Barry Callebaut Aktie

Great. Well, good morning, everybody, and thank you for joining this session. And we're very pleased to have on stage Hein Schumacher, Chief Executive of Barry Callebaut, especially on this important day when you've released your strategy announcement this morning. Perhaps before we get into the details of the strategy, perhaps you could tell us about your first 6 months in the role.

Your appointment was made in January. What was your perception of the business as you started? Why take this role? And how did you go about appraising the challenges that the company faced?

There's quite a few questions in one go, but...

I do keep doing that.

Yes, let's get started. So maybe to start with, why did I take the role? I mean, I have a foods background. I love global foods. And there's only a very few companies in the world that have sort of that end-to-end value chain. But also -- and I think this is super important that have a very deep expertise in what they do and that are truly global in nature. And obviously, I have a CPG background, a branded background. So for me, the new leadership opportunity was the business-to-business side of things. And so those were probably the 3 biggest reasons.

And I felt that this was a company where you can really make an impact. The company, and that's sort of a segue, I think, to this other part of your question, the company has been under pressure over the last couple of years from a number of things, a perfect storm.

One very fast-growing cocoa prices. I mean, literally, it shoot up almost 5x to the historical average which obviously, you're all very well aware of. Secondly, a few big quality incidents in the large sites of the network, and that hampered customer service. And thirdly, the company went on a massive transformation.

And if you do everything in one go, that had an impact on the people, had an impact on the organization, had an impact on service delivery, had an impact on stability. So I felt this was an opportunity to potentially make a difference. And I think the first impressions over the last 6 months were sort of in line with what I expected.

There is a deep expertise. There are good foundations. There's a huge opportunity. I feel, for the medium and the long term, for sure. But at the same time, we had to get a few things right to strengthen our basics, strengthen the fundamentals and making sure that we do the things that our customers expect us to do.

Thank you, Hein. And so looking at the business now after that period of discovery, perhaps we can walk through your assessment of the business as it stands, and then you can talk us through the focus for growth strategy announced this morning.

If we divide that assessment maybe into people and culture, the infrastructure and the go-to-market, starting with people and cultures, you say, been significant external volatility, but also a very high number of internal initiatives aimed at improving performance and also cost savings.

Presumably, that can take a toll on an organization. So how would you position the morale currently? And was it a place you think where people who were outperforming actually got recognized?

I would say when I arrived with everything that I sort of talked -- that I just talked about, I think it was a bit of a fatigue factor in the company, and I felt it. Many initiatives that had to be done and we have a high attrition level overall, which is something that we talked about.

But at the same time, this is a company, we are selling joy, right? I mean this is joy and indulgence and it's a very global company. And I felt that in the conversation with people, the opportunity that we have, and which is what we talked about earlier today, the Focus for Growth program to charter our own course.

And I involved immediately 30 leaders from around the globe, not actually my direct reports, but below. And we did that exercise to handpick them and with that group, we designed that Focus for Growth action plan that we talked about this -- earlier this morning in a video message. So involving people, making them part of the journey, doing this collaboratively and co-create the way forward, I think, was felt as a very positive step forward.

So in every organization where you come in, there is a certain culture and so forth, but I think there's an opportunity to quickly put everyone and get it in the right direction. So I feel there was a lot of enthusiasm and passion in the business but it needed to be unleashed. It needed to be unlocked a bit. And I think that's sort of where -- that's probably where we are on the people side.

I think second, on the infrastructure side, as I said, I think there was an immediate opportunity to strengthen fundamentals. I felt that the customer service process, our planning process, our quality assurance process, we're not as robust as I would have liked to see it. So I want to be very upfront about that. But at the same time, with a high operating focus and requiring discipline around those, I think we are making progress. It's not a silver bullet. It will not happen overnight. We need a bit of time which I talked about at the end of our second quarter.

Hence, we also changed our guidance for this year. But at the same time, I feel that we're making rapid progress now. And I think it's a matter of, I would say, towards the end of the year, and we should get that stability, right? So that's on the processes. I think the second one is on stability in the network. The network was very aimed at closing sites in the last couple of years to reduce cost, and that's a wonderful thing. But at the same time, you need to service your customers.

So what I'm very focused on is, first of all, to get the right capacity in because the customer and the consumer has evolved over the years. For example, customers. I mean, it's bifurcation that you're looking -- that's pretty global, and we're seeing it in chocolate too. Affordable solutions, then that means cocoa coatings and compound solutions and premium solutions. So dark chocolate, specialties, et cetera, et cetera. And our network was not -- was very focused on the mainstream. So we had to make some changes. And that's what we're doing now tactically to make lines more flexible, so they can either produce those compound solutions or the full solutions.

But we also had to invest in capacity, and we had to cut through a couple of knots quickly. So -- which was also announced this morning, it means a significant investment in Northeast U.S. It's a place called Pennsauken. It's a significant investment in Canada, and we announced the planning or the building of a new site in the Midwest. So North America, which is about 23% of our volume, I wanted to absolutely prioritize that, make sure that that's where the money goes and revamp the network there, but it was needed. So that was the infrastructure part. You had another one.

Yes. Well, it's on the go to market. Yes. I mean, I guess when we think about the digitization of the business or sometimes a perception at the level of investment required to fully modernize, Barry hasn't perhaps been made. Is that fair at all?

Yes. I think that's fair. I think we had an opportunity on digitization and the use of AI on 3 areas, one in R&D, but I'll talk about that later. But the most important one for us is, I would say, in the planning and in the customer interaction. So do you know what the customer really wants, where is the signal? And how can you have your supply chain cater for that? So I think that was opportunity one.

Secondly, it's in our Gourmet segment. So that's our premium -- most premium segment. And we inspire chocolate making and recipe making around the world. We're by far the global leader on that but we do that through chocolate academies. We have 20 of them around the world, but we had an opportunity to digitize that and not just inspire on recipes, but also convert into e-commerce. And that still -- it strikes me, given the experience in B2C, but it's still at a relatively early stage. And that's -- I believe it's an area where we can lead, and that's where the investment in digital now goes.

And what would be your assessment of the way, I guess, you've sought to maximize those growth opportunities before? I mean you've sort of alluded to perhaps a lack of rigor perhaps in the planning and assessment of those opportunities. I guess, how quickly will that change? And in terms of the sort of oversight and accountability, how you'll actually be getting the reports and the MIS systems? Is that something that's going to change internally?

So what I saw was an organization that was pretty hybrid in its execution. So we had people managing the commercial operations in the regions. So we are a food company, and I believe, therefore, a regional focus or having a regional way to conduct your business is the right choice to make. It's because the way people consume chocolate and use chocolate in North America is different than in Asia, it's different than in Western Europe, it's different than in Latin America.

So I want to steer the business really on a regional basis. We have defined 5 regions, and that's where the P&L should sit. That's where the resources should sit. And as a function, global functions, they have a very important role to play on the how, on planning processes on what tools to use, et cetera. So there is clearly a value for the company, but we needed to get that clear. That wasn't clear. So it was quite matrixed and I feel that bringing that clarity now is super important. That was one.

Second, the world was our oyster, and that's a good thing, but we've now defined 10 markets that are more than 2/3 of our volume and definitely more than 2/3 of our profit. They get the first call on resources. So when it comes to solidifying planning, for example, and service, first U.S. I was very clear -- that is number one.

Secondly, 4 countries in Western Europe and then thirdly, 4 emerging markets. And I think, look, choosing is not losing. I learned that the hard way across my -- over my career, but you need to -- yes, to make it explicit and then -- and then organizing coherently your resources behind those choices that usually takes a little bit of time.

But I feel it's happening. By the end of our fiscal year, which is by the end of August, I believe, we will organizationally be in the right place.

Thank you. Well, let's move on to today's announcement, in particular, then. So in your own words, how would you like to give an overview of the Focus for Growth Action Plan that you announced and its key elements?

Yes, sure. So I would say 3 things. First, relentless focus on these fundamentals that I talked about. We had customer service on-time in full rate on our important segments below 80% last year. That needs to be -- now to customers that need to deliver 95% or 98% to the retail. So we just simply have to step it up there. So that for me is priority #1. It's a bit brilliant boring basics, but you simply have to do it. So I think that's number one.

Number two, we are -- we've made a clear choice to do what I would call everything chocolaty. So that is full chocolate solutions, compounds and coatings, but also chocolate replacement opportunities, and that includes sunflower experiments that we're doing on a global basis as well as cell culture. So we really want to lead that. So that's two.

Third, we are making a clear shift towards premiumization. If I would add up the Gourmet segment, which I just talked about, plus Specialties plus some of our premium powder solutions, at the moment, it's just shy of 1/3 of the volume of the company already, but that's where we can make a difference, both in profitable growth as well as in absolute growth. So a clear shift to premium and be intentional about our resources.

And then finally, point number four, in those market segments, in those 10 markets that I talked about that we believe are attractive and that's not only chocolate confectionery, but think of the use of chocolate as an ingredient, in ice cream, in protein bars, in pastry snacking, provide a more holistic solution to the customer so that we become a one-stop shop for them. And that includes everything chocolaty, but that can also include a specialty like a decoration, a filling, which we already have, but we didn't -- we weren't intentional about it, and I want to scale that up significantly.

So for ice cream, for example, for ice cream, we're working with 10 out of 10 of the largest ice-cream companies in the world. And I think with everything that I've seen in the company, we can sort of provide that holistic solution filling, a decoration and caramelized nut solution plus the chocolate side and that is very attractive if we get that right. So those are the 4 elements.

Okay. And obviously, given an assessment of the categories, and you've sort of outlined the geographies where you intend to allocate the majority of your resources to. Are there any areas of the business that you'd consider exiting where you can't make the required return?

So when you list those specialties that I talked about, for example, I think we need ultimately around 6 or 7 type specialties, so chunks, baked inclusions. So these are, for example, those and so forth. The caramelized nut solutions that I mentioned, one shot fillings for ice cream. That's a list of around 6, 7, roughly. And I would say, at the moment, in the periphery of the company, we have around 25, 26, and that clutters the company, and that requires an adjustment in the portfolio. Those are not huge in terms of volume but they require attention.

They require CapEx. They require people. They require processing. So there we need to make a choice and we will.

The company has been through a number of costs...

By the way, just Tom, before I go, because I think also that differentiates us a bit versus the competition. There are -- without going into all kinds of competitions, but there are -- and then one of the companies is actually currently for sale, but they would be a specialty solutions provider for around 30 or 40 different specialties, all very small and so forth. We do need to provide a certain scale to things. So that's -- we need to make choices.

At the same time, we're not a trader. We are a company that is truly end to end. We're putting our emphasis on the value-added side right now, but then you need to choose on what you can do in a bigger way.

Okay. And so if we look at the cost side of the business, as we said, there've been a lot of initiatives before, a lot of cost initiatives over the last few years. There isn't a cost saving target as part of your profitability targets.

Where is the productivity going to come from going forward? And can you still make these productivity savings without affecting your ability to supply your customers?

Yes. Look, I mean, first of all, we didn't specify a productivity target as such. I mean, on cost, however, we did say -- I mean, on the medium term, but also on the shorter term that our -- we expect profit to grow ahead of volume, right? So you do need leverage in your P&L. And I feel that we can do that. If you look over the last couple of years, the company has invested also CHF 250 million in extraordinary items or one-offs. I expect that level to be way lower going forward. So that's, I think, a remark number two.

I think three, I feel that the current cost base that we have is mostly served by growing in the areas that I talked about, the 4 things and we need to shift resources behind those things first. And I felt that announcing now a major global restructuring after the last couple of years that I talked about was not the right message to -- in the company. And we first need to make sure that we resource the priorities in the right way. After that, of course, you can never exclude it, but it wasn't part of the plan as such today.

Okay.

We don't expect -- I also don't expect major cost increases. We talked about capital expenditure. We were at a level of CHF 300-ish million. We're ramping that up probably to CHF 350 million and on an OpEx level, I'm very keen to get inflation compensated by productivity. So that's all in the plan, but not a major restructuring.

Okay. So in terms of the priorities for investment through the P&L, obviously in your presentation, you give a red box that says investments, but that's the -- that's not quantified at this stage in terms of the incremental OpEx that you can spend?

Well, as I said, on the capital expenditure, I think we're pretty clear and that's the step-up that we're going to have to make. On OpEx, I feel that with everything there, whether it's digital, but also whether with the plans that we have, we can -- we should be capable to drive net productivity ultimately in fixed costs which would be a trend change already. But -- and as I said, this is also not a plan for a major restructuring or a major step up in OpEx.

I feel it's a shift plan. People are doing too many things, have been doing too many things. Investments as a result, get diluted. And I want to bring clear focus in everything that we do and bring consistency in our performance.

And in terms of -- you mentioned obviously the higher CapEx investment that you're putting in to support the growth in the 4 key areas. How do we -- should we think about whether you're actually building out capabilities that you already have or that you're actually having to build muscle in areas that you don't necessarily have now?

Yes, I think to give you a statistic, our network at this point is capable without going too technical, but 35% of our lines, they can sell cocoa coatings or switch back to real chocolate solutions. And cocoa coatings tend to be more affordable, right, because cocoa coatings in combination with oils and fats are an important ingredient list for many of our customers. But interestingly, when the cocoa price, which is around now GBP 3,000 per tonne, when it drops, so when it's higher than that, around GBP 3,500 or something, then these cocoa coatings become a lot more financially interesting.

When we're at the current level, that's sort of an inflection point and people do prefer taste and do prefer the more premium solution and they tend to go for chocolate. And we can talk about that and say, well, we like this or we like that. I'm taking a fairly pragmatic approach. And I'm saying, hey, we need to bring that chocolaty experience. And that means I need to have lines that are flexible. And we need to increase that flexibility and agility. So a 1/3 of our lines can do that in our important geographies, but I feel we still need to have a -- we can still make a step there.

Secondly, on the specialties, as I said, we have -- for example, we have baked inclusions, which are super popular on ice cream. And they have been out of stock because the demand has been there. We have a supply point in Europe. We've got a supply point in India, wonderful, but we need to step that up in other markets. And I feel that, that's something that we need to be faster on.

When we see those trends happening, okay, that -- caramelized nuts, we produce in Spain, wonderful solutions in combination with chocolate and particularly chocolate that performs great when it's frozen in ice cream again.

That combination is golden. All right, great. How do we move faster? And I feel that's something -- that's a muscle that we need to build up. And that will take a bit of time, but I feel those are probably the 2 changes that we need to bring.

So there's a lot of aspects that we've spoken about. So perhaps if we bring that together to the targets that you're setting, the phases of the plan and the time frame in which you're looking to deliver those outcomes. You're targeting 2% to 4% volume growth margin -- on the margin side, mid- to high single-digit EBIT growth and low teens PBT growth with the impact of lower financing costs as well as cash flow, CHF 300 million to CHF 400 million. What are the key phases of the plan and the milestones that we should all look for delivery?

So -- so first of all, that's a medium-term algorithm that we feel can -- is feasible in combination, by the way, with 11% to 13% ROIC as well as a leverage in a company that we -- that should get us to a safer level than where we were a few years ago, and I think that's ongoing and going in the right direction, but it's a medium-term outlook. In the short term, we've guided towards a volume growth for the next 12 to 18 months, that is not 2% to 4%, but around 1% to 3%.

Now what's -- first of all, what's driving that? First of all, we've seen 50% price increases over the last 3 years. And we need to see prices come down, and we need to see the consumer responding to that. I am positive that, that's happening because we've guided for this fiscal year, for the second half of our fiscal year towards volume growth already.

And that's with all the knowledge that I have today, that is indeed coming through. And we expect that to continue to some extent next year.

But of course, it will depend on the pricing and how consumers are responding. So I would say, I just want to be a bit cautious on that one in combination with higher fuel costs and disposable income and so forth. So that's one on volume.

On profit, we expect -- also for the shorter term, we expect profit to be ahead of that volume, but I want to be careful as well. We are making investments in our capabilities that I talked about. We need to step -- step up fundamentals. We have things to repair. So I just want to be a bit cautious.

We have a cost headwind on the fuel side, particularly in logistics, which is an important part for us. And I feel that we're going to make steps. But -- and the steps will be also the profit before tax actually will be ahead, I expect, in the shorter term will be ahead of the midterm algorithm because of reduced financing costs that are coming through to a faster extent than what we anticipated, which is all good. But I want to caution to great expectations on margin development per se.

Okay. And in terms of a definition of medium-term or milestones, I mean, is there anything you can sort of say about what medium term means, I suppose?

You can say around 18, 24 months, you should get to a medium-term type of view.

Okay. If we link this to your mission to be a reliable and innovative global leader, how do you think about the balance between wanting to get that volume growth and the positive benefits of operational gearing and wanting to provide a more consistent solid foundation to that growth?

Yes. I think the world is -- I mean the world in what we do is changing a bit. So -- and we talked -- I talked about it this morning in the Q&A as well. The chocolate confectionery market, from what I can see versus the past is not growing to the same extent.

As I said for the short term, but I feel overall will be sort of between 1% and 2%. That's lower than probably what it historically -- has historically been. But I feel that chocolate as a very versatile ingredient is used in adjacent categories that are super interesting, ice cream, which I know from some experience has been growing and will grow, I would say, between 2% and 4% roughly.

Snack occasions, such as protein bars and where chocolate is the preferred -- by far, the preferred taste and ingredient, will grow faster but also pastries will grow faster. So the second thing that we need to do is to move in those adjacencies and therefore expand our addressable market more intentionally. And then third, as I talked about, our service. Look, I feel that stepping up the fundamentals is arguably our best lever for growth right now.

So your question, look, I think this is the 3 things that we need to do, and that will give consistency over time, but we do need to build that machine. And as I said, I'm not asking here for everything long term. I say, 1% to 3% volume growth in the shorter term, profit ahead of volume and PBT somewhat ahead of the midterm guidance because of the particular dynamics around financing costs. But at the same time, we do need to build the machine and that is not an overnight exercise.

And you've very clearly introduced more oversight and accountability at organizations in your -- you've been in charge of in your career. What can you say about the degree of rigor to that, which will be brought to Barry? And will that affect the rewards and incentives framework that the business operates in?

Answer is yes. So as I said, I felt the organization is a fairly matrixed organization in terms of global functions, regional responsibilities that are not fully defined and so forth. So what we're going to do, 5 global regions, a simple set of targets for the regions in which they have accountability to deliver and of course, a global target set that's there. Key functions supporting the regions in a few important areas, supply chain and engineering, obviously, finance and operations to global shared services.

We have now 4 locations. And I want to stabilize that, get the cost levels out there, which I believe will help us to reduce that inflationary impact that you have every year, which I talked about. So that's for me finishing a journey. And I would say those are probably the key things. But we do need to get the accountabilities in the organization absolutely right, and I want to be very straightforward. If you're the President of North America in our organization then you run that show.

And our regions are around 85% self-sufficient. So a large region like North America, for example, is around 85% to 90% almost self-sufficient. And then there's some, of course, chocolate from Belgium, which is super famous, and that's what we own. Cacao Barry here in France, which is a very super premium chocolate. It's wonderful. You should taste it. And that's something that we can export.

But for the rest, they should run the show based on and with the help of global colleagues, but clear light regional offices, light head office, designed fit-for-purpose and put the resources as close as you can to the market.

Yes, I have to admit, yes, that's something I've done a few times -- I've experienced before, as you probably are aware of. And I think it works to have the accountabilities right.

Absolutely. So sustainability has been a top priority for -- well, for the industry, clearly and particularly for yourselves as a global leader. What role does this play in the focus for growth plan?

It's bigger than you think. I think it's worth saying that the undercurrent of sustainability, in particular for us in the ESG framework, the S, so child labor issues, but also, of course, deforestation issues in the chain, I take them extraordinarily serious, but not just that, but actually, we see the demands from our customers and the brand owners are going up and not down.

So while the topic of sustainability is sometimes not hitting the front pages these days, the undercurrent on the demands, the action that the industry is taking, I think, are very serious.

And we have a program that's called Forever Chocolate that was started 10 years ago, big credit to my predecessors on that. And we are not relaxing our targets on that. And I'm not going to make major changes.

I want to make sure that the couple of key targets that are in there that we hit them. And so I'm prioritizing 3 or 4, and that's what we will go after. But I think by doing that, we will be capable to provide something to our customers that no one else can because that's a clear level of differentiation.

So we've spoken about a number of different aspects across the plan that you've announced and obviously a number of different stakeholders as well. So in your view, what does success look like in the Focus for Growth Action Plan?

We cannot have in our most important segments, customer service levels below 80%. They need to be 93%, 94%, 95% plus, and that needs to be reached pretty quickly. Second, that 30% of premiumization in the portfolio needs to go up as a percentage of the total because it's a clear trend, and we need to address it.

And third, the segments that we want to win in, I called out ice cream, I called out bakery, I called out snacking and protein. With the specialties that I talked about, we need to win those segments and be the absolute market leader. For me, those are the 3 big ones.

And of course, very motivated and happy organization, but that's something you probably won't see from the outside so much.

Okay. Well, look, we've been through an awful lot this morning in a short period of time and sort of significant actions that you're taking to improve the performance -- but Barry, so thank you very much for joining us today and giving us this chance to speak on this important day as you launch the strategy. Thank you.

I appreciate your time. Thank you.

Okay.

Hello, and welcome to the Barry Callebaut Focus for Growth Action Plan Q&A session, which will be hosted by CEO, Hein Schumacher, and CFO, Peter Vanneste. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions] I will now hand over to your host, Hein Schumacher, CEO, to begin. Please go ahead.

Thank you very much, and thank you, and good morning, everyone. I hope that you had the opportunity this morning, albeit very early, to watch our on-demand presentation about the Focus for Growth Action Plan. And as you've seen, with Focus for Growth, we are making some clear choices. We are strengthening our fundamentals. We are focusing our resources and stepping up on our position as a solutions provider by, for example, scaling key specialties in market segments that we believe we should win. With that, we are very much looking forward to your questions and the discussion, of course, and I'll hand now back to the operator to get us started with that.

[Operator Instructions] The first question goes to Jörn Iffert of UBS.

And just 2 quick follow-up questions on the [ BU, ] please. The first one is, there was -- I mean, 1 or 2 years ago, the full-time employees of Barry Callebaut were supposed to be reduced by 15%. Can you give us an update where we stand here? And if there are reinvestments happening, in particular, in which areas you want to reinvest in SG&A to implement your new strategy? That would be the first question. And the second question is, please, on the equity free cash flow guidance or free cash flow guidance is CHF 300 million to CHF 400 million medium term. What is your assumption here on the interest cost line and also net working capital swings? Because when usually volumes are growing net working capital was cash outflow, just to double check these assumptions again.

I mean I wasn't sure I fully got your first question, but let me give it a try, but please let me know if I'm going the wrong way here. I thought you were talking about reinvestments and reinvestments in our margin or reinvestments in the P&L. When it comes to SG&A, look, this plan is not about making significant investments in our operating expenses, both not in SG&A as well as in, for example, fixed other costs such as fixed supply chain costs. This plan is very much about prioritizing our current expenses and investments behind the priorities that we have talked about. So top priorities around country focus, priorities around premiumization and priorities about scaling up specialties to become that service -- solutions provider that I mentioned in my opening.

So this plan is built on the foundation that we have, but it is very much around the shift. It's about adding focus, and it's not necessarily about stepping up a massive investment level in our operating expenses. Now I do want to say something about our capital expenditure goal. That is an area where we have historically been around a level of around CHF 300 million. There, we will give ourselves a bit of room because we feel that investments are necessary in North America, in particular, and we've outlined a few details on that one. We are expanding our site in Pennsauken to service the Northeast. We are looking for expansion of our Brantford site in Canada, and we are looking for a new site in the Midwest. So that will increase our overall capital expenditure level to a level that is around CHF 350 million or round about, obviously, depending year-on-year. So that is what I wanted to say about reinvestments. Peter, when it comes to the cash flow number.

Yes. On your question on cash flow and the moving parts behind it. So first, maybe on the financing cost, as you asked. As we said already this year, we will be landing below CHF 320 million for the year, which is CHF 60 million -- CHF 56 million down versus last year. We will continue on that trend as we are deleveraging further. We're paying back maturing debt, which is reducing our financing cost. So we have not given any official guidance on the financing cost itself, but you've seen that the PBT algorithm is faster than the EBIT algorithm, which means that, that gives an additional impact, positive impact.

Overall, historically, this company has been around -- has been in '23, '24 has been around CHF 200 million net finance costs. I mean this is the direction that we're moving into as well in our plan, obviously, with some improvements coming from our cash conversion cycle that in terms of inventories that is better than what it used to be -- to some extent, offset as well by evolutions in the EURIBOR.

But overall, that's the direction where we're going with that, and that's why it's an incremental addition to our net profit before tax. Net working capital, you have seen, I believe, and you're not surprised by that, that we qualified our assumption with a GBP 3,000 bean price assumption. We obviously have to take an assumption when we do that because that does have an impact if there's brutal movements on it, especially on the working capital side. So we have assumed GBP 3,000.

Now you know that we already have become more resilient to some of those moves by having lower inventories by having the financial instruments like the letter of credit in place. So that's not really a big discriminator, assuming that GBP 3,000 flat over the different years in the plan. Next to that, we have some further improvement on the cash conversion cycle as such as we are completing our efforts to become more effective and efficient in especially inventories where we have invested and are investing in better systems and tracking to get a better grip and monitoring of where our inventories sit and therefore, be more efficient.

The next question goes to Alex Sloane of Barclays.

Two for me also, please. Maybe just the first one, thanks for laying out the medium-term algorithm. In terms of next year, fiscal '27, I mean, should this -- should we be assuming sort of a more meaningful PBT inflection year given the kind of reversal of some of the gourmet price pressures you outlined in April? Or does that PBT guidance to the medium term incorporate '27? Just interested in your view on that.

And then the second one, actually, just following up on the -- maybe for Peter, just on the cocoa bean price assumption GBP 3,000 per tonne. I mean, I guess I'd be interested why are you assuming that level? I think in the past, you've said structurally, you see the cocoa bean price sort of higher, maybe GBP 4,000 to GBP 5,000 per tonne as a kind of sustainable structural view. Has your view there changed? And maybe could you give us the updated sensitivity on that assumption? Like I think you've historically talked about GBP 100 per tonne move being GBP 70 million to GBP 80 million swing on working capital. Has that sensitivity come down as you've made these efforts to tighten up working capital structurally?

Thanks, Alex. Very helpful. What I -- I would like to go into your first question on the shorter-term guidance, and then Peter will take your second question. On the short term and on 2020 -- on FY '27, a few overall remarks. I mean the first one is that we have guided on volume, and we expect volume to increase roughly around 1% to 3%. That is slightly slower than what we would expect in medium term. And there's a few reasons for that. First of all, pricing is still in there, and we need to see how consumers are responding to likely price decreases that will happen. But timing, of course, to be seen. And therefore, we do expect some volatility around that. And we want to await a couple of months before we give you more precise guidance on that.

The second reason for slightly lower on -- guiding slightly lower on volume is, of course, geopolitics. I mean we're seeing movements in the Middle East. That is an important area for us. And that will impact things over time. We need to see how that progresses. Also El Niño, we're seeing this year a fairly strong El Niño, and that could have impact on bean prices, something that will become much clearer in the course of June and July. So we're a bit cautious on volume. But at the same time, we have guided to volume growth already in the second half of this year. I can confirm that, that is indeed happening. So we're happy with that. And overall, we are guiding towards a return to volume growth overall for next year after a few years of decline.

Then on profit, PBT, we will -- we would say, in the short term, will go faster up than the midterm algorithm would state. And a key reason for that is also related to the finance costs. So finance, we -- as you know, we transfer that or we pass that on to customers in EBIT. So EBIT will have a downside effect because of that, but that's reversed in PBT. And overall, therefore, we expect PBT to grow faster than the midterm algorithm in FY '27, but we're cautious at this point to give you there a precise number. On cash, we would say that FY '27 will be roughly equal to what we would expect in the midterm. And of course, on ROIC and leverage, we will be taking steps. But you know where we're coming from. So that is a slow buildup towards the midterm objectives that we state to ourselves. So I wanted to give you a bit broader view on that FY '27 versus the midterm guidance that we've given today. And for the second question, I'll refer to Peter.

