ARYZTA Aktie

Good morning, and welcome to our H1 results call. Our presentation includes forward-looking statements, which details the various risks and uncertainties that may impact our business and which also apply to today's discussions.

I will now hand over to Urs to start the presentation.

Thank you, Paul. Good morning, all. Let me welcome you to this H1 2026 results overview.

On Page 4, you can see the key highlights of the first half year 2026. We did achieve a revenue of EUR 1.064 billion almost, which accounts for an organic growth of minus 2.7%. EBITDA has been achieved of EUR 139.9 million and a free cash flow of EUR 23.6 million. Earnings per share stands at EUR 1.82. In April this year, we did repurchase the hybrid bonds, the last outstanding hybrid bonds. And as you did read some weeks ago, we did a French bolt-on acquisition to expand our French business.

Then, on the next page, Page 5, you can see the H1 organic growth being impacted by mainly a heightened macro and geopolitical uncertainty. Consumer savings are going up and consumer uncertainty is visible, resulting in a subdued consumer sentiment. We did work against strong prior year comps. Germany was clearly the most challenging market. Germany's underperformance offset the growth in other key markets.

We are driving Project Excellence at pace to harvest attractive savings and strengthen margin resilience. For Germany, we are considering all options to maximize shareholders' value. Both measures accelerating and delivering attractive savings benefits. The Excellence program, as I did mention, is rolling out faster and in more bakeries and in more markets. We are streamlining the organizational model. Further optimization investments are planned for H2 this year. We have very good visibility on key inputs. The innovation rate of 19% is supporting profitability via premiumization.

Then on Page 7, the guidance for 2026. We are targeting to achieve organic growth at the lower end of the guidance range, reiterate expectation to deliver further EBITDA and EBIT improvement, and we expect to deliver solid cash generation and an improvement in net debt to EBITDA. For 2027 and 2028, the Board will propose a capital return allocation to shareholders at the AGM 2027. The options for this are dividends, share buyback or a combination of both. We are targeting to evolve progressively towards Swiss-listed SMEs payout ratios.

I will hand over now to Martin Huber for financial review.

Thank you, Urs, and good morning. I'm pleased to share our results for the first half of 2026. We had a challenging start into the year, particularly in Germany, but the group delivered a resilient performance in a difficult economic and consumer environment.

Revenue of EUR 1.0639 billion was below the prior year, resulting in an organic growth of negative 2.7%. This was mainly driven by volume mix of negative 2.1% with Germany being the key drag on the group performance. Our reported EBITDA margin of 13.2% was 70 basis points below prior year and includes one-time costs of approximately EUR 5.4 million, mainly related to the Excellence program, which is driving cost optimization and organizational efficiency. These one-time costs represent approximately 50 basis points of revenue.

Free cash flow of EUR 23.6 million is largely in line with previous year and our guidance for the first half of 2026. ROIC of 11.1%, although below last year, given lower profitability, is ahead of our weighted average cost of capital, creating value for our shareholders. At the same time, we made clear progress on the levers that matter for the full year. We accelerated cost efficiency, improved capital structure and reduced the financing cost.

Let me now provide more details on the composition of our revenue performance. Total revenue decreased by 2.1% or EUR 22.5 million. This reflects an organic growth of negative 2.7%, which is partially offset by a positive foreign exchange impact of 0.6%. The subdued consumer sentiment impacted retail in particular, as well as QSR channels in Europe, with Germany being the main driver of the negative growth. Solid organic growth in Switzerland, France, the Netherlands partly offset this impact, but not enough to compensate for the decline in Germany. QSR in Rest of World delivered mid-single-digit organic growth, supported by pricing and volume mix, while the other 2 channels in this region were flat. Overall negative pricing remains limited and is expected to be stable to slightly improving for the full year.

I will now move from the group revenue bridge to the performance of Europe and Rest of World. Europe, and Germany, in particular, weighed on group revenue performance in the first half. At the same time, it is important to highlight that there are clear signs of relative resilience in several of our retail markets. Year-to-date, 3 of our 7 retail markets have outperformed their respective markets and 2 additional markets have significantly closed the gap versus market performance.

Our continued strong innovation activity, representing 19.2% of revenue, delivered almost the same absolute top line contribution as in prior year, and importantly, is supporting margin. Distribution platform acquired in France will contribute to our revenue growth for the full 6 months of the second half. Lower revenue impacted profitability with an EBITDA margin of 12.4%, coming in 80 basis points below the prior year.

The European businesses are the main focus of our cost efficiency and optimization initiatives and most of the related one-time costs, therefore, are recorded in this region. Based on the progress of these initiatives, we are confident that Europe will recover margin in the second half and contribute to the overall targeted improvement of the group EBITDA margin. This was Europe. I will continue to share further details to Rest of World segment.

The QSR channel has been driving the top line performance of Rest of World. Positive organic growth of 2.7% is supported by both volume mix and pricing. The other 2 channels in Rest of World were flat in growth. Worth highlighting our Malaysian business with good contribution to growth driven by volume, which was, however, offset by the performance of the other businesses. The ramp-up of the Perth factory is progressing well, and we expect a positive contribution to revenue in the second half of this year.

The cost of pre-hiring of factory staff and preparatory work in the factory have temporarily impacted profitability of Rest of World. For the full year, we expect EBITDA margin to increase to previous year's level. As a next step, I will move now to the key drivers of the EBITDA margin. EBITDA margin reduced by 70 basis points in H1 to 13.2%, including a 50 basis points impact of one-time costs related to the cost efficiency and optimization initiatives of our Excellence program. These one-time costs correspond mainly to restructuring expenses and consulting costs supporting the accelerated rollout of the program.

Gross margin before distribution improved sequentially by 70 basis points versus the second half of '25 and remained flat versus the first half of 2025. Key drivers of the evolution of the gross margin versus previous year are a positive contribution from procurement and other savings initiatives of 90 basis points, plus margin-accretive innovation, which added 20 basis points to the gross margin. These positive effects helped to compensate the impact of lower operational leverage and the negative net effect of commodity deflation, labor and energy inflation as well as slightly negative pricing.

The negative impact of distribution and SG&A on the EBITDA margin on one side is driven by lower operational leverage, and on the other side, by approximately 50 basis points of one-time costs, which are recorded within SG&A. These costs were partially offset overall by the ramp-up of the Excellence cost savings program, which have already contributed 30 basis points to the result. We expect the impact of Excellence actions to strengthen in the second half and to be a key contributor to the targeted EBITDA margin improvement for the full year.

I will now provide more details on the Excellence program and the savings initiatives behind this margin improvement. We have made good progress in our long-term efficiency and cost optimization program Excellence. The program is now moving from assessment into delivery with confirmed savings already being realized and further rollouts prepared for the second half. Up to now, we have addressed with this program circa 45% of total production volume. So far, we have identified and confirmed EUR 8 million to EUR 10 million of gross cost reductions in operations.

We are gradually building up internal capacity to further accelerate the coverage on the remaining plants, and we expect to have our full manufacturing footprint covered by the end of 2027. The alignment of our organizational structure is progressing according to plan and is expected to deliver annual gross cost savings of approximately EUR 10 million. We are also progressing with the rollout of our IT roadmap, as we continue to evolve towards a more digitally enabled company.

Key initiatives this year include the S/4HANA implementation in Fornetti and the upgrade of our warehouse management system in the French Coup de Pates business. With this, we confirm that ARYZTA continues to target to achieve the EUR 20 million to EUR 30 million net savings by 2028 through Project Excellence by optimizing on one side our operation and on the other side streamlining the organization.

From Excellence, I will now turn to the cash flow performance. Free cash flow of EUR 23.6 million is largely in line with previous year and as per the expectation. Stable working capital and disciplined CapEx management supported the results. Lower absolute EBITDA was almost fully compensated by the improvement in financing costs and lower cash taxes. Higher net lease payments and some other elements had a slight negative impact on cash flow. For the full year, we are confident to generate solid levels of cash flow, supported by the improved profitability.

