Huhtamäki Aktie

Good morning, all. Welcome to Huhtamaki's Q1 2026 Results Call. My name is Kristian Tammela, VP of IR. We have today released the Q1 report and are hosting our AGM later today. We will now have a presentation first by President and CEO, Ralf Wunderlich; and then by CFO, Thomas Geust. And after that, we, as usual, have time for Q&A.

And with that, let's get started and handing over to Ralf.

Thank you very much, Kristian, and welcome, and good morning to all of you listening into this results call today. I'm, in fact, very pleased to report that we had comparable net sales growth in what you know is a very challenging market. And of course, our growth was supported also by volume growth, which is also very pleasing. Negative currency impact, which we have seen last year in 3 of the last 3 quarters already continued into the first quarter this year, which is giving us a negative impact both on the net sales side as well as on the EBIT side. However, our adjusted EBIT margin increased versus last year and is at 10%. So we are again very pleased with that outcome. Our focus on capital discipline also continued and enabled us to show a very strong cash flow in the first quarter, significantly up on last year. Again, we are, and that's the news of February, end of February now, ask to navigate the challenges which we are seeing from the war in the Middle East. So the team is on that, and that's clearly a very important task for us going forward. You have seen the latest changes of the management team, and I'm really happy to now say that we have a very strong management team in place, which will help the company going forward.

Let me dive in into the macroeconomic and geopolitical situation after the war in the Middle East started. And let me first go to some of the facts. Fact number 1 is that -- and you know this, but it's important to repeat it, that approximately 4% of our sales is coming from that region. And if I talk about the region, I really mean the UAE with our 2 factories in Dubai, our Foodservice factory in Saudi Arabia and our 3 factories in Egypt. So this is approximately 4% of our sales. What happened, of course, driven by the oil price increase, which was very steep and very sudden. It's today an increase of 75% of pre-war times. And we, of course, see all of that impacting our materials, be it resin, chemicals, solvents, adhesives, everything which is related to oil, but also on energy and logistics side, we see a clear impact. So the actions we are undertaking to mitigate this. Action number 1 and most important is the safety of our people. Really important that we take care of our people, and we are doing that, and I'm really happy to report that up to now, no 1 got hurt because of the situation in the Middle East. All our sites in the regions, the 6 I reported before, are operating. But of course, initially, we had lots of closures, and then we started with single shifts, and then now we are back to running the operations. It's very important to report that so far, we have been able to secure raw materials. But of course, there's a risk of availability in the market. So our procurement team is working very hard on making sure that we are not running out of any raw material. So we are able to continue to support our customers and reduce the impact to our customers to ensure that they continue to win in their respective markets. We have implemented appropriate actions to pass on rising costs, both with regards to our contractual terms. But also when needed, we had to talk to customers to make sure that we pass on earlier such cost increases. There is a possibility that the situation will have an impact on demand. We are very closely monitoring this and we are staying on top of what it would mean to Huhtamaki if demand would drop.

Let me swiftly move on to the actions which we started taking last year to drive value for the company. And you remember the 3 value drivers which we have implemented: profitable growth supported by all levers; capital discipline; and allocation to best projects, which we find at Huhtamaki and accountability with speed of execution. We have done that early last year, and I'm again very pleased to see that it's now really working in all our segments very well. Let me give you some examples of what we see. We see that we have now initiated with our strong sales initiatives growth. And as I mentioned before, we see comparable growth growing in the quarter, which makes us, of course, very pleased. We see that 2 of our segments continue to see also volume growth, which is, again, another very exciting thing for us. The mix improvement and the turnaround actions which we did in Flexibles are continuing to progress very well, and you can see this with our outcome in the Flexible segment. And pretty much exactly 1 year ago, we bought Zellwin Farms. Integration is going very well. It's getting close to a 1-year anniversary now. And again, very happy with that acquisition, which we did. So we are using all levers, organic and inorganic to drive growth for Huhtamaki, and we start seeing the outcome. And yes, it doesn't happen overnight. We knew this, but we also knew that we needed to start that journey.

Capital discipline. We did spend significant money before 2025, and we needed to be much more rigorous and disciplined how we allocate capital to the various segments, which we have. You know that we are splitting it in 3 parts, equal parts for maintenance, for efficiency and for growth, and that plays out really well. And of course, we are always reserving approximately EUR 10 million for what we call the license to operate. So safety, sustainability initiatives, which is very important. We are not jeopardizing any potential growth opportunities for the company, but we are much more disciplined. That is one of the reasons why we had a very strong cash flow outcome last year and, in fact, in the quarter this year, which I will talk about in a second, and then Thomas will dive in into more details later on.