Yes. And your second question, Alex, was around the cocoa bean prices. I mean the main answer is that we've assumed for our plan that the bean price remains at the levels that it is right now today. We've seen a bit of fluctuation movement in the last months. So the GBP 3,000 is not a strange assumption from where we are today. So that's the main. What we're looking at is a fairly -- it's still a supply surplus year as we've also seen last year. So there's not a lot of reasons in the short term to assume that, that's going to change. Now as -- and already hinted that as well. There's, of course, we're watching the potential effect of El Niño that could have an impact on the bean price. But overall, as we believe that this is the short-term view that makes sense, we took that as a starting assumption.

Obviously, it could be higher over time, as I mentioned. And we do believe that it could be around GBP 4,000 or even a bit higher. And on that, as I hinted, Hein also when I was answering Jörn, we have all our measures in terms of reduced -- working with reduced inventories, having a higher procurement agility in buying beans earlier, later, especially later, having different sources and channels to buy the beans from different origins, having the operations flexibility to manage it from different origins, which has reduced our dependency to some extent on those bean price. Of course, it doesn't eliminate it completely, but I think we're a much better place on that front than what we were before.

The next question goes to Jon Cox of Kepler.

Q&A session, very useful. A couple of questions for you. Just sorry to come back to FY '27, not so much on the PBT. I think everybody can see that financial line is coming down pretty rapidly. Just on the EBIT line, you're guiding for 1% to 3% growth on the volumes. Would it be correct then to assume that the EBIT growth with -- you mentioned no significant investments, but you seem to be hinting at maybe some, maybe EBIT growth will be closer to volume growth in FY 2027, that's the first question. Second question, maybe just on that net financial line, Peter. You said you're going down towards CHF 200 million. We're below CHF 320 million this year. Could you give us a bit more granularity like I don't know, I'm just looking at my model now, CHF 280 million next year, FY '27, CHF 250 million the year after, CHF 210 million the year after. Does that sound sort of reasonable or not so?

And then, sorry, just more of a question on that guidance of 2% to 4% you've come up with. It's lower than the company has had historically. And I understand you're obviously going to focus a lot more on the premium segment. You talk about 1% to 2% growth in the chocolate market. You mentioned GLP-1s, I see in the presentation earlier. I wonder you just give us a breakdown of where you think you can get the 2% to 4% -- because historically you've talked about more outsourcing deals, gourmet growing faster plus emerging markets. You seem to be not talking so much about outsourcing deals and talking a lot more about gourmet and elsewhere. If you could talk a little bit about that 2% to 4% and the building blocks associated with that?

Thanks a lot, Jon. So I'll take question one, then I'll refer to Peter to question 2, and I'll do question 3, but I may do question 1 and 3 in one go if that works for you. So first of all, on PBT and EBIT, and Peter, please add, of course. So look, you talked about the dynamics on finance costs, so we will not belabor that. What I can confirm is that for FY '27, we do see EBIT increase ahead of volume growth. However, we're very cautious at this point to give you there a precise guidance for some of the reasons that I already mentioned, which is around -- obviously around volume. I do want to state a few things though, because you mentioned it on costs.

Over the last 5 years, we've seen cost increases in the company, both in SG&A as well as in other fixed cost areas. And we've also seen a significant investment in transformation in one-off cost that was around CHF 250 million. And whilst I would never exclude, of course, taking a one-off, if that is necessary, I would overall say that would come down to a much lower level. So that's something that I wanted to make sure that, that's noted. The second thing is -- on the cost levels, I've suggested no major restructuring at this time. However, as I said in my first answer today, I expect we are very keen to keep costs stable. That means offsetting inflationary pressures. I believe that's something that we should do given the focus that we are bringing to the plan and given the fact that we are shifting our resources behind our most important priorities.

And that -- so that's a trend shift, but it's not a major disruptive event on the cost side. So cautious on volume, EBIT ahead of that, but cautious for now. PBT ahead of the midterm algorithm. And on the cost side, we will be prudent, but we're not envisaging a big one-off or a major restructuring. So I hope that adds some color to it. Then on -- on the volume development, I think very -- yes, very good observations. Look, I think there's a few elements here, Jon. So first of all, as I said, on the short term, the 1% to 3%, we do expect the market overall to return to growth, but confectionery at a level of 1% to 2%, that is a bit lower than what we've indeed seen in the past. So yes, that is there.

In addition, we've said that for us, specifically outsourcing, and I've commented on that at the half year results as well. Outsourcing has come to a hold. I mean it's not increasing as fast. And the reason for that is volume pressure in the sector, our performance in the past on service, which has not been great and some of the large companies have therefore in-sourced. Those decisions have been taken, and that will impact FY '27 growth for us because we expect that to bottom out. But we don't see after all the conversations that I've had with large customers that, that is a structural trend going forward. The second thing to say about that is that midterm midsized companies as well as the fast-growing local companies, they don't in-source. So that is, for us, algorithm-wise, that will help us given their strong performance in driving volume there.

Why do we see the 2.4%, therefore, ahead of confectionery? Well, that's for 2 reasons. One, the -- what we call adjacencies and where chocolate is used as an ingredient. And by the way, chocolate is a very versatile ingredient. And then you have to think of snacking bars and protein type solutions, then you have to think of ice cream solutions where we still see a faster growth than in the confectionery side, that's the areas where we are already strong. But with the strategy that we're pursuing, which is to provide those solutions, including specialties and so forth, we believe that we can tap into those adjacencies in a good way. So that will add 0.5 to 1 percentage point or something ahead of the chocolate confectionery growth that I pointed out.

And then the third one, over the last couple of years, we have suffered some market share losses given our service track record. We believe we can step that up and all the signals that I'm getting is that will give us an uplift on share, just given what we offer in terms of taste, in terms of solutions and so forth, and that will take us to the 2.2% to 4% range. So it has 3 components: a slightly slower confectionery chocolate, our ability to capture the adjacencies that are attractive and that we believe will grow ahead and then step up in our base and our fundamentals and in our performance to drive execution.

And maybe to pick up on Hein's comment on the first one on the EBIT evolution and so on, linking it to the finance costs. We are, as Hein said, for next year, we're also looking at a profit and EBIT evolution that is faster on the EBIT line that is on volume line and even faster on the net profit before tax. What's important to note as well is this impact that the finance cost reduction has on EBIT versus PBT. As you know, it's neutral on PBT on EBIT as we reduce finance costs, we price through less finance cost that has actually a negative effect in the short term. So that's one of the drivers that will make EBIT grow lower -- slower than PBT next year because mechanically, it has this impact as the bean price goes down, we price through less on EBIT. So that's one thing to keep in mind for next year. Having said that, we believe EBIT is going to grow faster than volume.

On the point you made, Jon, on the financing costs, I mean, that was quite a specific question. But -- so I'm not going to quote annual numbers, but the direction is, as you said and as I said, it will take a few years to get to that level. But we will see meaningful drops. We've seen -- we will see -- we are seeing meaningful drops this year. We will see a meaningful drop next year as we're paying back maturities. You heard me say in the past, there's about CHF 700 million maturing debt average per year over the next years, and we've been deliberately spreading that when we were raising debt over the past few years. And then maybe the last thing, next thing to add is that we are evolving very strongly towards more flexible debt with like the [ BBF, ] where we -- of course, we -- that secures the sourcing of the funding when we need it, but also that allows to not use it when we don't need it, which then obviously also helps to keep the finance cost down when the bean prices are lower.

[Operator Instructions] We have a question from Antoine Prevot of Bank of America.

So 2 for me, please. I mean, one, we saw some a bit of volatility in some trading sessions around cocoa over the past couple of weeks. Just to confirm, but the move towards the letter of credit system, did it work as you expected or intended to smooth the cash flow -- the cash outflow in this kind of like volatile trading sessions. I just wanted to confirm a bit on that. And then second question is around private label. So you don't really talk about this in your plan. But it has been a part of the market in kind of your subcategories, which has been doing pretty well ultimately in terms of like gaining market share and volume. Is it not a part of the market you are really interested to address a bit more? And any indication on like how big private label exposure is for you?

Thanks, Antoine, your questions. I'll refer for the first question to Peter, and I'll come back to you on the second one.

So on the letter of credit, Antoine, yes, it is fully in place, and it is being used. Now of course, the first benefit of this letter of credit, again, maybe for people who don't remember, I mean, what it does is that instead of -- when the bean price increases, instead of having to deposit cash with our brokers, as if the bean price goes up and impacts our futures, we work through a way of a bank guarantee. So it avoids big cash outs in the short term. And therefore, it smoothens the cash flow and that also allows us to keep less buffer because we don't have those -- we basically smoothen those spikes.

So the main benefit, obviously, is when the cash flow -- when the bean price goes up and there's cash to be deposited. So -- but yes, that's working. So what we've seen very recently, I mean, of course, that smoothens out the increase that we have. Obviously, it's not very critical at this moment because, first of all, the bean prices are still at very reasonable levels. And secondly, we're also working, as I mentioned before, with much a lower amount of open futures as we are buying later, we're buying more flexibly from different origins. So versus the past, our exposure is simply also lower. But it works as we anticipated.

On your second question Antoine, it's indeed well spotted on private label. We obviously see the growth there. And historically, the company has been focused more on branded consumer products. So you're absolutely right, but we do see that opportunity. And in fact, that is happening today. So in the algorithm going forward, we do see that as a meaningful segment, particularly in Europe. It does mean, however, Antoine, that it is for us a bit of a different way of working. And let me add some words to that. So where you normally work with CPGs, that will be a direct connect between the customer and ourselves. When you work with retailers, obviously, they have manufacturing -- manufacturers to produce their end products. So it means a 3-party cooperation.

And historically, we've -- again, we've gone through those manufacturers directly. But at the moment, and I cannot be specific, but I hope to be capable to announce a few things in the next half year or so, is that we are actually developing strong contacts with retailers define solutions on what they need and then make sure that we can be part of that manufacturing solution. And that's an interesting area of growth. I like it and a couple of the teams are realizing some of those opportunities. So thanks for asking the question. And indeed, that is an area that we believe is interesting predominantly in Europe and later on in North America as well. So it's a developed market phenomenon, as you well know, but that's where we're focusing on our efforts on...

The next question goes to Samantha Darbyshire of Goldman Sachs.

You already touched on this, but you mentioned 1% to 2% chocolate confectionery market growth, but your addressable market is higher. Can you quantify the actual addressable market growth for your business specifically? And maybe kind of go into some of the driving factors of which categories or regions are driving that? And then also just you mentioned uncertainty around how consumers could respond to price reductions. Are you able to see anything in the market so far? Or have there been instances of price reductions in the past that we can kind of take learnings from to extrapolate to this scenario? And then my second question is, sorry if you've already covered this, I might have missed it, but do you have a leverage requirement before beginning to increase your dividend payment? Does it need to come below that 2x target? Or could you start increasing your dividend, say, when leverage becomes below 2.5x?

Thanks, Samantha, for the questions. Let me start on all 3, and Peter, please add on the last one. So on -- you're right. So the 1% to 2% chocolate confectionery, I think it really differs per adjacency. So on the data that we are seeing, so let me just give you 2 examples. I mean, on ice cream, for example, we're seeing roughly 2% to 4%. And that's what I've seen historically as well when I was working in a different capacity, but I believe that's an attractive segment overall. So roughly that. If you look at energy bars, for example, we're talking 4% and in some markets, 4% plus. When you think of pastries and particularly the more premium side of that, we're also looking at roughly 3% to 4%. So just to give you some indication. And therefore, the question is, of course, how much of our chocolate ends up where. And therefore, I cannot -- given that mix, I find it a bit -- not difficult, but I find it a bit cavalier to sort of give you sort of the precise outcome of that.

But if we do the mix, we believe, as I said, that overall, by increasing our exposure to those segments that we believe are attractive, where we can offer holistic solutions in combination with specialties that could add somewhere between 0.5 and 1 percentage point of growth versus the confectionery part. And as I said, we should not forget that for us, just simply being capable to drive perfect service in itself is a growth lever as well since in the last -- particularly in the last 1.5 years, we have been below what customers should expect from us. So I think the combination of the 3 would lead us to the 2.4% on the midterm. But in the shorter term, we are a bit cautious. I'm happy, though, to say that the second half of this year, as I said already, but the sector is returning to growth, and we are seeing that coming through in line with the guidance that we have given you earlier on for this year.

On price reductions, maybe let me just verify if I understand your question correctly. I think you said how consumers -- how fast consumers are responding to the price reductions. We are seeing price reductions coming through, certainly in the Gourmet segment as well as in sort of the price listed business, as we call it, as well as in the consumer market overall. And many manufacturers have also gravitated to solutions such as chocolate coatings, for example. And yes, consumers are responding. As I said, we are seeing a return to growth already in the second half. So there is a response, but I want to be a bit careful given the overall development. I talked about the Middle East about the direct effects, but of course, the indirect effects with high fuel costs and so forth, what is the disposable income that consumers will have, what -- and what is the bean price in the short term going to do given the El Niño effect. So I just want to be a bit cautious on that. But that said, we are seeing an effect of market growth now that prices are stabilizing at a lower level than where they were before.

And maybe to pick up on Samantha question on leverage and then linking you made to the dividend. Obviously, leverage, it's a very key metric for financial health, for ability to invest and all of that. We don't have any covenants related to leverage. We have them on a few other elements, but not related to leverage, and that's clear. And also the dividend as such is not linked to any leverage threshold. I mean we mentioned that our intention is a consistent stable or increasing dividend over the next few years, but there is no formal link to reaching one or the other level of leverage.

The next question goes to Matteo Lindauer of Vontobel.

I've got a question around your customers and the outsourcing agreements. You were talking about some larger players in-sourcing. Can you share with us the maturity of the long-term agreements maybe? And also furthermore, do you expect some of the customers to cut back the volumes or renegotiate the contracts with you? And my question is, is that already included in the new volume and EBIT guidance going forward?

Thanks, Matteo, for your questions. We will not disclose particular negotiations or particular in-sourcing agreements. But as I said, we have enough reasons to believe that in-sourcing has happened, and I talked about that at the second quarter results as well. And that is something that we've seen coming through. But I also believe that the decisions on that have been taken. We see that given the available capacity at some of our customers that, that will also bottom out by the end of 2027. And if there is a rather substantial announcement on that to be made or if something needs to -- if it's material effect, of course, we will disclose. But at this point, I just want to be careful that we're giving individual customer data and individual customer dynamics.

Overall, we feel that with the 7 -- the choice of 7 global accounts, where we have seen some volume decrease in the last 2 fiscal years. Our goal is to obviously stabilize that overall and return to growth in the midterm, and that is baked in our plan. Also the normal in-sourcing decisions, apart from any decisions that may come up because you never know, I cannot do precisely in their kitchen, but that sort of bottoming out the effect is included in the 1% to 3%. And overall, the direction is included in the 2% to 4%.

And I've got one maybe quick follow-up question on North America, the investments regarding the factories. Is the investment more about capacity expanding? Or is it just making the process more resilient of the factories in North America and to be more agile? Can you give us some more color on that maybe?

Yes. So on North America, and that's a very important market for us, and it's -- we needed to make some adjustments there, but I'm looking at it through 3 lenses. I'm looking at through the short term, the midterm and the long term lens. So let me just give you a few facts. So first of all, on the short term, it is indeed about adding flexibility. We are currently converting liquid lines and so forth to also be able to provide chocolate coatings. And that flexibility is really going up. Around 35%, I believe, of our lines at the moment is capable to switch very quickly between the 2. And of course, depending on the level of the bean price, at this moment, chocolates, we're seeing demand increasing. But with a high chocolate price, we're seeing the demand for cocoa coatings increasing. And that sort of that inflection point is probably around where the bean price is today.

So we should be capable and the name of the game in the future will be flexibility, and this is something that I think strategically we need to be ready for. And that's part of the upgrades that we're currently doing. We believe that, that will add the necessary coatings capacity throughout this year, but we would still be a bit short of where I would like to be. Then in the midterm, a few investments. First of all, although we say it, but our Pennsauken factory servicing the Northwest, that is truly additional capacity. So that's not flexibility, it's additional capacity in areas where we feel it's the right one.

The second one on -- particularly on specialties, we see a great opportunity on specialties on fillings as well as chunks as well as some of what we call nutrition and you have to think of sugar solutions, for example, and that needs additional capacity. So that's where we anticipate an uptick in the overall capital expenditure level. And as mentioned, we are expanding our site in Brantford. So you have to imagine that currently, we have one major hole with a number of lines in there. We're adding a second hall to that, including more lines. And then for the longer term, we're seeing a site in the Midwest. That could -- the question is net-net, is that whether that's an increase or whether we would be looking to consolidate. But I don't want to go there right now. I would say, in the short and the midterm, it's about capacity expansion as well as having flexibility between coatings and chocolate production.

We have a follow-up from Antoine Prevot of Bank of America.

Just 2 other questions. First one is a bit more like, let's say, healthier indulgence product or a bit better for you, talking like the high flavanol product launches that you did. I wanted to know like how have been the launch, for instance, of this product or the uptake from the clients? And I guess, in general, I think like dark chocolate volume trends have been clearly a bit better, probably also because of a bit healthier in general, less sugar and so on. What is your exposure to dark chocolate globally? And what's kind of like a bit maybe your plans to grow that side of the business more?

And second question is on coatings or compounds, whatever you want to call it, is -- I mean, it was a big focus, I guess, previously, was clearly much less mentioned today. Any reason why you talk less about this? Because clearly, you have strong capabilities there. And is it just because you're a bit more maybe cautious going forward because maybe the economics are a bit less interesting with cocoa butter price coming down? Or do you hear maybe some customers go back to like a bit higher with chocolate content? I mean what's kind of like the rationale behind that?

Thanks, Antoine. Yes, a few remarks. I mean, first of all, when you talk about health and wellness, I'm taking it a bit broader, but I'm coming very quickly to your question on flavanol. So we're seeing a really significant interest in what I would call everything health related. So those are chocolate in combinations with protein, those are low sugar solutions or different sugar solutions. And indeed, those also include the high flavanol content chocolate. On the latter, we're seeing mostly impact in Asia. So this is -- flavanol as a concept is not that well known in Europe and in North America with consumers. It's very well known in Japan. It's very well known in China. And particularly in China this year, we're seeing a significant increase. I do not have -- at this point, I don't have a precise number on how much that's influenced by flavanol. But overall, the growth in China is very significant, and this is playing a role in our -- definitely playing a role in our offering.

If you look at the dark chocolate, it's about 1/3 of our volumes. And yes, that's growing. As I said, we also in our powder strategy, we're looking at dark, we're looking at low fat. So we see that overall that trend on dark, and we see that increasing also as a result of GLP-1. I think I said something about it in the video. And it is important, but I wouldn't point to dark as significantly ahead of some of the other forms of chocolate. I mean, even milk chocolate, you can do a lot with sugar solutions, you can do a lot with protein solutions. So I wouldn't call that one out as something that is growing much faster than other parts of the portfolio.

On coatings, actually, it's a good question. And as I said, coatings obviously get a lot more interest when the price of the cocoa bean is very high. As I said, there's sort of an inflection points that is around the price where we are when the one is financially and economically more favorable than the other. And then there's the question of manufacturers, whether they prefer a coating solution or whether they prefer a full chocolate solution. And that's a question that depends on brand preference, depends on premiumization and so forth. So we're having those conversations with them.

But we are indeed the largest coatings provider in the world. As I said, we're adding capacity in the U.S. because that's where we are short. And I believe that in coatings, while economically interesting, there is a significant interest in seeing better taste, a better experience overall. And that is why we are investing in a concept called Cacao Max, which is a part of our premiumization strategy in each of the segments. So Coatings is a segment, but within the segment, you can actually premiumize because the whole concept idea around sensory, about taste, super, super important. And that's where we're focusing on right now more than just adding -- talking about coatings as such. We want to improve the experience.

And just maybe as a follow-up on flavanol. So interesting to understand this difference between Asia and the rest. But is there anything you can do to increase the awareness of that in Europe or the U.S.? Because ultimately, these markets, clearly, as you said, I mean, they are shifting towards a bit more focus on health. So like anything you can do there to drive that?

Yes. Antoine, I mean, obviously, my consumer brand heart is sticking on this because I think it's fantastic. But at the same time, we are playing our role in the supply chain. So the way to think about it is I'm very keen, and this is something that we're actually pursuing at the moment on the back of focus for growth is we talk about innovation platforms. So health, for example, is one of the platforms. Taste experience is one of the platforms, think of Cacao Max. When I talk about health, within health, we have a couple of areas. So think of Sugar solutions, but also think of flavanol solutions.

So when we talk with the big customers, our role is to provide sort of those platforms and then say, hey, this is what you can say. This is what we see as the benefit. We have great R&D. We can prove those benefits. But ultimately, it's depending on the brands to talk about this with their consumers. And it has just more fertile ground in Asia since there is a base awareness with consumers and less so in Europe and in North America. But I'm hopeful that, that could change, but I don't see it as our role necessarily to advertise, of course, for that because that's just not who we are. But we can prove, we can show, we can experience and we're doing all of that good stuff. And that's what we will do more of given it's an important platform in the focus for growth direction.

We have a follow-up from Jon Cox of Kepler.

Yes. Just to maybe follow up on that last conversation. You talked about coatings. What about the non-cocoa alternatives? And are you still looking at that market now prices are back? Or do you think there will be long-term growth in that market after the shock that came to the market from super high cocoa prices. And I wonder if you can just sort of split out your capabilities there in terms of chocolate is, I don't know, half of the volumes, cocoa coating is maybe, I don't know, 40% non-cocoa, probably just a couple of points. And is that a fair guess?

Second question, just a follow-up. I think it's from Alex's question earlier. On this, if there is GBP 100 move in cocoa prices, the impact on Swiss franc free cash flow or working capital historically, I think it's like CHF 70 million, CHF 80 million. But you seem to be alluding to using other things like promissory notes and stuff like that. Has that figure actually gone down there, Peter? Is that what you're trying to tell us?

Thanks, Jon. I'll take your first question. Peter will take your second one. So as I said in the -- if you look at the chart, I think it's -- if I remember well, it's Chart 2 or 3 in the presentation that we showed to you this morning, which is about our ambition. And I was really trying to be super clear about that. I'm just now getting the chart number, oh, it's Chart #4. And if you look at that chart and the ambition, it says on the right upper corner, that we want to offer a full portfolio across cocoa, chocolate, cocoa coatings and non-cocoa solutions. So I wanted to be very explicit about that. And that means that we will continue our efforts on cocoa replacements. And for us, we are making 2 "bets" here. The first one is a partnership that we have with Planet A Foods, and that is a cocoa replacer through sunflower seeds. And we believe that is the best opportunity in the markets available at this point that comes closest to what we believe is right taste, what we can offer our customers and so forth and also what we can deal with from a manufacturing perspective. So it's an interesting partnership.

And we are seeing first volumes coming through actually in the several markets in Europe as well as North America. We're also looking at Asia. So super, super exciting. And therefore, we will continue to work that. But at this point, the volumes, I wouldn't want to quote a certain percentage, but of course, it's small versus the total. The second one that I want to call out is the -- on non-cocoa solutions is the development of cell culture. And also here, we are looking at partnerships where -- with whom we work and that we could do in different ways, either through equity stakes through manufacturing agreements, we're bringing that clarity at the moment. And I believe that, that is for the long term, that could be interesting. We should be prepared for that so that we cannot be surprised. So we're absolutely on that.

So I see ourselves, and I hope you got that from the ambition. If you take that full portfolio, in combination with specialty -- scaling key specialties, it is truly about providing solutions to customers in the area, call it everything chocolatey. I like that term, but I saw my IR people didn't really include it in the script, but I like chocolatey. That's sort of -- I think that's who we want to be. We want to be passionate about that. We can add to that. And I believe we can sort of take that space if we are very clever about it and if we are making very strong choices. So I hope that gives you a bit of a background on that. Peter, on the second point.

Yes. Second point, Jon, on this CHF 70 million to CHF 80 million, obviously, the bean price has an impact, as you know, on -- especially the inventories, right? So it's especially the inventory side. We have an impact on payables and receivables as well when the bean price moves up or down, but that's a bit offsetting each other to simplify a bit. So the biggest impact really is on inventories. Indeed, I was commenting on the fact that we've been making good progress on our buying agility, our inventory management, sourcing different origin and so on. That does mean that we see the impact of this rule of thumb of CHF 70 million, CHF 80 million lowering more into the area of CHF 60 million to CHF 70 million change in working capital for every GBP 100 move in the bean price.

To note still that this is a midterm effect, right, because short term, it can be impacted by many things. It's impacted smoothen by our letter of credit, as I mentioned before, but also depends a bit on when exactly the bean price is moving, right? If it's the middle of the peak harvesting season versus summer, that has a bit of an impact. But midterm, you can assume that we bring it -- that the impact will be a bit lower than what we said before, around the CHF 60 million to CHF 70 million.

We have a follow-up from Matteo Lindauer of Vontobel.

A quick question on the LTI scheme. Could you remind us about the KPIs you're measured on? And for example, are volume and EBIT development included, for example?

Thanks, Matteo. I'm not sure I fully got the question. So I'm looking at looking at...

You're asking for the long-term incentives, right?

Yes, exactly. The KPIs that are linked to the LTI.

Well, we've got a number of elements within our long-term incentives plan depending on the level in the organization. I mean, first of all, short term, of course, we have the volume, EBIT and free cash flow where we're having this across the organization. And it's one of the things that we will further simplify and of course, focus towards the -- Focus for Growth priorities that we're putting in. This is on the short-term incentives.

If we go to the long-term incentives, we have the element of ROIC, return on invested capital within our targets. We have the customer Net Promoter Score, NPS within our targets. We have sustainability within our targets. So that's what is basically driving us. And then so that's adding up to about 60% what I just mentioned. And then next to that is the share price, which is basically being linked to the peer group and the performance of Callebaut share versus the peer group. So again, to summarize the share price performance and then the different elements, I just mentioned before.

It looks like we have no further questions. I'll hand back to Hein, CEO, for any closing comments.

Thank you, and thanks, everyone, for your interest, of course, in the company as well as for, again, listening to the message that we have shared earlier this morning. We really appreciate it. And we know that we'll be exchanging thoughts and questions in the next couple of days with many of you. We are looking forward to that and to that ongoing dialogue. I wish you a great day for those who are here in Paris and wherever you may be. Thanks a lot.

Thank you.

Good morning, everyone, and welcome to Barry Callebaut's Half Year Results Presentation for 2025/ 2026. I'm Sophie Lang, Head of Investor Relations. And today's session will be hosted by our CEO, Hein Schumacher; and our CFO, Peter Vanneste.

Our presentation today will start with Hein's initial reflections and observations then Peter will go into the half year results and the outlook. And finally, Hein will conclude with a preview of the Focus for Growth plan. Following the presentation, we'll have a Q&A session for analysts and investors. [Operator Instructions]. Before we start, take note of the disclaimer on Slide 2, and I'd also like to inform you that today's session is being recorded.

And with that, I hand you over to our CEO, Hein Schumacher.

Thank you, Sophie, and good morning, everyone. It's my pleasure to be speaking with you as part of my first results presentation here at Barry Callebaut and I'm now approaching my first 100 days, and I wanted to start by sharing my initial observations and reflections before I hand it over to Peter to cover the results. So far, I've been in a listen and learn mode and spending a lot of time across the business to gather a broad range of perspectives from our people. And I've had the opportunity to visit a number of our factories and offices around the world and gain insights into our operations and the culture of the company.

What has stood out most to me is the passion, the expertise and the resilience that defines this organization. I've also met with several of our key customers, which has sharpened my understanding of what truly matters for them and how we can support them on their growth journey. Back in February, we formed the Growth Accelerator coalition, which is a diverse group of around 30 deeply experienced colleagues, talents from around regions, functions and nationalities. And this working group from within is designed to advise, challenge and co-shape our path back to volume growth.

