Aryzta Aktie

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.

Good morning, ladies and gentlemen, and welcome to ARYZTA's Half Year Results 2025 Conference. The call will be hosted by Michael Schai, CEO; and Martin Huber, CFO. There will be a presentation 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. On Page 2, you will see various risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking outlook statements. I'd just like to draw your attention to that as this is important in relation to all our discussions today. I will now hand over the call to Michael to begin.

Thank you, Paul. Good morning, ladies and gentlemen. It is my pleasure to welcome you to the ARYZTA Half Year Results Conference Call and Webcast. My name is Michael Schai, Group CEO. And with me today is our Group CFO, Martin Huber; and Paul Meade, Head of Investor Relations.

I'm very pleased to announce that we have achieved in a challenging market environment, a solid H1 result with revenue at EUR 1,086.4 billion or a 3% growth versus H1 2024. Our organic growth amounts to plus 2.8%, driven by a healthy positive volume increase of plus 2.1%, which resulted in further market share gain. Our EBITDA delivery stands at EUR 150.5 million, an improvement of EUR 0.7 million versus prior year. In relative terms, our margin comes in at 13.9%, 30 basis points lower than in H1 prior year. Martin will provide more details in the finance section. The free cash flow amounts to just under EUR 30 million, and the EPS stands at EUR 1.84, which is an increase of 12.4%. This takes into account the reverse share split from May for a like-for-like comparison.

We have delivered these solid results over the past 6 months in what was and still is a volatile and demanding market context. The H1 result was supported by a strong quarter 2 organic growth momentum of plus 4% after plus 1.6% in quarter 1. Europe has performed consistently and rest of the world has caught up in the second quarter after some QSR promo phasing early in the year. While headline inflation has come down from its height in 2023, 2024, we still face heightened raw material and labor inflation across many of our markets. The volatility of these input factors has delayed some of our tender agreements in H1, but we have closed all open negotiations now.

While obviously different market by market, the overall consumer sentiment is still subdued with shoppers being less loyal and more price sensitive, which leads to an overall more nervous market environment. The market consolidation is ongoing, as outlined in more detail at our Capital Markets Day early in the year. Our absolute focus remains on organic growth and the fact that we have delivered a balanced volume mix and price growth in H1 confirms our strategy.

The 3 main levers for our H2 performance continue to be organic growth, strong innovation and a relentless focus on cost efficiencies. As outlined at the Capital Markets Day in May, the bake-off segment ARYZTA is active in continues to gain market share. In addition, a baked goods calorie remains the most efficient calorie in an environment where consumer spending is stretched. Innovation, we are holding a consistent high share of innovation, which stands at 18% in the first half of this year. The strong innovation supports organic growth and margin progression and is one of our 4 strategic growth pillars.

We continue to focus on our successful cost discipline measures with the 3 main areas being operations, procurement and structural cost initiatives. Based on our solid H1 results in what admittedly continues to be a challenging environment, we continue to target our 2025 full year guidance. This is organic growth in the low to mid-single-digit range and EBITDA margin expansion versus prior year and the improvement in key financial metrics plus further earnings per share growth.

To round off my section, here again, our midterm targets until 2028, which we have communicated at the Capital Markets Day in May this year. We are fully committed to delivering against these financial targets. As our H1 results demonstrate, our strategy and business model delivers good results in a demanding market environment.

Martin will now elaborate in more detail on the financials of the past 6 months. Over to you, Martin.

Thank you, Michael. Good morning, everyone. I'm pleased to present to you our results for the first 6 months of 2025. In this period, ARYZTA has delivered a robust set of figures. Revenue increased by 3% with a balanced contribution from volume mix and pricing. The good acceleration of growth in the second quarter is reassuring. Significant input cost volatility and the muted consumer context resulted in prolonged negotiation of some of our key retail contracts. This had an impact on profitability in the first half of the year. Although we were able to increase absolute EBITDA versus the previous year by 0.5%, the margin is slightly impacted.

Return on invested capital of 12.9% remained at solid levels, generating value for our shareholders. EPS continues to improve and increase in the first half of 2025 by 12.4%. We made further progress in strengthening our balance sheet versus the comparable prior period, reducing total net debt leverage to 2.8x. We have delivered these results against a difficult economic backdrop characterized by consumers being more and more value-driven, an increasingly competitive environment and significant volatility in input costs.