Accountability and speed of execution is something which was very important to the global executive team because in a market which is so volatile, which is changing so quickly, we needed to get faster, we needed to get closer to our customers and the end markets we are playing in. And we did a number of initiatives, which we concluded last year, and we are again now seeing that those changes are helping our business segments to be faster, be closer to customers and then see the outcome.

Let me now go into more details of the quarter, and let's start with the top line, where I said that I'm really proud of seeing comparable growth growing. So you'll see the EUR 947 million outcome for the quarter, and a very, very big impact of more than EUR 60 million -- EUR 63 million of currency. So adding those 2 numbers together, you can see that we did grow 1%, which is coming from the organic side of the business and a small impact still in the quarter for acquisitions. It's the last quarter where we will see that impact. So really pleased, and as I mentioned before, North America and our Fiber Packaging business did see growth for the quarter again.

Going to the P&L. In the P&L, as just reported, we see the 1% comparable growth. So we ended up on a reported basis at EUR 947 million. Our adjusted EBIT margin did grow from 9.8% to 10%, you see the EUR 94.5 million reported EBIT -- adjusted EBIT there. If you add back the EUR 4.8 million currency impact, we would have been at EUR 99.3 million, which would compare to EUR 98.5 million so we would increase our adjusted EBIT on a comparable way.

Adjusted EPS landed at EUR 0.56 and capital expenditure was EUR 27 million, below last year, but not significantly low because we believe that we have now found the right level to continue to invest in the business, maintain the business and get efficiency out of the business. But very pleased to say and to report that our free cash flow increased by EUR 32.5 million and was positive in the quarter with EUR 10 million.

Let me walk you through the segments specifically. And let me start, as always, with Foodservice. The demand in Foodservice continued to be soft. And it's especially the smaller accounts, which are very soft for us in the quarter. That's partially driven by the Middle East impact, which is an important region for our Foodservice business, which had very weak top line. But overall, as I mentioned, smaller customers are very soft in the quarter for us. So we see a comparable 8% decline because of the weak demand, but also driven by currency on that side. So 8% comparable declined, 11% on a reported number decline.

The segment did a great work and continue to do good work on taking cost out. So we were able to manage our adjusted EBIT, and we came in at 8% margin with EUR 16.7 million in absolute EBIT for the quarter.

Capital expenditure, absolutely in line with last year, but very good work on the working capital side enabled the segment to deliver a very strong operating cash flow of EUR 17.7 million. So EUR 10 million ahead of the same quarter last year. Very pleasing to see the focus on the cost side, the focus on the cash side, and of course, working hard to get the small customers back to Huhtamaki and to make them win and then also benefit on the back of that.

Let me move to North America. And you heard us saying in the last report that we had a very significant weather impact in North America in January. In fact, we had it in 5 of our factories for multiple days. So we saw significant cost increases there, which, of course, we see in the quarter. However, what we also see in the quarter is a very strong net sales number. We see a comparable growth of 8%, which is fantastic. But I need to be clear that this is supported by an early Easter this year. Last year, Easter was a few weeks later. So we had the impact in April. This year, we have the impact, as Easter was early April, we have the impact for us in the first quarter. That clearly detailed our comparable growth. And still, we are very proud to report the 8% comparable growth in North America.

On the margin side, we ended up double-digit 10% and of course, impacted again by currency. And the big part of the just shy of EUR 5 million currency impact for the group is coming from North America, just shy of EUR 4 million from a currency perspective. And of course, we had, as I mentioned early on, we had the impact of the weather. So if you would put those 2 things together, we would have ended up on the adjusted EBIT side in North America at par or even slightly ahead of what we reported last year. So pleased with the outcome of the North American business after a very difficult start due to the weather in January.

Capital expenditure discipline continues, EUR 9 million versus the EUR 12 million last year. So again, capital discipline implemented in all of our segments, and you see it here also in North America really strongly implemented with a positive cash flow in the quarter for our North American business, which is very pleasing to report.

