa butter alternatives. Can you give some examples of what you're doing more with customers? How do you expect this to shape volumes for Q4 in 2026? Is there like a stronger pipeline that you're seeing at the moment? Thank you.

Thank you. So on the CCF, if we start, the first question there was, as you said yourself, If you see cost or inflation easing, yeah, that could absolutely, in a theoretical model, at least should lead to higher demand or at least consumer not be feeling those price pressure on the shelf in retail. So that's positive in that sense. But then when you look at how we supply, if you will, it's back to what I mentioned before. We... we supply an alternative. The reformulations are done by the customers with support of us. So that's an ongoing activity. It has been accelerated, of course, with the dramatic increase of cocoa prices that you saw. But if you're asking now short term, I mean, it's just very recently that cocoa butter came down. So we engage with our customer more on a yearly, quarterly basis. You don't change things overnight. So I don't think we've seen the impact of lower cocoa prices at all yet and then we'll have to see where that what that leads to at the end of the day and i think the best way to look at that is what do you see in communication from the consumer goods products we supply to their production again as it relates to the second question on raw material prices coming down to some extent in terms of cocoa butter and so forth we

We do see, of course, those changes, but that's something that we've lived with for a long, long time, especially over the last five to six years where volatility and uncertainty has been much, much greater than what we've seen in the past. And I would say pricing is a piece of it, definitely not the whole benefit that we've seen so far. We also have all the programs that we've been working with internally in terms of efficiency and so forth driving our EBIT per kilo margin. But just to make sort of a step back in time a bit, we saw raw material prices come up significantly from 2020 to 2022, then dropping down by about 50%. And then remaining flat for a year, year and a half, and then now increasing again. We have been able to manage this in the past very successfully, continuing to increase our EBIT per kilo. And we expect to do so also in the future.

The focus is not leveraging the fluctuation of raw material prices, but rather bringing the value to our customers and then doing market-based pricing more and more.

As you know very well, we don't play the market on raw materials. We hedge it back to back as best we can to continue to increase our EBIT per kilo.

And then on your last question, can we exemplify a little bit more? What are we doing in this commercial push? And one piece is about speeding up and simplifying price calculations, making sure that we are connected within the company. So a quicker call it connect between sourcing operations and go to market so that we understand where can we have a positive impact on get a leverage on fixed cost, if you will, by making sure that we're covering our Variable cost and then striking an EBIT positive deal. Our focus, and we've said that, let's not forget, our financial target is EBIT growth. So we're always trying to drive EBIT growth. And that could be done by margin, could be done by volume, or ideally in a combination of the two. So that's how we focus. So that's why we are not necessarily prioritizing one or the other, but we're always focusing on can we make a creative EBIT deal. But to give you some examples of what we are doing, we are, for example, apart from simplifying price mechanisms and so forth. It's also about targeting customers or commercial push country by country. And one example is that we have in a few countries, single out customers where we haven't been that active, maybe smaller customers that we didn't do business with before and structurally going after them. And we've seen some positive uptick quickly in some of those markets. So that's one example. The other one is what we mentioned here is the co-development with customers. So for example, bringing a new better solution to market in this case, a CCF for chocolate and confectionery ingredient that is giving that functionality in the chocolate. But the real benefit for the customer here is that we are improving their production. So when doing enrobing, you have always the challenge in a production site where you get a buildup of material, you get clogging, if you will, of your production line. So you need to do maintenance. You need to clean the line and then you start running again. And with this solution, we reduce that downtime because you can run longer before that buildup or clogging becomes a problem. So in essence, we are offering our customer maintenance. a quality product for the end solution but with the capability of running their lines faster longer so they could increase their capacity and with that reduce their cost of landed cost for finished product so these are examples of what we are doing to drive volume both short-term but also in a long-term perspective with innovation

Thank you very much. Just to follow up, how does the pipeline look for Q4 in 2026 if we are thinking about the holiday season?

That is for our internal optimization and not for display to competition. But we're working actively with our pipeline.

Okay. Thank you very much.

Thank you.

This is your operator speaking. We are reaching the end of the session, so let's take the last question and move to closing remarks.

The next question comes from Victor Hansen from DNB Carnegie. Please go ahead.

Thank you. Thank you, operator. Hi, Johan and Thomas. A couple of questions. I can try to keep it short. I was curious about food ingredients improving sequentially.

and could you give us any comments on how you would say you are faring versus the market and if you during the quarter saw any recovery or if it was evenly down throughout the quarter thanks thank you uh yes it's improving sequentially uh and i would say it's uh as we've seen a bit of softness in bakery bakery is also the one coming back dairy is continuing to show strength And to your specific question, yes, it is sequentially. So during the quarter, we saw continuous improvement throughout into September as well.

Okay, good. And then on bakery, where you still have some weakness, Would you say that this is due to destocking or are food ingredients, the Q3 volumes, are they fairly close to current consumer demand?

I would say that it's not a structural destocking in bakery. Bakery is a very local market, first of all, so we supply bakery globally, but most of the companies within the bakery industries, if you will. They are local players country by country. So what is more dominating here is the reduction in China and Turkey and a few other countries where we serve. That is more the way on bakery than a structure or call it bakery across the world dynamic.

Okay, thanks. I'll stop there. Thank you.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you. Thank you for all your questions and interest. Again, we delivered a strong quarter with 9% operating profit growth at fixed FX, and we remain focused on our activities to also drive volume going forward. Thank you for your interest and for your questions today.