On the next slide, I share more details on the working capital performance supporting cash flow. Our trade net working capital was maintained at efficient levels and protected cash flow performance for the company. Our cash conversion has slightly increased by 2 days compared to H1 last year. Somewhat higher inventories and days of sales outstanding have been almost fully offset by better payment terms management.

I will now move to our capital structure and leverage development. We continue to move towards our targeted leverage levels and to improve our financing and capital structure, supported by consistent cash generation and disciplined balance sheet management.

Key achievement in the first half of 2026, our total net debt decreased by almost EUR 100 million to EUR 789 million, corresponding to a leverage ratio of 2.7x. The repayment of the last remaining hybrid principal concluded our hybrid repayment and refinancing program, and our core equity continues to increase to 23.3% of total assets, up from 18% in previous year.

On the next slide, I'll explain the evolution of our financing costs where the stronger capital structure is translating into tangible benefits. Supported by the continued optimization of our financing structure, the reduction of total net debt and a further improvement of our cash management decreased total financing costs by EUR 5.5 million to EUR 16.8 million.

Our interest rate hedging, which is covering 29% of our bank debt, will end in the second half of this year. Given the positive evolution of our year-to-date financing cost, we are improving our full-year guidance to the lower end of the EUR 37 million to EUR 40 million range. This compares to the previous year range -- the previously targeted range of EUR 40 million to EUR 43 million.

Next is the evolution of ROIC and value creation. Our ROIC remained robust at 11.1%, which is ahead of our cost of capital. Even in the more challenging profitability environment, the group continues to generate returns above its weighted average cost of capital and creates economic value for the shareholders. The year-on-year reduction of ROIC is explained by lower operating profit in the first half. Importantly here, the capital base has been well controlled, disciplined CapEx and efficient working capital management have delivered a stable to slightly declining invested capital base. ROIC is lower than last year, but remains comfortably above the cost of capital.

Moving now to the earnings per share. Earnings per share at EUR 1.82 is largely stable versus previous year. The lower operating profit was almost fully compensated by further improved financing costs and a lower tax charge.

I will now conclude with our outlook for the full year. While the first half was demanding, particularly in Europe, we have made significant progress in ramping up our cost optimization and efficiency initiatives. These actions are expected to support a stronger profit contribution in the second half and keep us on track to deliver profit improvements for the full year. We are set to accelerate the impact of the Excellence initiatives, which contribute to the targeted profit improvement for the full year. The plan to further drive channel penetration, the contribution from our growth investments in new facilities and the strength of our innovation pipeline provides support required to target the lower end of our organic growth guidance.

We are reviewing all options for Germany over the next few months to support shareholder value maximization, and we'll share the outcome in due course with the market. Our resilient business model and solid cash generation will set us up for the resumption of returning capital to our shareholders in 2027.

So in summary, while the first half was challenging, the direction of travel is clear. We are addressing the short-term pressure points, accelerating the initiatives, which are under our control and are strengthening the financial platform of the group. This gives us confidence to target profit improvement for the full year and the lower end of our organic growth guidance.

Thank you very much, and I hand back to Urs.

Thank you, Martin, for this information. We would now continue with Q&A.

[Operator Instructions] First question comes from the line of Daniel Burki from Zürcher Kantonalbank.

Can you hear me?

Yes. Yes.

Yes. I would have a question on the European market, especially in retail. Is the shrinkage there, it's only the market decline or you also walk away from some contracts or did not renew them because they were not attractive enough? That will be my question.

Thank you, Daniel, again. It's basically the market and the consumer environment. We have good figures and good visibilities in the markets. We believe that in many markets, we are gaining market share even in Q2 in Germany. But in Germany, the market for H1 for bakery products was short by minus 1% in value and minus 4%, minus 5% in volume. So this is the main driver of this. So there is no cancellation of contracts or cooperations. It's clearly a market issue we see in this retail business.

The next question comes from the line of Chiara Di Giammaria from Berenberg.

I'd like to ask what gives you confidence in achieving the full-year guidance? Are you already seeing demand acceleration in the beginning of H2? And then, I also wanted to double check if you have any comments on the midterm guidance.

Thank you for this, Chiara. We have all programs in place, as you already see. Martin did mention the markets outside Germany are doing reasonably well. We have good initiatives in place. We have a high share of innovation, which are -- which is driving our positioning in the market.

On the other hand side, we have this aggressive cost program, this Excellence program, which is delivering good results. We have now addressed almost 50% of the entire manufacturing footprint or the entire volume output by 50%, which is a good progress, generating very good results. That's why we are confident to achieve the guidance we gave on the top line at the lower end. As we have told, the markets will remain challenging, mainly in Europe, mainly in retail, but this has been addressed. This is the confidence we have.

And on the midterm guidance.

We stay with this for the moment. This is no change. We have, as I told, good programs in place, good initiatives. As we have told, we test options for Germany. Midterm plan '28 remains unchanged.

We now have a question from the line of Marti Queral Ferre from UBS.

The first one would be on Germany, please. I mean, I would like to understand what happened on pricing, especially. So -- yes, I mean, what is driving this negative pricing? Are there overcapacities? Is there potential in-sourcing from retailers putting pressure to prices? And any color here would be appreciated.

And also my second question would be on, yes, considering what you can control, what are the plans to drive growth, especially in Germany, but also elsewhere in 2027 and beyond?

Thank you for your question. In terms of the first one, look, Germany, no surprise, has been always a cost-conscious and price-competitive market environment. We as -- for the first half performance, we are not satisfied with the performance there. And that's why we have decided that we will study all options for the German businesses, and we'll analyze that. We come back with the -- once we have concluded the assessment, we'll come back to the market and inform the market about the next steps we are taking.

As Urs has mentioned, the German bread market is in decline. That is the driver of the performance. So it's not about walking away from contracts, as we have mentioned before already by the first question of Daniel. And it's also not a topic of in-sourcing. So that's the overall summary of what has happened in Germany and our actions towards that situation. So we are making sure that we are ahead of the curve and address the points in order to fix the performance and maximize the overall value creation of our business.

Does that answer your question?

Yes. And my second one on growth in 2027 and beyond, not necessarily only in Germany.

Yes. I think I would reiterate what I mentioned in the presentation. It is about driving channel penetration. It is about leveraging the investments that we have done in our new facilities and in our growth CapEx. So for example, the Perth factory is expected to deliver growth in the second half, and that should help us to improve the performance that we have. I would also like to draw your attention to the fact that the second half was -- in 2025 was softer than the first half. So, therefore, we also have an effect of comps. And don't forget our continued strong contribution from our innovation program, which has been strong in the first half, and we expect it to continue to drive contribution to the top line in the second half.

[Operator Instructions] The next question comes from the line of Jon Cox from Kepler Cheuvreux.

Just coming back to Germany. I think you said the market overall is down 1% in value and then down 4% or 5% in volume. Was that what I heard? Because when I look at your interim report and look at the segment reporting, Germany is down actually almost 10%. So just trying to square the circle in terms of you're saying you haven't walked away from any contracts, you've not lost any in-sourcing deals or whatever. I'm just wondering why your German sales is down 10% when I look at your interim report in that segment reporting.

There are several aspects on this. These numbers I did give you the minus 1% and minus 4% or minus 5%, these are retail sales. They are in Germany, in food service as well and in quick-serve restaurants. Now, there is in markets like Germany, an accelerating effect. There are protagonist customers with own manufacturing capacities. And if markets are short, they are in-sourcing. So if the market is short, there is -- the addressable market for the suppliers is becoming less because some big customers are then reinsourcing products in their own manufacturing. This is the -- or these are the 2 points you need to consider in this number.