And through a series of focus sessions, this group has developed a unified view of where we stand today, identified key bottlenecks that hold us back and is helping define a set of high-impact priority initiatives. And collecting these insights from across our organization is enabling me to shape a clear and decisive action plan that will sharpen our strategic direction and set our key priorities.

Now I will come back to that later in more detail. But first, let me share some initial observations. Over the past years, the company has been navigating a very turbulent period marked by transformation, significant industry volatility as well as supply disruptions. The Barry Callebaut Next Level program was launched with all the right intentions. However, the sheer number of initiatives proved too ambitious for the organization to absorb at once and particularly against the backdrop of unprecedented industry disruption. And frankly, without sufficient course correction in priorities, this created a perfect storm.

Now that said, several important steps were taken on the Next Level because the program did deliver savings of around CHF 150 million, and these enabled much-needed capability investments in core fundamentals such as digital, quality and supply processes. But at the same time, these savings were more than offset by the impact of volume declines, higher operating costs, particularly from the cocoa market and supply disruption as well as from a more competitive environment. And the combined effect was an organization that it become overstretched and quite internally focused. And with too many quality incidents, the business also began to lose market share.

And as a result, we find ourselves in a position today with clear improvement areas that need to be addressed. I'm calling out 3 areas: First, our manufacturing network. We do have capacity constraints in key growth areas with site upgrades that are still work in progress. A lot has happened, but it's still work in progress. It has contributed to quality incidents with longer recovery times due to limited business continuity plans and we have made progress on the Next Level without a doubt, especially in strengthening quality foundations, but more work is to be done. And our service levels are currently below industry benchmarks. We need to improve.

Second, our digital transformation. A good direction, but initiatives were decoupled from core business priorities and the scope was very broad. We moved very quickly before co-processes were sufficiently stabilized and before our data and operating systems had reached the required level of maturity.

And third, our operating model and the organization. Historically, Barry Callebaut was highly decentralized and the intention of Next Level was to introduce a greater degree of centralization and standardization and that was the right direction. But in some areas, for example, in customer service, we went too far and probably too quick. In others, we ended up with a hybrid central regional model, and that has created an ambiguity in accountabilities. It added complexity to the organization and it limited regional empowerment, where essentially, the customer is where the market is, and where we need to drive local decisions. Because I believe that food is fundamentally a local business. And our region should define the what, whilst global functions should support the how with scale, expertise and obviously, consistency. And that makes the value of the corporation essentially bigger.

Now importantly, while there is work to be done, as I said, we are building from a position of strength because Barry Callebaut has strong and solid foundations, and I'm confident that we can return to growth and reinvigorate ourselves as a reliable industry leader. Because we have a truly unique market position with leading relationships, strong customer relationships and a strong portfolio with benefits from our integrated end-to-end cocoa and chocolate model, very important for our group.

And in turn, this gives us deep expertise across R&D, innovation, cocoa and sustainability and these are capabilities that are highly valued and appreciated by our customers around the world. And my conversations with CEOs of our largest customers have reinforced this view. And they see Barry Callebaut as an important partner and they want to grow with us. They expect us to step up and play a key role in unlocking and supporting their growth agendas. And let's not forget that we operate in a fantastic category with strong underlying fundamentals. And as a market leader, we are well positioned to capture significant long-term growth opportunities. And underpinning all of this is our people, as I said in the very beginning, people with deep commitment and passion for what we do. And that's critical to ensure that we can fully deliver on the fundamental opportunities ahead.

Now bringing all of this together, clearly, we have strong foundations from our unique market position to the depth of our expertise, and that positions us to win in this industry. And at the same time, to fully deliver on the opportunity ahead, we must refocus behind a reduced set of priorities to stabilize key fundamentals as well as to step up execution. And in turn, if we do that well, it will unlock sustained profitable growth and it will reinvigorate Barry Callebaut as a reliable, innovative global leader. And that is the objective of our Focus for Growth action plan.

And I will share a preview of the plan later. But before I go there, let me hand it over to Peter to walk you through the first half year results. Peter, here you go.

Thank you, Hein. Good morning, everyone. Let me walk you through the half year performance first, and I'll start with a short summary. Cocoa bean prices have decreased strongly in H1 and especially in the last few months, and this is surely positive for the recovery of the chocolate demand. On volumes, we saw a sequential quarterly improvement to minus 3.6% in the second quarter, supported by double-digit growth in Asia and continued momentum in Latin America. Recurring EBIT decreased by 4.2% and strong cocoa profitability was more than offset by the impact of lower volume, supply disruption and a highly competitive overcapacity environment.

In Gourmet, margins were pressured with the context of the very rapid drop of bean prices, and I will come back to that a bit later in the presentation. Despite the decrease in EBIT, however, we grew recurring profit before tax and net profit, thanks to lower finance costs and income tax. And very importantly, despite the peak harvest and heavy cocoa buying season, we generated strong free cash flow and further deleveraged to 3.9x [ net ] debt over EBITDA.

Let me get into some details now. Starting with the cocoa market. The cocoa bean prices have decreased very, very rapidly, falling by 53% in just 8 weeks in Jan and February and closing at GBP 2,057 at the end of February. And that's driven by good main crop arrivals in West Africa over the past few months, and favorable recent weather conditions that are supporting output for the mid crop. At the same level, the market is still seeing some demand softness. So global stocks have replenished to healthier levels.

Overall, this means we expect a surplus this year for the second year in a row. Importantly, the structure of the cocoa futures markets has also improved significantly. We now have a carry structure meaning that the cost of buying spot cocoa today is cheaper than buying cocoa in the future. This means it is less costly for the industry to carry physical stocks and it's indicative for a more stable outlook.

In the short term, given that this is demand-driven surplus, we expect bean prices to remain in the GBP 2,000 to GBP 3,000 range. That said, we continue to monitor the markets very closely as the demand recovers and thus we assess potential supplier risk linked to El Nino and potentially speculative volatility as we have seen in the past. Over the medium term, depending on supply and demand dynamics, we believe prices could move back into the GBP 3,000 to GBP 5,000 range.

Lower cocoa bean prices are certainly positive for the future recovery of both the cocoa and the chocolate markets. We're seeing indications of this through our forward bookings. As you know, we contract several months in advance for our customers and in recent months, we've seen a greater willingness to book further ahead again. At the end of February, our futures booking portfolio was much, much higher than at the same time last year when cocoa bean prices were spiking. At the same time, our customers have priced through to their end consumer. As a result, consumer pricing and the rate of end consumer volume declines have started to stabilize. In the most recent quarter, Nielsen global chocolate/confectionery volumes decreased by 6.3% with plus 13.7% pricing.

And importantly, we're now seeing our customers gradually shift their focus back to its category investments to stimulate growth. And I'll just quote a few examples. In North America, Ferrero launched their Go All In promotion from April 1 backed by a $100 million investment. It marks their first portfolio-wide campaign and largest marketing commitment in the company's history. Another example is Hershey is boosting media investments by double digit this year with the new quarter 1 media campaigns on Reese's and Hershey, the first launches of this nature. We're also seeing increased interest in innovation from our customers. In half year 1, we saw a significant increase in number of projects in Western Europe for ChoViva, our non-cocoa chocolate offering as well as a growing traction on Vitalcoa, our high flavanol solution, especially in AMEA.

Beyond these benefits, the magnitude and the pace of the decline in the cocoa bean prices, as mentioned, just now more than 50% down in the last 8 weeks, helps, of course, the demand and the cash front but has also created some challenges on the short term as well and mainly on profitability. And there's 5 key impacts I just would like to highlight.

First, in the past few months, we've seen very favorable margin environment for cocoa. In half year 1, this helped to offset some headwinds we saw in chocolate. Looking ahead, we expect this cocoa margin tailwind to normalize in the second half as market conditions have become less favorable. Second, as we just saw from the Nielsen data, demand has been down for some time. And given the high prices that have been put into the market in the past, this has resulted in some industry overcapacity, which is intensifying competition with more aggressive pricing and commercial actions.

In this competitive environment, we've seen a temporary margin effect in Gourmet. The Gourmet business typically works with a 3 to 6 month price list where forecasted sales are covered and then a price list is determined. Given the unique speed now we've seen of the cocoa bean price decreases in half year 1, the result was a long position in a declining market, creating a high price list with not all players following the same approach. And this impacted our volume and profitability through the need for some short-term commercial investments. Also, next to that, there's a more technical effect related to the shift between EBIT and profit before tax due to lowering financing costs.

The opposite, if you want, of what we've seen last year. This is a reversal of the finance cost pass-through, again, as we saw last year, and we now have lower finance costs as the bean prices come down. And it also means then a lower pass-through at the EBIT level. But it is -- importantly, it is neutral at the profit before tax level. Finally, there's also a BC-specific headwind in supply disruption. We had operational incidents in North America in the St. Hya factory, resulting in some volume losses and higher operating costs.

Before we move to the half year 1 figures specifically, I'd like to spend also a moment to highlight potential implications from the Middle East situation. As many, many industries, the primary impact for us is on the supply chain side. It includes shipping disruptions, increased transit times resulting from port closures or limited container availability and of course, as we all know, there's a sharp increase in energy prices. In some markets, fuel rationing has been introduced combined with higher freight and insurance costs and all of that is adding complexity and costs across our supply chain.

Next to the supply side, we've also seen some regional demand effects. Within AMEA, the Middle East and North Africa cluster represents about 10% of the volume there. This cluster has a specific high gourmet exposure and is experiencing therefore, disruption to imported premium products. Clearly, HoReCa food service segments are negatively impacted by the tourism levels in those areas as well as the closure of the schools, offices, rules on working from home and so on.

Beyond directly in the Middle East and North Africa, we also see an indirect impact in India, where we have an important business where LNG imports are disrupted and constraining the energy availability for food manufacturers, commercial kitchens has been impacting their operations and, therefore, also ours. Overall, this obviously remains a highly dynamic and uncertain situation that we are monitoring, obviously, as per the latest developments every day.

Now let me get into the numbers in a bit more detail, starting with volume. Overall, the group saw a sequential volume improvement in the second quarter to minus 3.6%, meaning we landed the first half with a decrease of 6.9%. Looking to the left of the chart by segment, Food Manufacturers continue to be impacted by negative market dynamics with our customers adapting behaviors in the context of high prices and lower demand. And there was the supply disruption in North America that impacted this segment for us. Gourmet, while more resilient, our competitiveness was temporarily pressured by the high price list in a sharply declining bean price environment, as I just explained. Also -- and also here, there was some impact of the St. Hya closure we saw in the first quarter.

Global Cocoa declined as a result, mainly of a negative market demand, especially in AMEA and secondly, also due to our choice to prioritize higher profitability segments, which did have its impact on volumes in certain areas. This business, the cocoa business saw early signs of market improvement in the second quarter with a sequential volume improvement of minus 5.2%, so significantly better than in the first quarter.

Now moving to the right-hand side of the chart, to global chocolate. Globally, we've seen chocolate volumes decline by 5.1%, which is ahead of the 6.5% decline of the market as reported by Nielsen. In Western Europe, we saw a 4.2% volume decline as demand continues to be impacted by market softness. Central and Eastern Europe declined for us by 3.6%. And way better than the market as our local accounts saw solid growth, especially in Turkey. North America decreased by 12.6% impacted by a strongly declining market as well, but as well as the network supply disruption we've seen from the temporary closure in St. Hya in the first quarter.

Importantly, though, North America saw recent months improvements as the business is rebuilding inventories and meeting increasing customer orders. Latin America grew by 1.5%, well ahead of the market, driven by a strong momentum in Gourmet that we've seen multiple quarters in a row now. Finally, volumes in AMEA grew by a strong 8.5% and reached double-digit growth in the second quarter, driven by strong market share gains in China, momentum with key customers in India and additional business that we secured in Australia.

Moving to EBIT now. Recurring EBIT decreased in local currencies by 4.2% to CHF 316 million (sic) [ CHF 310.9 million ]. The EBIT bridge on the page shows the respective moving parts. Cocoa, first of all, the green block on the chart saw strong profitability in half year 1, given a more favorable market environment -- margin environment, sorry, and market volatility where we're able to capture the volatility and increases of the prices and the decrease of the prices that we have seen.

In half year 1, this has helped to offset some of the other headwinds that we're facing in chocolate. The impact of the half year 1 volume decrease was meaningful. This is clear when we look at our EBIT per tonne as well, which increased by 3%, whereas our EBIT in absolute declined by 4%. So the impact of volume was meaningful in the first half, and this is something that we'll see turning around in the second half.

Next, there was an impact of the intense competitive environment and particularly within Gourmet. As I explained earlier, our high Gourmet price list and long position in the context of this very rapid decline of bean prices required temporary commercial investments. In addition, supply disruption resulted in higher operating costs to maintain service and deliver products to our customers. Finally, we also saw the shift between EBIT and profit before tax that I explained as a result of a lower financing cost year-on-year and therefore, a lower pass-through on the EBIT level. And this effect will get bigger in the second half of the year.

While our recurring EBIT decreased, it's important to note, we were able to grow the absolute profit before tax and our net profit. And to be more precise. As you can see on the left-hand side of this chart, our recurring EBIT in local currencies was CHF 14 million lower than last year. This is the minus 4%. In the middle, our profit before tax increased by CHF 2 million or plus 1.3% as a result of a CHF 16 million decrease in financing costs in local currencies driven by our actions to reduce debt and, of course, in the lower bean price environment. To the right, our net profit increased even further by CHF 42 million or by 66%, given significantly lower income tax expense compared to what we saw last year.

Recurring income tax expense decreased to CHF 29.6 million versus the CHF 69.4 million we saw in half year 1 last year. This corresponds to an effective tax rate of 21.4%, which mainly resulted from a more favorable mix of profit before taxes and much lower nontax effective losses in some of the countries.

Free cash. Free cash flow delivered strongly in the half year at CHF 802 million across the 6 months despite the peak buying season that we're having always this time of year. Now when we look, as always, at the moving parts behind this cash generation, we saw -- and that's the dark black bar, we saw CHF 1.5 billion positive impact from the cocoa bean price this half year. Bean prices decreased significantly in half year 1, especially in the second quarter, as I mentioned. And this has benefited us during the peak buying period, particularly in non-West African origins, which do not have the same forward contracting model as Ivory Coast and Ghana have.

There was a, next to that, a CHF 472 million negative impact on operational free cash flow, as you can see in the green bar. This has all got to do with the peak buying season. Half year 1 is always operationally like that with a negative cash out for the bean buying given the timing of the cocoa harvest. This was offset, however, partly by continued operational benefits from actions on the cash cycle reduction that we explained largely already in the previous communications. We continue to do so with our efforts to diversify our origin mix, reduce forward contracting and so on.

As a result, actually, our inventory was now this time of year in February, 10% lower than February last year. So that also helped to generate the cash. up to this level. And finally, there was a CHF 183 million CapEx investments, as you can see in the yellow bar in the chart.

Leverage. Leverage came down to -- strongly to 3.9x, and that's significantly below the 6.5x we saw in February last year and also well below the 4.5x we saw last August despite, again, the seasonality we always have in half year 1, with an important net debt reduction of CHF 2.5 billion, enabled by the strong cash flow that I've been talking about before. So leverage landed at 3.9x. But in fact, if you would exclude cocoa bean inventories from the net debt, and I'm talking only cocoa bean inventories, so not even correcting for cocoa products or chocolate stocks, our adjusted leverage RMI would be 2.7x. This progress mostly came from a lower inventory value given significantly lower bean prices, which is about 1.3x leverage in this decrease. But also through the actions to reduce our inventory volume, as I talked about, which made up about 0.6x in this reduction of leverage.

In terms of gross debt reduction, we repaid EUR 263 million term loan in September '25, so a few months ago and EUR 191 million in February on the Schuldschein. We've also reduced significantly our commercial paper and bilateral facilities over this time. Obviously, all of this has been an important contributor to the lower net year-on-year finance costs that we've seen in the first half already. And we will certainly continue to focus strongly on the deleverage in half year 2. It remains a key priority. We want to end much lower than where we are even today. So with the further actions that we're defining on the cash cycle will bear further fruit going forward. This could be and this will be partly offset to some degree because of the safety stocks that we will be watching and potentially reinforcing a bit in a few key segments. Again, back to the support we need to have on the service levels following some disruptions that we have seen over the last months.

So before I conclude the half year 1 section and staying on the financing. Earlier this week, we signed a EUR 2 billion sustainability-linked borrowing base facility. The borrowing base is linked to our underlying inventory asset base and represents an important step in the diversification of our funding sources. The facility strengthens our funding flexibility, particularly in periods of prolonged higher or lower bean price environments. It increases our agility and the agility of our capital structure and our ability to actively manage financing costs more in sync with cocoa price moves. Just to share a few additional details. The facility comprises of a EUR 1.6 billion of committed financing, complemented by an uncommitted tranche of EUR 400 million which is providing additional liquidity flexibility.

So moving now to the outlook of the fiscal year. We've updated our guidance, reflecting our focus on volume and deleverage while taking short-term action to protect our market share and drive growth. We have, first, raised our expectations on volume. We now expect a decrease for the group between minus 1% to minus 3%. And this implies a return to positive growth overall in the second half. We've also raised our guidance on leverage. We now expect net debt over EBITDA below 3x using a working mean price assumption of GBP 3,000, so with the continued tight focus on this and further progress despite our updated profit assumptions.

At the same time, we have lowered our outlook on EBIT. We now expect a mid-teens decrease on a recurring basis in local currencies. And this reflects short-term actions to protect market share and prioritize growth in the context of the rapidly declined cocoa bean prices. Important to note that a significant reduction in financing costs in half year 2 is an important factor in the reduced EBIT guidance. We expect to recover more than half of the absolute decrease in EBIT at the profit before tax level. Clearly, this outlook is subject to potential impact from the ongoing disruption in the Middle East that I commented on a little bit earlier.

Now before I hand back to Hein, I want to take a moment to explain the half year 2 moving parts on EBIT. Our return to positive volume growth will be a clear tailwind for half year 2, of course. However, this will be offset by a number of factors. One is short-term actions in global chocolate. We are prioritizing restoring Gourmet share following this unique and temporary long position impact that I talked about. We're also taking some temporary customer-centric interventions to restore service levels, and Hein will talk about it a bit more later, but action is needed to stabilize supply after a number of incidents that we've seen. Customer centricity is our #1 focus going forward, and we're taking action to reclassify lines, increase spend on staffing, maintenance and quality.

Second, as already discussed, cocoa profitability is expected to now normalize in half year 2 following an exceptional half year 1. Third, we are taking further actions to reduce finance costs. This means significantly lower year-on-year pass-through in finance cost at the EBIT level, while neutral on profit before tax. And finally, we have the uncertain and volatile situation in Middle East, which is bringing additional cost and supply chain disruption depending on how it will evolve further. Finally, the uncertain and volatile situation in the Middle East brings additional costs and supply chain disruption.

And I will now hand over to Hein to share more on our Focus for Growth.

Thank you, Peter. Now let's talk about Focus for Growth. And this has been shaped, as I said before, by the insights and learnings from our growth accelerator coalition that I mentioned earlier. And at this stage, me being in the company now for 2 months plus, the plan is directional as we continue to refine and deepen our assessment of the actions as well as the opportunities ahead of us. And I'm looking forward to sharing the full detailed update with all of you in early June. And in the meantime, I wanted to be transparent and therefore, share the direction that we are heading in.

Now before we go into details, let me start with why focus is so critical for Barry Callebaut. Because what really struck me when I started engaging with the team on our business portfolio is actually how concentrated we are. As you can see here on the chart, a few examples. So if we look at our top 7, top 7 markets represent 56% of our total volume. And of course, if you would extend that to 10 markets, the concentration increases even further.

Similarly, with customers, our top 7 global customers are approximately 1/3 of our volume. In our Gourmet branded business, our top 7 brands or top 7 propositions generate 85% of our volume. And on the sourcing side, 90% of our cocoa is sourced from our 7 origin countries. And finally, although we operate around 30 specialty categories around the world, the top 7 represent approximately 90% of the growth opportunities that we see today. So as we focus on stabilizing the fundamentals, which we talked about and focusing our resources behind reduced priorities, getting these top 7 really right already moves the needle meaningfully. And this is why focus sits at the heart of our growth agenda for the future.

Now turning to our Focus for Growth action plan. We do see that compelling need to increase focus across 3 areas. First one is commercially. So concentrating on a defined set of distinct growth opportunities and prioritizing key markets and segments where we see the greatest potential. Second, operationally by restoring fundamentals. I talked about that, and particularly in the areas that matter most for our customers in terms of reliability, quality and service. Customer centricity is absolutely vital. Third is organizationally by prioritizing a reduced number of the most impactful initiatives and restoring that customer-centric winning culture and by driving focus, restoring fundamentals and putting the customer firmly at the center of what we do, our objective is to reinvigorate the company and return to sustained profitable growth, and market share gains and, therefore, unlock strong financial performance going forward.

Now let me share some details on each. I'm starting with commercial focus. And we are defining a clear and distinct set of growth opportunities where we will intentionally concentrate our resources and our attention. And this starts with markets. And as we discussed earlier, our top markets truly move the needle, not only in terms of volume but also in profitability. Let me start with the U.S., our largest market, representing approximately 17% of our revenue and ensuring the right level of focus and execution in such markets is critical to deliver growth.

But also other markets stand out with clear growth potential, for example, Brazil, where we have a meaningful presence, Indonesia, India, Peter talked about that, and China, where we're experiencing strong growth right now. And it is therefore clear that our resources need to over proportionately support these priority markets, a distinct set. And importantly, this focus must be actionable, value-added defining a set of focus markets within AMEA rather than spreading our attention across that vast region thinly.

The same logic applies with Gourmet & Specialties, where we need to concentrate on the right segments and opportunities, and I will come back to that in some detail in the next chart. In cocoa, in itself, we see clear opportunities to unlock growth by increasing our focus on high value-added powders, whilst ensuring that we have the right growth capacity, of course, in place. So across all of these areas, a key enabler will be strong innovation platforms. Not many, but a few strong platforms that will allow us to lead in the market and that we can leverage across the portfolio to drive growth, greater level of differentiation versus our competitors and of course, to support our customers around the world.

Now let me talk about Gourmet, such an important segment for our profitable growth, and we are reintroducing here a clear brand hierarchy and customer propositions. Callebaut, Masters of Taste, that will continue to be our group commercial identity. And then we have a clear brand tiering after that to serve the different customer needs with a greater impact. And as you can see here on the top of the pyramid, we anchor the portfolio around our super premium global brands, led by the Callebaut Signature Collection and Cacao Barry. Now Callebaut brings over a century of Belgian craftsmanship and unrivaled bean to bar expertise and Cacao Barry brings 2 centuries of Cocoa Origins mastery and French pastry heritage, important brands on top of the pyramid at a higher price level, strong quality focus.

Now beneath that, our core Gourmet portfolio is firmly positioned in that premium segment with the Callebaut core section. And here, the focus is on delivering consistent quality, reliability and strong performance for professional customers in their day-to-day operations. Complementing these, we continue to develop strong regional propositions. Typically, one per region, such as Sicao, Chocovic or Van Houten in Asia, for example, ensuring that local relevance. And across all these tiers, our brands are supported by end-to-end services from the chocolate academies that we have around the world to innovation and technical expertise. These help our customers to succeed. And the objective is simple and clear, a more focused Gourmet portfolio with clearly differentiated propositions and price tiers that enable to serve our customers better, and it will allow us to allocate resources more effectively and drive the profitable growth in this important segment.

Now let's turn to specialties. Our plan here is to be a bit more selective, focused on a defined number of margin-accretive specialty categories that we believe we can integrate in the company, and the core of the company and by doing that, scale them first regionally and then globally. And while the final list is currently being defined, we already see clear and compelling opportunities in a number of areas, such as filled and baked inclusions, which you find in products like ice cream, where we have a very strong presence in that segment. But also both chocolate decorations, including toppings for bakery applications and fillings and coatings, for example, solutions with reduced sugar functionality.

And once this prioritization is finalized, the intent is to bring these selected specialties much closer to the core on the regional responsibility including, therefore, a tighter system integration. At this moment, they're not that fully integrated in our operating system. And that means we will invest behind them to ensure there is sufficient growth capacity, clear ownership, P&L ownership within the region and stronger category management. And we believe that this more focused approach will allow us to scale what really works. It will simplify the specialty portfolio, and it will concentrate resources where we see the strongest combination of growth, margin expansion and, of course, customer relevance.

Now moving to operational focus, where the clear goal is to restore some of the fundamentals. And Peter talked about the disruptions. Our #1 priority is to restore service levels and on-time in full performance that we are now measuring consistently every day, every week, every month. I'm absolutely determined to get us there and to improve on that particular KPI. And as I mentioned earlier, a combination of transformation complexity, industry disruption that we've had and many operational incidents, this has taken our focus a bit away from the basics. And as a result, service levels have been below industry standards. Now that's something that I'm keen to turn around for the company. We have to get this right.

Now beyond service, we also need to ensure that our network, our factory network is fit for purpose, both for the portfolio that we operate today, but also where our customers will go tomorrow. And at the factory level, we see currently mismatches between line utilization, so specific line utilization and the overall capacity available in our network.

So in the short term, that means we will make targeted and tactical adjustments to unlock available capacity. On the midterm and the long term, we will invest selectively behind those growth capacities that I talked about -- we talked about the focus areas, for example, ensuring that we deploy there for our capital towards the right opportunities.

And finally, restoring the fundamentals also means strengthening the core processes and enablers of the organization, very much the intention of Next Level, and we will build on that. We do need better data visibility, more effective end-to-end decision-making on a number of processes. And therefore, the priority for us is to focus on the core process as the company first, get them really right, such as the overall demand and supply planning processes, customer service processes and, of course, the quality and the usability of our data. We made strong progress, but now we need to finish it behind those few big priorities.

Going into more detail, there are a few areas where we need to focus operationally. So North America, as I said already, this region contains our largest market in the U.S., and we need to get it right. And as Peter has described, we've seen broad supply disruption across the network, and that resulted in longer lead times for our customers and capacity constraints in several high-demand product categories. Network investments under Next Level were there, but some of them were postponed given the macro backdrop.

Now there's an immediate need to stabilize the network and rapidly improve service levels, focusing over the coming months on increasing staffing and adapting shift patterns at relevant sites as well as targeted initiatives to stabilize critical facilities, particularly across maintenance, quality, infrastructure and planning processes. In parallel, we are reclassifying and redeploying existing product lines across the network to better utilize the available overall capacity.

We are developing a midterm plan to future-proof the network in order to sustainably support future growth. On emerging markets, here, our focus will be on a select number of key growth markets, large markets, though, but where we have a meaningful presence already and where we intend to invest to support evolving customer needs. Think of countries like Indonesia and Brazil. On this, we will update you in much more detail in June.

Service and OTIF, on time in full, we are taking targeted actions not only in North America but also in Europe to immediately improve reliability and to step up our safety stocks in selected categories. Peter talked about that. This will stabilize our key business processes and in turn, it will improve customer service in the months to come. And then finally, core processes. I talked about digital efforts before. We need to focus our digital efforts and investments behind those core processes, such as planning as well as customer service, driving better data visibility and transparency, and this will, therefore, strengthen these processes and, therefore, increase service levels for our customers.

Now turning finally to organizational focus. Our objective is to reestablish that winning culture with customers at the heart of everything that we do, while refocusing the organization, as I said, on a set of impactful initiatives that truly matter. And a key priority here is to increase the empowerment and accountability of our commercial regions because these regions are the closest to our customers and our markets, and they should clearly drive what needs to be done to win locally. And of course, supported by global functions. They provide the how. They provide the scale, the expertise and the consistency behind those core processes that I talked about.

By doing that, we need to be, therefore, more disciplined on prioritization because the organization, as I said, has been overloaded by a significant number of initiatives during a time of also intense industry disruption. And that, in itself, dilutes the focus and the execution capacity. So by intentionally reducing the number of priorities on the table, we will free up time, energy and resources. And this will allow us to focus on what truly matters. That's what we're going to do in the next couple of months.