Next slide. While the start of the year was at the lower end of the organic growth guidance, we accelerated in the second quarter with an organic growth of 4%. This acceleration is supported by strong volume/mix growth and improving pricing, which drove organic growth for the first half of 2025 to 2.8%. EBITDA grew to EUR 150.5 million, resulting in an EBITDA margin of 13.9%, which is a drop of 30 basis points versus previous year. The resilient profit performance was affected by the prolonged customer negotiations and the subdued consumer environment. Proving effects of pricing over the first 6 months and our disciplined cost management programs helped to offset part of these effects.

Free cash flow of EUR 29.4 million is below last year, affected by strong working capital performance at the end of 2024. While we recognize that this result is at the lower end of our expectations, we are confident to generate free cash flow above EUR 100 million for the full year. Slightly lower profitability and stable invested capital has delivered a return on invested capital of 12.9%. This is well within the value creation territory.

Next slide. Within the context of an increasingly competitive market environment and value-driven consumers, our revenue grew by 3% to EUR 1,086.4 billion. Volume/mix delivered 1.8% to this growth, particularly supported by Europe. Key contributors are Germany, Poland, Ireland and the European QSR cluster. The recovery of our Rest of World QSR business also added to this achievement. Pricing improved from 0.9% in quarter 1 to 1% for the first half of the year, supported by Europe. We expect pricing to remain at current quarter 2 run rate, contributing to our performance going forward. FX added slightly to the overall revenue growth, mainly driven by Switzerland, Poland and the foodservice business in Rest of World.

Next slide. Europe had a good start into the year and sequentially improved organic growth from 2% in quarter 1 to 2.9% for the first 6 months of 2025. All channels are contributing to this growth with mid-single-digit growth -- organic growth in QSR and good momentum in retail and foodservice. Apart from the European QSR cluster, our primarily retail-focused businesses in Germany, Ireland and Poland delivered solid growth performance. Innovation continues to be a support to our organic growth in Europe with a share of 18% of revenue, which is at similar levels compared to the previous year. Profitability decreased by 40 basis points to 13.2% due to the input cost pressure and the tender timing.

Next slide. In Rest of World, the first quarter was impacted by promotional phasing. Organic growth strongly accelerated in quarter 2 to 5.4%, closing the first half of 2025 with an organic growth of 2.1%. In QSR, impactful promotions and the continued recovery of the business contributed to these results. High mid-single-digit organic growth in Q2 in our foodservice businesses, supported by innovation and strong growth in Japan brought the foodservice channel to a flat growth in the first 6 months in this region. Overall, profitability in Rest of World improved by 90 basis points to 19.6%. The recovery of the QSR business and the overall strong Q2 revenue performance are the key drivers of this achievement.

Next slide. ARYZTA delivered an EBITDA of 13.9% in the first half of 2025. This result is slightly below the previous year and impacted by the prolonged negotiation time of some key tenders with European retailers and the volatile input cost context with significant inflationary pressure from key ingredients such as butter, eggs, cocoa as well as labor costs. As a result of this, our gross margin decreased by 140 basis points. Improving pricing in quarter 2 and the contribution from innovation as well as cost reductions from our procurement and Simplex initiative of almost EUR 6 million, together with other cost discipline measures addressing the indirect factory cost helped to partially offset these negative effects.

Distribution and SG&A costs delivered 90 basis points margin contribution. It's worth highlighting here that the growth of SG&A cost was well below revenue growth, generating 60 basis points of this improvement alone through operational leverage. All of these measures maintained the EBITDA margin of the group at robust levels and allowed ARYZTA to continue investing in our long-term efficiency initiatives such as the ERP rollout and the expansion of the business service center in Poland.

Next slide. Our cost discipline measures are and will continue to be an instrumental part of our overall value creation framework going forward. As communicated in the Capital Market Day in May, we expect to deliver EUR 20 million to EUR 30 million net savings by 2028. Key parts of these cost discipline measures are our procurement and Simplex initiatives, which have contributed almost EUR 6 million cost optimization in the first 6 months of 2025 and the structural cost initiatives.

With this program, we will drive simplification and standardization in our organizational setup, focusing particularly on those businesses which are already supported by the business service center and are SAP based. We expect to gradually ramp up contribution from these measures in 2026 onwards. In order to harness the benefits of these cost discipline programs, we are progressing well with the rollout of our ERP and IT applications road map. The [ S4 ] rollout in our Fornetti business in Hungary is on track, and we plan to address Pr Pain and Mette Munk by 2026 to bring them on the group ERP platform as well.