Okay. And then to come back to this down 10% and I've seen this before with other big food suppliers, Barry Callebaut, same sort of thing happened, volumes down across the board, everybody started to in-source and that put pressure on their business. Why should this turn around in Germany in the second half of the year for you guys to get to low single-digit decline overall in organic sales growth? Because if the market is down 4% or 5%, it takes a bit of time to get their own work off their own capacity again before coming back to you to actually do that. And maybe as a bit of an add, I understand that Lidl, and some others are actually expanding their own capacity over the next year or so. I guess, this would impact your own business with them, as they would look to fill up that capacity.

Jon, we have indicated in the presentation that, let's say, there is 3 drivers that will drive the acceleration in the second half. This is channel penetration. This is the contribution from our new facilities that come online, and the overall growth investment that we have concluded over the last couple of years and our continued strong contribution from our innovation activities. Then, there is a technical effect. There is lower comps in the second half.

And we have -- as I mentioned, we have some of the 7 retail markets, we are measuring on a consistent basis where we see strong performance. So we have 3 markets that are outperforming the market. We have 2 markets that are catching up to the market momentum. That gives us confidence that we have the positions and the pieces in place to drive a strong growth performance in the second half. And as we have mentioned, we will review all options for Germany. We will do that analysis. We will come back to the market once that's concluded and let the market know what the next steps are for Germany.

Just on Germany, and you've talked about the fact that next year, you'll start to return cash to shareholders, either dividend or a buyback. In terms of Germany, if you have to start closing factories, it's not a cheap thing to do. I'm just wondering what would the impact that be on cash generation for you and your ability to pay a dividend or do buybacks next year if, say, you're closing a couple of your factories in Germany and/or you do a full exit and then maybe you have to write down all of these assets or effectively maybe you can't really monetize much of what's actually in Germany at the moment?

Jon, as I said, we are assessing all options. We are running these analysis. And once we have concluded these analysis and these assessments, we'll come back to the market and let the market know about the next steps.

Do you have any rough time scale for when this sort of review will be concluded?

You can expect that this is sometime in the second half of this year.

Okay. Maybe just the last one. On the Rest of the World business, you have capacity coming on there. Maybe organic sales growth was a little bit more subdued than some of us expected with that new capacity coming on. Is it just maybe the capacity is not coming on as fast as you anticipated in the rest of the world?

I think you heard me say in the presentation before that we expect Perth factory to contribute to the revenue performance in the second half. And I would call it that this is running in line with expectations.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Urs Jordi for any closing remarks.

Thank you for this. Thank you for joining. We are here to answer questions. We will have our meeting today. Maybe one or the other will have the opportunity to meet us in person today. I wish you a good day and a good week. Goodbye.

Good morning, everybody. I would like just to highlight today that we have on Page 2, a forward-looking statement that highlights some certain risks and uncertainties that impacts our business. These risks and uncertainties are relevant to today's discussions, especially in relating to forward-looking statements.

I would now hand over to Urs Jordi for the presentation.

Thank you, Paul. Good morning all. Welcome to our Full Year 2025 Results Call this Monday. We will start on Page 4 of the presentation. As you can see, a revenue of EUR 2.223 billion being achieved in the year 2025. And with this, an organic growth of 1.5%, supported by volume and by price. An EBITDA of EUR 306.9 million we have in our books and with this a free cash flow of EUR 120 million. Based on this, on this solid performance and the strong cash flow, we decided to repurchase the remaining hybrid bond, the outstanding Swiss franc bond on the amount of CHF 144.3 million by end of April this year.

On the next page then, you can see that we did complete our customer negotiations, year-end '25, beginning '26. We maintain a strong share of innovation, 19% of revenue. New capacity is ramping up in Switzerland, as you know, a new line for gipfelis and pastry. The first investment goes operational soon as we are speaking now and in the next 2, 3 weeks. And investment in Portugal, the burger bun factory is confirmed and the planning, execution starts. There's a new investment planned in Poland. Planning is continuing. And as you know from our last calls, business cost optimization is accelerating. On the next page then about the organization of the company, the Board, the management, the dual mandate, the Chairman and the interim role will end at AGM 2027. The Board will propose for then -- for this AGM 2027, a new Chairman. I will remain CEO of the company and Board member of the company.

A Board refreshment is as well proposed for this year's AGM 2026. We proposed Heike Sengstschmid to join the Board. Helene Weber-Dubi decided not going for the next round after being more than 5 years with us. We did as well decide to relocate the head office from Schlieren to Zug. This is subject to the AGM approval from April. The guidance then for the coming year on the next page. We confirm to deliver our midterm plan as disclosed, we will achieve a low to mid-single-digit organic growth. We will continue with our EBITDA and EBIT improvement activities. We will remain on a strong cash flow generation for the business and the Board will publish a capital return policy 2026. This is a remarkable point, first time in ARYZTA's existence since many years, the company is in the situation to debate and to propose a capital return plan for shareholders.

On next page, then you can see the midterm targets. You know then about EBITDA margin, EBIT margin, 15% or more, 9% or more. CapEx amounts to 3.5% to 4.5% of revenue as we had in the past. Total net debt leverage from 1.5 to 2x is a target level we will achieve. All of this supported by a strong cash generation and improvement on ROIC and on earnings per share.

We would go now to the financial review and I would ask Martin to guide us through, please.

Thank you, Urs. Good morning. We are pleased to share with you the details of the resilient results we achieved in 2025. ARYZTA has delivered on the updated guidance after the executive leadership change in October 2025. We achieved revenues of EUR 2,223.3 billion, corresponding to an organic growth of 1.5% with contribution from both volume mix and pricing. Our EBITDA of EUR 306.9 million is above the guidance. The corresponding margin of 13.8% demonstrates our ability to deliver robust results despite the context. Free cash flow of EUR 120 million, representing a cash conversion of almost 40% of EBITDA confirms the cash generation strength of ARYZTA's business model. Despite lower operating results, the disciplined management of our invested capital protected ROIC. The 12.1% is well above the group's weighted average cost of capital, delivering value creation for the shareholders.

Next slide. In a challenging consumer end market environment, ARYZTA delivered an organic growth of 1.5%, supported by volume mix growth of 0.5% and a resilient pricing of 1%. Foodservice and QSR contributed with solid growth levels, while retail was flat. Important to highlight that pricing was strongly supported by our foodservice business, while QSR was a key contributor to volume growth. Retail delivered a contrasting picture with some businesses delivering substantial volume mix growth compensating others. Innovation with a revenue share of 19% was organic growth accretive. Next slide. Europe achieved an organic growth of 1.3% with positive volume mix and pricing. Contribution to pricing was stable across the year. The growth in Europe was broad-based with good contribution from Ireland, France, Germany and Poland as well as our European bun cluster.

Good performance in foodservice driven by pricing and, to a lesser extent, volume as well as solid volume progress in QSR. Retail had a generally more challenging performance in both pricing and volume. Innovation share of revenue reached 19%, underscoring our category leadership. While EBITDA margin of 12.9% was below last year and further decreased compared to H1 2025, we have been able to significantly recover profitability in the last quarter. The reset triggered by the leadership change supported this acceleration of margin recovery in the last quarter with the several cost optimization initiatives we have put in place. Next slide. Rest of World delivered strong results with an organic growth of 2.9% and a EBITDA margin improvement of 110 basis points to 20.9%. Key contributors to this achievement are a mid-single-digit organic growth in QSR with important contribution from volume and mix. The continued QSR recovery also resulted in improved profitability.

The other segments of Rest of World achieved largely flat organic growth, however, added with important margin progression to the results of the region. We expect the QSR to further progress. The new factory in Perth will be commissioned at the end of the first quarter this year and will support this trend. Next slide. We delivered an EBITDA of EUR 306.9 million, which was above the October guidance. The resulting margin of 13.8% is 80 basis points behind previous year but largely stable versus our H1 result. Input cost inflation, particularly related to labor cost as well as some commodities like butter, protein and chocolate have impacted gross margin by 290 basis points. FX and other elements had a negative impact of 50 basis points. This was partially offset by pricing as well as procurement and Simplex cost optimizations, which have benefited gross margin by about 190 basis points.