Before closing, let me briefly highlight some of the initial steps that we have already taken as we start to put the Focus for Growth strategy into action. We've reduced the executive leadership team. I had a team of 20, we've reduced it to 12 members. This creates a smaller, more agile and more importantly, a more commercially focused leadership team in the company, which will enhance the speed of decision-making that we need. We also removed the global transformation office related to Next Level, and we significantly reduced our consultancy spend for the months to come. And this reflects a shift away from a separate transformation office towards a more integrated business ownership and execution.

And as such, we have fully integrated the remaining Next Level initiatives into our global functions as well as into our regions. And that has stopped a stand-alone program tracking savings, for example, and therefore, we're now much more focused on the bottom line delivery and therefore, the net impact of these changes. We've also strengthened our global customer account alignment, and the global 7 accounts that I've talked about before are now reporting directly to me. And this is designed to reinforce regional execution actually, but also to accelerate the deployment of global innovation where it matters most for our customers. Now these are early but important steps. Obviously, there's more to come, but the momentum in the company has started.

So that concludes my preview of Focus for Growth and we're not reinventing our strategy, as you've seen. What is different is the level of focus, the level of energy and depth supported by clear choices and strong resource prioritization. So to summarize, our priorities are clear: drive focus and discipline and put the customer back at the center of everything that we do. And I'm confident that our unparalleled industry leadership that we have and our truly unique business model will provide that strong foundation to sharpen that customer focus and return to profitable growth.

I'm looking forward to coming back to you in early June with a more detailed plan and to share our financial ambitions in parallel. And in the meantime, this concludes today's results presentation, and we are delighted to now take your questions. And with that, I will hand over to the operator to open the Q&A.

[Operator Instructions] Our first question comes from Alex Sloane from Barclays.

I'll have 2, please. I guess, overall, you previously guided to double-digit PBT growth in fiscal '26 based on today's guidance. Is it fair to assume you're now expecting PBT in constant FX to decline at sort of mid-single-digit rate for this year? And I guess if that's the case, within that potential 15%-plus downgrade, how much do you see as '26 specific or transitional versus perhaps more structural and put another way, how much of that do you think investors should reasonably expect to sort of bounce back in fiscal '27 would be the first one.

And I guess the second one, somewhat related, but in terms of the commercial investments that you've talked about to restore competitiveness in Gourmet, can I just say, does this purely relate to price gaps or -- in Gourmet? Are you also potentially suffering from some of the service level issues highlighted at the beginning of the presentation?

Thank you, Alex. For the first question on the -- on PBT and this year's guidance, I'll let Peter answer. I'll come back to some of the points on structural as well as take your second question on Gourmet. So Peter, first on PBT.

Yes. So Alex, thanks for the question. We will have a significant reduction of finance costs over the year, up to CHF 60 million, so CHF 50 million to CHF 60 million versus last year, which means that a very significant part of the gap that we see on EBIT will be offset towards the PBT level. So profit before tax will be down for the fiscal year, but to a lesser extent than EBIT because of that recovery on the finance cost.

And Alex, I think a few remarks on the structural nature of the guidance for this year. Look, there are a few things that I would call pretty temporary. These are, for example, the gourmet positions that you talked about. The other one is supply disruptions that we have seen as well as the volume declines that we've seen in the first half. I expect those to -- over time, of course, to come back. Some of that will go faster than others.

But more structurally, and Peter talked about that, our finance cost with a lower bean price, overall, the finance cost are not as high as in the EBIT definition, but they will come back and they will be neutralized on a PBT and on a net profit level. So some aspects are structural and some are temporary, but I wouldn't call it overall a rebasing of the company.

I think your second question on Gourmet. Yes. So we had long positions out there and -- in Gourmet, which is partially a price listed business. We are seeking to retain market share. Obviously, we're going to drive volume. I think that's super important for us. We have, of course, fixed cost, but also we want to retain our customers after having had some years of disruption. So we're very keen to put the customer right -- front and center for everything that we do. So that's something that we're investing in.

But if you look at Gourmet, yes, there have been disruptions also for Gourmet. Some of that in the North American part, but some of that in Europe, obviously, from somewhat longer time ago, but we're still sort of rebuilding capacity, and we're still rebuilding customer service. So this is something that we're now going to do on an accelerated pace. All the key factories are under hypercare. We've added some resources to make sure that we can deliver. We're also pushing some tactical investments through the sites because the customers have evolved their portfolio needs. We were a bit behind. We're stepping that -- we're really stepping that up and going fast after that. And therefore, I'm quite confident that in the second half of the year, overall, as a company, we are going to return to growth, and that will then sequentially improve the volume picture by quarter including Gourmet, which of course, is an important profit segment for us. Next question, please.

Our next question comes from Jörn Iffert from UBS.

The first one would be, please, on the reinvestment needs to restore customer service levels. For how long do you think it will last that this is more pronounced? And do you think despite these reinvestments, there could be operating leverage benefits for EBIT in fiscal year '27? So just to get a feeling for the time line here?

And the second question, please, a technical one. Into the core segment, I assume it is, in particular, the spread, not the combined ratio, which was beneficial in the first half, I mean, what do you expect as a more normalized profitability on the current cocoa bean versus butter and powder spread going forward from here?

Thanks, Jörn. I'll take the first question. Peter, you can take -- if you would take the second one, that will be good. On the -- yes, on the investments, look, as I said, there's a few different types of investment here. And so the first one as I said, it's around evolved customer needs of what they need in their portfolio. And I think whilst we have an overall capacity that is sort of sufficient given, of course, the volume reductions that we have and the existing capacity that we had, on a line basis, the capacity wasn't always keeping pace with the changes of what customers really wanted.

And therefore, we're doing a number of tactical investments predominantly in North America to keep pace and to satisfy the evolving customer needs. Some of that is in compound production. Some of that is in inclusion, for example, we need to step it up there. And so that's part number one. And that's partially CapEx. But of course, with all -- with quite a number of changes that we're doing and these are happening literally to date, that was in North America in the last couple of days and witnessing firsthand of what we're doing to step up that customer service and change portfolio. So that's number one. And that, of course, comes with some extra cost.

The second one, given the disruptions that we had, we absolutely want to make sure that food quality and food safety is paramount. So yes, we are investing a bit extra also in manual operations to secure that. We've had incidents over the last couple of years. We simply cannot repeat that. The reputation of the company is essentially what safeguards the value of the company. So I'm very, very keen to focus on that as well.

And then thirdly, as I talked about, investments when it comes to the long positions that we -- and we already mentioned that a few times, the long positions that we've had on cocoa and the impact on price listed business. So we're making here the right trade-offs, but we want to stick with our customers and we prioritize volume and we prioritize market share now and that's the third area of investment that we're making. Yes, I mean those are the main ones. But clearly, again, customer centricity and stepping up our efforts to evolve our capacity to that -- to the exact needs of the customer, that for me is really a priority now. And that's pretty short term. But I think in the midterm, that means that we will -- we need to continue to evolve our network, our supply chain through changing needs. And I think we can do that. And obviously, more to come on that in June. Peter?

Thanks for your question on cocoa. We've seen a strong EBIT growth on cocoa in the half year 1 year-on-year in local currencies. And very much linked to the fact that we're able to profit in cocoa and benefit from a more favorable margin environment and also the market volatility considering the speed of the market movements we've seen some time ago already with higher butter, higher powder prices, and we were able to capture that. We expect this to normalize in half year 2 going forward because the butter ratios have continued to drop in line with the terminal market evolution. Butter is now below powder and trading at a discount actually to CBE, which means that some of those benefits that we've seen linked to that volatility and the whole market that we captured in half year 1 and to some extent, a bit as well in half year 2 last year is at least, for the short term, not coming back. And then, of course, we'll see how the market evolves further to be more specific about that.

Our next question comes from Ed Hockin from JPMorgan.

Thank you, Hein, for your preview on your Focus for Growth strategy that I look forward to learning more in June. But on the Focus for Growth strategy, what I wanted to clarify a little bit following on from the last question, is on some of these initiatives you've outlined on capacity investments on focus and scaling of innovations, whether these are a refocus of existing resource or whether these are incremental investments? And within that, how we're thinking about the cash flow? Should we be, therefore, presuming that CapEx is higher for longer? And of your higher safety stocks in H2 that you mentioned, should we also expect that this is something longer lasting. So will you be holding inventory levels as a norm going forward? Or is this specifically an H2 comment?

And then my second question, please, is on your volumes outlook for H2 and the return to volume growth. The industry, as you noted, is currently tracking minus 6.5% volumes. So to return to volume growth in the second half of the year, can you try and help me to bridge that? Is it that the industry volumes, you should expect some improvement in the second half of the year? And how significant contribution should the actions you're taking in gourmet have? Is it some reversal of shrink inflations or some reversal of the temporary in-sourcing that you've seen in previous years. Just if you could help me bridge that gap between the current industry volumes and improved picture for your volumes in the second half?

Thank you, Ed. And let me take first go at it, and Peter, please add where you see fit. So I mean, first of all, this is not about incremental resources. I talked very much in focus for growth around galvanizing and rallying our people, and that is people's component, but also indeed capital expenditure as well as cost behind less initiatives. We're choosing essentially 6 to 8 initiatives in the company right now to focus our resources on.

We've been looking at many, many process improvements as a company over the last couple of years, ranging from HR processes to supply chain processes to essentially covering absolutely everything. What I'm really keen now is to focus our resources behind those processes that touch the customer first, and that is planning, so demand planning, supply planning, and making sure that we link up with our customer seamlessly and that we optimize our planning processes. So that means also digital efforts behind that. So that's the number one.

Number two, customer service. Over the last year, customer service has been pretty much standardized and, in some cases, has been moved from a decentralized model to a more centralized global shared services model for customer service. That was a decision taken. It didn't always go well. So we absolutely have to nail it now and be there for the customer and make sure that, that customer service process runs extraordinarily well. So this is not about incrementalism. No, it's about everything that we were doing under the Next Level program, it's to choose those things that are meaningful and impactful and putting our people behind those. So that's very much the mantra. Not an extra. We're not going to expand on that.

When it comes to capital expenditure, also for this year, we're not increasing the guidance. We have redirected some of the capital expenditure spend through the tactical investments that I talked about. And on the medium term, whether that's going to lead to a higher level, I'm going to come back to in June. However, we are very, very committed to deleveraging the company, as Peter has talked about. So that will remain an important priority. We will live within our means, but at the same time, I want to make sure that we spend the CapEx behind tangible, thought through, thorough growth initiatives, in a select number of markets, in our most meaningful segments. Gourmet, I talked to a few specialty categories, for example, and then, of course, in customer processes related to our Food Manufacturing segment. So more focused, clear and not incremental. So that, I think, hopefully answers your first question.

When it comes to the volume picture in the second half, a few comments. Obviously, with lower bean prices, what we're seeing is that customers ordering for longer, that's clear, and that's helping the volume picture for us. We also see that customers, and we said that in the presentation, customers themselves are going for growth. And we've seen a number of initiatives from Hershey's, for example. We've seen initiatives from Nestle. And I think that's really important. We are seeing an enhanced growth picture in some of our key markets. In ice cream, for example, in North America, we're seeing overall an increased demand picture. And again, I think the lower bean prices helped.

At the same time, and I think this is very important for us, when I talk about our efforts to restore growth, we believe that, in the very recent months, we are growing a bit ahead of the market with a reinvigorated focus on growth. And if we keep the pace, we make those necessary investments, we restore our processes and our credibility and stability, I'm actually very convinced that we will continue to do that in the very near future. So that's going to help us. So with less disruptions, we should see some growth. There's one important caveat, and that's, of course, the situation in the Middle East. At this moment, I mean, that's the latest one this morning. We believe that in the next week or so, business activity in the Middle East will resume somewhat, but obviously, it's very, very volatile. So that's something that we need to manage.

So that's more on a high-level basis. I don't know, Peter, if you want to make some further comment on what we have been doing?

I'm risking to repeat a lot of what you said. So no.

Okay.

Our next question comes from Jon Cox from Kepler Cheuvreux.

I have 2 questions really. One, just on what's happened in the last couple of years and what you're doing now to sort of maybe unwind some of that, maybe it went too far. I think under the first program, you laid off about 20% of your workforce and did a couple of factory closures and that sort of stuff. Just wondering, should we assume that maybe you're going to unwind the staff by about 10%, so maybe going back a little bit, or halfway from what you've done?

As an add on that, do you think there's anything more needs to be done in terms of the factory network? Or is it more, as you mentioned, it's all about quality issues and maybe some lines are not working as well as you want to? So that's the first question.

The second question, more on the top line outlook. I'm quite surprised that we're not really seeing volumes recover given the fact that cocoa prices have declined. I know there's a lag and so on and so on. But in terms of -- I'd imagine the whole industry is short chocolate in various places. Are you worried that maybe structurally, the chocolate market has changed in the last few years, maybe with GLP-1s and we see various data points suggesting that maybe chocolate demand volume growth won't come back to that on average 1% or 2% we've seen historically, maybe it's going to be closer to flat going forward. Any thoughts on that sort of long-term chocolate market outlook?

Thanks, Jon. I mean, first of all, on the Next Level program, as I said, in the plan on the Focus for Growth plan, look, I think that the Next Level program, again, the intentions to standardize more in the company, to reduce our cost by progressing our network into fewer, bigger sites into doing more with digital, intentionally definitely the right program. But what I'm saying is, therefore, we will build on that. And I have no intention to unwind necessarily what was going on. But I feel that efforts in the company were quite diluted. We have lost a lot of people. We have had quite some incidents and disruptions, and we have let customers down and customer service. So hey, I'm just very keen now to restore that confidence, go back behind a number of core priorities. So that means that we're not going to unwind, but we're going to phase and pace it. We'll go deeper, we're going to finish a number of initiatives, and we're going to do it well, but always with the customer in mind.

So yes, we will continue to evolve our network, and that may end up in less factories. But before you close a factory, you need to make absolutely sure that the volumes that you provide to a customer from that factory are then, of course, transferred to another place, and you can help the customer to succeed. So I'm very keen to progress, but again, in a thoughtful manner. There's no point in adding necessarily resources. As I said, we are making some selective investments now in the supply chain, particularly in North America as well as in quality assurance. But overall, I do not foresee that we're sort of adding cost on a structural basis. That is definitely not the intention. And I don't want to talk about unwinding. I want to talk about focus, and I want to talk about fewer, bigger and better. with a strong focus on operations discipline and customer centricity.

I think when you talk about volumes, actually, we are pointing towards a volume recovery in the second half. So of course, progressively, quarter 2 was a little bit better than quarter 1, in terms of volume, still negative. But going forward, as you sort of follow the algorithm, we're guiding to minus 1% to minus 3%. And that means mathematically that we're going to have to see a positive territory in half 2. Now where does that come from? And I talked about that lower bean prices? Yes, from our end, a better competitive position, strong focus and of course, with the caveat that I already talked about in the Middle East. But overall, we are actually seeing good signs of restored volumes. So in that sense, certainly on the midterm, we're looking more positively.

On GLP-1, I think yes, I mean, several of our customers have also talked about that. And I just wanted to highlight that quality chocolate, the more premium style chocolate, we believe that's actually benefiting in some cases. We're seeing that also in interest for our Gourmet products. So I think, yes, look, there will be some impact, but at this point, it will not be significant for the company.

And maybe just to add, there's some reassurance, of course, from the past on the market rebounding. I mean the market pricing has been significant, of course, this time, but also a few years ago on the back of COVID, there was a 20% pricing up in the market, and you could see the chocolate category bounce up well after that. And maybe last, as you said yourself, I mean, there is this lag, right? We had ourselves for the first time now a quarter in Q2 where our pricing was negative year-on-year. So we had our peak pricing, plus 70% a year ago. We had still plus 25% pricing from us to our customers in quarter 1. Quarter 2 was the first quarter where it started to come down. So there is this lag that the market needs to cycle through before it starts hitting the consumer.

I think, Peter, there's also -- and I think that on your question or the question before, I want to come back on one point, which are inventory levels. We've obviously seen inventories coming down, and that's partially bean price, but also operationally, our inventories are showing a healthy development. What I do believe towards year-end, again, tactically and particularly on what I call the runners in our portfolio, Gourmet products that are pretty standard, we are increasing the inventory levels somewhat to make sure that we have a very positive start into the new year.

I believe by the end of last year, the inventory levels were very, very low, and it hampered us a bit in satisfying customer needs. And again, with the positive signs that we are seeing in the market, we believe there is room, again, tactically and in a few areas to increase the safety stocks a bit to safeguard service. Again, a major priority for us going forward.

Our next question comes from David Roux from Morgan Stanley.

I just want to come back to Alex's question on the guidance. Can you perhaps quantify how much of the cut in the PBT guidance was attributed to the investments in Gourmet, Middle East conflict and then other factors? And then my second question is on Global Chocolate. On the Food Manufacturer client cohort specifically, do you see any need or any risk here that you need to invest in pricing here? I appreciate there's a mechanical cost-plus model with this cohort of customer. But I mean, how robust are these agreements? And then just my follow-up question on Global Chocolate is, where do you see manufacturer inventory levels at the moment?

Peter, you take the first. I'll come back on the Food Manufacturing.

Yes. So David, the first question on the moving parts on EBIT and then PBT overall versus the guidance that we now put into the market. Overall, as we said, still for the full year, there's a positive on cocoa considering the high and the strong benefit that we took on volatility and the increases of the market in the past, normalizing half year 2, as I mentioned.

Now if we look at then where the delta comes from in terms of the negative impact, you could basically argue that about 70% or 2/3 is triggered by this very rapidly declining bean price, which had an impact on, first of all, our financing costs, that pass-through had reversed basically on the EBIT line. Secondly, the impact that we've seen on Gourmet, where our long position and high price list forced us to do some commercial investments to secure the volumes that we have. So 2/3 is really coming from that rapid decline of the bean price.

The remaining part, basically, there's 2 components. One is volume that over the year will still be slightly negative. And secondly, some of the increased costs that we are taking to manage through the supply disruption, making sure that we can deliver our customers despite some of those disruptions that we've seen. So this is basically the different blocks that you should be considering within our guidance.

When it comes to the Food Manufacturing segment, you're right. I mean, most of our contracts, they follow the price of cocoa. So I'm not overly -- from everything that I'm seeing margin-wise and so forth, I don't see major volatility in that. I feel pretty confident about the segment going into the second half. And we will move with customers and of course, based on the contracts that we have. So when I talked about the major impact from the long position, that is more related to price-listed businesses.

When it comes to global stock levels, as I said, I think there are some -- we see customers buying a bit longer. I can't comment on exact stock levels. I'm not long enough here to give a really educated answer on that. But it's a fact that at this point, with the current bean prices, there is room for some increases globally. That's all I can say at the moment, unless, Peter, you would have further comments?

Our next question comes from Tom Sykes from Deutsche Bank.

Firstly, just on the capacity expansion that you're putting into North America and your comments to the earlier question around longer-term demand. I mean, if you're investing into compounds, which is the majority, I believe, of your Food Manufacturing business, are you not just signaling that there is a permanent reduction in cocoa demand even if it's not chocolate demand and that's coming from compound growth rather than cocoa content, if you like?

And then just on Gourmet, where would your gross profit per unit be standing versus 12 months ago? And are you saying that you're going to be cutting that even more? Because if you do have this shift towards more compounds and we're in a sort of excess capacity, I suppose, are we not just going to see a rebasing of Gourmet pricing? And indeed, is it still going down?

Thanks, Tom. I mean, first of all, in investing in North America, as I said, I think the network overall probably didn't keep sort of the pace with evolving customer needs. So I think it's more that we were a bit behind. And we are very, very keen to fill in some of the blanks. We have very good relationships with many customers. Obviously, in North America, we are the market leader. But I want to make sure that for particular needs, and indeed, there could be compound production, that they don't go to alternative suppliers. So what we're doing is we fill in tactical needs, and I believe that, that will strengthen our position with customers significantly.

At this point, with the bean price where it is now, we don't see compound necessarily growing faster than chocolate. We're seeing some movements that chocolate is actually back, and we're seeing some customers going back to chocolate. And again, with the current bean price, I believe that is overall probably even beneficial for them. We're sort of at that inflection point. So no, I don't think that compound will continue to always gain. I think what is more important for companies like us is that we're agile and that we can fill in the blanks of the portfolio that customers need.

And they will have a need for compound for particular parts of what -- in their portfolio, and they have a need for chocolate. And of course, there is the volatility of the bean price. So I think what is important for us, given our role in the industry, is that we are agile, that we have the ability to supply what is needed. And that is exactly what we're going to do in North America with a number of shorter-term investments. So that's, I would say, for the next 4 to 5 months or so.

I want to come back in June, as I said, with a more midterm picture for North America as well as coping with growth in a select number of large emerging markets, and I'm talking mainly Brazil, Indonesia, for example. India, we have ample capacity that can continue to grow. I mean we've done that double digit, and I feel that going to happen, that's going to go -- that will happen going forward. But I want to choose a few of the bigger markets where we have an emerging presence where I think we can succeed, but where we have some bottlenecks that we need to resolve. So I hope that answers the first question on investments.

On Gourmet profit, I wasn't exactly sure on the precise question. But I would say there's no rebasing on profitability as such. As I said, there were long positions out there, and then you need to determine what you do, what is your priority. And we feel that retaining customers is driving growth, whilst at some point these positions will unwind and we will be returning to normalized profitability on Gourmet. That's at least what I'm seeing going forward. But in the meantime, we want to make sure that we keep the customer connection that we can compete in our geographies. And that's what we're doing.

And maybe just one addition because I think I might have understood in your message that for compound production, we need an entirely new setup of factories, which is not the case, right? We can produce from our existing factories. There's a few interventions you need to do in terms of tanks. But overall, I mean, we can convert our lines. So it's not that if any move happens to compound, that is an entirely new network that we need.

Our next question comes from Antoine Prevot from Bank of America.

I have 2 questions, please. First, on coatings. So within Global Chocolate, I mean, could you quantify the volume growth of coating versus true chocolates and especially considering that now CBE is more expensive than cocoa butter, are you seeing maybe some pressure there overall, especially as a pretty big buffer on volume for the past couple of years?

And second, on Gourmet, so could you quantify a bit how much of your chocolate profit comes from the Gourmet side? I mean, it's about 20% of your volume, but I would suspect it's much higher on the profit. And considering the reinvestments and like the price change you're doing into like H2, how quickly do you expect a situation to improve there on volume?

Thank you, Antoine. So I think Peter takes the second question on the composition of the profit, if I got it right. I think on your first question, overall on compounds, by the way, we call it cacao coatings, we saw flat growth in the first half, but with a double-digit growth for particular super compound products. Don't forget that I'm talking about investments in compounds. And yes, we need to follow the customer, but we are the leader actually globally in cacao coatings. And we have quite a few R&D projects with many of our customers on the way to continue to compete in that well.

So if I sort of take a step back, as a company, what we are offering, we're offering the chocolate solution, we're offering the cacao coatings, but also non-cocoa solutions. And in that sense, we are partnering with Planet A Foods. We're working on what we call ChoViva, which is a non-cocoa product, which also has its own cost structure, and we will continue to invest in those type of alternatives. So we're very keen to provide the whole portfolio. Now again, flat growth in the first half with particular double-digit growth in a subsegment what we call super compound products.

Yes. And on Gourmet, Antoine, yes, it's about 20% of our volumes and it's over-proportional in terms of our profit split. We're not really disclosing a lot of details on it. But as you mentioned, it's a lot more accretive than the FM business. Volume-wise, 20%, despite the challenges, it's still performing relatively better than the FM business as we speak. And also in H2, I mean, we will invest, as we said, some of that long position, but it doesn't mean that we'll be cutting even more. We expect actually positive evolution in our business in chocolate, both on the FM and the Gourmet side going forward in the second half. Yes, I think that's where we are on the Gourmet side and everything else I think we said before, as it is linked to the very steep decline of the bean price, we do expect this to be a temporary phenomenon.

Our next question comes from Samantha Darbyshire from Goldman Sachs.

My first question is just around the end markets. It would be really helpful to get some context from you around how you're expecting them to progress from here. You've got pretty good visibility on the order book, it seems. How much of this is kind of because your customers are innovating, having to bring out new products to kind of support that volume growth? And how much of it is that you think that consumers are adjusting to the price levels of chocolate products right now?

And kind of along those lines, are you starting to see any appetite from your customers to reduce prices or increase promotions, increase pack sizes to get the volume coming back in the market? And if there's any regional context as well, that would be super helpful.

And then just switching to, just thinking about your service levels, can you perhaps contextualize where they are versus history? I know that it's been quite volatile. There's been a lot of disruption. But if we think about where Barry Callebaut used to be, say, 5 years ago, how significantly below that are we? I know that the company is below industry levels. But any kind of indication of the delta would be really helpful.

Thanks, Sam, for the questions. So first, I would like to talk a bit about the market and our customers and what consumers are doing. Let me just make a few points here. And some of it will be repetitive, I hope you don't mind. But obviously, there are lower bean prices and we're seeing a flattening as well of the futures curve. So there are some early signs, as I said, of market stabilization for our customers. So customers are therefore also willing to book further in advance. As I call it, these are longer positions, and there is some room for higher inventories overall.

I think we're seeing that customers are pricing through to some extent. Obviously, that's a customer decision. I don't want to go too deep on that. But I'm very encouraged by what I'm seeing with some of our large customers in particularly North America. Ferrero, and we said it in the presentation, they launched their go all-in promotion lasting from April to July, and that's backed up by significant investments. They've made a very public statement about that $100 million investment. Hershey also making significant media investments in this year with a very big launch around Reese's and Hershey. It's the first launch for them since a number of years that is sort of at this magnitude. So we're seeing restored confidence. Obviously, the margin profile will help given the lower bean prices. So these are, I think, very positive signs for recovery going forward.

We're also seeing, therefore, some increased innovation interest from our CPG customers. And as I said, that we do across the whole portfolio. We're seeing -- particularly in Western Europe, we're seeing interest in the non-cocoa solutions for ChoViva, the brand that I talked about before, but also the high flavanol opportunity, the high flavanol innovation in AMEA, and this is gaining really good traction in Japan as well as in China. So if I sort of summarize lower bean prices, so therefore, customers going a bit long. Secondly, a very specific big initiative from some of our large customers that will help the market. And third, we're seeing if we are focusing our efforts behind scalable innovation platforms, we believe that particularly on a regional basis, we're seeing increased interest. So I would say, these are very positive signs. And therefore, we believe that the second half, we can return to a growth picture.

On customer service levels, yes, I look back to a number of years ago. And particularly in the last 1.5 years or so, we have been below our historical averages. I don't want to call out one customer service level, because you need to drill down a little bit. And customer service can, for example, become low if your portfolio is not exactly the customer needs. So can you deliver against an unconstrained demand? That's a question. And in many cases, we haven't been able to do so, and that's why we're making these investments.

The second one is, due to disruptions, do you need to cancel contracts or cancel deliveries that the customer has asked for. So in some of our key segments, we've seen customer service levels even somewhat below 80%. They are now improving fast. And again, that's where we're laser-focused on to get them to the highest possible level now. And I think that's something that we do progressively well. So without calling particularly percentages too much, I would say we weren't at the level that we were a number of years ago due to disruptions, due to many process changes, due to the whole transformation impact. We're now going back to fewer initiatives, restoring customer service on those areas where we really need it and preparing for a midterm picture. And obviously, I'd like to come back to you in June on what that looks like.

I think that concludes the overall -- if I'm not wrong, this was the last question?

Correct. We currently have no further questions.

Thank you, everyone, for spending time with us this morning. We are looking forward to come back to you in June with a full update on the Focus for Growth program and to have more interactions with you in the next couple of days as well as after the June conference. Thanks a lot, and speak soon.

Thank you.

Hello, and welcome, everyone, to the Barry Callebaut Q1 Key Sales Figures for the Fiscal Year 2025/2026. My name is Becky, and I will be your operator today. [Operator Instructions]. I will now hand over to your host, Sophie Lang, Head of Investor Relations, to begin. Please go ahead.