Next slide. Free cash flow of EUR 29.4 million for the first 6 months is at the lower end of our expectations. Working capital contribution to free cash flow was negative. This is primarily driven by the strong improvement of working capital at the end of 2024. The reduction of financing costs more than offset higher cash taxes and mitigated part of the negative working capital impact. A slightly increased EBITDA and stable CapEx corresponding to 3.7% of revenue did not have a significant effect on cash generation versus the previous year. Supported by our continued improvement plans in place to working capital, we are confident to deliver a free cash flow above EUR 100 million for the full year.

Next slide. Overall, ARYZTA continues to improve the efficiency of working capital management. The 5-quarter average of trade working capital as a percentage of revenue which is our long-term trend indicator, has further improved to 0.2% in quarter 2. Continuous focus on improved inventory management and standardization of payment terms will allow us to further drive efficiency toward year-end and support the overall cash generation of the group.

Next slide. We continue to make progress on strengthening our balance sheet. At the end of June 2025, our total net debt, including the hybrid bond decreased to EUR 886 million. This improvement is supported by solid year-on-year cash generation and our strategy to reduce the hybrid funding. The resulting leverage ratio has reduced from 2.9x in H1 '24 to 2.8x in the first half of 2025.

Next slide. Our strategy to deleverage the company and to optimize the overall financing cost is driving consistent results. Financing costs reduced from EUR 33.5 million to EUR 22.3 million in the first 6 months of the year. The repayment of the hybrid bond in October 2024 is delivering circa EUR 14 million of this optimization. Higher bank financing as a result of the hybrid refinancing strategy and an increase in lease interest is compensating EUR 2.7 million of the hybrid interest optimization. For the full year '25, we confirm the guidance for the financing cost range of EUR 46 million to EUR 50 million.

Next slide. The continued disciplined CapEx and working capital management maintained invested capital stable versus previous year. The somewhat lower profitability impacted ROIC slightly with 12.9%. We maintain a healthy level of return on invested capital and contribute to the value creation for our shareholders.

Next slide. Our earnings per share increased by 12.4% to EUR 1.84. This is another double-digit EPS growth on top of the achievement in H1 2024. Our financing strategy and disciplined financing cost management strongly contributed to the overall EPS growth. This has more than offset higher taxes and slightly lower operational profitability compared to H1 2024.

Next slide. We recognize that the market context has become more challenging due to a more and more value-driven consumer, an increasingly competitive market environment and further input cost volatility. Considering these updated situation and as Michael highlighted before, we continue to target to deliver a low to mid-single-digit organic growth, supported by both volume mix and pricing. Our focus on innovation and the contribution from our cost discipline programs will provide the means to improve our key financial metrics year-on-year. And we are confident to deliver a free cash flow above EUR 100 million and will further strengthen our balance sheet. Thank you, and I hand back to Michael.

Thank you, Martin. I'm now passing back to our operator, Laura, and open the floor to the Q&A section.

[Operator Instructions] The first question comes from Andreas von Arx of Baader Bank.

I have 3 quick ones. I guess I go through them one by one. First one is on the net working capital. I mean, historically, net working capital has been negative, respectively, slightly flat -- respectively flat without the debt securitization. Now that you are, let's say, a normal company with normal development, do you think when you grow going forward, you can grow with a stable net working capital? Or will you be a typical food company where higher growth will lead also to continuously higher net working capital needs? That's my first question.

I'll pass this straight on to Martin.

Andreas, thank you for the question. We certainly have, over the past couple of years, done some significant improvement on working capital management, which was clearly visible there in the presentation of the 5 quarter trade working capital percentage of revenue. This is to normalize, and we expect going forward to have more stable working capital evolution. We believe that we still have opportunities to continue improving the efficiency of working capital and that this -- with this manage the effect of the increasing growth. I would refer to probably the most single biggest lever to further improve is our overall business planning efficiency, which is a more longer-term measure, where we believe that we have some further opportunities to manage growth and working capital evolution in that sense.

I might have missed it, but could you remind me what was the euro impact of that delayed price negotiation in the first half? Are you able to quantify that? That would be my second question.

The euro effect of the delayed -- I think -- look, I think I would keep it as we communicated. We had, on one side, the impact of the delayed negotiation of some key European retailer contracts, which, as Michael said, are now all closed and finalized. We have, on the other side as well, our cost discipline measures. Just to reiterate, for example, the contribution from our procurement initiatives and Simplex, which delivered around EUR 6 million of cost optimization. This helps to balance the effect. And then you can see also in print, the quarter 1 pricing and the quarter 2 pricing there an improvement. And this has also been another measure to sort of compensate part of these effects that we have highlighted.