The increasing share on revenue of margin-accretive innovation has also helped to mitigate the effect -- the negative effect the input costs have. Distribution costs and SG&A have contributed 60 basis points to the result through disciplined cost management, efficiency gains from the shared service center and procurement savings on the newly onboarded indirect categories. We have delivered these robust EBITDA levels and have continued investing in our strategic efficiency initiatives to ensure our business model and setup is future fit. Next slide. During the Capital Market Day last year, we committed as part of our 2025 to '28 midterm plan to deliver EUR 20 million to EUR 30 million net savings. Operations, procurement and structure cost improvement will contribute EUR 40 million to EUR 60 million savings, of which we will use EUR 20 million to EUR 30 million to invest in improved digital maturity and AI.

Over the last couple of months, we have further evolved and refined our savings and IT investment road map and incorporated them under the umbrella of the ARYZTA Continuous Excellence program. The focus will be on operations as well as commercial. We will drive efficiency in manufacturing through initiatives such as center lining, waste management and changeover cleaning optimization as well as accelerating the rollout of bakery best practices to our factories. In logistics, our focus is on driving the efficiencies of our distribution platforms and our direct store delivery setups.

In sales and marketing, we have launched a set of measures to accelerate customer and channel contribution. The excellence program is complemented with transversal initiatives, addressing the structural costs by aligning our organizational models, implementing a standardized integrated business planning process and further extending the reach of our above-market procurement organization. The investments into our digitalization road map will evolve the IT and OT capability of the group and will ensure that the benefits of the excellence program are sustainable.

On the next slide, I'll share a couple of early examples of this acceleration of our excellence program, which we have intensified over the last quarter of the year. In operations, we have run a manufacturing optimization pilot project in our Swiss bakery in Dagmersellen and identified material cost reduction potential. The realization of these saving potentials has already started. We will roll out this program further. Germany will be the next manufacturing hub, which we target. Through the alignment of our organizational model, we have identified across the group circa EUR 10 million of gross annual structural cost reduction through the alignment to our predefined organizational models. The implementation of these actions has started and will show its full effect in 2027 as we will have some one-off restructuring costs in 2026.

Our business service center now drives major process redesign and technology rollouts across 60% of our revenue, enhancing controls, efficiencies and scalabilities and with that, positions ARYZTA for sustained profitable growth. In terms of our digitization road map, we continue strengthening our digital core by unifying the ERP and business application landscape, tighter data governance and deeper end-to-end system integration. This is reducing manual work, moving supply chain or improving supply chain visibility and enabling faster AI-supported insights. Next slide. ARYZTA delivered EUR 120 million in free cash flow. Continued strong focus on working capital management, disciplined management of CapEx, which only increased by about EUR 4 million versus previous year and the reduction of total financing costs supported by the hybrid buyback program and increased efficiency in cash management were the key drivers of this result.

Next slide. Our continuous focus on working capital management allowed us to further reduce trade net working capital as a percentage of revenue to 0.2% compared to the 0.7% at the end of 2024. Management of inventory was one of the contributors to the positive evolution as well as continued disciplined collection management. Next slide. We made good progress in strengthening our balance sheet. The solid cash flow supported by the hybrid buyback program and the further improved working capital efficiency allowed us to reduce the leverage to 2.6x. We are fully on track to deliver the targeted levels of our current midterm plan. In addition, our core equity is progressing as planned and represents already 21.1% of the total balance sheet assets. As announced today, we will repurchase the last remaining hybrid on its next interest payment date at the end of April and repay the outstanding principal of CHF 144.3 million. With this, we will successfully conclude our hybrid buyback program and further progress towards a normalized financing structure.

Next slide. Our disciplined and consistent management of financing has delivered strong results. Total financing costs, including hybrid dividends and lease interest amounts to EUR 41.6 million. This is over EUR 4 million better than the lower end of the guidance range for 2025. The hybrid buyback strategy contributed almost EUR 23 million to the reduction of the financing cost and was only partially compensated by higher bank financing interest. Our interest exposure hedging strategy has paid off. Currently, around 37% of our total exposure is covered. For 2026, we expect that our total financing costs remain stable at EUR 40 million to EUR 43 million. Next slide. Return on invested capital is at robust levels with 12.1%. The lower operating profit is impacting the 2025 results. Our invested capital remained, however, stable compared to previous year. Disciplined management of CapEx and working capital have contributed to this.

The 2025 result of 12.1% is well ahead the group's weighted average cost of capital of 8%, creating value for our shareholders. The earnings per share increased by 5.7% to EUR 4.25. The positive contribution from our disciplined financing strategy more than outweighed the impact from lower operating results. The tax charge, as you can see on the slide, was largely stable. Concluding now, we have delivered a robust set of figures in a complex and volatile context. The measures we have taken in Q4 to reposition the company and correct the course towards the midterm planned flight path are delivering results. We have refocused the commercial organization and expect to deliver an organic growth in the low to mid-single-digit range.

Our negotiations with customer are mostly concluded and pricing is expected to be largely flat for the year. We are focusing the organization on operating profit and expect to return the EBIT margin towards the flight path of our 2028 targets. Certainly, our cost discipline measures structured within the excellence program will support this. We expect to sustain strong free cash flow generation for the current year. And end of April '26, we will repay the remaining principal of the last outstanding hybrid bond and further normalize our financing structure. And last but not least, we have validated our SBTi targets and are making good progress in our ESG journey.

Thank you and I hand back to Urs.

Thank you, Martin, for these financial results. We would go now to the Q&A session.

[Operator Instructions] The first question comes from the line of Jorn Iffert from UBS.

It would be 3 quick ones, please. And the first one is on the incremental cost saving program you've announced. Can you give us a little more granularity what to expect net on the EBITDA bridge? And also what's the extent full-time employees to be reduced? Is it going down 1% or 2% or even a little bit more? Just a little bit more clarity here. Second question, if you allow me, why was retail only flat more or less on revenue growth? Isn't there a trend that smaller artisan bakers are disappearing and people going more towards retail? So would this imply that underlying consumption of bakery is not really great in the current environment? And the third question is, please, do you expect a back-end loaded year? Or is H1 already showing us some progress on organic sales and also margins?

Thank you, Jorn. I will start with the cost saving and the retail business then and would then hand over to Martin about the H1 and H2 balancing. This -- the cost saving programs, this Agility to Win and the excellence program, the short to midterm program are in work in progress and in the rollout. So there will be significant savings in the entire supply chain. The numbers for this, we are elaborating. There is already a part of the savings in the budget. We will know and see what the total number is but there is a component as well on the FTEs and you will understand that we will not communicate these numbers. This is always a bit difficult as well. So we are in process to finish this program in Switzerland. The next approach we will take in Germany. This is work in preparation and will start within the next 2 to 3 weeks. So this is the status.

We will again see a significant saving in this numbers. We will not communicate this. You will see this in our results. Retail for the last 12 months was okay. It was a bit up and down but the consumption in retail is solid. The bake-off part in retail is a growing and outgrowing part. There is a bit an impact on promotion or on shifts in the portfolio. But basically, retail remains strong. There is, as you know, a pricing initiative from retail, which is good and bad. The good thing for us is that we are efficient and being able to address this. So we clearly count as well for this year for a solid and slightly growing retail volume. On the other hand side, this is the other side of the coin, quick serve restaurant and foodservice did good in the last 12 months. So this is the nice balancing of our business model. We are in quick serve restaurant, retail and foodservice. So if somewhere is a low-ish trend visible, we can offset this with the other 2 channels we are in. Martin, H1 and H2?