Good morning, everyone, and welcome to our 3-month key sales figures conference call for 2025/2026. I'm Sophie Lang, Head of Investor Relations, and I'm joined today by our Chairman, Patrick De Maeseneire; and our CFO, Peter Vanneste. Given our additional announcement this morning on the CEO transition, Patrick will join us for the first 15 minutes of the call only to share a few words on the transition and to take a few questions. Peter and I will then proceed with the usual Q1 presentation followed by Q&A.

I'd like to remind you that the session is focused on our Q1 volume and sales update, and we will keep that Q&A session focused on discussion of these key figures. As usual, please limit yourself to no more than 2 questions. I'd also like you to take note of the disclaimer on Slide 2 and remind you that the conference call and webcast are being recorded.

I will now hand over to our Chairman, Patrick De Maeseneire. Please go ahead, Patrick.

Thank you, Sophie. Good morning to all of you, and thank you for joining this call. You indeed received our press release this morning about our CEO transition effective January 26. A couple of words to this change. Peter joined Barry Callebaut as CEO in April 2023 with the clear mandate to transform our company into a simpler, leaner and more agile organization. Next to leading BC Next Level, Peter has navigated our company through the perfect storm with unprecedented cocoa bean prices, market turbulence and a challenging geopolitical situation. Now with this unprecedented cocoa crisis behind us and BC Next Level nearly completed, it is time for us to embark on a new chapter of growth, value creation and industry leadership. The Board and I are therefore happy to welcome Hein Schumacher as our new CEO.

With over 25 years of experience in the industry, Hein is a clear veteran in the food sector. Hein is indeed a seasoned and a decisive leader with a unique blend of expertise in food, business-to-consumer, business-to-business and ingredients, as well as a proven track record in creating significant shareholder value from 2 CEO positions with Unilever and Royal FrieslandCampina. Hein has lived and worked in various countries and regions, including the U.S., the U.K., Europe, Singapore, and China. In other words, he has experience from developed and developing countries.

We came to the appointment of Hein after an extensive search process. During his time as CEO of Unilever, Hein implemented a comprehensive growth plan that allowed the company to sharpen its focus, increase execution discipline around power brands and key geographies and achieve shareholder value growth. Prior to Unilever, Hein led Royal FrieslandCampina as CEO during times of very volatile commodity prices, and he strengthened the company through major restructuring initiatives, which resulted in a more focused business and a significant revenue increase. Previously, Hein worked for Kraft Heinz for a decade, first as Chief Strategy Officer, before moving to Heinz China, and later on as EVP of Heinz Asia Pacific region business, where he did a successful turnaround of the business, which spanned China, Indonesia, India, Japan and Australia.

While our business continues to navigate market and volume pressures, we have a clear opportunity for future growth. Barry Callebaut is the world's largest chocolate and cocoa ingredients producer, supported by unmatched scale, a deeply integrated value chain, a strong innovation track record, and close customer relations.

We agreed with Hein on the following 3 priorities: First, return to growth with increased customer focus to reenergize also Gourmet and go for a bigger share in the emerging markets. Second, drive the people agenda to create a customer-centric and winning culture as the engine of that growth. Third, strengthen further our balance sheet. The key word here is, of course, deleveraging.

As said, Hein will start already next week, Monday, January 26. To ensure a smooth handover and continuity, Peter will be available for the transition to Hein. More than 30 of the 36 BC Next Level initiatives have been implemented and the last steps are targeted to be completed by the end of the fiscal year.

Last point, the Board wants to thank Peter, who will pursue other career opportunities, for his immense work and leadership during challenging times, and wishes him all the best for the future.

Before leaving the call now and handing over to Peter Vanneste for the update on Q1, I'm happy to take your questions on our CEO transition.

Operator, please go ahead for the Q&A on the session.

We will now move to the Q&A for the CEO transition. [Operator Instructions] Our first question comes from Alex Sloane from Barclays.

I guess from my side, while the Next Level saving actions, as you've laid out, are largely complete, the fruits of those actions are kind of yet to accrue to the bottom line. So is the CEO change and pivot to focus on growth and customer service may be an acknowledgment that some of the actions that have been taken have gone too far from a customer service level perspective and reinvestment might be required to reignite that growth. I guess put another way, the message on the conference call in November at the full year results was there was likely CHF 100 million of net savings that could accrue in fiscal '27 from Next Level that weren't visible yet, but were going to accrue. Do you think that's still realistic? Or do we think that maybe some of that will need to be reinvested?

Alex, thanks for the question. I wouldn't say that this change will require reinvestment. I would say it's more a shift of focus in the organization. As you know, we have gone through, and I mentioned it, through the biggest transformation in the history of the company in the past more than 2 years. And what we had not foreseen was, of course, these cocoa market price increases and volatility and a difficult very geopolitical environment.

That required a lot of focus internally into the company. And I would say, the focus now with Next Level almost being totally completed, like I said, with 30 of the 36 work streams being done with I cannot say a bit more stable environment, but at least on the cocoa side we have a much more stable environment, we can really shift the focus now outside being closer to our customers, increasing volumes with our customers again. And that's absolutely the objective of this change.

Our second question comes from David Roux from Morgan Stanley.

I think much of my question was actually answered there. I think I would just be quite interested in terms of timing, whether we should expect -- given the fact that we're coming to the end of the Next Level savings program, whether we should expect or when we could expect another strategic update? Would that be over the course of this year? Or do we wait until next year for potentially CMD, et cetera?

David, as I said, we agreed with Hein on 3 priorities. And of course, there are always many more in the company, but the return to growth is our first priority, driving the people agenda, our second one. And strengthening the balance sheet, that's more in the camp of our CFO, Peter Vanneste, but he's working hard on that one. So those are our 3 priorities. So I don't think that there is much need for a different strategy or a different focus. It's just that we're shifting the focus from the inside to the outside.

Our next question comes from Jon Cox from Kepler Cheuvreux.

A couple of questions from my end. One on just the overall shape of the group. There's been the reports about maybe the owners have been looking to split the company into maybe cocoa and chocolate components. And clearly, the management have been very public saying we prefer being integrated. And I'm just wondering if this had any part of the reason for the change in CEO, and potentially Mr. Schumacher would be more interested in running a group focusing on the chocolate more on towards an FMCG rather than the sort of a commoditized cocoa business? That's one question for you.

The second question, it's Peter Feld bailing out not yet completed this savings program. When it started, your EBIT was around CHF 650 million-odd, and you said you're going to be giving CHF 250 million savings over a few years, of which CHF 188 million would be dropping into the EBIT line. I'm just wondering where we are on that whole program, because it looks like you're saying he's gone, now we're focusing on growth. Does that mean we shouldn't expect this CHF 188 million to come down anytime soon. And actually, maybe we're looking at half of that amount coming through? This year, consensus is like CHF 720 million. I think next year is about CHF 770 million.

And then just lastly on that, you say, growth strategy, you had these sort of weird targets about post the whole restructuring, you're going to grow low single-digit mid and then EBIT doing low single-digit mid. Do you think you're going to give any clarity on those targets now that you're going for growth in the future?

Thank you, Jon, for your questions. On your first question, Barry Callebaut has, since going public and since the merger with Cacao Barry, been a fully integrated company, and we have the absolute intention to stay that way. I was, of course, aware of the Reuters article that went out there, and we immediately stopped that internally, or contradicted that rumor internally saying, we've been always a fully integrated company that gives us a tremendous cost advantage. It gives us full control over the quantity of the bean, the quality, the sustainability, the traceability.

We have, as one of the few companies, our people on the ground in the origin countries to ensure that quantity, quality, sustainability, traceability. So there is absolutely no reason why we would change that model. It would give us a competitive disadvantage if we would change that model. So no difference on that one.

On your second and third question, if I would be the CFO, I would redirect you to the first half results, but I'm not the CFO. So I'm handing over to Peter.

Yes. Hi, everybody. Good morning. I mean, in Next Level, basically, as Patrick already said, I mean, the majority of the projects have been hardwired in the organization. They have been implemented. It's more about now making it part of the running business. Just to give you an example, GBS is in place. So it's in the 4 hubs that we have. So now it's really about standardizing, ensuring the effectiveness and the efficiency. We do the BCOS program in the efficiency, and the KPIs of the factory is about rolling out and embedding it again in the daily running operations and having additional SKU reduction is behind us. But it's, of course, as we generate new SKUs through innovation, it's, of course, getting into making sure we apply the discipline of the one in, one out. So it's more about finalizing and embedding it.

In terms of savings, which was part of your question, as we already also addressed in the year-end communication in November, these initiatives are delivering savings. I mean, we have been -- just an example, BCOS and the GBS centers are clearly having those savings. At the same time, we also faced some exceptional costs more related to the market disruption in cocoa, which we are very focused on cycling out to make sure that we can make those steps into the direction of our long-term ambition in terms of stepping up the profitability. We'll come back on that in due time, but that's, I think, what we are working on.

Our next question comes from Thomas Sykes from Deutsche Bank.

Just one question on your IT and digital, because it's been a relatively small amount of BC Next Level expenditure. And as you become more customer-centric, and those customers will have spent a lot on their IT and digital transformation themselves, do you believe that you've spent enough on that to be a modern business dealing with the volatility that you're likely to see, because it does feel like quite a low amount that you've spent on that side of the transformation, please?

Maybe I'll take that one. I mean it's not that much of a low amount, and I'm not sure where you get your information from, but we've stepped up very significantly on the digital spend and investments as part of this whole program, the OpEx that we have reinvested -- that we have invested in Next Level. Barry Callebaut does have an important digitization journey ahead of it. It's been part of the pillars of Next Level, and we are going to continue on that journey, obviously, focused in the direction, as Patrick has been mentioning, in terms of internal versus external focus. But it's clear that, that is not leaving our agenda.

It's almost doubling in both CapEx and OpEx. So it's really a substantial investment.

I guess it's just as a proportion of that spend in absolute amounts. It doesn't feel that large given the size of the business, but I take the point on the percentage increase.

The final question that we have time for on this topic comes from Ed Hockin from JPMorgan.

It's really on the BC Next Level program. I think that when it was communicated at the time, there was a growth agenda embedded in that program as well with the focus on growing in Asia, focus on growing in Gourmet and focus on growing in compound chocolates discussed recently. So what I wanted to clarify was why was Peter not the person to lead this second part of the Next Level program and to embark on that growth agenda? And should any of those priorities on growth, be it Asia, Gourmet compound chocolate, is any of that changed? And is it just a refocus? Or will there be some other tangible changes in the growth agenda as well?

I would say there's no change. But like I said, we went through the biggest transformation in the history of the company, didn't foresee the volatile geopolitical organization (sic) [ environment ], nor did we foresee at that moment that cocoa prices would grow above GBP 10,000 per tonne, so you have to take that into account. And as a consequence, as you have seen, the demand -- the consumer demand also went backwards. Putting leaders in the position, what people often forget is the right leader in the right position at the right time. And the right time is often forgotten. And doing a transformation requires a certain profile of leader, going for a growth trajectory requires another profile. And that's what we have been looking at since a number of months, and that's what we have also openly discussed with Peter, and that's why we came to this conclusion.

Thank you. I will now hand the call back over to Patrick to continue.

Thanks again for attending this call. If you would have more questions, you can always contact me either over Sophie or directly. And with this, I would like to leave you now in the good hands of our CFO, Peter Vanneste. Thank you all, and have a great day.

Thank you, Patrick. Let me now start with a short summary of the quarter 1 key figures. As anticipated, we started this fiscal year softly. Our Global Chocolate volumes were in line with the declining and challenging market, and additionally impacted by the production pause in our St. Hy factory in Canada, which we informed you about in November.

At the same time, volumes declined significantly in Global Cocoa due to a negative market demand and the continued prioritization of our volumes to higher return segments within Cocoa. Overall, our group volume, therefore, landed at minus 9.9% with more resilience in strategic areas like Cacao Coatings and AMEA. Importantly, we see resilience in strategic growth areas, and we believe that the continued lowering of cocoa bean prices is an encouraging sign for market stabilization. And in that context, we reiterate our guidance for the fiscal year and are very focused on preparing for return to growth.

Let me get into some more details. Starting first with an update on what has been happening in the cocoa markets. Cocoa bean prices have come down significantly as no doubt you've seen over the past months with prices 30% lower since the start of our fiscal year and even falling below GBP 4,000 last week and some more yesterday. Importantly, the structure of the cocoa futures market has also improved significantly.

The forward curve is now in a flat to slight carry structure. This means that the cost of buying cocoa today is the same or cheaper than buying cocoa in the future. And this contrasts with the steep backwardation we saw in the market this time last year, which significantly increased the rolling cost associated with our hedging. Importantly, the flat curve also incentivizes our customers now to book today rather than wait for lower prices in the future.

The '25/'26 crop is developing in line with our expectations with strong early arrivals in Côte d'Ivoire and Ecuador. And since cocoa farmers outside West Africa have been benefiting from higher cocoa prices, we also have seen those origins increasing investments in items such as fertilizers and seedlings, which is clearly positive for future supply. Alongside weak cocoa bean grindings, this is helping to bring some replenishment of global stocks of cocoa and the market should be entering its second consecutive year of cocoa surplus.

Of course, these movements in the cocoa market have been creating a knock-on effect on both the B2B chocolate market and also the B2C market. The historic cocoa bean prices of last year resulted in a significant B2B pricing in fiscal '25. And in turn, our customers have been reacting through destocking, pack sizing, reformulations and et cetera. to prevent and protect the consumer from the full price increases. Some large brands have also reacted to their volume pressure by filling their own excess capacity first. Now with bean prices lowering, our pricing at BC has also started to sequentially lower. And in fact, we already passed our pricing peak in quarter 2 last year.

This is positive for stimulating future B2B demand, and we are starting to see early signs of that through our forward bookings. As you know, we contract several months in advance with our customers, and we have seen our customers more willing to book further in advance again. At the end of November, our future booking portfolio was at 20% higher level than at the same time last year, when the cocoa bean prices were spiking.

At the same time, it takes customers some time to price through to end consumers, which has now happened with Nielsen data showing that global cocoa pricing -- chocolate pricing, I'm sorry, in the market are now more than 30% higher than the pre-cocoa market spikes. As a result, there's clearly some price volume elasticity given the extent of pricing. However, we believe consumers will adapt and adjust to these new price levels and ultimately continue to buy chocolate given the high engagement of the category. The category has seen a similar short-term reaction like this in the past. We also see upside because our customers have mostly priced through higher bean prices. And with bean prices now lowering, this will incentivize category reinvestments and promotions, which should help to drive back consumer demand and volume.

After those market dynamics, let's now move to how those and other factors have been impacting our quarter 1 performance. Of course, we faced short-term headwinds in quarter 1. As discussed, the market dynamics have been very challenging with Nielsen B2C market volumes declining by 6.1% in our first quarter. In addition, volumes were impacted by the temporary pause in production at our St. Hyacinthe plant in Canada due to a technical malfunction with one piece of roasting equipment. This factory is a significant contributor to our overall North American production and was closed for around 3 weeks in September, October with the issue now resolved.

In Global Cocoa, we sharpened our focus on returns to prioritize volumes within cocoa to segments where we see the better returns. And that, of course, in the context of our agenda of deleveraging. At the same time, it's clear also that our growth foundations remain resilient. Our compound business, which we now call Cacao Coatings, saw flat growth overall within a declining market. We've continued to support our customers with innovation and reformulation with around 600 R&D projects currently underway on Cacao Coatings. We're also exploring non-cocoa solutions with ChoViva, the chocolate alternative without cocoa with a phased international commercial rollout in process. The AMEA region saw positive growth well ahead of the market and with good expected momentum ahead of us. And finally, as mentioned, across all regions, we're seeing our customers increasing their forward bookings, which is an encouraging sign for stabilization and future growth.

Now let me dive into our volume growth in a bit more detail by region and segment now, starting with Global Chocolate, where volumes declined 6.8%, largely in line with the 6.1% decline of market volumes as per Nielsen. First, to the left of the page by chocolate region. Western Europe saw a 5.2% volume decline as demand continued to be impacted by higher prices and knock-on effects on customer behavior that were relatively a bit larger in that region. Central and Eastern Europe declined by 2.7%, significantly better than the market, as local accounts saw solid growth, especially in Turkey, while the large food manufacturer customers saw some challenging environment.

North America reported a decrease of 14%, heavily impacted by the St. Hy plant closure, as I just discussed, as well as a continued challenging customer and macro backdrop. Latin America saw a slightly negative development at minus 1.4% ahead of the market, as strong momentum in Gourmet was offset by large food manufacturing navigating the impact of the higher prices. Finally, in AMEA, volumes grew by 0.6% with improved demand in China, continued momentum in India and additional business secured in Australia, partly offset by market pressures we've seen in Japan and South Korea.

To the right of the page by segment, while Gourmet market has been more resilient, also now it has been impacted also by the higher prices and knock-on customer demand impacts with customer reducing elevated stock levels. And there was also here some impact from the St. Hyacinthe closure. Meanwhile, as we have discussed, Food Manufacturers were impacted by customer behavior shifts in the context of those significantly higher prices. And Global Cocoa, I already talked about.

Now as this is a sales and revenue update only, I will not go into reporting beyond that, but I briefly wanted to talk about leverage given that this is one of our key focus areas yesterday, today and tomorrow. We are certainly working further on the key actions we have already started to implement last year, and then I talked about at the November communication. In particular, first of all, reducing working capital, especially inventory, with key actions to maximize our bean blending capabilities, diversified to origins with shorter cash cycles, working on the underlying processes. Secondly, enhancing our financial agility with less cash-consuming solutions for margin calls that we have established with the letter of credit facility and making progress on inventory financing solutions, and also several end-to-end value chain projects like demand planning improvements and contracting flexibility.

In the first quarter so far, we reduced our gross debt by prepaying the EUR 262 million term loan in September, as well as reducing our commercial paper outstanding and bilateral facilities. As we already discussed in November, we do expect a temporary step-up in leverage in half year 1 due to the fact that this is the peak buying period given the cocoa seasonality. Historically, we have seen bean prices -- when the bean prices were back at GBP 2,000 range, we saw around a 0.4x historic leverage step-up in H1 versus the end of the prior fiscal year, again, linked to the seasonality. Of course, with higher bean prices, that increases that magnitude of this step-up. However, obviously also offset by the operational actions we are taking to reduce working capital every single day. Through this initiative for the full year, we do aim to reach the below 3.5x leverage by the end of August 2026.

And finally, we have reiterated our guidance for fiscal '25, '26. Let me remind you of the volume elements in this particularly, given this is a sales update. We do expect to see the mid-single-digit decrease at the group level and within Global Chocolate. In Global Cocoa, we expect the mid- to high-single-digit decrease as the business enhances its focus on the higher return segments, especially powder. The first half year is expected to be challenged as customers and consumers continue to manage the high prices in a soft market. And we're expecting an improvement in the second half with lower bean prices being an encouraging sign for market stabilization, as I mentioned before.

Let me conclude with the following key takeaways before opening for Q&A. First, our key focus is on returning to a growth trajectory with strong customer focus, as you have understood from Patrick as well. Second, what we see in the cocoa markets today is already starting to reflect in increased forward contracting, which is an early sign of market stabilization. And third, we are driving innovation and enhancing customer experience to future (sic) [ fuel ] that future growth.

And on that note, thanks a lot for listening. We will now move to the Q&A session, and I will hand over to the moderator to start that Q&A.

We will now have our Q&A for the Q1 key sales figures. [Operator Instructions] Our first question comes from Daniel Bürki from ZKB.

Regarding pricing, it was still pretty significant in the first quarter. When do you expect your pricing impact, let's say, go into negative territory? That's the first one. And then regarding the volume recovery, what phasing do you expect? Do you already expect positive volumes in the second half? Or we just have to think about '26, '27?

Thanks for your question, Daniel. On the first question on pricing, as I mentioned in my presentation, we have seen our peak pricing in the second quarter of last year, which was then 70% up versus the year before. We've seen a sequential slowing down. In Q1, our pricing is still 25% up versus, again, same quarter last year, but gradually coming down in absolute. And you know, as we are typically contracting several months in advance, we expect to turn negative at some point during the quarter 2, the existing quarter, assuming, again, the bean prices stay at the level or go down versus the level that they are today. Therefore, we do expect H1 pricing to remain positive in general, but H2 should be, in terms of pricing, negative versus H2 as we follow the market in a forward selling mode. So that was your first question.

Your second question on the volume recovery. As I mentioned, we have reiterated our guidance for the full year with mid-single-digit volume decrease. There is still some consumer reaction in the market today. We do believe that this is temporary. As I mentioned, we've seen this kind of pattern before, maybe a bit less disruptive than this time around, but the market recovers after consumers have adopted and customers, in terms of promotions and so on, have adopted and accepted the hiccup.

We do expect some customers to start reinvesting in the category. We see our order book and forward selling book improving. So in Q2, we do expect an improvement versus Q1, but still in a soft market. And H2, we will see a further improvement versus the first half for sure, to the extent of which, of course, we'll have to, well, go back later. We're still in a bit of an uncertainty on how the market will react, but certainly an improvement versus H1.

Our next question comes from Matteo Lindauer from Vontobel.

I have a question on the bigger picture of Barry Callebaut. My question is on customer relationship. Could you tell me how is the sentiment with your large outsourcing contracts, because you said you want to increase volumes with customers. And my question is how you try to tackle them, because we have been analyzing potential upcoming renewals, and I would like to get a view from your side.

Thanks for the question, Matteo. On the large customers and the outsourcing, I mean, this is still -- this has been a bit soft over the last, let's say, 1 year, 1.5 years, because the whole market -- our customers, the whole markets have obviously been focusing a lot on the disruption, pricing and the volatility that has been happening in the market. So big shift. So admittedly, the focus has been a bit less on the short term on outsourcing.

Now we do see that it's still quite high on the agenda and the top of mind of -- and the trends in outsourcing. The long-term trends for outsourcing in our view and with the discussion that we have remain very intact, because the underlying dynamics have not changed. If anything, they have been aggravated or enlarged with what's happening in the market. It has become an even higher capital-intensive environment with the bean prices, in our mind, there to stay at higher levels than they have historically been. And some of our customers do have other priorities than investing in the next chocolate line.

On top of that, the complexity of the industry is really not decreasing. Sustainability regulation, EUDR, despite the changes in the timing, I mean, these complexities continue to increase. In terms of assortment as well, specialties, innovation, Cacao Coatings, the industry becomes more complicated, which is where we can play a key role because of our scale and reaching all of that. So the topic is absolutely not of the agenda for the next years, but admittedly, of course, it's been a bit of focus in the last 1 year, 1.5 years.

And you talked about contract renewals. Obviously, this is part of general business, right? We have long-term contracts with key partners. We have a lot of key partners. So it's a normal course of business that every so many years, we have a renegotiation happening on some of those contracts, which also is an opportunity for us and for them to adjust to the new market reality.

Our next question comes from Samantha Darbyshire from Goldman Sachs.

I just want to stick with the outsourcing topic. Can you talk a little bit more about the pipeline itself? You've given some really good ideas about structural reasons why outsourcing should still be a priority for customers. But given we've had a lot of disruption in the last few years, there have been disruptions at your factories as well. How are you thinking about customer appetite working with Barry Callebaut specifically?

And then also just kind of coming back to the stabilizing trends in H2. What are you seeing in terms of visibility for customer contracting? The last couple of years, there's been less visibility as customers haven't committed as much further out. You have said the cocoa curve dynamics are more conducive to those longer-term commitments. But where are we at in terms of visibility in those commitments versus what you might have had, say, 3 years ago? And then just kind of sticking with that as well, when you think about customer pricing, cocoa is now significantly below GBP 4,000 a tonne. In theory, could we see some customer promotions starting to step up in H2? So I'm not just thinking about the brand investments from marketing, but in terms of consumers seeing lower prices as well.

Thanks, Samantha, for your questions. I will also look at Sophie to keep me honest to the different questions that you asked. So if I forget one, let me know, Sophie. The first one, I think, was still on the outsourcing. We have been making -- and you were referring to some of the, like, I guess, St. Hy incident that we had. We've been making very significant investments into a new quality rigor, and we certainly have leveled up our game with the next level investments when it comes to product quality and product safety.

The tightened regimes and firewalls that we have established for our customers, they work. We handle those potential issues with a lot of prudence and take the actions to measure and protect our customers at all time. Sometimes that lead to delay of shipments, sometimes that leads to some hiccup. But overall, I think we are proving and we're getting a very good feedback from our customers on the massive progress we're making there. And at the end of the day, I think that will give a strong asset in the continued discussions we're going to have on outsourcing with our customers.

In terms of visibility forward, we have seen a very significant improvement in customer coverage levels and forward bookings during the quarter as the bean prices have been lowering. You will remember me talking about the opposite more than a year ago, as we saw the bean prices going up in a very backwarded market, consumers -- customers holding back on ordering, holding stocks lower. We've seen the opposite right now and our November portfolio has been 20% higher than the portfolio in the same time a year ago. So this is a very encouraging sign for next quarters, as we believe the market is going to recover, which is also a little bit back to your third question, right, around the GBP 4,000 barrier on the market that has been reached.

As I mentioned, the customers on average have priced up 30% versus the peak cocoa prices, which is on average -- again, I'm not going to talk about individual customers, which is on average, again, sufficient to cover price levels where they are today. That will give oxygen to the business and the chocolate market. So we do believe we will see some increased activity promotion in the market together with, again, customers adopting and adjusting to the increased prices. So that's part of the increased momentum that we see happening towards the half year 2.

Our next question comes from Jörn Iffert from UBS.

Two questions, please. The first one is coming back what the industry is doing to stimulate the chocolate market volumes. According to your market intelligence, I mean, would you be surprised to see structural lower list prices of the consumer players in the next 1 or 2 years? Or would you expect really more its marketing budgets going up and you see here and there some temporary promotions? This would be the first question, please.

And the second question, if you allow me, sorry, I was a bit late to the call and sorry when you have elaborated on this, but the midterm targets after the CEO change, I mean, are the midterm targets confirmed? Or could also be the case that maybe here and there some contracts are not prolonged in outsourcing, that there's a setback first before the midterm targets could start to kick in again?

Thanks, Jörn, for your questions. On the first one, we have a very diverse group of customers, as you know very well, from artisans to the big FMCG companies. I am not going to talk on their behalf of what they can or should be doing. But I do expect, as I mentioned, that they will continue to put investments into the chocolate category. I mean, at the end of the day, even if some promotions were dialed back, chocolate is a category where consumers react and respond on promotions. So once the margins have been restored also for them, I'm sure they will reorient to those categories that are the most engaging for the consumers. How and which tools and levers, I mean, I think I will leave up to them.

In terms of the midterm guidance, we absolutely believe, and you will remember that in the past, we talked about the 3% to 4% market growth and then a 10% EBIT margin. The 3% to 4% market growth, we absolutely believe we're turning back to that. The question, of course, how fast now and it's -- but I do think we do believe that the turn has been set there. So we certainly believe that we're going there after the delay, of course, we've seen in the last few -- 1 year, 1.5 years.

In terms of profitability, this business absolutely can step up profitability. There is no change in that belief or ambition. Now when you talk about the 10%, of course, we have to nuance the metric a little bit, because we used to be -- 1.5 years ago, Barry Callebaut was an CHF 8 billion company. Now we're a CHF 15 billion company. So as a percentage, of course, that has a different meaning. So it's also important to look at the EBIT or profit before tax per tonne. But the profit step-up ambition is certainly still there. There is a lot of opportunity in this business to move ahead. And that's one of the things I have in mind as well as we are navigating through the end, hopefully, of the market disruption as we've seen it.

Our next question comes from Antoine Prevot from BofA.

With cocoa price falling down, how are you seeing in terms of like your ability to pass on financing costs still to your customer? I mean, ultimately, your bonds and balance sheets have kind of like a long duration, right? And so with cocoa price falling, is it still kind of like an easy discussion on those financing costs?

Yes. As you know, in the majority of our business, we have a real-time costing, and financing cost is part of what we are pricing through. That counts both ways, right? That counts up and down. So as we are decreasing our debt and our exposure on that front and our financing cost, that obviously has also a repercussion there. So you can imagine that we continue to do that going forward. And at the same time, we are working with our customers, and that's probably the most important thing. We're working with our customers really to work on the cash cycle in general, which is where we really have the big wins, working on bean blending, diversifying origin mix for both us and our customers.