Let me swiftly move over to Flexible Packaging. And the story continues in Flexible Packaging that with the focus of margin improvement, that one continued also into the quarter. And we would put a lot of emphasis again on our mix. So you see even though comparable growth was down 3%, we continue to improve our mix. We continued to win with the customers which are focused for us. And so we're very pleased with the outcome on that side. Of course, that is translating with an amazing cost management and in an adjusted EBIT increase to 7% to EUR 28.6 million, with a margin of 9.5%. So they are well in the range of where we want to see our Flexible Packaging business.

Capital expenditure, absolutely in line with last year, but a very strong focus on working capital, which enabled the segment to end up on the cash flow side at EUR 20.9 million, significant increase versus the same quarter last year, so well done to the Flexible Packaging team.

And then we go to Fiber Packaging. And here, we also see a continuation of what I have reported to you last year, continue to see strong comparable growth, both driven by pricing and volume. And as you know, on the Fiber side, we are running at capacity. We are investing quite a bit in Fiber to enable us to increase capacity as this is a business running flat out as we speak today.

Adjusted EBIT increased by EUR 2.5 million and 15.2% margin, which is a very pleasing margin to see for that segment. In Fiber, we continue to invest significantly. We did it already in Q1 last year. We continued the same number this year, so a significant investment in our very well-performing Fiber business. So we spent in our Fiber Packaging business. And still, they were able to deliver a very strong cash flow, just shy of EUR 6 million, so EUR 5 million more than in the same quarter last year with high capital expenditure clearly driven by a very strong EBIT/EBITDA delivery of the number.

Let me hand over to Thomas, who will give you more details on the financial side, please.

Thank you, Ralf. Starting off with the currency impact, which still is trending negative for us. No surprise on that one, I believe, to any one of you listening into this call. However, maybe pointing on some of the biggest moving parts here. If you look at the average rate for the biggest impact, currency U.S. dollar, you see that we had in the beginning of -- in the quarter last year, a $1.05 average rate, but we now had $1.17. So despite the U.S. dollar slightly strengthening, we had a significant negative impact of that currency in the quarter. You will also see that most of the other currencies are also trending negatively. But maybe focusing a bit on the impact from the U.S. dollar. So if we take a few data points out of last year, we had an average rate of the U.S. dollar of $1.09 in the first half of the year and landing end of year at $1.13. And as you said now, we are at $1.17. This means basically that the headwind will continue still in the second quarter, although then if continuing on the current slightly flattening out then towards the end of the year. So less currency impact in the second half of the year, hopefully.

But as said, EUR 63 million almost of net sale impact translating to EUR 4.8 million in overall EBIT impact. So similarly, despite the currency headwind, I'm very pleased to say that we are maintaining our margin or actually improving our margin slightly to 10% from 9.8% previous year, and that's very much supported by still the very focused cost-out activities, so around both taking the accountability, but also continuing on that playbook, we introduced when we ran our efficiency program, which we stopped reporting mid last year, but our activities are still going on, also supported by a stable value add. Looking at the finance costs, you can see that we are approximately on previous year's level, slightly up. Here, I would say one could assume a EUR 5 million to EUR 5.5 million monthly run rate costs for that item. So we are still on the low side there for the first quarter. And then on the tax rate, we now reported [ 23.6% ETR ]. That's slightly below previous year when we were around 24% and year-end 22% -- 22.4%. So tax rate is roughly in line with where we are. And obviously, depending on where the profits are collected, tax rate is slightly fluctuating. Then looking at the EPS with all the parameters just reported here earlier, the adjusted EPS coming in at EUR 0.56 versus EUR 0.59 previous year.

Moving on to the cash flow. Ralf already mentioned that the cash flow was positive. This is not very typical actually for Huhtamaki. We are normally very strong in the fourth quarter and then coming in -- with a low free cash flow number in the first quarter, in many cases, actually a negative number. So from this perspective, we are very pleased to deliver a positive cash flow. You will see from this graph that the main contributor here is working capital. We are slightly down also on capital expenditure. And as you see, the taxes or paid taxes are higher than previous year, which is really around the timing of when the taxes come to payment. Continuing on a healthy net debt-to-EBITDA level of 1.9%. So our efforts to maintain a strong balance sheet has been delivered. The gearing is down slightly from fourth quarter. So also a positive development. And as stated on this slide, we have a significant cash and cash equivalents available. And on top of that, we also have the unused committed credit facility of EUR 450 million available. Despite that said, we are working on our loan maturities. You'll see from this slide that in 2027, we have a significant board maturing. As you've seen from previous efforts from refinancing, we are continuously and diligently working on maintaining a healthy structure when it comes to maturity. So activities around that one can be expected.