As we have guided for the full year, maybe let me start with the Q4 reset that we have done. So we have taken there clear and strong actions. We have refocused the commercial organization that I have mentioned. We have accelerated the savings and cost optimization programs, structured that, as I presented, under the excellence program and are making good progress. So I would really focus that we are guiding for the full year, low to mid-single-digit organic growth. We are, with all these measures that we have taken, returning towards the flight path of the midterm plan and progress on margins. In terms of cash flow, we have some cash expenses at the beginning of this year for the conclusion of the factory in Perth and the installation of an important cooling system in one of our factories in Europe. And this is impacting our cash flow. So the cash flow as it was in '25 will also be in '26, more H2 driven and probably be at similar levels in H1 as we had last year.

If you allow me one quick follow-up to the first question. Can you just give us an indication what are the restructuring costs you will book in EBITDA in 2026?

Look, what I -- I think I leave it as I mentioned it in the call, we have -- we expect to get annualized savings of these measures of about EUR 10 million. The full impact of this is being impacting positively our results in 2027 as we will incur restructuring expenses in the course of 2026. Overall, we have said that the total contribution from these programs that are now, let's say, under the umbrella of excellence will be EUR 20 million to EUR 30 million net savings over the period of the midterm plan.

[Operator Instructions] The next question comes from the line of Jon Cox from Kepler Cheuvreux.

Congratulations on the free cash flow and the recurring EPS. Just on the free cash flow, you've obviously brought down that trade working capital down to a pretty low level. Can you keep going there? What I'm trying to get to is where the free cash flow could come in this year? Is there a chance actually comes down from what we had in 2025 if you get -- maybe you've already exhausted where you can go on that trade working capital. That's the first question but it's sort of linked as well to this whole capital allocation. And I think I'm not alone. I think some of us were hoping you would come out with a capital allocation policy today given that the balance sheet has now pretty much normalized and obviously, the last -- the final bit will be the hybrid. You talk about this 1.5 to 2x. You've talked about an equity ratio, which is not in the slide.

So I guess that's up for a discussion. But I'm wondering why you can't, at this stage, even commit to a dividend in 2027. Is it because you really want to get down below this 2x level before you start paying a dividend? So that's sort of like a free cash flow capital allocation question. The second question is just on top line. And I'm just wondering, do you think there's anything structural going on in the market? We're hearing a lot about bakery being under pressure in North America with the potential to shift to higher protein diets, GLP-1s, all of this type of stuff. Given the reset, given what you're seeing in retail sales of bakery at the moment, I wonder if there's any thoughts on that. I know you're quite passionate about bread and what it can give you in terms of calories and it's very efficient, et cetera.

And then just a couple of nuts and bolts questions. Just on the effective tax rate for this year, again, you look lower in 2025 than some of us expecting. Where you think the effective tax rate will be? And then also, did you mention that there will be a restructuring charge because I know normally, you guys are very good and including that in your EBITDA? Or are you now talking about a change in policy there you'll actually start to split that restructuring charge out?

Thank you, Jon. I would answer the trend at the market first, giving Martin time to prepare the answers. So you remember Atkins diet, what was it 25 years ago. And then the next one and the next one, same time, the carbohydrate consumption remains stable. In our part of the world, somewhere between 70 and 75 kilogram a year. In Asia, it's even ramping up. At the beginning of our business, this was not even measured. And today, in the markets we are, this consumption is somewhere around 20, 25 kilogram. So there might be impacts and appearances affecting the consumption maybe for a certain period of time or in regions or whatever it is. Overall, we are absolutely convinced that we are in a very good business in a very efficient and effective calorie. The cost of living crisis, let me say it like this, is a good helper for carbohydrate calorie. And the way I did mention at the beginning, we are in -- we have a good channel mix with quick serve restaurants, food service and retail. So we do not see any significant change in the trend. Martin?

On the free cash flow, you have seen there, we have improved our free cash flow, thanks to the support of working capital management, which we have consistently worked on over the last couple of years. When we compare H1 versus H2, we have been able to reduce our cash conversion cycle by almost 10 days. A big part of that is coming from inventory management. And to your question, are we able to sustain continuous improvement? I'm not -- I'm clear we have reached competitive levels. That doesn't mean we cannot further improve. I've mentioned under the excellence program, we have a transversal initiative, which is the implementation of a standardized integrated business planning process. We expect from this improved process quality, a further improvement on our overall inventory management. So the steps are getting a bit tougher but I do expect further improvement of our overall working capital and hence, contribution to our free cash flow.

For the -- for 2026, I would expect continued strong cash flow generation and I would not expect a change of the deliveries that we have been able to bring forward. When it comes to capital allocation, I think we have been very clear that we will come forward with a communication of a capital allocation strategy, which the Board will issue in the course of this year. We have a clear pathway to that. The first step is the hybrid buyback that we just announced and we will execute at the end of April. We have also indicated that we will further improve our balance sheet structure. We'll be working on -- or continuously working on cash generation, which will help us to do so. At the same time, we will diligently work on improving our credit ratings. That's the next step, which allows us to further diversify our balance sheet structure. And we have given a target of around 30% core equity ratio.

We are already, as I indicated in the call, at 21.1%. We have increased this from 15.6% in '24 and we have almost doubled it if I compare to 2023. So we expect this to progress and at the end of '26 to be closer to the 30% than to the 25%. So in that sense, I think we have the pathway set up and you can expect in the course of this year, a communication on this capital allocation and the distribution of capital to the shareholders, be it through dividend or be it through share buybacks. The Board will issue that communication.

In terms of the effective tax rate that you have asked, we are about at the same level as we have been last year. And on the long run, we indicated that we will be in the mid-20s when all, let's say, the losses that we have in the different jurisdictions are consumed. That is the tax rate that you can expect over the long run. Currently, our effective tax rate for the year is at around 20%. The last question, the nuts and bolt question you had in terms of the restructuring. We -- as we have communicated, we will absorb these costs within our profit levels. Therefore, we will certainly disclose what the costs are but it will be within the communicated results. So we're not going to an underlying or a core profitability. You can expect that we continue to result -- the results as they are.

That's right. That's very welcome. So just to push a little bit on free cash flow. So you think there will be progress in free cash flow again this year? And then just -- sorry but back to this core equity ratio, you're saying it will be towards 30%, you think, in 2026. Would you still pay a dividend if your equity ratio is not at 30%?

So in terms of the free cash flow, I think you can expect largely similar levels as we had this year. In terms of the core equity ratio, when you look at how we have progressed over the years, '23, '24 and '25, it is an improvement every year by around 5 to 6 percentage points. So that's why I'm saying, at the end of -- and this is almost like clockwork style. So you look at this and it's step-by-step core equity has increased by 5% to 6% year after year. So you can expect that at the end of this year, we will be closer to 30% than to 25%. In that sense, the Board will come forward in the course of this year on how our capital allocation policy will look like.

There are no more questions in the queue. Now I will hand back over to Urs Jordi for the closing remarks. Please go ahead, sir.

Thank you for joining the call this morning. We will have the opportunity to talk today or tomorrow. I wish you a good day. Thank you. Goodbye.

Good morning to everyone. Thank you for joining. After some opening remarks from our Chairman and Interim CEO, Urs Jordi, the call will then move to Q&A. The key risks and uncertainties which apply to today's discussion are provided on Page 2 of our short presentation. I would now like to hand over to our Chairman and Interim CEO, Urs Jordi.

Thank you, Paul. Good morning, all. Thank you for joining this trading update call today. The purpose of this call is to give reassurance of our performance level is based on our key performance metrics such as organic growth, EBITDA and cash generation. The full year results will follow on March 2, 2026. The audit 2025 is still ongoing.

I invite you now to go on Page 3 of the presentation. The organic growth is in low to mid-single-digit range, supported by volume and price. The EBITDA is north of EUR 305 million. Free cash flow is in the range of EUR 115 million to EUR 120 million. Financing costs, including lease interest in the range of EUR 42 million to EUR 44 million, significantly below the guidance we have given.

On the next Page 10, we did complete negotiations with key customers. This is usually a year-end, maybe in some constellations beginning of the year activity. We did conclude and complete this in a good and expected way. New capacity is ramping up to expectations. You know the investments we did, Germany, Switzerland, Malaysia. We have a new one soon coming online in Perth in Australia. So this is all ramping up according to plan.