The differences in differentials, the differences in cash intensity of different origins has increased over the last 1.5 years. So there is a key optimization to be done by being more flexible on origins and on blending. And that's where Barry Callebaut absolutely has a big advantage as we are present as a market leader in all the origins. We have been stepping up our bean blending capabilities. So that's, first of all, the first lever that we play and discuss about with our customers to seek that win-win from that angle.

Our next question comes from Alex Sloane from Barclays.

Just one, Peter. Just you referenced a few times customer orders being 20% higher. Do you mind just explaining what exactly you mean by that, and when and how that translates to your kind of reported volume growth? And then just on the free cash flow, I appreciate you're not going into detail today, but you historically gave that rule of thumb, GBP 100 per tonne move, circa CHF 75 million change in working capital. I mean if we apply that to the kind of current spot levels, I mean, it would look like the free cash flow for the full year could be quite a bit higher than the guide you gave in November, maybe closer to CHF 2 billion versus that CHF 1 billion guide. I appreciate that's going to be H2 weighted. But is there anything else we should consider with regards to that rule of thumb as to why it might be different this year?

Yes.

That was around how the customer coverage being higher translates into...

Yes, I forgot your first question. Sorry. Yes. So as you know, we are forward selling business, right? So we have basically 6 months, you can say, forward selling, and then we close contracts with our customers on that horizon. Now there's no longer -- with a flat market basically now, so the outward prices 6, 12 months from now at the same level as the nearby prices, so there's no incentive for our customers to wait for lower prices. We've seen this increase of portfolio that I have been talking about. So that's the visibility that we have.

Of course, there is still some flexibility to call off orders. There's some flexibility in the market with our customers to do that. So this is part of the answer. Calling it off is then the next step in doing all of this. But that's how it basically then translates in the actual sales that we're having forward. But it is for sure an encouraging sign of the future market and sales evolution for BC.

On your question on cash flow, I obviously was expecting that. Now this is a sales and revenue update. So I'm not going to get into a lot of new details. But yes, we've guided the market to a CHF 1 billion positive cash for the fiscal year, assuming a price range close to the GBP 5,000 range that then should deliver this leverage below 3.5x in combination with all our efforts that we're doing that I talked about in the call as well.

We also said that half year 1 would be negative free cash and half year 2 would be the moment where we generate a positive free cash. That phasing is still there, obviously, because the seasonality is certainly there. We've been buying a lot of beans in November, December and right now. Now with the bean price going down, obviously, that helps, right? So that will improve that position that we've been talking about before. It will also improve, to some extent, what we had forecasted for half year 1, be it that there's a bit of phasing, right?

It doesn't happen immediately, and we have also this letter of credit facility that I talked about before, which helps to smoothen the impact of cash when it goes up. We're no longer exposed to margin calls when the bean price goes up to an immediate magnitude. It also phases a bit backwards when the bean prices come down. But overall, I mean, yes, the rule of thumb and the lowering of the bean price obviously helps in reducing especially our inventory values.

Our next question comes from David Roux from Morgan Stanley.

Peter, I've got 2 questions. So the first one is just on the impact from the factory closure in North America. Can you quantify the volume impact from the St. Hyacinthe closure? I mean, my understanding was this was limited to 3 weeks, and the factory has about 300 to 400 kilotons of annual chocolate capacity. So suggests to me that excluding the impact, North America volumes were actually closer to flat. Perhaps you can just confirm this.

And then the second point is just going back to your comments around the guidance, which, as you pointed to, was underpinned by an assumption of the bean price around GBP 5,000 per tonne. I mean, given that we're now near GBP 3,000 level, is there not upside risk to this guidance, I mean, notably on free cash flow and also profit before tax?

Thanks, David. On the North American volume, yes, so St. Hy, I think it's -- probably about half of what we've seen in North America in the quarter has been driven by -- or the decline that we see in North America, so remember, the minus 14% year-on-year in quarter 1. About half is linked to this temporary pause of the St. Hy plant, which, again, as I mentioned, is behind us. So we don't expect significant impact in Q2, maybe some residual effect of ramping up with some customers, but it's mainly been in Q1, about 50%.

Don't forget that the North American market as such is also still down. If you look at Nielsen, it's about 6% down in the first quarter. So you could argue that without St. Hy, we're more or less in line with the market in North America. So about half is St. Hy, but the other half is more general market and macro, which continues to be complicated still in North America.

On the second question, I think you came back on the free cash flow guidance for the full year around the GBP 5,000 level. I mean, I can just repeat maybe what I mentioned before, right? I'm not going to give a more specific guidance at this point. But obviously, we do see that as a tailwind and it will help to get our inventories down, be it with a bit of phasing, and again, with the bulk of our cash flow generation being in the second half of the year.

Our next question comes from Tom Sykes from Deutsche Bank.

So just on the volume guidance, what are you assuming about the Nielsen market sellout, if you like? And what are you assuming about customer inventory levels? I mean, you've said before that some customer inventories are low. And then you say that Gourmet is coming off high levels of customer inventories. So if you do see an improvement in restocking, do you think that will be in Food Manufacturing? And interestingly, do you think that will also be in cocoa?

And then could you just help in terms of the SG&A reduction, because a lot of the temporary increase in SG&A was because the pricing was going up so quickly and you needed people to reprice contracts. So given that the price is falling so quickly, why do you not need those people to remain in the admin position to reprice things on the way down? What is it you're not doing on the way down that you were doing on the way up, please?

Yes. Thanks, Tom, for those questions. On Nielsen, yes, in general, we have seen lower stock levels at some of our customers, which is probably also linked to having people like me as their CFOs trying to keep stocks down when the value is really up. So I don't think they will immediately go back to that. And we're not -- long story short, I'm not calculating that we're going to have a big effect from stocking up again, but much rather from the market turning into more positive territory and consumers again adjusting to the bean prices that are now translated into the market.

In Gourmet, indeed, we had a bit of a slightly different story or a situation where some of our Gourmet customers really had high stocks and then cycling them out has impacted the Gourmet business a bit over the last few quarters. But yes, I think that's what we see. So looking forward at Nielsen, it's really about consumer adjusting to the higher prices, and our customers having and seeing more space given the lower bean prices.

On SG&A, yes, I mean, we had some offsetting costs, as I did mention in previous calls, in some of the saving programs that we had that were needed. I think, fundamentally, our pricing mechanics are similar, pricing up and going down. But there's, of course, a few elements that have been quite disruptive over the last year. And I just want to quote 2. One is the whole tariff situation in North America, which required exceptional interventions. Now I assume that's not going to be the same in the next year than it has been in the last year. Secondly, also, we had to do some upgrades in the way we do it and to make our systems and our process a bit more robust to enable the frequency of pricing up or down in some of those extra areas. So there's a few areas that I believe we've implemented that we can cycle out. But obviously, we have similar dynamics in pricing up and pricing down in general.

Thank you. This concludes our Q&A session for today. So I'll hand back over to Peter for closing remarks.

All right. Thank you, everybody, for joining our call today and for your questions, both on the part that Patrick presented, and myself. I appreciate that. The IR team is available for any further questions you might have, as always. And we are looking forward to seeing some of you at the Innovation Day we have in Wieze in a few weeks from now. So thanks for your attention, and have a good day.

This concludes today's call. You may now disconnect your lines.

Good morning, everyone, and welcome to Barry Callebaut's Full Year Results Presentation for 2024-2025. I am Sophie Lang, Head of Investor Relations, and today's session will be hosted by our CEO, Peter Feld; and our CFO, Peter Vanneste. Following the presentation, we'll have a Q&A session for analysts and investors. Please do limit yourself to no more than 2 questions. Before we start, please take note of the disclaimer on Slide 2. And I'd also like to inform you that the webcast and conference call today is being recorded. With that, I'll hand you over to our CEO, Peter Feld.

Thank you very much, Sophie. Good morning, everyone, and welcome to our fiscal year results presentation for '24-'25. Today, we will also be sharing a strategic update covering the actions we have taken and are taking to build a more resilient Barry Callebaut, delivering on our Next Level objectives and how we are unlocking future growth and shareholder value.

Let me start with a few key messages. As you will hear in more detail from Peter Vanneste shortly, in H2, we returned to cash generation and made strong progress on our deleverage agenda. This was supported by actions we've been taking on our BC Next Level journey and to step up resilience to market volatility.

As we look to the year ahead, we have three clear focus areas: deleverage to less than 3.5x net debt to EBITDA and delivering strong cash generation; preparing for a return to growth with a clear focus on customer experience, competitiveness, and unlocking new innovative solutions for our customers; and third, relentlessly addressing optimization opportunities for the new environment.

With that, I will hand over to Peter Vanneste to talk to the results.

Thank you, Peter, and good morning, everybody. Let me walk you through the full year performance in a bit more detail now. Starting with a short summary. After significant cocoa bean price increase and volatility in half year 1, the market has stabilized in half year 2, and we have been taking decisive actions to reduce working capital, enabling strong cash generation and deleveraging.

At the same time, the cocoa market turbulence created a challenging B2B environment, and we took some prioritization decisions within cocoa, both of which impacted our volume development at minus 6.8%. When it comes to profitability, recurring EBIT growth of 6.4% in constant currency was supported by pricing through the increasing cost of financing and mix. After major pressure on net profit in half year 1, half year 2 net profit benefited from the further cost pass-through actions we have taken.

Let me go into more details. Starting with leverage. We delivered major progress in the second half of the year, enabled by our working capital actions, which I will talk more about in the next slide. Back in half year 1, we saw a step-up to 6.5x net debt over EBITDA as higher prices during the peak harvest meant that we needed to finance significantly higher inventory value.

For the full year, our intentional actions enabled us to land at 4.5x leverage, significantly progressing towards our ambition of being below 3.5x by the end of fiscal '26.

Our leverage adjusted for cocoa beans or RMI is actually today at 2.7x. But in fact, if we also adjust it for cocoa inventories as well as beans, so only cocoa, not even excluding chocolate and other stocks, our adjusted leverage is below 1x. But actually, you can see that on the right-hand side of this slide, and it's important to realize that our net debt of CHF 4.3 billion is actually fully backed by high-quality inventory at CHF 4.7 billion value.

When it comes to reducing our net debt going forward, we have very intentionally established a balanced debt maturity profile with around CHF 700 million falling due in the next 5 years on average every year, enabling repayments with our strong liquidity position.

So going through those working capital actions in more detail. We have been diversifying our sourcing with increased purchases from origins like Brazil and Ecuador, which do have significantly shorter cash cycles and reduce our forward contracting. This goes hand-in-hand with our actions to step up our bean blending capabilities so that we can optimize recipes for our customers.

Next to that, we've also been optimizing our purchase timing and inventory levels and reducing forward contracting, for example, when it comes to safety stocks, where we have been somewhat overcautious in the past. At the same time, we also took action to enhance the flexibility of our financing options with the introduction of a letter of credit facility last August.

And this allows us to replace futures margin call cash outflows with a letter of credit, benefiting from both liquidity and agility in volatile times. It delivered 200 million operational cash inflow now, but it's especially an important buffer in case of potential future bean spikes and volatility.

The next level focus on improved planning and logistics processes with better end-to-end coordination also had an important impact on our inventories. And finally, of course, the increase of EBITDA is also contributing to our good progress on the leverage through the pricing through of the higher cost of capital, delivery of the next level savings and prioritizing higher return segments within Global Cocoa.

So what does that mean for free cash flow? Free cash flow declined by CHF 312 million for the fiscal year with a return to a strong cash inflow of CHF 1.8 billion in half year 2. When we look there at the moving parts, let's maybe start with the brown box, which is the cocoa bean price impact. This had a negative CHF 1.1 billion cash impact for the year with CHF 664 million positive inflow in half year 2.

The bean price did close at a similar level at year-end versus the start of the year, which was around GBP 5,300, but with much higher prices, of course, and higher volatility during the year. We saw a negative impact from the bean price for the fiscal year still for two reasons: one, liquidity swaps; and two, some phasing.

Now as you might remember, in fiscal '23, '24, we had taken significant liquidity swaps to better allocate our cash flows to our business cycle. And this has postponed margin call payments in the range of several hundreds of million Swiss francs into fiscal '24, '25, so this fiscal year. And this has been the main driver of this.

Secondly, also our long cycle of business between the bean contracting and the customer sales and given the much higher prices a few months ago, there's also a bit of a phasing impact when the bean price comes down. So we do expect some further benefit to come if the bean price, of course, stays stable at a lower level.

Moving to the green boxes, which is the operational free cash flow. We see here a positive contribution of CHF 1.2 billion for the fiscal year, of which CHF 1.4 billion in the second half of the year. Here, we see the major operational benefits from the next level actions on working capital reduction and financing flexibility that I just described in the previous page.

Finally, looking at the yellow box, we invested 388 million for the fiscal year behind investment in CapEx and we see next level. Looking ahead with all of this, given the harvest timing and a typical H1, H2 cash trajectory profile, half year 1 of this fiscal year, the coming fiscal year is expected to see negative free cash flow before we see further strong progress in half year 2.

Moving to the market disruption now that we have seen over the past years. I will only talk briefly here as Peter will also go into more detail. But we all know, of course, that the bean prices have increased significantly in the first half of the year. In response to that, the strength of our cost-plus business model allowed us to successfully pass these higher prices through to our customers, driving 56% pricing for the fiscal year and even higher at 85% on our cocoa business.

We saw our peak pricing in quarter 2, with pricing remaining high though in half year 2, but a bit lower sequentially. At the same time, it does take our customers some time to price through to the end consumer. So we have been impacted by a challenging B2B market as they manage the transition and adjust to the higher prices.

And in particular, our customers have been reducing pack sizes and reformulating in some cases, certainly also adjusting their stock levels and their forward cover, calling off orders sometimes later. And finally, a few of our very large customers who also produce chocolate in-house have been prioritizing capacity as they saw temporarily lower demand.

Nevertheless, our customers have also taken significant pricing with Nielsen data showing chocolate prices in the market that are around 30% higher than what they were before the bean price increased.

Within the next few months then, we know that it will still be challenging, but we do expect market dynamics to improve because of this and also given the recent decline that we've seen in the bean price. We, therefore, expect our customers to take only limited further pricing, and we have seen customers willing again to contract further out in light of these lowering prices.

On top of the market dynamics, there's also been a number of BC-specific factors for the decisive actions we took in this environment. In Global Cocoa, we sharpened our return focus to prioritize volumes within cocoa and also towards chocolate, where we see the higher returns in the context of higher bean prices and our deleverage agenda. The impact is expected to continue into half year 1 of fiscal '26.

In North America, the intervention in our Toluca, Mexico factory at the start of the fiscal year saw a residual impact as we worked through all of that to get customers back and requalified. And finally, our SKU rationalization efforts, which are now complete, impacted volumes for Gourmet, especially in Western Europe.

At the same time, we did focus our strategic direction on the growth platforms, which have shown resilience. Cacao coatings, which we used to call our compound business saw positive growth overall, particularly driven by high single-digit growth in Western Europe and double-digit growth in Latin America, where we have supported our customers with innovation and reformulation.

In Specialties, we saw particularly strong growth in our inclusions business. And finally, in EMEA, the region was impacted by the China microclimate, but we saw double-digit growth in key geographies like India, Indonesia and the Middle East, supported by innovations, our actions to delayer our route to market and portfolio segmentation.

These market dynamics have led to 5.3% decline in chocolate volumes. And for the group, we saw a decline of 6.8%. So the group decreased more than chocolate as Global Cocoa declined by 12.8% with a strong impact from the negative market demand to the higher prices on the one side, but also due to the prioritization reasons that I outlined before.

I will, therefore, focus this slide on Global Chocolate first by region and then by segment. Starting by the regions to the left of the page, Western Europe saw a 6.6% volume drop as the demand there continue to be impacted by higher prices and the knock-on effects of all of that on customer behavior as well as some effect of SKU rationalization.

Central Eastern Europe declined by 4.4% with a very challenging customer environment, particularly for food manufacturers that are local. North America saw a decrease of 6.7% as new customer wins were offset by the difficult market environment and the impact of the Toluca intervention I talked about. Latin America saw a strong growth of plus 6%, driven by innovative customer solutions, particularly for cacao coatings, again, compound. And finally, EMEA saw slightly negative growth as the demand pressures in China and the developed markets offset the double-digit growth I just discussed for India, Indonesia and the Middle East.

By segment, to the right of the page, Gourmet has been more resilient as growth in EMEA, Latin America and CEE was offset by the challenging environment we saw on that in Western Europe and North America, again, here impacted by the SKU reduction and the Toluca intervention. Meanwhile, the Food Manufacturers segment was impacted by customer behavior shifts in this context of volatility and significantly higher prices as we've seen across the whole market and as I talked about earlier.

Moving to profits. And first, recurring EBIT. Later, I'll talk about net profit. Recurring EBIT was CHF 703 million, increasing by 6.4% in constant currencies. Looking at it per tonne, we saw a 14% increase, showing that the impact from the lower volumes was significant. Now EBIT benefited from mix as the higher profit segments like gourmet specialties and cacao coatings saw better growth than the overall group. Importantly also, the cost-plus model enabled us to successfully pass on the higher financing costs of this high bean price environment with a strong improvement in pass-through in half year 2 after some gaps we had seen in half year 1 as it does require time in a forward selling business to pass this through.

Third, delivery of the BC Next Level cost savings also benefited EBIT. At the same time, we've also seen a number of offsetting costs, some temporary, some structural. In particularly, unprecedented market disruption costs, especially in half year 1, such as the impact of steep backwardation on rolling costs and high market prices that are raising carry cost of our inventories.

These already improved significantly in half year 2. Also, we saw an impact of the lower volumes on the fixed cost base and inflation. And finally, we made some structural investments in customer experience and internal capabilities. For example, digital investments, supply chain investments such as enhancing our bean blending flexibility and capabilities, people investments and some other cost inflations, partly due to the cocoa environment like higher insurance costs on the much higher value of the beans that we are transporting around.

Closing this section on recurring net profit. Net profit was at CHF 250 million or CHF 267 million at constant currency, down 36% in local currencies. However, it's very important to distinguish between half year 1 performance of minus 69% and half year 2 performance, which was flat versus last year.

Half year 1 net profit was heavily impacted by the speed and the magnitude of the bean price increase and the corresponding working capital impact and the time it takes to fully pass through this higher cost in a forward selling business.

Half year 2, however, we did see a strong improvement to being flat versus last year, showing the strength of our actions with around 3% profit generation versus half year 1, driven by further actions to price through higher cost of financing, our cost of financing increased sharply to -- with 170 million year-on-year in sync with the higher working capital needs that we had throughout the year and the additional funding we raised for that. And we took actions to price through those financing costs, which further took effect in half year 2.

Second, a bit of market stabilization with significant easing of the backwardation in the cocoa market. And this means that the gap between the near term, the more expensive prices has been narrowing versus the long-term less expensive prices. So that has been helping in half year 2. And third, the impact of our end-to-end value chain projects and planning improvements.

With that, I will hand over back to Peter, who will talk more about the actions that we take to enhance the resilience of BC and make us an even stronger leader in this industry.

Thank you very much, Peter. So the last 2 years have been, in many ways, unprecedented. The market environment has radically changed. The entire industry was disrupted. Today's full year results presentation provides an opportunity for us to reflect about what we've done and about the journey ahead of us.

So looking back, how we have been delivering BC Next Level while taking decisive actions in a radically changing environment. And looking ahead, how we are pulling all levers to deleverage and decouple from the bean price while enabling growth and returns. So let's dive in.

So BC has seen unprecedented time over the past 2 years. We are unlocking our full potential with BC Next Level by progressing relentlessly to weather the new normal. We've launched our strategic investment program, BC Next Level 2 years ago. We are advancing Barry Callebaut to become the trusted adviser of our customers, best value, best service, best sustainability and food safety and quality with the goal of creating a better customer experience, a better scaling Barry Callebaut and a onetime cost improvement of 250 million.

As you know, due to the disruption and bean crisis and also the tariff situation in North America, we announced a delay by 12 months. Now let me be clear. BC Next Level is delivering. More than 30 initiatives are hardwired, way more than halfway through. But unfortunately, due to these external shocks, the savings uplift will only be visible in the bottom line later.

We have achieved a lot since we have started our journey 2 years ago. We've talked about the BC Next Level transformation during our results presentation about our new operating model, our footprint optimization, the SKU reduction to name a few topics shared so far. But BC Next Level is much more than this. It is a strategic investment program with 36 initiatives that bring tangible benefits to Barry Callebaut and importantly, our customers.

Now we won't have time to look at all of the 36 initiatives today. I want to focus on a few to illustrate the benefits that BC Next Level brings to BC and our customers. Before we go there, I want to thank our teams in Barry Callebaut who have worked tirelessly to get us where we are today. Thank you very much.

Starting with food safety, a cornerstone of our business. We have elevated food safety to the next level and installed 3 fire lines for safety to provide certainty to our customers at all times. One, full product testing before releases, 100% positive release; two, rigorous supplier compliance; and three, investments into technology and factory design. A great example are the auto samplers we have been installing, precise, repetitive and efficient sampling for best results. All of this is part of our larger food safety agenda.

As part of Next Level, we've done many things to improve our supply chain performance. I want to share 2 examples today. The first one that you see on the page right now, we have introduced real-time track and trace for all our road shipments in Europe and North America. We are testing this as we speak and will soon be ready to have everything at our customer fingertips.

Customers will know when their order is ready, when it leaves our factory, when it arrives at their factory, if there is any delays. On time, in full, in spec and quality delivery is a critical part of our customer journey. The benefits are obvious. With a similar intent, we've launched Ocean Edge with DHL to give end-to-end visibility on our ocean freight. We've massively improved ocean shipments with efficiency benefits, detailed tracking, centralized document repository. BC Next Level is a key enabler for a more scalable Barry Callebaut.

The next example I want to give is our new factory operating system, BCOS, a milestone in Barry Callebaut's history, a global standardized way of working to be established in all our factories. 29 locations are going live by the end of this year. We see remarkable results in a factory where we have already introduced BCOS so far. The training and the mindset shift enabled a 20% more efficient production on a 6-month period across the lines that started first. This is huge and the benefits will be coming in the future.

All our new factories like Brantford in Canada and Neemrana in India that we've started up this fiscal year are starting with BCOS from day 1 with all its benefits. BCOS is a backbone to create a better scaling Barry Callebaut for the future.

The next example is our global business services that now operates from our 4 hubs: Lódz in Poland, Hyderabad in India, Monterrey in Mexico and Kuala Lumpur, 24/7 capabilities around the globe. All four hubs are fully up and operational. Lódz and Hyderabad drive global processes, Monterrey and Kuala Lumpur support regional operations.

GBS brings significant benefits and efficiency benefits for Barry Callebaut. But importantly, it is also the base for better, more consistent service to our customers around the globe. Integrated processes, standardized workflows, end-to-end process ownership, clear benefits for BC and for our customers.

And the last example for today, and we're only covering a fraction of the BC Next Level programs. If you haven't realized by now, our annual report and this presentation looks slightly different. We've launched Masters of Taste as our new brand purpose with our global power brand Callebaut. It underscores our deep commitment to be #1 trusted adviser for our customers.

As you know, taste is by far the most important purchase driver in the chocolate industry, confirmed by 84% consumers globally. This brand purpose for us brings all of Barry Callebaut employees and our partners together and helps to drive a stronger value perception with our 15,000 customers globally, especially in the Gourmet segment.

As earlier and shortly after announcing BC Next Level, the cocoa crisis hit the industry. For decades, cocoa and chocolate prices have been comparatively stable with relatively low volatility. We all know what happened over the past 2 years. The first price spike in '24, making chocolate 3x more expensive within 4 months, a second spike in '25. Today, we're still 2x higher compared to historic levels.

This unprecedented situation on bean price, volatility and supply introduced challenges and require decisive action. We needed to tackle a lot of challenges resulting from the high and volatile bean prices and the more difficult supply situation. Increased working capital requirements to fund the inventories, rapidly increasing our leverage as well, changes in customer behavior, more short-term bookings, delayed call off, a lot of conversations with customers not used to such rapid changes in prices.

Challenges for the industry to source the beans from the right origins and the right quality. Demand and supply forecasting challenges in uncertain environment with ripple effects throughout the entire value chain, a lot in parallel, and we have been addressing it.

We have acted swiftly and decisively, including by deciding to push forward with BC Next Level. To address the bean price volatility, we installed cross-functional task forces to effectively respond to the temporary price spikes, clear action plans in rapidly changing market conditions.

I would say it brought all of Barry Callebaut closer together as a team. The level of collaboration across cacao, chocolate and the different departments is probably the highest it has ever been. As a joint team, we've secured the right financing for this environment, including the 2 billion of bond issuance in January and February '25, less cash-consuming solutions for daily market volatility as explained by Peter earlier.

But also lots of actions to secure the bean supply. We quickly diversified and expanded our traditionally more Ivory Coast and Ghana-focused origin mix. We drastically reduced our bean and produced stock inventory through various measures to minimize working capital needs. And we have a clear plan what needs to happen in the future to make Barry Callebaut even more resilient.

Let's look ahead. The focus forward is clear: deleverage and return to growth. Before we get into it, I want to provide an outlook on the cacao market. Our views differ short term versus long term. Short term, in other words, for the upcoming crop cycle over the next 6 months, we are cautiously optimistic on supply. It is expected to be broadly similar to this past year, likely a slight decrease in West African crops to be offset by growth in the other origins. Cacao prices at 2-year lows, also positive, but the volatility remains structurally higher than before the crisis and customers are all still adjusting to the changing environment. So temporary price spikes are not out of the question yet.

Long term, structural challenges remain for the industry to solve, climate change, diseases, farming conditions. We are leading the industry to secure supply, and I will share more details in a minute. The main message I want to leave with you, we are preparing Barry Callebaut to weather higher prices and volatility for longer while working to decouple the business from bean price fluctuations.

Let's get into the crop. Prices. We've all observed the recent significant drop in cacao prices. Three topics I want to highlight. One, the cacao terminal market is now below GBP 5,000, a level we believe our customers have largely priced through in retail. That's good. Short term, the market seems to have found a price that works for farmers, processors, our customers and consumers. Too early to tell, but cautiously positive to see.

Two, for the first time in 2 years, the forward curve is flat. You pay the same for cacao delivered in December of this year and December of next year. This is very important. It incentivizes our customers to book rather than wait for lower prices in the future. It also reduces rolling costs associated with hedging significantly. The flat curve is good news. Three, volatility has reduced, but it is likely here to stay, which brings us to the next slide.

Volatility. Looking at the daily change in cacao prices, let us think in before '24, cacao prices changed around [indiscernible] changes on a daily basis. This is unprecedented in terms of speed of change. Volatility has come down, yes, but we continue to observe strong reactions around selected news and [indiscernible].

To be resilient in this environment and to protect us. Volatility is likely here to stay, and we are prepared for it. Our quarterly pricing, which is tied to cacao prices, of course, has peaked in quarter 2, '24, '25. Nielsen quarterly pricing, the sellout data is only now starting to stabilize, in line with a typical 3 to 6 months B2B to retail delay we see in the industry.

We believe customers and consumers are adjusting to the new normal. Consumers' appetite for chocolate remains strong. It is the #1 preferred consumer flavor by distance. Customers, we believe, have largely priced through the current terminal market levels, and we are proactively collaborating with them on recipe optimizations, new product launches and other efforts. Short term, our customers will still continue to navigate consumer readjustments on a case-by-case basis, but we believe we are through the worst as an industry.

Let me also say, chocolate has been far too cheap for far too long. We believe actions are required to ensure long-term supply of our beloved cacao. As I said in the beginning, the long-term structural challenges are not resolved. A significant part of today's cacao supply is at risk due to climate change and disease. We are tackling this proactively, and we are leading the industry to ensure a predictable long-term supply across four areas with ingredient innovation.