Okay. My third question is, I mean, you had your Capital Markets Day in spring. I guess you also then had a lot of talks with your shareholders afterwards. Would you be able to summarize maybe a bit your discussions with what your shareholders think with regards to the priorities of cash usage of dividend, hybrid payback, net working capital securitization reversal and fourth buyback? How do your shareholders seem on average to think what the priority should be?

Thank you. I think we had -- indeed, we had a couple of discussions with a broad range of shareholders representing a relevant share of our investment. And the strategy that was presented in the Capital Market Day in May was well understood in terms of the ambition, in terms of the focus and also in terms of the evolution of the results. And as a consequence, the timing and the sequence when we will come back and communicate how we intend to distribute capital to our shareholders, be it through dividends or be it through share buybacks.

The sequence, I think, is also well understood that the first one to address is the hybrid buyback. We have reiterated that we aim at a core equity ratio of around 30%. We said that this is not a hard target, but that is the direction to move towards. When you see also our core equity has significantly improved versus H1 '24. So we're making good progress in this direction. So in that sense, I think it was -- the strategy communicated was clear, well understood and shareholders see it relevant for their case.

Your next question is from Patrik Schwendimann of [indiscernible].

Patrik Schwendimann from ZKB. What was the contribution from the new lines in Malaysia and Switzerland in H1? And would you expect here a higher contribution from these lines in H2? That's my first question. Then secondly, could you please explain the volatility of the payables and why you are positive that this factor will rewind in the full year? And then maybe 2 housekeeping questions. What's your best guess for the tax rate for the full year and the future? And what's your best guess in terms of depreciation and amortization?

Thank you, Patrik. I'll do the first one in relation to our new lines in Malaysia, which we started late last year and then the new line in Switzerland, which went up in March, pretty much at the time of the Capital Markets Day. And then there's another one literally being ramped up as we speak. All the 2 lines plus the third one that's coming online are well on track. There's no delay in timing. As we always communicated, it takes about 2 years to fully utilize the line. And we do not communicate on individual line utilization as such, but both the Malaysian and the Swiss line are really exactly on track and ramping up those volumes. And as they ramp up, they will clearly contribute more, in particular, also to our innovation agenda in the second half of this year.

And for question 2 and 3, I'll pass it on to Martin.

That is just a question -- just so I make sure I heard you back correctly. So working capital question, the tax rate question and depreciation and amortization question. Is that correct?

Yes, correct. And for the net working capital specific for the payables because we have seen high volatility there, yes.

I think overall, when you see -- when you -- refer back to that 5-quarter average trade working capital chart, there is a consistent evolution step-by-step towards the result where we are. So there is -- there might be volatility in one quarter to the other, but comparing overall working capital evolution quarter or June '24 versus June '25, I don't see major variation. There might be a variation in between the different levers. But as a total, I don't see a major variation.

We have had, and I reiterated that with the answer to Andreas before, we have had significant improvement over time and improvement is becoming now, let's say, more difficult to achieve on one side. On the other side, we are now starting to focus on maintaining a level that is at similar levels of percentage and absolute amounts for the period. So I think we are on track. We have additional measures, as I mentioned before. Some are more long-term effects like the planning efficiency improvement. Some are more shorter term as the ones I mentioned during the presentation.

Tax rate, we are in the progress of normalizing. We're not yet at a normalized tax rate. You see higher tax charges in Page 125. This is mainly driven by the fact that we have continued improved profitability in our businesses, and we are getting to the end of the consumption of accumulated losses that we had from previous exercises.

So therefore, we are -- and we said our long-term tax rate is somewhere around 25%. This is -- that's also what we are using for the ROIC calculation. And I would leave it at that. Depreciation has increased. That's part of the effect of some new lines being commissioned. And I think when we look at going -- at the rate going forward, you can probably expect a similar rate as a percentage of revenue as you have seen here in H1.

And your next question is from Jon Cox of Kepler Cheuvreux.

A question from me, just on the margin. Obviously, a 30% decline in H1, and you're talking about conditions getting worse well, in terms of the consumer environment plus increased competitor intensity. Just wondering what your thoughts are for the full year. You've talked about EBITDA margins still going up. How confident are you on that? What levers do you have?