Business cost optimization is well advanced. You know our 2 projects, the Agility to Win and the Excellence projects. So we see their progress and effects arriving on our results and business setups. There's an investment in Portugal, which was confirmed. This is basically a burger bun line going online in 2028. This is a good message to have projects in the portfolio supporting future organic growth. Thank you for this. Martin, is there something to add?

Not much from my side. I think probably go now to Q&A and answer questions that might exist.

[Operator Instructions] The first question comes from the line of Jorn Iffert from UBS.

Would be 3 quick ones, please. The first one is on the average selling prices for 2026. You are now guiding organic sales growth, but can you maybe give a little more detail what you expect about the average selling prices? And if you have good visibility on these average selling prices for the full year? Or will there be another round of discussions by midyear, like it was maybe during inflation times and during COVID?

The second question would be, please, on the cost savings. I mean, what have you initiated? And what is roughly the cost savings you could expect to come up in the P&L during 2026 and where exactly is it coming from? And if you allow me a quick third question on the equity free cash flow for 2026, can we expect a similar range like in 2025, so EUR 115 million, EUR 120 million. Is it fair to assume despite the CapEx ramp?

I'll take the 3 questions that you have given. In terms of -- I think it's very important to reiterate what Urs has mentioned in his introduction speech. We have concluded the negotiation with our key customers and therefore, have a pretty good understanding of where the pricing is evolving. And we do not expect a significant impact on pricing in that sense. So organic growth for the coming year 2026 will be supported by volume and mix, and we don't see pricing as a negative impact on our overall performance figure. We will give further details on the guidance in terms of organic growth, in terms of profitability and the usual measures on the 2nd of March.

In terms of cost savings, I'd like to draw your attention to the elements that we have highlighted in the Capital Market Day. These are the blocks, operations, procurement and structural costs, where we have guided for the midterm plan savings of EUR 20 million to EUR 30 million. Urs has mentioned that we have made strong progress on our initiatives. He mentioned excellence, which is primarily targeting operations, and he mentioned Agility to Win, which is addressing our structural costs.

We have indicated that we made good progress in Switzerland already. We have the optimized the structure already in 2025 to a large extent. This is part of why, let's say, we are able to exceed, for example, our profitability figures that we have communicated today. And we expect to further accelerate in operations and procurement. I would be more specific in terms of how these figures will impact 2026 when we come out on the 2nd of March.

In terms of free cash flow, free cash flow performance has accelerated in the second half. And I think this is a state -- let's say, a result of the power of our shared service center. Just like to remind you, we have about 60% of our revenue already covered by the shared service center, and we have made significant progress on standardizing processes. Amongst them is the payment schedules. So we have standardized the payment schedule of these businesses that are onboarded. That has helped us to drive cash performance. We have also made significant progress on improving our inventory management. And these together were the key levers to deliver the cash flow acceleration. We have highlighted as well the fact that our financing costs are below our guidance. This is another element of contribution to the free cash flow.

And Martin, for 2026, can we expect roughly more or less a similar strong cash conversion number I would assume.

Yes. I would refer to our midterm guidance where we have said that in the period of the current midterm plan, we target to achieve a cash conversion -- free cash flow conversion of EBITDA of above 40%. So this is clearly the level we are working towards over this midterm plan.

Okay. And if you allow me a very quick last question. I remember in September, October, you mentioned the environment has changed. I mean has deteriorated. Do you see now the overall bakery environment to have stabilized again if in fact gets the worst over?

I think, let's say, when we look at the overall context, I mean, we are in -- and I don't have -- Davos is currently happening. And I think it's a picture of that we have clearly entered the VUCA world. So VUCA is a reality. We have volatility, we have uncertainty. We have complexity and we have ambiguity. This is here, and I think it is not a question of bakery. It is a question of the whole industry, of the whole economy. And I also like to, let's say, refer back to the point that Urs has mentioned many times before. Bakery is an economic category, is an efficient category from many points of view, is a key element of calorie for the consumers. And I think in these periods, we are a resilient category, and we are not to be afraid of the VUCA environment.

The next question comes from the line of Patrik Schwendimann from ZKB.

Could you please elaborate a little bit more about the current situation in the different channels and markets? That's my first question.

Then second question, what's your best guess now for CapEx for '26 and '27, including now this investment in Portugal? And then finally, what's your best guess now for the net financial costs for '26?

Patrik, I would start with the channels. Retail is a winner of our days. This is visible. So the big formats are rolling out. We are a big participant and a strong participant in this business. This is a tough environment. It was always like this, and it will be like this. And we are playing our good role as we did in the past in the future in this. So this is the retail part.

Quick serve restaurant is recovering. There was a little dip somehow during last year. This is coming back, ramping up on a good track. One appearance of this is investment we can do in Portugal, but we see it in other reasons. As Martin told before, there are always up and downs month-on-month or region on region. But overall, quick serve restaurant is a part of our business, which is clearly a winner in days when price sensitivity is going up.

Our foodservice businesses are doing well. We had a good winter, and we hope we can do winter -- we can finish the winter in a good way. People are traveling, skiing, being on the road. So this is solid. The business model we are offering there in foodservice is clearly addressing the needs in our days. So shortage of labor, the volatility in guest count, the shortage of prereservation.

So we are well positioned there. We are quite optimistic for all these 3 business models, knowing that what Martin has told, we are living in a volatile world, but having a good portfolio. Bakery is the most efficient calorie on our table, not only for breakfast. This is a good place to be. For the other 2 questions, I would hand over to Martin.

Thank you. Patrik. In terms of CapEx, look, I think I would refer to the guidance that we have given also in the midterm plan, 3.5% to 4.5% CapEx as a percentage of revenue. This is clearly the watermark we are using to manage our CapEx spend. Also, we have shown in 2025 that with all the projects we have concluded that we have a CapEx spend that is at quite similar levels that we had in 2024. So we have a track record of proven delivery and management of CapEx. The bakery that we have been awarded to in Portugal is around EUR 40 million, as we have said. This is a bakery that will come online in the beginning -- in the first half of 2028. So the CapEx will be spread over '26 and '27 to a large part, a smaller part in '26, and we are -- we will manage that within the framework that I had mentioned before. So I don't think there is anything to add to that.

In terms of net financial cost, over the last 5 years, we have clearly laid out that the priorities is cash generation, business improvement with that restructuring and continuous improvement of our balance sheet. Diversification of the funding is a strong element. Improvement of equity is a strong element, and we will continue to do that. We have improved our cash management. This all has allowed us to come in significantly below the guidance in terms of financing costs.

We are working on developing the company towards getting an investment-grade rating to access the attractive capital market in Switzerland and further diversify the bonds. So further diversify the balance sheet. So in that sense, we continue to work on driving these measures, improving performance, delivering cash, making the cash used as efficient as possible and with that further optimizing our financing cost.

Just on the financial costs, I mean, it seems now that net debt, including everything, was below [ EUR 100 million ], right, for '25?

We'll communicate our figures in -- on, let's say, exact figures on March 2. As Urs mentioned, the internal -- the audit of the figures is currently ongoing. But I would expect to clearly communicate on the 2nd of March a further improvement of our figures and in line with what I said with our priorities in supporting the deleveraging and further optimization of the balance sheet.

[Operator Instructions] The next question comes from the line of Jon Cox from Kepler Cheuvreux.

I wonder if you can just talk a bit on 2025 organic sales growth. You say you're in line with your target, but you probably have a better indication just roughly would be helpful. As an add to that, you mentioned earlier that pricing for this year is going to be, I'm guessing, flat. Is that what you were saying, like a black 0 or a red 0, something like that in terms of pricing?

And then just on the free cash flow, I'm wondering if you can give us an idea of how much securitization may have contributed to the free cash flow. And also in terms of the CapEx, i.e., was -- where did CapEx come in, in terms of that free cash flow number?

Martin?