Mid-July '25, we announced our partnership with the Zurich University of Applied Sciences to explore cacao cell culture technology. And today, we are pleased to announce a long-term commercial partnership with Planet A Foods. More on a few slides, 2 examples amongst many taken to deliver new chocolate experiences with less or no cacao content.

Through our sustainability program supporting the leading consumer goods companies of the world, the scale of these programs is massive and by far the largest in the industry. I want to use the opportunity to reiterate that we are ready for EUDR. We are supportive of the legislation. It is important to give the entire industry a level playing field. We are ready for -- at Barry Callebaut for our customers, and we believe traceability is the right thing to do. And we are also driving investments into small order farming and large-scale high-tech farming.

So how are we progressing with our Future Farming Initiative? Our Future Farming Initiative is designed to modernize sustainable cacao farming at scale, a catalyst to the industry to invest in farming. Under the leadership of Steven Retzlaff, who led over 2 decades our Global Cacao business, we are going forward, and we are having good news on that side. Many elements are in place to scale the future of farming. The team is making strong progress.

We've built a team of industry-leading experts working tirelessly. We have the largest nursery established in Brazil, two farms to test and improve farming methods, and we're driving productivity investments such as our AI-based cacao port harvesting robot. We've also identified a funnel of properties that fit our criteria for large-scale cocoa farming. Advanced discussions with partners and landowners to put funding and scaling models are in place. So the ingredients to really unlock the future farming opportunity are here today. The team is now working on executing the plan.

So talking about our long-term priorities. We remain focused on our four strategic growth priorities and continue to drive improvements in execution. A few thoughts how we are progressing on each of them. One, deeper partnerships. We are the trusted partner of choice for innovation and reformulation. Customers are looking towards us to provide our solutions or our new commercial centers of excellence are driving capabilities and impact while our new customer segmentation allows us to be more tailored in our service offering.

Since the cacao crisis, outsourcing was not the top priority on our customers' agenda. Today, we are making progress nicely on some larger opportunities for the future. We remain bullish on outsourcing as a key enabler to strengthen our strategic partnerships and by more deeply interlinking our supply chain to bring benefits of our scale to our customers.

Two, as shared, we've launched Callebaut Masters of Taste. We also successfully launched our pilot direct-to-consumer web shops in Germany and Austria for our Gourmet business and launched our digital Callebaut Academy.

Three, we are continuing to improve the scalability of our specialty offering through a more focused portfolio, accelerating innovation in cacao coatings and expecting and expanding into non-cacao solution and experiences.

Four, we continue to see a huge opportunity in getting to fair share in EMEA with China completely untapped. The team is progressing nicely in key markets as evidenced in the numbers that Peter has shared with you earlier. We are preparing for a return to growth to innovate, lead and grow.

Our Net Promoter Score that our customers have given us has increased significantly compared to last year, a great step towards the ambition of delivering best customer experience. This increase is driven by a few factors. Our customers especially highlight our product quality, the effective solution advisory, our understanding of their business needs and the breadth of our portfolio. This is our ambition, being the trusted adviser to our customers. Great to see the progress on customer experience.

We have in Barry Callebaut chocolate solutions for any customer needs from cacao products to decorations and inclusions. Our ambition is clear, leading in chocolate, growing in cacao coatings and launching non-cacao. I spend -- I want to spend a bit more time on 2 of them, cacao coatings previously named compounds and non-cacao solutions, and we will go a little bit more into these exciting news.

There are many reasons to accelerate our growth in cacao coatings or as we call them before, compounds. It is very high on any customer's innovation agenda right now, and it makes financially sense. Lower capital intensity than chocolate, you need less beans per ton of product, higher returns than chocolate with attractive profitability, higher growth than chocolate driven by current cacao price dynamics and push into reformulations.

You see this reflected in our numbers. Cacao coatings is outperforming chocolate in most regions. I want to call out Western Europe, in particular, the largest chocolate region in the world, where we see promising growth in cacao coatings. While our global chocolate business overall has declined, cacao coatings have grown substantially in many regions, if I may add. More to come. We are continuing to invest in this exciting category, and this brings me to another exciting news to share.

Earlier today, we have announced our commercial long-term partnership with Planet A Food, the German food tech innovator behind ChoViva. This partnership marks a key milestone in diversifying our portfolio and capturing the exciting opportunities in chocolate alternatives without cacao. It is also exemplary in how we innovate, lead and grow by embracing technology to open further avenues for growth while enhancing our resilience to today's cacao market volatility.

Let me be clear, these non-cacao innovations are not meant to replace traditional chocolate, but to complement them, expanding our portfolio to keep -- to meet growing customer and consumer demand. Together with the team at Planet A Food and its motivating founders, Sarah and Max, we can scale the production of irresistible chocolate-like creations that broaden choice without compromising on taste, quality and our commitment to the planet.

So let me zoom out again. We are well on our way with many strategic actions spanning our entire value chain to make Barry Callebaut less bean price dependent and drive growth. The goal is simple: deleverage, decouple from bean price, enable growth. This is guiding our actions throughout the organization. We are increasing our financial agility, solutions that breathe with the bean price and consume less cash. We are reorienting the purpose of cacao with a clear focus on ROIC targets for the third-party sales.

We're driving a step change in digitization and analytic capabilities. We have improvements in sourcing, as discussed previously, and conscious decisions on product and geographic portfolio to drive growth. Many new products are requiring less working capital. We've improved our operations already significantly, reducing transport time, improved visibility on stock levels, better end-to-end collaboration across cacao and chocolate, all to capture incremental value across our value chain. Our ambition is clear: deleverage, decouple from the bean price and enable consistent profitable growth.

So with that, we're moving to the outlook for the year ahead. While we've seen a stabilization in cacao bean prices, it is clear that we are still operating in a challenging environment. Our customers and the entire industry are still digesting cacao prices 2x above historic levels and the ongoing B2B efforts of that will remain pronounced, particularly in the first half of this fiscal.

Our working assumption is for a bean price in and around GBP 5,000 with continued volatility, albeit at lower levels than last year. While we've taken steps to enhance our resilience to temporary cacao bean price spikes, of course, if this were to happen, it would have an impact on our delivery of '25-'26.

As you know, the largest impact of our cacao bean prices on cash and leverage with a likely knock-on impact on volumes and profit as our customers are likely delaying orders and adjusting their purchase behavior as we saw last year as well as further prioritization in Global Cocoa.

When it comes to guidance, our clear focus is to deleverage below 3.5x and prepare for a return to growth. H1 '25, '26 is expected to remain challenged as customers and consumers continue to manage higher prices, while we aim for improvements in H2. On volume, global chocolate is expected to see mid-single-digit volume decrease. With a focus on ROIC in global cacao, this will result in mid- to high single-digit volume decrease in Global Cocoa.

As a consequence, we see group volume is expected to see mid-single-digit decrease related to bean price developments impacting global cacao return prioritization. In particularly, while we don't typically provide guidance by quarter, we wanted to be transparent and proactive share what we expect as a significant volume decrease in Q1. The key reason relates to North America, where we temporarily paused our production site in Saint-Hyacinthe in Canada due to a technical malfunction with one piece of our roasting equipment.

The factory is a significant contributor to the overall North America production was closed for around 3 weeks. The site is back up running. And while we are doing everything possible to deliver our customer orders as soon as possible, this will have an impact on H1 performance for North America. We've agreed with the Board to invest in a new facility in the United States as well as taking significant upgrade investments in existing network. This decision earlier this year comes with a delay following more clarity on the tariff situation.

On profit, we expect low to mid-single-digit growth in EBIT recurring and double-digit growth in profit before tax recurring, both in local currencies. These are on a recurring base and exclude remaining BC Next Level onetime OpEx investments of around CHF 60 million to be spent on digital and on growth initiatives. So to conclude with three clear focus areas for us this fiscal year.

First, deleverage to less than 3.5x net debt to EBITDA and delivering strong cash generation. Second, prepare for a return to growth with a clear focus on customer experience, competitiveness and unlocking new solutions for our customers, leading in chocolate, growing in cacao coatings and launching non-cacao solutions.

We will be third, relentlessly addressing optimization opportunities for this new bean price and quality environment. So with that, we are building an even stronger leader, and we are confident that Barry Callebaut can win in the new market reality.

Thank you very much for listening. We will now move to the Q&A session, and I will hand over to the moderator to start the Q&A. Thank you.

[Operator Instructions] Our first question is from Jörn Iffert from UBS.

Two as guided. The first one would be, please, on your volume outlook being down mid-single digit in fiscal year 2026. I mean, don't you expect that as you also highlighted, the GBP 5,000 COGS impact on the beans is worked through. We are maybe even entering a deflationary environment in chocolate going to 2026 or at least incremental price will be quite limited.

So why do you expect to underperform the global chocolate market volume growth again in 2026? Is there anything on in-sourcing happening? Is there anything where you see ongoing SKU rationalization on customers? Have you lost the customer? This would be the first question.

And the second question on the cost savings, can you please remind us what is the total aggregated net saving run rate we have seen now in fiscal year '25 in the EBIT? And what are the incremental net saving benefits in fiscal year '26 and then also '27?

Yes, first from my side, thank you very much for your questions. Let me just come back to your first question, which was on volume. Look, I think, as you know, we are a forward-looking business. And as we've just shared, we obviously continue to look very closely at what customers are doing.

We believe, as per our information that our customers have about price through 30% of the price point that we see today. However, there's still discussions and we see still discussions happening between our customers and the retailers as they -- or the end customers as they bring the products into the market.

So that is one of the elements why we're cautiously positive on it, but we have to recognize that we're coming from a low run rate there. The second thing that we have informed you about is the incidents that we had in the Saint-Hyacinthe facility in Canada that obviously had an impact and that we are having behind us, but that obviously will impact the first half year outlook on the business.

The second question that you've asked on -- Next Level synergies. Let me tell you that we've had in the end of the fiscal year '25, about 60% in the numbers and about 70% hardwired for synergies going forward. So progress in line with what we had set out on the agenda there. But as we've explained to you earlier, we have other cost elements that we have to address, and there's a whole array of task forces underway to deal with the new bean price and bean quality environment as we speak.

Our next question is from Jon Cox at Kepler Cheuvreux.

A couple of questions for you. One a point of clarity. i.e., I'm trying to ask another two on top. This Saint-Hyacinthe in Quebec facility closure, that is your biggest facility in North America. Am I right thinking it's like 300,000, 400,000 tonnes capacity? You said it's just closed for a few weeks and you lost some customers.

Can you just elaborate a little bit on that? I'm just trying to parse out what the impact of this thing will be on the guidance for the year. Second question, just to come back on the cost savings. Your EBIT level recurring is the same as it was last year. And I know there's a load of different things going on, but we're not even 10% above we were in terms of recurring EBIT from when you actually started this program.

I'm just trying to get a handle on how much is gone in FX. I'm guessing half of it is gone. So that 187 net EBIT gain we should have expected over 3 years now to 4 years is probably half of that amount. And as part of that, what should we see, because we can see EBIT per tonne is improving. Is it just a matter of seeing that volume growth even when it does improve, we're going to see a big step-up in EBIT growth because you're saying that eventually, it will be shown in the bottom line, but we're just not seeing it at all.

So that's a sort of broader cost savings and final impact. And then just lastly, on the financials line, we had a minus CHF 370 million there, you're talking about CHF 700 million of debt falling due, which is maybe 20% of the debt, which you've sort of used as part of this problems with the balance sheet. Why can't we expect that financials line, the net financials to come down by 20% per year over the next couple of years?

It just -- it's sort of like -- it's a big balloon on that net financials and probably going to contribute to pretty high EPS cuts on FY '26 because it just doesn't seem to be moving down much, even though your efforts on deleveraging are far better than expected in H2.

Thank you, Jon. Thanks for the questions. Let me take the first one. So the St-Hy impact has been an impact that was driven by an equipment that shut down one of our roasting facilities. You're right, it's one of the big factories, especially also for the cocoa that goes into North America. So there's a triple effect that we actually see from that. For me, the important aspect is that we have concluded with the Board to invest significantly in the North America network to bring it to the same performance level that we expect to have in reliability. And combined with the work on BCOS, we were confident that we actually will make the improvements needed for that facility.

This incident has been with us for about 3 weeks. It's a proactive activity that we have done. And obviously, there's a trickle-on effect for our North American customers. Look, we want volume back from any of those incidences that we had from the decision we took in Toluca last year, the same situation here. It's extremely painful. But as I said in my introduction, we have a clear obligation to our customers when it comes to quality, performance, reliability, and that's the rigor that we're putting into Barry Callebaut's new product supply infrastructure to really go forward.

So it's a lot of work that actually is impacted there and that we're doing. I'm thrilled to see that we have approval from the Board to build a new facility in the United States as well as to upgrade significantly the network across North America as we speak.

Yes. And I'll take your next two questions, Jon, on the -- first of all, you're talking about EBIT and the savings. I wasn't really sure you talk about backward or forward, but let me give the overall picture. EBIT has gone up indeed by 6% over the last year. We talked about the moving parts just now in the presentation. There's a positive about the mix for sure. There's positive about passing on those financing costs, right, throughout the year.

There's positive about Next Level savings rolling in, as Peter was talking about. But there is important offsets as well, which are linked to the disruption that we see in the market. Some of them being temporary because we need to price much faster, much more frequently pricing teams in place to do that.

Some of them also a bit more structural, which is really about part of the backwardation costs that we're carrying that were very high, carry costs that are higher, some investment in capabilities like digital insurance costs. There's a lot of offsetting costs as well that have been not making it see as much as you would have seen and we would have seen in the EBIT otherwise.

You asked about ForEx. We had a 45 million ForEx impact. If you then look at the reported, right? We had a 45 million impact indeed last year canceled out with the ForEx and the strengthening of the Swiss francs. We do expect another CHF 15 million on that next year, especially driven by the Turkish lira and the U.S. dollar. So also next year, we'll have smaller, but also as it looks now, a CHF 15 million impact on the ForEx.

So that's what played on that line. And then your last question was about financing costs and the pass on and especially the level, I think you asked. Yes, we landed the year at 377 million finance cost, which is obviously a big increase versus last year, an increase of about 170 million. Very much linked, obviously, to the bean price that spiked and the fact that we then, of course, had to finance this.

There's a lot about the value of the inventories, as I explained in the presentation. So we did the two bond issuances in early this calendar year, which obviously played a big role. That's a step-up that we are seeing. Next year, we will have lower levels. Actually, H2 has been lower than H1 last year already despite this funding of the two instruments in the beginning of the year because we already -- we're working on some of those levers that we've explained in the presentation.

And I think that's the positive news, right, that we are building on the operational sourcing and financial agility to bring back our working capital, which allows us to bring back our financing costs. So for next year, we do expect to be at least 40 million lower than where we've been reporting finance costs this year.

We stay in a very volatile period. We are -- we have the harvest -- the peak harvest coming up, so we need to be a bit prudent. The good news is that we're making this good progress on working capital. The other good news is that we have maturities of 700 million every single year for the next year. So it allows us to pay back debt that we don't think is we need to hold.

We are doing that already. We pay -- we are reducing commercial paper. We paid back some bilaterals. So we're certainly going to push on that lever as much as again, the bean price environment and the working capital progress is allowing us.

Our next question is from Alex Sloane at Barclays.

Some follow-ups. Just in terms of the volume outlook, I appreciate you haven't sort of quantified the impact of this incident. But I mean, in terms of the phasing of that mid-single-digit decline through the year, would you expect to be in positive growth in the second half of the year? And then secondly, if I can just come back just on -- in terms of -- there's a lot of moving parts on the next level.

But in terms of the CHF 187 million kind of net impact that you're targeting to the bottom line, could you maybe spell out sort of how much of that you actually think will have landed and be visible in fiscal '26? And how much of it will have landed and be visible in fiscal '27 at this point just in terms of sort of how much more is to come because I'm a little bit confused on the moving parts there.

Yes. Thanks, Alex, for your question. Let me just start on volume with a different focus. I think we need to be very clear that we're driving volume growth in the chocolate solutions, which is chocolate is our global chocolate, and we are focusing on that.

As we've said in the outlook, we will have a tough quarter 1 start, and we are seeing H1 to be down. We hope to recover that quite a bit in H2. And that's, I think, the key message that lands us into the outlook that we've given to you on global chocolate mid-single-digit decrease for the fiscal year.

When you look at cacao, then we have guided you that we're focusing the cacao on the core KPI to be ROIC. And for us, that is very important to understand, specifically when it comes to liquor and to butter sales to third party. That obviously correlates with leverage and our objective to decrease our leverage, and that needs to be the #1 priority. So we're focusing Global Cocoa third party on ROIC, which will then result at current bean prices of 5,000 as we have assumed, to a decrease of mid- to single high digits.

As I've explained earlier, when we see the bean price change and just looking back 1 year, you will remember that from the 1st of November '24 to the end of November '24, we literally had seen a doubling in bean price just in 30 days. That obviously has a big implication, and that's why we're giving the guidance in a distinct difference between chocolate, where we will clearly focus on regaining market share and volume. And on the other side, on Global Cocoa, where we'll focus on ROIC in order to manage our leverage -- deleverage objectives.

Yes. And Alex, on your question on the Next Level savings and then the total EBIT, again, and I'll try to be a bit more specific, right? The individual projects that we're delivering on Next Level, as Peter also mentioned, they are delivering, and we do get those savings on, let's say, GBS. We moved all these people in shared service centers. So there's certainly labor arbitrage element, which is straight into the pocket.

There's the factory closures that obviously also help directly. So it's undoubtable that these savings are landing in the P&L as such. But at the same time, we do have significant costs about disruption -- the disruption, the bean quality has worsened, which means that leads to higher cost in our factories. We need to manage higher volatility over the last year that led to our impact on our cost, which means that net, you didn't see the effect.

If we look forward specifically, we will do two things, right? We will continue to deliver and some of it will now roll of those savings of the individual projects into the fiscal year. At the same time, we will be focused on building down some of those temporary disruption costs that I've been talking about.

Order of magnitude, I think you can talk about, about CHF 100 million that will be contributing to the P&L next year. But again, it's a combination of delivering the project as such and managing the cost of disruption down in parallel.

Our next question is from Edward Hockin at JPMorgan.

I've got two, please. One quick one is embedded within your volumes guidance for the coming fiscal year, can you tell us what assumption you're making on the end market volumes, so versus that minus 3.5% that the market declined by in FY '25, what you expect for '26?

And my second question, please, is on the free cash flow building blocks. So if I'm looking at Slide 8 in the presentation. Can you maybe talk about FY 2026, how some of these moving parts should evolve to the operational free cash flow? Should we think of this 1.1 billion, 1.2 billion as a new steady-state level? To what degree should the bean price free cash flow turn positive? And just remind us of CapEx plans, what kind of level we should be expecting for FY '26?

Thank you, Edward, for your question. On the volume guidance, and specifically, when we look at the end consumer market, we continue to be very positive that chocolate will remain the #1 ingredient in any food product globally. It's the key driver for our business.

And as I always say to our employees, we have a great luxury to operate in this business that creates a little happy moment for consumers around the world whenever the sun shines or it's raining. And I think for me, that is the paramount important element here.

We have 2.5 billion consumers entering the market in Asia that now have the opportunity to invest in this category. So great trajectory looking forward. It's a great category, and I'm convinced that we will see stabilization as consumers will also adjust to the higher price points. What we've shared earlier in the presentation is that our customers have in the latest Nielsen report, seen in FMCG, so in what Nielsen really tracks, not Gourmet because that is less covered, actually hardly covered by Nielsen.

We see on the FMCG side that 30% of consumer price has gone up, driven by the chocolate industry. We had guided for that a while ago that, that is roughly by category a little bit different because you always have more or less chocolate on the product, but that's certain of what we've seen. So we believe that consumer prices have been taken at this point in time to the current bean price level of about EUR 5,000 or less or GBP 5,000 or less. So that's the part there.

So we keep on being hopeful that the category, and convinced that the category going forward will be a great category to invest in. However, as our customers are bringing that price further into the market and especially on the gourmet side, where we operate around the world with many distributors who then actually serve the end customers, the smaller bakeries, the patisserie shops, that obviously is a longer cycle that our customers have to work through.

And that is why we believe there's a disconnect still that needs to happen as in that specific industry, the prices probably have not yet gone completely through. So this is why we are thinking that the guidance that we've given to you is an appropriate guidance on the chocolate business because we think that we believe on the long term very clearly that there's a fantastic category to invest and operate in. And on the other side, we still believe that there is some digestion that needs to happen as the entire industry moves to a 2x price point on its key ingredient, cocoa bean.

And on the second question on the cash flow page in the presentation and looking forward, we are looking at, and obviously, that is needed, because we're deleveraging towards 3.5x at least. We're looking at a positive -- a strong positive free cash next year of about CHF 1 billion in our planning, which is based again on that assumption that we made about 5,000 bean price.

Of course, it fluctuates as you -- we all know very well by now, fluctuates a lot around that. Thanks to continuing to work on those big pillars that help us to make the big step in half year 2, the operational agility, the sourcing agility, the financial agility that helps to bring it down.

So specifically to your questions on those components, we will have -- if you're looking at the page, the yellow part, the investment CapEx and Next Level CapEx will have a number next year, which is similar as what you've seen in fiscal '24, '25 with about CHF 300 million CapEx and CHF 60 million one-off investments that we plan to do in Next Level.

And then the rest will mainly be operational free cash flow progress, which is the green part on the side. There's a little bit still rollover of bean price benefit because we're -- if the bean prices come down and the fact that we're forward selling, there's a bit of the benefit that we still need to come, but that's really the small part of what's remaining. The big part to get to the CHF 1 billion will be operational free cash flow further improvements.

Our next question comes from Tom Sykes at Deutsche Bank.

Just trying to sort of nail down the bridge on getting to EBIT growth. So are you expecting the gross profit to be up on volumes being down mid-single digit? Then on the volume outlook, are you expecting volumes -- what are you expecting to happen to volumes, excluding North America, please?

And then finally on -- just to understand the sort of customer behavior, where do you think inventories are for your largest customers vis-a-vis the, the kind of run rate of demand? Because I guess part of the bull case is that there's potentially a restocking as some of those volumes come back or at least as some demand comes back. But it's difficult to understand where quite the sort of industries or your customers' inventories are relative to the run rate of demand. So if you had any thoughts on that, that would be great, please.

Do you want to take the EBIT?

Yes. Your question on EBIT, I think, was specifically on the gross margin and the moving parts on EBIT for next year. Obviously, the biggest impact on EBIT next year will be the impact of the volume, right? The mid-single-digit negative volume is impacting obviously, on the gross margin line. While there will be a mix positive level because we will have as this year, right, over proportionally growing in those areas, specialties, gourmet, that delivered the better margins.

There will be a plus on Next Level savings, which is somewhat above, somewhat below gross margin and offsetting some of those structural cost disruption costs that I've talked about, reducing those. So those are the four big moving parts. There is one other part, which is the pass on of the financing costs, which also has a play on EBIT. If we have less financing cost to pass on, that might have a mechanical effect on EBIT, which is why we're guiding also on net profit before tax. But really, those are the 3, 4 components that drive the EBIT for next year.

Yes, Tom. And then to your other two questions on volume, let me start there. So obviously, we are impacted in North America quite a bit because of the size of Saint-Hyacinthe, as we discussed before. We do see Europe a bit more stable in that situation compared to North America very clearly, as our motives for the factories have improved significantly across all of Europe.

We are also in significant reformulation activity as I mapped out to go from certain chocolate solutions into the cacao coating side of things. And actually, we're leading with innovation on that, which is -- which we're thrilled by our customers actually coming to Barry Callebaut to ask for those innovations to really make a step change. So that's the positive things that we're seeing on Europe.

On EMEA, excluding China, I want to leave China aside for a second. And LatAm, we are a bit more positive, clearly striving to deliver positive growth on these environments. And in China itself, as we've said many times, chocolate hardly exists. It's a long-term growth opportunity for the industry and for Barry Callebaut, and that's what we're trying to unlock, probably not having a huge impact in this fiscal year on China, but we believe that there's a great opportunity going forward in that aspect.

On inventory, let me just share that one of our Next Level activities is also to have a better understanding of our inventory levels at our top customers, especially on the gourmet side. You can imagine that we have good discussions with our larger accounts where we will soon talk about the G20, more than the GCAs, as historically we've done that make up about 65% of the volume of Barry Callebaut globally.

On that volume, we have good discussions with our customers to understand where they are. They have clearly shortened the inventory cycle significantly as the bean prices spiked last year and going into '25 -- calendar year '25, and they retained at low level. So now the good thing is we see a bit more positive momentum since 3 months ago, the bean price actually came down a bit. So we had a bit of a catch-up in that, and we're excited about it, obviously. And as Peter has shared in his presentation, the forward curve is obviously very attractive to actually book today, right? So that's the aspect there.

On the Gourmet side, our new Next Level capabilities is bringing our top customers in Gourmet, the top distributors in Gourmet to actually allow us to see their inventory levels. We're building that database up. The software has been established. We're now in deep discussions with our customers to have far better visibility on that, and that will give us a far better understanding of the flow-through of products as we have that long supply chain from the beans all the way to the end consumer.

At this time, the Q&A session has now concluded. So I will hand the call back to Peter Feld for closing remarks.

Well, thank you very much for attending our annual results conference today. We're very much looking forward to the individual discussions that we will have with many of you later on. Thank you very much for attending, and I'm handing back to the operator.

Thank you. This concludes today's conference. You may now disconnect from the call.

Hello, and welcome to the Barry Callebaut 9 Months Key Sales Figures, Fiscal Year 2024 to '25. My name is Kenneth, and I will be moderating your call today. [Operator Instructions]

I will now hand you over to your host, Sophie Lang, the Head of Investor Relations, to begin. Please go ahead.

Thank you, and good morning, everyone. Welcome to Barry Callebaut's 9-Month Key Sales Figures Conference Call for 2024-2025. I'm Sophie Lang, Head of Investor Relations, and today's meeting will be hosted by our CEO, Peter Feld; and our CFO, Peter Vanneste. As usual, at the end of our presentation, we'll have a short Q&A session for analysts and investors. I'd like to remind you that today's session is focused on our volume and sales update, and we'll keep the Q&A session focused on discussion of those key figures.

Before we get started, please take note of the disclaimer on Slide 2, and I would also like to remind you that the webcast and conference call are being recorded.

With that, I will hand you over to our CEO, Peter Feld.

Thank you very much, Sophie, and good morning, everyone. Thank you for joining us for our 9 months results presentation. We are all aware of the challenging environment of the past 18 months. The cacao market continues to experience historic volatility. These unprecedented conditions have become the new normal and have fundamentally impacted the entire industry and value chain. Despite all of this, Barry Callebaut is holding up well and remains healthy. And we continue progressing our next level transformation.

Let me emphasize this once again. We play to win. We are leveraging our cost-plus pricing model. We have successfully priced through the cacao price increases to our customers much faster than the market can absorb at retail with a 63% price increase year-to-date and significantly increased with that revenues by nearly 57%. Additionally, our strategic decision to prioritize high return segments in cacao and chocolate speaks to our mission to deliver the world's best chocolate solutions as well as our financial ambition to deliver sustainable profitable growth. Although the market disruption led to a volume development of minus 5% year-to-date for chocolate and due to changes in strategic priority for cacao, a group volume of minus 6%.

This is mainly driven by the B2B headwinds as customers slow their buying, ordering and importantly, call-offs. This has led to an unexpected overswing reaction in demand in addition to our strategic choices for cacao. These developments underscore the importance of BC Next Level where we are delivering ahead of plan. Through BC Next Level, we are building the capabilities that are needed to succeed in this environment, becoming more agile, scaling for better and faster and operating with a leaner cost base.

At the same time, we are strengthening our financial model, and we've already started to take concrete actions to reduce our leverage and insulate our business model from these bean price spikes, setting us up well for future growth. In summary, Barry Callebaut is resilient. We're building for the future and our transformation is gaining momentum even in these challenging times. We are laser-focused on unlocking sustainable profitable growth for our next decade to drive higher returns and position Barry Callebaut as an even stronger leader.