Looking at our balance sheet. On the balance sheet side, as I have mentioned so many times before, we are having translation differences on our equity, although it's slightly improved versus the year-end level of roughly EUR 34 million. The drag is still coming through on currency. And as said, I said that the working capital helped us to improve on the cash flow side. Our return on investment is still lagging our ambition, but we believe once we are getting more top line in that, that we will see -- start to see that one improving as well. And that one, then how we progress on our long-term financial ambitions. You will see that our comparable net sales is significantly below the long-term ambition. However, given the last year's trend, we are very pleased to see a positive number on the comparable net sales in the first quarter.

Adjusted EBIT margin continuing now on the double-digit level, although we normally see some weakness in the first quarter. We are very pleased to see now the double digit coming through also in the first quarter, similar to year-end '25 and '24. And then as said earlier, the return on investment is still lagging our ambition. And if approved today, then we will have the dividend payout in line with our long-term ambitions. Looking forward on the outlook, we -- the outlook remains unchanged. However, on the short-term risk and uncertainties, we have added the sentence ability to pass on increased input costs. Just to highlight the importance of now managing this exceptional cost escalation situation we are seeing in the market as Ralf was so well presenting on the Middle East situation.

And with that one, I would hand over for Q&A. So please feel free to address your questions.

[Operator Instructions]

I have a few questions. I wanted to start with North America and on currently, the volume growth outlook in the different segments because if we look at the reports -- the Q4 reports from different Foodservice names from Q4, I think the data was quite mixed. So if you could educate us a bit what you're currently seeing in the different segments in terms of volumes in North America? So that was the first question.

Maria, thanks for the question. So we were very, very pleased to see that in North America, in fact, all our 3 different segments did show volume growth in the first quarter. So retail Foodservice, which you're referring to and consumer goods as well. So we see that very strong trend, of course, especially driven on the retail side by Easter. But in general, we see this continuing. Our customers, most of them certainly are winning in their markets. So we are very pleased on the Foodservice side. You do remember that we are in North America on the Foodservice side serving especially Tier 2 customers. So yes, there is a mixed outcome for our customers in general, but in particular, for us, we had a strong quarter and we don't see any signs that, that would go in a different direction in the short term in North America on the volume side for Foodservice in particular.

And then was there anything specific on the volume development in the retail side?

Yes. The retail side is very much driven by holidays in general. So if you think Easter, you think Thanksgiving, Christmas, so there are certain parts of the year where the retail side for us in North America has very significant peak. So as I was trying to explain in the beginning, North America, Maria, we had Easter last year a few weeks later. So it clearly had an April impact for us last year. This year, it was much earlier, so it was early April. So we had a March positive impact, which, of course, helped us specifically on the retail side. But that's very normal. That's our seasonality in North America and of course, very much depends on when those states fall. We see the impact either in Q1 or Q2 for Easter specifically. And then in general, you see that our China products are keeping a very good position in North America. So we are really fortunate that we have a strong brand. We're fortunate that consumers like our brand a lot. So we see China still traveling really strongly. And again, Q1 specifically, of course, driven by early Easter on the retail side, if that helps.

Yes. Perfect. I had 2 more questions. If I take them one by one. The first one of those is still on the Foodservice, but more on the European perspective, which were declining in Q4, and we saw declines in now in Q1 as well. So if you look at month by month, I mean, do you see now the trends still deteriorating? Or are we currently seeing like some type of a bottom here?

No. We clearly see that this trend continued now for a few quarters. So we -- if there is not a specific month impact for Foodservice, it's more like the initiatives which we started last year of really going to the smaller, more local regional accounts is something which we needed to do. And you could say we should have done this much earlier. But we started it last year and we start seeing that we have good discussions, promising discussions, but we need those discussions to come to fruition. So and this will not happen overnight, but it will happen. We are absolutely confident that it will happen and that we will get back to growing smaller and regional accounts.