And I'm wondering, given the fact that you've given up a bit of margin, but you've got maybe market share gains in H1, should we anticipate this is likely to be more of the strategy going forward, i.e., a focus on top line and if push comes to the shove, you would rather maybe give up a little bit of margin. And just a point of clarity, on the pricing, you talked about the run rate being similar. I guess you're talking about around 1% pricing for the H2.

Thank you, Jon. Maybe just one clarification from my point of view. I do not foresee that the market environment deteriorates. I think what we call out is that, in general, it is a more nervous market environment. But I think, again, as we always said, in the baked goods area, the baked goods calorie is a very efficient and a very cost-effective calorie. So I do not foresee that the market significantly changes or additional headwinds. It was more in the context that in general, probably the FMCG and food and drinks market is in a bit of a more nervous state.

To your point on full year guidance, we clearly target to deliver what we said low to single mid-digit organic growth and an improvement in all key metrics that does include EBITDA. I think what gives me the confidence for the second half is when you look at the acceleration of our organic growth quarter 1 at 1.6% now into quarter 2 at 4%.

And if you look at current trading, I have no reason to doubt that, that momentum we have gained as new capacities come online, as innovation have been introduced in the market is a baseline we can count on. And Martin has shown also the improvement on pricing. There's a slight improvement. And now that we have closed all open negotiations that we had, in particular with retail, that also provides us with sort of a higher flight level for H2. So clearly confirming that we continue to target our full year guidance, both top line and bottom line.

And to your second question, whether we would, I guess, focus maybe more on market share gains versus profitability. I think what ARYZTA has consistently done over the last 3.5 years is have that healthy above-market growth, but delivering year-on-year profitability improvement. I have no reason to change this and either sacrifice margin for market share gain or lose market share gain to optimize the margin. I feel confident with the 3 channels and the 2 geographies that this can go hand-in-hand. And as we showed at the Capital Markets Day, obviously, the big jumps are 50 and 100 basis point improvements of the past, that is not realistic. But beating the market and delivering a year-on-year EBITDA improvement, I feel confident about.

[Operator Instructions]

I think time-wise, we are pretty much there. I'm just looking at Paul, whether we have time for one more. One more.

Your next question is from Marti Queral of UBS.

For 2025, you're guiding for an EBITDA margin above last year. So that is above 14.6%. What will drive this margin improvement in H2? Is it more pricing? Is it more SG&A efficiencies? Some color here would be appreciated. And my second question also, if I may, is on mix. Why is it still negative in Q2 when innovations accounted for around 18% of sales?

I'll probably just follow up on my elaborations with Jon around H2. I think the 3 levers we have for H2 is the acceleration of organic growth and the momentum we had in Q2 and taking now into the second half year that gives us clearly operational leverage. If you also look at normally H1 and H2 over the past years, H2 from a volume and revenue perspective has always been the stronger year so that there is a natural, I guess, improvement in H2.

The second one is innovation. We have achieved in H1 innovation of 18%. That is a building block for our organic growth, but it's also a building block for margin improvement. As Patrik has asked on the new capabilities and capacities that came online in Malaysia, Switzerland and in a week or 2 in Germany, that again helps us on a top line perspective, but also from a margin building block.

And then the third one, Martin called out, we had in H1, EUR 6 million, I guess, cost savings or efficiency gains. And we do foresee again that, that momentum will increase as those projects in operations, procurement and structural cost initiatives basically accelerate and are rolled out to all the markets. So this organic growth momentum that we have, a strong innovation pipeline with new capacities and capabilities coming online and this relentless focus on efficiencies and cost discipline gives us the confidence that we continue to target the full year guidance.

And then there was a second...

I think there was a question... maybe just building on what Michael said in terms of innovation on the mix question you called out. While, yes, innovation, just to reiterate, is a key driver of organic growth and is margin accretive. We had some softness in the foodservice channel, which is impacting the mix in that 0.3% that we have reported for H1. We -- based on the plans we see, based on the forecast we see, we expect mix to turn towards neutral to positive for the full year. So I think that's kind of a temporary effect that we see there.

Thank you, Marti. That concludes our Q&A, and I'm passing back to Laura.

There are no more questions in the queue. I will now hand back over to Michael Schai for closing remarks. Please go ahead.

Thank you, Laura. Ladies and gentlemen, thank you for taking the time on this very beautiful summer morning here in Zurich for the ones that are based in Switzerland. Thanks for taking the time. Thanks for your questions. We look forward to discuss over the next hours and day or 2 in more details with some of you. And thank you for your interest in ARYZTA and wishing you a great week. Thank you.

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.