I think to your first question, I would really like to go back to the statement that Urs has mentioned in the beginning. The update today is to remove uncertainty around the company's performance post the significant changes that we had in October. We are confirming with this communication that we have exceeded our guidance or met our guidance in all our criteria that we have laid out, organic growth for the full year in the low to mid-single-digit range and EBITDA of above EUR 300 million and the free cash flow as well above of EUR 100 million. So we have given within prudence these figures or ranges, and I would leave it at that.

In terms of pricing, as I mentioned, yes, we have negotiated with our key customers, the contracts. And as I mentioned before, to Jorn, we expect organic growth to be primarily driven by volume and mix in the next year, and we don't expect any significant impact on the pricing side. We will be more specific when we come out with the guidance in March -- on March 2.

In terms of free cash flow, the acceleration of free cash flow, as I said, is strongly driven by working capital. And as I mentioned before, the power of our shared service center is seen in this figure with the standardization of the processes that have onboarded there. Within this standardization process, we have aligned payment schedules of already about 60% of our businesses, and this is a strong contributor to the free cash flow acceleration. The second part, as I also mentioned, is the much improved management of inventory. So these are key elements that have driven. And I mentioned before to Patrick as well that CapEx in 2025 was at comparable levels to 2024.

There are no more questions in the queue. Now I will hand back over to Urs Jordi for closing remarks. Please go ahead, sir.

Thank you for this. Thank you all for joining this short update. Again, the purpose of this call was the reassurance of our performance level. We will have the full year set March 2, 2025, answering then more questions and all the details you did ask today. Again, thank you for dialing in. Wish you a good day. Goodbye.

Thank you very much.

Good morning, ladies and gentlemen, and welcome to this ARYZTA update call. The call will have opening remarks by ARYZTA management and followed by Q&A. This call is being recorded. Now, I'd like to hand over to Paul Meade, Head of Investor Relations, to open the call. Please go ahead.

Thanks, Laura. Good morning, all, and welcome to today's update. I'm joined today by our Chairman and Interim CEO, Urs Jordi; and our CFO, Martin Huber. I would just like to remind everyone that the normal forward-looking statement of risks and uncertainties applies to all of today's discussions. I would now hand over to Urs.

Thank you, Paul. Good morning to everybody for joining this call. You did receive our ad hoc statement today morning. I think the message is understood, and I think we go directly into Q&A, Paul.

That's fine. Laura, can you ask folks if they have any questions on the ad hoc on the announcements, please?

[Operator Instructions] The first question comes from Jorn Iffert of UBS.

Just to double check, can you hear me?

Yes.

Just a couple of questions from my side. The first one would be, please, I would take them one by one, if it's okay. There's a quite significant deviation in the second half EBITDA year-over-year versus your guidance of around, what is it, 10% plus/minus at least. Where exactly is this deviation coming from? This would be my first question, please.

Martin?

Okay. So okay, you want to take the question one by one, fine.

Yes. It's okay, yes.

Okay. Look, I think first of all, we are in a challenging environment and the pace of implementation of the necessary cost implementation measures was slower than expected. And we're now going to focus in Q4 to address that and into 2026 in order to bring them back on track and to bring the flight level of our EBITDA margin towards the flight level that we need for the midterm plan.

We want with that updated guidance on the EBITDA margin -- on the EBITDA, clearly reassure that we are doing that based on a strong position. We are now accelerating these action plans. What we have announced, this is an unplanned event. And we are now going to address that with accelerated pace quarter 4 and onwards.

The statement in the ad hoc is talking about an EBITDA at least EUR 300 million. And as Martin has told, there are cost activities and improvement activities we accelerate now. We need to be faster in this. There is a bit consumer hesitance. As we know from everywhere else, salaries, labor costs are going up. So businesses are asked then to work against this. It's all a question of speed, a race against time. And we will accelerate and increase our speed to improve the business. This is basically the answer on this.

But if I may follow up here because I think it's a quite important detail, which I still like to understand. I mean the EUR 20 million deviation, I mean, can you split this? Whether it is EUR 10 million wage inflation you have not seen? Is it EUR 5 million technical pricing you have not seen? So EUR 20 million is quite significant deviation within 6 months. And I mean, if you can have, maybe a kind of bridge that we can understand, this would be definitely helpful?

Look, Jorn, I think I try to answer this in the following way. We have reiterated our top line organic growth guidance.

Can we go on mute? It's difficult to hear then.

Okay. So I'll restate that. So we have reiterated our top line organic growth guidance in the range of low to mid-single digit. Pricing and volume are supporting this guidance. And we will give further update overall on this -- on our trading update in -- on October 20. Firstly, as Urs said, we are targeting at least EUR 300 million on a like-for-like basis, and we are going to improve and accelerate these cost measures, which were slower than what was expected. And that's what I would like to -- or that's how I would like to answer that question.

Can I ask, are the new lines which are coming on stream, are they currently loss-making due to ramp-up costs?

Sorry, I didn't understand the question, Jorn. Did you ask about the new lines, the new...

Yes. If the new lines in Switzerland, Germany, which is running up in production right now, if this is loss-making initially?

No. No, no. It's ramping up more or less the way we did foresee this. You remember that we have always told that to the maximum usage, we will need something between 18 and 24 months. This is on track. We have good products in the market in the meantime in Switzerland from this line. The same for some bread products in Germany. This is on track. You know that we have a third big project ongoing, which is progressing more or less like planned, which is this burger bun bakery in Perth. This bakery will go online in the first quarter 2026, and this is as well as planned.

It's really the way Martin described. This is -- we are in a new world as everybody else. This new reality is asking for activities -- cost activities and these activities, we have to accelerate. We need to be there faster, more aggressive, and this is what we are doing now in Q4. We increased the pace and the speed towards these actions. This is basically the deviation, the way you call.

Okay. And then the last quick 2 questions. Number one, can you comment on the free cash flow for this year? Can it still be around EUR 100 million with unwinding net working capital? And the second question would be, Urs, are you doing this now for longer? What is your plan?

So Urs is going to answer the second question, certainly. On the cash flow, yes, we are expecting to achieve around EUR 100 million. And as we said, it's at least EUR 300 million on a like-for-like basis, and we are accelerating the cost measures and improvement measures also supported by top line improvement, and that should help us to deliver the around EUR 100 million for the year.

Thank you, Martin and Jorn, the second question, we have now the 8th of October. There are some days to go until the 20th, some weeks to go to year-end. There are challenges outstanding there, and this is the focus we have now. This question we did not answer. The Board took the decision to reinstall the old constellation, and now we are focusing on results and bringing the company to the place we would like to have the company. This is the plan now and everything else is then up for discussion somewhere. Did we answer this, Jorn?

Yes. All good.

Your next question is from Jon Cox of Kepler.

Yes, just a follow-up on that question. Does that mean that you'll be interim CEO for the foreseeable future in the same way when you sort of guided the company through the first stage of the restructuring and turnaround before Michael was appointed? We should expect a similar duration?

Second question sort of linked to that is Michael has only been there 8, 9 months. I guess you guys were overseeing him on a day-to-day basis because I know you obviously have Board meetings frequently keeping an eye on business. I'm wondering why he is the one that had to fall on his thought if you felt that the cost-cutting operations are running slower than expected, this sort of roughly EUR 50 million that you're expecting? Because I'm sure you knew on a week-by-week basis, what was actually happening. I'm wondering if there's any other issues involved. Maybe just personality-wise, it didn't quite work out. He wasn't the guy you thought he was originally.

And then the last question, just maybe following up from Jorn's a little bit on the EBITDA. The Street is expecting you guys to be close to 15% margin next year already. With your reset, it's going to be probably close to 13% this year. Now when you see these resets, even though you've got these cost savings coming through, it can take years to come back. It's very difficult for food companies just to turn on the tap and improve the margin, particularly in an environment we see now where pricing is clearly under a bit of pressure and maybe it's a much more competitive market than it was during that inflationary spiral when everybody was quite rational, maybe people are being quite aggressive with tendering, et cetera.