Let me start with a few highlights on the cacao market. The price backdrop remains elevated and at highly volatile, increasing 43% in the year-to-date period. Back in May, we saw yet another spike. But relevant to note the futures market has self-corrected several times now as it is forced to reconnect with the reality of the supply situation. From a supply perspective, the expectation for a slight surplus in the past harvest remains. Going forward, we're seeing encouraging cacao productivity improvements, but it will take time to see the benefits here. In the short term, we believe the higher farmgate prices in Ivory Coast will help the outlook here. This market volatility creates ripple effects that our whole industry is adapting to. We operate in a very attractive part of the value chain, but it also leads to an amplification of these ripple effects in the short term. As customers adjust behavior at the same time, consumers are getting used to higher prices.

Our cost-plus model enables us to price through in near real time, the volatility of the terminal market. You can see we have been successfully passing along these higher prices with revenue moving up in lockstep with bean prices. Down the value chain, our customers must negotiate with retail partners without perfect visibility into how the cacao price will develop further or how consumers will respond. As a consequence, they must make assumptions and take actions in anticipation of consumer reaction that they continuously adapt, which then again has an impact on us further up the value chain.

Ultimately, Nielsen is just a lagging indicator reflecting the consumer customer reaction of the terminal market price. What we can see now is that Nielsen is reflecting the cocoa price spikes. While significantly higher bean prices will, of course, create a short-term market demand impact, we can see the category remains very resilient compared to other food and beverage categories. As we look beyond the top line figures to our strategic growth pillars, there are several things that I would like to highlight. First, we continue to deepen our outsourcing partnerships with customers. The pipeline of opportunities continues to grow, and we can see that especially in this volatile environment. My conversations with CEOs continue to reinforce this opportunity.

Second, Gourmet was impacted this quarter by a high comparison base, but continues to show strong resilience. We have delivered strong growth in EMEA and in Latin America, while continuing to reshape the way we go to market, including digital route to market showing very promising signs. Third, specialties is creating the intended positive mix effects with positive growth with the end customers, which is capitalizing on the demand for products that appeal to consumers in the context of higher bean prices, particularly in categories like ice cream and biscuit. Fourth, in Asia, we've launched our Neemrana factory in India to take advantage of the growth opportunity in that market. We are scaling up our compound Center of Excellence in Singapore. And here, we've signed a strategic collaboration in the region to accelerate sustainable chocolate innovation geared to the consumers in this region.

All discussed changes in market dynamics underpin the rationale for our Next Level investment program. The organization in Barry Callebaut continues making very solid progress to improve our capabilities to deliver better customer experience by being closer to markets while simplifying and digitizing Barry Callebaut. We made progress scaling our new operating model for our product supply environment with BCOS and continue to develop best-in-class food safety capabilities. Our new GBS network is well underway with 93% of knowledge transfers completed to date. We are rolling out various new digital tools that will deepen the partnerships with our customers and also enable us internally in Barry Callebaut to operate faster and far more effective.

And last but not least, we're seeing nice acceleration in bringing our organization along in Barry Callebaut with results of our last culture survey significantly up versus just 6 months ago.

So with that, let me hand over to Peter.

Thank you, Peter, and good morning, everyone. Let me dive in our volume performance in a bit more detail now. Sales volume has been down 6.3% in the 9 months and 9.5% in quarter 3. Now within this, it is important to distinguish between Global Chocolate, which decreased by 5.1% in the 9 months, 6.2% in the quarter and Global Cocoa, which was at 11.3% in the 9 months down and 22.6% down in the quarter. Now starting with chocolate. Food manufacturers have remained under pressure with 5.8% volume decrease, driven from the challenging pricing environment and amplified by the U.S. tariff uncertainty as we talked about. Still, performance improved sequentially in Q3 versus Q2.

Gourmet also decreased, yet was more resilient at minus 1.7%, led by EMEA and Latin America. The Q3 volume in Gourmet was impacted by the high base of comparison last year, and we also see an increased inter-quarter volatility given the specific timing of the price list increases, so a softer Q3 after a stronger Q2. In Global Cocoa, we saw a significant decline in our third-party sales as we made intentional decisions to prioritize chocolate supply in a supply constrained market and to focus on the more profitable segments within cocoa.

The business also saw significantly lower market demand, especially in areas like EMEA and CEE, impacted by the high pricing and given the more commoditized nature of this part of the business. Moving now to the chocolate regions. Volume development in Western Europe was heavily impacted by customer behavior that Peter also talked about in reaction to the higher prices like supply phasing, destocking, price pack architecture. The effect of the SKU rationalization also played a role over the full year in Western Europe, specifically also in Gourmet. In Central and Eastern Europe, we saw negative growth as the market with lower volumes for several large regional and food -- and local food manufacturer customers triggered again here by the price increases, but also an intensified competitive environment, especially in Turkey.

In North America, volume remained impacted by temporary volume pressure triggered by pricing for the large food manufacturers, the ongoing efforts to fully ramp up customers in Toluca in Mexico after our quality intervention we had there. And in the third quarter, North American volumes further deteriorated as the challenging U.S. tariff environment created customer uncertainty. Latin America continued to see strong volume growth. Brazil was the key contributor to growth with a particularly strong momentum in Gourmet and compound products. And finally, in Asia and Middle East and Africa, volume growth was positive, but much stronger when we exclude Greater China, where we and the rest of the industry continues to be very challenged by the overall economic slowdown.

Now we're working with a lot of focus on our action plan to deleverage from 6.5x net debt over recurring EBITDA that we reported at the half year 1 results to a level of 3.5x. The plan is focused on 3 areas. It's first, reducing our net working capital cycle, especially on inventory. Inventory is where we see the biggest impact of the bean price and the debt step-up that we have seen. And in this area, we've also made most progress so far with the end-to-end value chain projects and views that we are working on to improve demand planning, reduce inventory levels.

But next to that, we're also further leveraging our flex blending capabilities. We're diversifying into origins with shorter cash cycles and also further assessing the contracting flexibility that we have. Second area is obviously on increasing EBITDA and here also particularly pricing for the higher financing costs that we are carrying. In some of those segments, we have already increased prices to cover this and continue to monitor our competitiveness on that closely. We also have task forces in place with some of our largest customers on how we can jointly avoid certain costs for the industry by adjusting practices across both of our value chains. And obviously, we continue to focus on delivering the next level cost savings agenda.

And thirdly, initiatives around the funding mix and structure, so how we finance it. So one area is evaluating instruments that are less cash consuming in those peak bean moments. You've seen in the charts before those high peak volatility with high peaks and leveraging instruments that are less cash consuming in those areas are certainly going to help to reduce our financing costs. We're also making more use of inventory-linked financing solutions to reduce the dependency on this immediate fluctuations. And also on that front and across the different levers, we are making good progress. Discussions are ongoing, and we will be sharing more with you at a later stage when we report more specifically also outlooks at the end of the year.

Overall, we expect to take around 12 to 18 months to see the full impact from all of these deleveraging actions. Some are fast, some are a bit slower, but we do expect the first good step already at the end of this fiscal year.

And on that note, I will hand back to Peter to share the outlook and to conclude.

Thank you, Peter. So with the recent swings driven by unparalleled market volatility that we've just talked about and our internal decisions for cacao, we are revising our '24-'25 outlook to mid-single-digit volume decrease in cacao and double-digit decrease in cocoa with the result overall in minus 7% volume decrease for the group. And with EBIT recurring expected to see a mid- to high single-digit increase in local currency. So let me just sum up. As the entire industry is in a new normal now, we are continuing to drive decisive actions to enhance resilience and agility. One, in pricing, leveraging our cost-plus model; second, with our clear focus on our 4 key strategic pillars: outsourcing, Gourmet, specialties and Asia and importantly, creating better customer experience and enhancing agility, scalability and cost efficiency.

We are confident and continue implementing the right steps to build a stronger, more resilient Barry Callebaut for our customers, our employees and our shareholders, especially in this new environment.

Thank you very much and handing back to the operator.

[Operator Instructions] We have our first question from Ed Hockin from JPMorgan.

My questions are both actually on pricing, please. So number one, pricing in the short term, obviously, in H1, the pricing that you took was not able to fully compensate for your higher net financial costs. I think it was about 50% coverage, if I remember correctly. Can you comment on how that pricing coverage has evolved in Q3, please?

And my second question, more kind of mid- to long run is on your action plan for the next 12 to 18 months. I see the wording looks to have slightly changed since H1 and H1, the #1 topic was pricing for the higher cost of capital requirements and adjusting the cost-plus model. I'm wondering, please, can you elaborate on how those discussions with your customers are going? Are you seeing much in the way of pushback and when we might start to see that adjustment to the cost pass-through model coming through?

Yes. Thanks for your question. Let me start and then maybe Peter can take the second part of your question. So indeed, I mean, in Q1, obviously, with this, how you said, an extremely strong slope or increase in bean prices in the November, December period, we obviously already in Q1 priced through very significantly at that point in time. I think we said that in H1, we priced about [ CHF 3 billion of CHF 3.1 billion ] which is pretty unseen in the industry. But indeed, as you said, there were a few delays, especially in long-term contracts, where we're bound to long-term agreements with customers. Since then, we've made strong progress, and Peter talked about it before, both in working with our customers, how we can reduce jointly the cash cycle. But secondly, we're obviously tailoring and going further in making sure that we drive our cost-plus model into the market.

Technically, as you may know, we have 3 ways we go to market. We have partnership agreements, which are long-term contracts that are literally going in real time in pricing unless there's additional cost -- cash cycle discussions happening. Secondly, in the closed book arena, which is mainly for the FM customers and then certainly in Gourmet and Gourmet, you have technical delays simply because we are legally bound to certain periods of pre-announcements such as, for example, in France, where it just takes some time to implement pricing into the market. I think as you've seen in the second or third slide that I was sharing, we have really ramped up very significantly in, as I call it, price through in near real time into the market to a significant level of 63% year-to-date, which is quite amazing when you think about it.

Peter, maybe you take the second part.

Yes. I'm making the bridge from your first question to the second one. Of course, we're working both on regarding to those finance costs and those extra costs that we carry in the disruption. We're working both on the pricing as on avoiding some of those costs. So those are the -- and this is also what we -- to explain in this one page, and I heard you refer back to the H1 communication we had on that. Essentially, it's the same levers. Admittedly, there a little bit differently structured this time around. But let me elaborate a bit on that and give you a bit of a status. But the same levers, they -- of course, they evolve. Some of them, we see more potential, some of them we face a bit. But we have not lost traction or belief since half year 1. We're just being more specific and making progress.

So we do have those end-to-end value chain projects in place, right? When do we buy the beans, how fast in advance, which kind of cost can we avoid by buying later, what are the consequences on the way we produce on the value chain with that so -- and to what extent, of course, that also helps to reduce the inventory levels, including origins, which origins do we buy beans from because some origins have lower cycles than others. We can be flexible around that. Our flex blending capabilities are being stepped up, so we can get to the same and strong quality results with different bean sources.

We're assessing the flexibility and that, of course, we do together with customers, flexibility that we allow and have in our contracts in terms of when customers take off. Customers have challenges, obviously, for themselves as well in the market. So they need to have some flexibility. Of course, this flexibility in this disruptive market might have a cost. So we're working on that. We're obviously pushing our internal program. I didn't emphasize this in this time around in the communication, but we have our internal Cash is King program where based on strong reporting KPIs, we work on the different levers on the cash conversion cycle, inventory, payables and receivables. So that's one area.

The other area, of course, is EBITDA. Pricing comes in, as Peter talked about, not just the straight bean pricing, but also pricing through carry costs, switch costs, all the costs that are related to operating in this volatile environment. Also there, we have task forces in place with key customers to see how we can either price or avoid some of those things, which is more of a win-win even than pricing it through. And then the other levers, of course, on the cost savings side, which is the next level agenda of cost savings and next to that -- next to the next level also cycling out gradually some of those extra costs that we are carrying that also impacted H1 that we're carrying in a disruptive market. Think about pricing frequency that we stepped up, to some extent, still is manual. The shifts of the bean origins create some complexity in our factory network.

So all these things we're working on to reduce that, which will also step up our EBITDA and therefore, also reduce our leverage. And then the third element, I'm not going to repeat it, I said in the presentation, is more around the financing and the funding inventory-based solutions, other types of financing that are less susceptible immediately to short-term fluctuations in the bean price.

I hope that answers your question.

We have our next question from Jörn Iffert from UBS.

The first question would be, please, on the volume outlook. I mean you mentioned there's some temporary in-sourcing happening, some SKU rationalizations on the customer side. And also in cocoa, you're focusing more on higher-margin products. I mean, for how long do you think these things outside of the consumer price elasticity will impact your volumes? So in other words, when roughly do you expect volumes to turn to positive territory again? This would be the first question.

And the second question, please, on the competitive environment. You mentioned in Turkey, it's quite competitive. Do you observe some customers not fully priced rising financing costs, et cetera? Is it irrational pricing happening? And also what we call, it seems the government is increasingly partnering up with Chinese players to invest in grinding capacities. Do you expect this to impact your business? And yes, this would be the second question, please.

Thank you, Jörn. Just let me answer the questions quickly. So on volume outlook, look, I think the main things that I would point to is really the market volatility and disruption that we've seen in the last 18 months, combined with the -- obviously, North America with, as Peter was mentioning, with the disruption we saw with the new administration taking measures on tax and tariffs. And then our internal decision on cacao in line with our focus on cash, that obviously is paramount. So the way that we see that is that -- and you see me pivoting far more to really making sure that we look at the chocolate solutions going forward, which really is the essence and the purpose for the company.

And so with that, we will -- I believe that we will see less volatile pricing, but at a higher level, as we have said before. And I do think we can see that in the latest spike that went far less up than before. But I must say that we will continue to be in a volatile environment, needless to say, going forward. I think for us, internally, we're having far more end-to-end discussions about cacao into chocolate and how we actually really drive that synchronization of activities that we have in chocolate for cacao far more effectively, far more efficient, as Peter was also outlining with the different bean plans and the mechanisms that we put in place. So that's to the first part.

In the competitive environment on Turkey, I think that there's a quiet market where we have been cautious in the past given the currency volatility that was in Turkey. Hence, we have a strong program in place locally. We have literally developed our business very nicely, but at a lower market share level than in comparison to the rest of Europe, simply by the fact that we've been cautious on investing in Turkey versus the currency and the devaluation that was going on some years ago. So that's a little bit the situation there. There's local competitors, which in turn then obviously operate locally, and that's creating the competitive environment that we see in Turkey.

Okay. And the Chinese partnering up with the government and what we call is something which is concerning you regarding the...

No, I wouldn't say that I was just -- no, I wouldn't say that. I was just 3 weeks ago in Ghana. In fact, I met with the ambassador of China in Ghana because obviously, the Chinese government is very active in infrastructure development projects. And when you think about that we need to get fertilizer to the farms, roles matter, and that is why it is obviously important for us to engage, and that's what we're doing. But I don't think that, that is a, let's say, a significant amount of activity to the opposite, I think we're far more seeing activities in infrastructure investments and other things.

We have our question from Alex Sloane from Barclays.

First one, just on volumes. I mean you show in the presentation Barry Callebaut's performance versus Nielsen. You've shown that for the last kind of decade or so. I mean when I look at the sort of the 9-month numbers and the comparison, I can't remember a period of such stark underperformance. And I mean, specifically in North America, the delta of your volume performance versus that Nielsen has really widened materially. I mean, in that context, should we not be concerned that Barry Callebaut appears to be losing market share? Or is this just entirely about differences between kind of sell-in versus sell-out? And if it is the latter, could you maybe update us on sort of where you see inventory levels at customers and retail today? That would be the first one.

The second one, just going back to the sort of finance cost and the pass-through of that in pricing. I didn't fully get the answer there. But I think you've historically guided -- I mean, you had guided at H1 to the finance cost being around CHF 350 million for the year. Is that still the right guidance? And can you tell us how much within your updated EBIT guidance you're assuming is passed on in terms of higher financing costs year-over-year, obviously, quite an important variable.

Thank you, Alex, for your question. Let me refer back to Page 5, which I deliberately put out there. I know that BC has for the past decades, always referred to Nielsen as the best proxy of what's happening in the -- on our customer side. But what it is important to understand is in this short-term disruptive environment, Nielsen is a bad proxy to look at. And the reason that we're showing both slides here is because there's a 9-month delay between what happens in the consumer offtake and the reporting that Nielsen is doing, which also has a lag compared to when customers actually order with Barry Callebaut. And so it's paramount for us, and we're pivoting. We've actually -- I think I can share that we just fielded a B2B study because we need to have a proxy for B2B environment and give far better accuracy on market shares in the B2B environment that we're focusing on.

So I think absolutely, there's a decoupling here that we see in Nielsen and the lag, the time lag of 6 to 9 months versus purchasing activities and call-off activities of business in Barry Callebaut. Now that said, we're having eyes very clearly on the ball here in North America because, obviously, we took a major intervention last year that you will remember with Toluca in Mexico, 100,000 tonne chocolate factory that we deliberately took out for 2 months and where we're reconnecting very nicely now. But that obviously had an impact because customers had to find interim solutions elsewhere. And that is being returned and reversed at this point in time, but obviously, it will take some time to get back fully into the numbers.

Peter, maybe you take the financing.

Yes. So the financing cost and pass on, we believe we're going to land the year. I'm not going to give a very specific guidance because this is, of course, about volume, but we believe we're going to be somewhat above the CHF 350 million that we mentioned at the half year. So that's going to be a bit higher. Obviously, as the bean price comes down and as we are making our progress on deleveraging, we are, of course, going to be gradually reducing that as we get the maturities of some of the debt or we reduce some of the open debt that we can do immediately. So that will go down, but end of year will be a bit higher than what we guided in the middle of the year.

And then on the impact and the pass on, I mean, we obviously -- we will have -- we had an exceptional impact on half year 1, right, because of the speed of the increase that we saw then happening. So H2 will be significantly better. Our net profit because it's -- I'll talk a bit about -- more about that in that context because net profit is, of course, a key KPI, right, that we have very high metrics on internally. As I mentioned in my previous answer, we were both on pricing through those interest costs, but also in avoiding some of those. So that helps. We will have a significantly better net profit results in H2 than what we have seen in H1, be it that it will still be slightly negative, most probably and certainly the full year will be.

So we're making very strong progress in passing on everything that needs to be passed on. But next to that, of course, we have a bit of volume pressure and some of those extra costs related to the disruption.

We will take our next question from Liu Danping Liu from Citi.

I have 2. The first one is on financing. So I'm just very curious that whether more financing will be needed in the short term. So if I remember correctly, at H1, you had about CHF 1.6 billion cash and nearly CHF 2 billion RCF, which was not drawn out. And then you had at that point, the short term -- the current liabilities of the both about CHF 2.5 billion. So it looks like the liquidity you had at that point was just about to cover the short-term debt. So my question is, under what scenarios in the short term, will you need more financing? And specifically, since the -- I think the procurement of the main season cocoa beans is about to start in the summer. Will you need more financing to procure if everything stays as it is today? So that's my first question.

And then my second question is just a quick one on tax. I remember at H1, we had some extraordinary tax charges, and that was to do with some less favorable mix of profit before tax and then some nontax effective losses in some countries. So now we are 3 months past into H2. Directionally, do you expect any sort of exceptional tax expenses in the second half? Or just any additional color on that would be very helpful.

All right. Let me take those. I'll say a high level, of course, because it's a bit detailed for a volume update. But if I -- to your first question on liquidity, of course, that's at any update important. Just one thing to say on your -- part of your answer is that we always have kept, including in the months where the bean prices were very high, we also have kept sufficient liquidity buffer to make sure that we can absorb any peaks that could come on top of whatever peak -- the prices are. That's a very important point. It's like a very basic thing.

Our liquidity today is ample. So we have -- we certainly have enough today. We have raised, as you are well aware, within Jan, Feb with the Eurobond, with the Swiss bond, additional liquidity. We keep our RCF and an additional RCF that we have completely open. So we're not tapping into that. So we have a very significant buffer that can protect us. On top of that, as I mentioned, we are developing and concluding instruments that keep us less exposed to short-term peaks if they might come and they might come, there might be some volatility. We don't expect bean prices to stay very high for very long. You've seen it in the past, but we could have peaks, and we're using different elements to do that. But even without that, I think we are -- I am very comfortable with the financing that we have, liquidity that we have and I'm not anticipating that we need to raise more over the next months or even year.

And then you had a point about the tax. I mean, yes, you explained it well what happened in half year 1, which was exceptional for the reasons that you mentioned. In half year 2, we expect an improved tax rate versus H1. It will still be a bit above the usual that you've seen in the past of 17% to 22%, but a significant improvement versus what we've seen in H1 and no major exceptional things to mention.

We will take our next question from Antoine Prevot from Bank of America.

So 2 for me, please. First one on global cocoa. So maybe could you split a bit the performance between, let's say, powder, liquor and butter, please? Because I mean, global powder price has been improving, and there's probably some okay demand there, whereas butter is really down a lot. So I guess, demand more weakish. And so maybe splitting a bit the performance there. And how should we think about this business, let's say, going forward? You said you want to focus a bit on higher -- on better mix type of products. So what does that really mean in terms of like the term of different subcategories?

And the second question is maybe on compounds. I mean you said momentum, I think, remains strong. But with cocoa butter coming down and cocoa powder going up, would not the price differential means compound is becoming less interesting technically to use compared to normal cocoa powder -- butter sorry?

Thanks, Antoine, for the question because it goes to the heart of you could say the transformation of how we manage the portfolio and how we look at cacao really being the supplier for chocolate, right? I mean when you think -- when you go back to our November '23 presentation, we already said that we are the chocolate solutions company, and we're the best in the world. And that's what we're driving at. And so cacao needs to have the clear role that actually creates a competitive advantage for our chocolate business and the chocolate solutions we're driving. That's the whole setup, right? Now as we're transitioning into that environment, we're obviously looking very detailed at, okay, how do we further grow our compound business.

You may know that we have roughly 65% in chocolate, 35% in compound. We're the largest compound company in the world when you think about it. We barely have spoken about it, but it's a very strong capability in Barry Callebaut that we're now even amplifying with the innovation center in Singapore and the collaboration that we actually have established there. And in fact, I'm next week in Singapore for that reason. So I think that's a very important element for us to really think more through how do we leverage cacao relentlessly and get every bean to the complete utilization in Barry Callebaut. That's a key underlying strategy in the group and has been since November '23.

Now when you think about third-party sales, what we're doing there is we have obviously taken measures early in the year to think about the end-to-end needs in chocolate and hence, have deliberately taken action as the bean price was exploding to actually mitigate the cash impact in the right way. And with that, we're obviously now seeing cacao because there's obviously a delay between when you buy beans and when you then actually call off the volume into customers, we've seen the erosion that we were talking about to a large degree, self-designed.

So Peter, do you want to comment on that? Any other thoughts that you have?

No, I think you talked about powder -- powder and liquor and butter, I think powder is, of course, the majority of what we're selling into cocoa. I mean it's a good business, right? So -- and the powder prices have strengthened. But we've seen -- so it's a profitable business, but we've seen, again, the demand pressure that Peter talked about in terms of destocking, some substitutions, take customers, taking some less cover. And as I mentioned in the presentation, this category is more commoditized than the chocolate products that we're selling. So some of those pricing impacts are simply more amplified.

We have our next question from Andreas von Arx from Baader.

First question is on the dividend. Given your new shareholder structure, I mean, could there be a change in dividend policy given that maybe your new shareholders do not need, let's say, a constant payout. So maybe you could lower the dividend payout in order to strengthen the balance sheet. That will be the first question. And then second question would be on the tariffs. You also mentioned that they have an impact. Could you elaborate a bit more in detail what you expect for North America, let's say, given the current news flow, what to expect of impact if additional tariffs would come?

Let me start with your first question, and then I'll hand over to Peter for the second one. On the dividend, yes, I mean, we confirm that half year -- in the half year communication that we would maintain the dividend during the transformation at the level that it has been last year. So that was what we have confirmed at that time. I have the comfort that we can get to our leverage agenda without needing to intervene on that. What shareholders might think about that is not really not up to me to judge that. I'm focused on the deleveraging plan, and I'm working within that framework to get that done.

And maybe on tariffs in the U.S., I mean, you know that, that has an impact on the industry as a whole, not just chocolate industry. I do think, and I want to reiterate what I said in H1 presentation, we are actually very local with our business. We have operations in the U.S. We have operations in Canada. We have operations in Mexico. So we can actually pivot to actually navigate this environment in the right way. But in the short term, it has significant impacts. And Peter alluded to that in the markets -- the market developments that we had in Q3 as we obviously had like 2 announcements for 25% taxes between Canada and the U.S. and our customers as a consequence, we're simply extremely confused and worried about what is happening. And when you think about our customer base, we're not just having the big FMCG companies, but we have like more than 1,200 midsized family-owned businesses that obviously are vastly worried about the announcements and the uncertainty that was created in that.

So it's less a lasting impact on taxes. It's more a -- people are just worried about what is coming. And that is fundamentally different, I think, for us in Barry Callebaut versus, for example, the car industry because we are already very local with multiple operations and factories in the U.S. as well as in Canada as well as in Mexico, and that is true for cacao and for chocolate.

We have our next question from Tom Sykes from Deutsche Bank.

So just firstly, on customer behavior. You obviously said there's kind of a lag between what you see in buying and what comes out through Nielsen. But what are you seeing in terms of cocoa content, the chocolate content and products that people are producing? And is that something that you expect sequentially is going to put pressure on the amount of chocolate in product in aggregate? Or are we cycling now some of the effects of what we've seen over the last 6 months? And then just on -- and any differences in type of between manufactured gourmet, et cetera, would be interesting. And then just on stock levels, I mean, you mentioned destocking. How much do you think destocking is an impact on your volumes at the moment? And where are industry stock levels at different points, perhaps where your larger customers, where are their stock levels versus history, do you think?

Yes. Let me take the first one, Tom, and then we can see what we do in rest there. I think on customer behavior, we already today are the largest compound company in the world. And so we have -- there's somehow an echo. I don't know if we can reduce that.

There's clearly a lot of innovation underway. And frankly, we've already implemented many projects into the market with our customers and won new business with customers as we're driving those innovations for them in what we call the super compound area and the compound area and other things. But we also see the different angle. And depending by brands, our customers are selective in deciding what they actually do in this environment. We can -- I can tell you that we have just had discussions with a very large customer of ours who's actually pivoting to more innovation in chocolate for respective brands because that is what consumers are expecting to see.

So we see a whole array of that. But I think that is underpinning the strength of Barry Callebaut's business model to literally be the, you could say, the engineer for our customers and become the adviser for the brands of our customers to really unlock growth for them. And I think that's the strength that we're driving there. I would say that this situation has just unlocked an array of innovation opportunities for Barry Callebaut, and we're aggressively going after that because obviously, we have the capability globally in our R&D centers around the world and with our academies around the world to excite our customers with new innovation that is actually helping them to navigate through this environment. So I don't see a lasting issue. I, in fact, would say that crisis usually triggers innovation, and that's good for Barry Callebaut. So that's the first message there.

On the destocking, Peter, do you want to take that?

Well, maybe just to pick up on what Peter said. I mean, at the end of the day, we're still in a very resilient end consumer preferred taste. And the biggest shift we're going to see is to compound or even non-cocoa-based solutions, which, by the way, both have a very positive cash effect. So we're going to see some shifts in that front. But we've seen that historically that through price increases and so on, you have temporary impacts, but consumers do go back to their preferred tastes.

On the destocking, I mean, it's difficult to give you specific numbers. We've seen, first of all, and we reported on that in half year 1, that customers reduced their cover, first of all. We've also seen with that customers keeping less stock again, with high bean prices waiting for and hoping for a lower price, but also at the same time, of course, they see they have similar working capital impacts as we have, right? So they also have their CFOs and their cash focus. So it's certainly at a lower stock levels than what we have had historically, which obviously has an impact on what we have been selling out.

I'll now hand back over to Peter Feld for any closing remarks.

Well, thank you very much for joining us this morning and looking forward to seeing you in person at the next conference. Thank you very much.