On the big account side, so take our largest customers, doing very well. In fact, you can see that we got the Supplier of the Year award from our largest customer that was published just I think, a few days ago. So we are doing extremely well with our largest customer in Europe and Asia Pacific. So very happy about that. Look, the one caveat, I need to tell you is we're going to see how the Middle East crisis will play out, how long this will take. As I mentioned, we have approximately 4% of our net sales -- Huhtamaki's net sales in that region. And we clearly had an impact of the Middle East after the war started on the 28th of February in March. So there was an impact to be seen how long that war and that impact will take. We clearly currently believe it will take some time. And we are making supply chain arrangements that we can supply from other plants into the region. And we are, of course, making also lots of agreements with suppliers to ensure that we get raw material. So that one is more difficult for me to tell you any timing on. I am confident that we will get the regional and smaller customers back to be selected by Huhtamaki. But I'm not telling you that this is going to happen overnight. It's a journey which we started and we will play it until we will win this.

Perfect. And then finally, I wanted to touch up on the raw materials, mainly on the plastic prices that have doubled within the last month. And here, I wanted to see that, I mean what kind of effect you will have on the profitability on doubling of the plastic prices? And how quickly do you see -- you can see -- you can transfer these prices on to your clients? And if you see any availability issues when it comes to the plastic raw material prices, please?

Very relevant question, Maria, from where we currently sit. So you're spot on with your assumption, we have a 75% increase in oil prior war and today. And of course, everything which is related to oil, and that's not just resin, but it's also for solvents, adhesives, inks but then it goes into transport logistics is impacted. And it is impacted in such a strong way that we could not just wait to tell our customers that we go with the normal lag and the normal contractual, which is typically a 3-plus month lag. But we went to our customers immediately, and we clearly had a very good partnership discussion with them to say, number one, it is important for us to secure -- that was part of your question, secure raw materials. So we are out talking with our customers and then our suppliers to ensure that we get the raw materials that we don't have shortages. So task number one, we are secured for the next couple of months, but this is really a month-to-month work now. This is not that you can secure for the long term as even our suppliers don't know exactly how to forecast and allocate volumes than at the midterm. So that's a day-to-day work. We are on it. We were on this one from day one. Second one is, of course, then the pass-through. We want to make sure that the impact to our customers is minimized. We want to make sure that they continue to win in their markets. And that has, first and foremost, to do with ensuring that we have availability of our materials for them. So that's what we are working in partnership with our customers on very hard. But we were clear from day 1 on because it was an unprecedented steep increase. It was not a small partial increase. It was an unprecedented steep increase on a very short time frame that we told our customers from day one, we have unfortunately new prices for you, which we have to pass on to you immediately, we can't just wait for the lag, which we usually do. So we are on it. We were on it from day one. This is especially for our Flexible business relevant. That's where we have most of those materials. In fact, 80% of the impact is for our Flexible business. I'm very proud of what the team is doing. They are on it. Daily -- we have daily calls. They are daily in contact with customers and suppliers. So the team, procurement team on the 1 side, sales team on the other side and then business team overall is on this. So I have a very good feel about the activities they are doing on that side, Maria.

Next question comes from Hai Huynh from UBS.

Next question comes from Cole Hathorn from Jefferies.

I have 3 on my side. The first is just trying to put some quantifications at the EBIT level. You've been very clear that you're passing on prices faster than normal to offset the polymer costs. I'm just wondering, are you giving any kind of rough guidance. Is this kind of a EUR 5 million or so EBIT impact into 2Q before it's recovered and margins are sustained from 3Q onwards.

And then similarly, in North America, you had a few different impact you had timing of Easter, which was positive, but you also had the weather. Is there any way that you could kind of quantify how those move into the second quarter, just so we can think about a run rate for the second quarter?

And then the third one is more of a difficult one to answer, but the cost increases for polymer are clear, but we are seeing logistics costs increasing globally. And I'm just wondering how you are discussing with your commercial teams to try and recoup that from a pricing perspective because we haven't necessarily seen the folding carton prices move, but logistics are a cost that you will need to recover or at least get some efficiencies. So I'm just wondering how you're thinking about pricing for the business from here?