So really, we should be thinking, I guess, that you have this goal of a 15% margin, I think, towards the end of this next medium-term plan. Should we all just chisel away our margin assumptions for the next year just to be prudent? Or are you saying that next year, you can actually bounce back and get 150 basis points margin recovery in 1 year to get back to where the market was expecting you to be? So there's 3 questions there. Urs yourself; second, Schai, why did he get the boat? And thirdly, just on the EBIT margin question, should we expect it to be pressured for a couple of years to get to 15% at the end of this 2028 period?

Thank you, Jon. Three questions. Let me try with the last one. You can expect that the company is reacting on this. We have a good management team, an excellent Board with specialists. The Board reacted fast on this deviation and decisive. So you can expect that the midterm plan is the midterm plan, and there is a way back to this path, but the management and the entire organization will find its way back there.

You're right, the environment did change, which is good and bad. The environment changed for everybody, and we believe that the survival of the fittest will start to work. We are in a not yet consolidated industry. This will accelerate this plan, and we will be a good participant in this plan. So we will get back. The midterm plan stays as it is. This is the work we have to do now.

Now there is always a journey, a Board and a new CEO to go. In the meantime, a lot of things happened around us, as you described. I believe the Board had time to follow the performance and the activities. The Board took the decision after 9 months. So we have been close. The Board has been close, and that's why a decision was then taken after 9 months and not after 2 years or even a longer period of time.

Now the first question, the duration, I would answer this in the same way like I did with Jorn. This is not on top of my mind now. We are having now a challenge to manage. There is October, so November, December. Customers are looking for support projects, innovations, new concepts. Our customers are challenged as well. So we need to be the best partner in this, supporting them to address all these new realities. And this is the focus now for our work. So we invest brain and power in our business and the rest when the rest is up for decision, not now.

I wonder if I could just follow up. You mentioned about participating in the industry consolidation. Now clearly, that's something maybe the market would have welcomed from a position of strength, everything was going tickety-boo. But now you seem to be saying even after what's happened today with this warning on the EBITDA and the CEO changing that you still want to participate in this consolidation of the industry.

And maybe as an add, the market is still waiting for you to announce you're going to start paying a dividend. I know you've sort of kicked the can down the street and said you're going to make a decision maybe with the full year results. You're saying you'll be able to do the EUR 100 million free cash flow today, is what's holding you back on paying a dividend? Is it really because you see a big deal coming, which you want to be part of?

There is a hot and a co-consolidation. Every day, protagonists are leaving the market, bakeries with 800, 1,000, 2,000 employees. So this co-consolidation is working. As I told before, we are investing in lines. We took these lines online. We are following our customers. So this is the way besides the organic growth and the baseline business improvement to improve our business.

And on the question you raised at the end, the acquisition, there is no statement we do. We focus on organic growth. As we have told, we are observing and following everything which goes on the market. But at the moment, the organic growth and the fitness of our business is clearly in the core.

Maybe complementing on what Urs has said on the topic of the capital or the return of capital to shareholders. I think what we -- I can only reiterate and reconfirm what we always have said. The sequence is the hybrid will be paid back. Once the hybrid is paid back, then the next step will come. And what we have said, we have this around 30% equity ratio. So I think we can stay with that sequence hybrid buyback when we will be envisaging this around 30% and then the subsequent steps.

So we took over the last years always a prudent approach. Hard working, being prudent, and we will follow this path. So the statements we did about the midterm plan in this Capital Markets Day are still in place. Times most probably are telling us as well to remain careful with all we do. We are betting on the right horse. And maybe you can't hear it anymore, carbohydrates are the best calories in our days. This is a very efficient calorie. It's an environmental-friendly calorie. It's a liked calorie. I don't know anybody who does not like bread, and this we will leverage on a day by day-by-day business.

And if the Board, and we believe time is up for an incremental activity, we will test this prudent and then we would let the market know. But at the moment, clearly, the focus is on the day-to-day business to be the good servant for our customers.

Okay. Maybe just a final one -- yes, sorry, go on.

Thanks.

Yes. Maybe just a final one on the, say, day-to-day business. Is it becoming much more competitive that tendering process at the moment, would you say over the last -- since the pricing has been under pressure, the tendering is much more aggressive and maybe this is the issue underlying everything that's happening in the industry?

I did have many discussions with our good colleague, Heiner Kamps. Heiner Kamps is even some years longer in the business than I am. What we are seeing now is normal appearance in this -- in our business. Impact costs are fluctuating. Consumers are one day a bit more in spending mode, the other day a bit less in spending mode. The reaction of the company on this is then the key question. And that's why we told we will accelerate these cost measurements and getting there to a healthy base.

But basically, what we see now is nothing new. We will address this and the bakery calorie will be one of the winners in this. Price pressure was always an appearance in our business. We are not a brand company. We are a private label company. This is a product we are producing, which is compared in pricing from customers and consumers. This was always the case in retail, in foodservice, in quick-serve restaurant. So this is nothing new.

The good thing in this is, and let me repeat this, there are homeworks to do for everybody in the industry, for everybody in the customer landscape. We are doing our homework now, and we are doing this homework a bit faster. And this will be a good, what shall I say, phase for us to get to the next level. It will take time. The road can be a bit more bumpy. This is the actuality now, but this will be a safe and a good journey for ARYZTA.

[Operator Instructions]

And we'll now take our next question from [ Emanuel Spee ] of Whitestone Capital.

Thank you very much for setting up this call. I'm not so surprised about this news. This unfortunately can happen. And of course, we all are very happy how you have led the company before. But my question goes more to the governance. How do you see that? In best practice, it would -- it's recommended to have a cool-off period for the former CEO. How do you see that?

Okay. Thank you for this question. We have very active Board in place. We have committees in place. We have a very experienced lead Independent Director in place, which is invested as well in the company. So believe me, the oversight and the governance of the Board is well, well given. This is, I think, an enormous progress this company did over the last 5 years. It's a good mix between the focus excellences we have in the Board. It's a well-experienced Board and the committees and the checks and balances are in place.

Of course, there are maybe better things than dual roles. But at the end of the day, we are talking about a listed company, which has to perform. This is the key question of everything. So all the aim of governance, of organization, of committee is to secure a strong performance for all of our shareholders. And the Board decided and I fully support this decision that this constellation we are in is the best interest -- in the best interest for our shareholders to address the challenges we are having now and for the coming challenges from the future. The world is not becoming a less challenging one over the next months and years. I don't believe so. So this is the answer from the Board to be -- or to protect the interest of all shareholders.

May I just continue with my questions. I'm very happy with the Board and that you takes the role as CEO again. And I'm looking forward about the opening of the market to hopefully buy more shares. But in the second step, once you will find a new CEO again, how do you see it with the kind of cool-off period that before the former CEO, let's say, you, takes again on the role as Chairman. Is that something you may consider to have a cool-off period before taking again the position of the Chairman?

Let me be honest to you. I'm focusing now on the business today and tomorrow and the month end of October and the discussion we have with our good customers and the business trips we are doing and the entire rest will have a time in a Board for discussion. But at the moment, we are in a business mode, in a fighting mode, there is a picture we use. We change from a cruise ship to a warship. And this is in the core of the thinking and of the activity. This is the only answer I can give to this.

There are no more questions in the queue. Now I will hand back over to Urs closing the conference call. Please go ahead.

Thank you very much for handing me back. There are better days like this in a company, no doubt. But I strongly believe and we strongly believe that this was a necessary change, and I very appreciate that the Board was able and willing to react fast and decisive for the good of the company and again, for the interest of all shareholders. See you or hear you soon in whatever occasion. We will have Q3 result announcement on October 20. And this is then most probably the next moment we talk or we interact with each other. I wish you a good day. Take care wherever you are, and hear you soon. Good bye.

This concludes today's call. Thank you for your participation. You may now disconnect.