Thanks, Cole. Look, so 3 questions. Let me start with the first one on the raw material impact for the quarter. So we are really looking at this from a full year perspective. And if you go back to 2022, so post-COVID, where we had a very similar issue. The difference was it was not as steep and maybe also not as big. But we have the system in place. We have a very systematic system in place to ensure that we are passing on, on the one side. On the other side, as I mentioned also to Maria before, we are making sure that we have the raw material available. And number three, we make sure that we are not upsetting customers. So if we always take those 3 points, is our target here to make sure that we deliver. We have a very, very strong feel that for the year, this will clearly help. The reorganization of our procurement organization last year to have a global organization is also extremely helpful here because they have an overview, not about just one region or certain suppliers, but they have the global overview, and they are well aware and well trained on how to do this on the supplier side as well because it's not just that we are accepting any price supplier is giving us. Of course, we are making everything we can to, number one, get the materials and number two, make sure that we have the lowest negative cost impact as we can. So that's a general answer. So I'm very positive for the year. And I'm also positive, I have to say that there will not be a short-term significant hit for us, Cole, because of the daily work the team is doing, because of the daily work the team is doing and they did not wait after the 28th of February for a few weeks, but they went on to it immediately on all fronts, as I said before. So I'm very confident, number one, with the experience which we have after COVID. Number two, with the experts and professionals we have in procurement and in sales that we are able to do a good job in passing on and making sure that we are making our customers continue to win in their markets. That's point number two. Point number two, I think you asked me about North America and how Easter plays in. And let me start by giving you a bit more flavor about Q1. So if you think about our reported number for Q1 in North America, I would encourage you to add what I said in my presentation, the approximately EUR 4 million of currency impact into North America. So if you do that, you go from EUR 34 million to EUR 38 million. And then I mentioned to you without giving a number that we had a significant impact of the weather in North America in January. And I mentioned too, I don't give you a number for that, but I give you a flavor that we would have ended up the quarter ahead of last year's quarter. So you can make your assumptions and that it was a good quarter, which, of course, was positively driven by additional volumes from Easter, which we will not see in April. But then we will see in May and June, we will see 250 years North America coming, and we will see a World Cup coming. So for the quarter for North America, we see, of course, an Easter, which is gone, but we see a couple of things at the end of the quarter, which should help our retail business, which is the one which is mostly impacted by Easter seasonality.

So overall, North America Q2, I think, of course, we will have the April Easter impact, but I see a May and June impact, which with the 2 factors I mentioned, 250 years North America and World Cup, which should help our business there. So that's my answer to your second question.

And the third question is also very relevant. That was all about logistics, transport, other raw materials impact there. And first thing first, other raw materials. Yes, you're right. We don't see that impact yet. We stay tuned if it comes that we are -- again, like we are doing on the resin, adhesive solvent side, inks side now that we will be on it very early on. And in a very clear way to make sure that we get availability, that we satisfy the customers and that we pass on our costs. Logistics, transport, that's happening. And it's happening in 2 fronts. One front is it's partially very difficult to get logistics and to get transports because that of the street still being closed, even although there is a ceasefire, the streets are still closed, and there's a lot of logistics and transport currently not available. That's one. And the other one is that those costs, as we see ourselves when we go to a filling station, prices are going up significantly or book a flight ticket today, prices are going up significantly. So we see that. And what we do, of course, also, like, on the raw material side, we talk to our customers that we need to have surcharges and to pass on those costs as much as possible as there is a clear increase, very visible, Cole. Hopefully, that was answering your 3 questions.

That was very helpful. And on the logistics side, that includes actions on just the fuel charges even for kind of North America. Are you doing some kind of surcharges there on any of that to just logistics?

Absolutely, Cole, we do.

And then I've got one from an investor just asking on potential for M&A considering the world is more uncertain. You do have a good balance sheet. How are you thinking about opportunities if they arise and someone is under pressure here in an uncertain world.

Yes, thanks for asking that one very relevant question. And absolutely, yes. So when we talk about our value drivers, I always -- and I know that Thomas and Kristian do the same, we make sure that we are very clear that we are looking at organic and inorganic at all levers. And we are very active on the M&A side. It doesn't look like that because we did only one deal last year or more or less exactly one year ago. But it's because we are so disciplined and we do not want to fall into the trap of doing a deal just because we want to deal, but we want to do it when it fits, when it's financially value accretive to our shareholders. And when we can actually run it with the management team, which we know and which we have in place with a culture which fits to Huhtamaki's culture, only then we do it. We could have done a number of deals but we didn't do it. We choose not to do them because of either one or more of the factors I just mentioned wasn't fulfilled. So we are very clear on that. We are still out there actively looking at that. And to your specific point, we believe that the uncertainty which we currently have might help us to get deals which are going to tick the 4 boxes I just mentioned. So we are working on it. We continue to be disciplined, but it's high on our agenda and our strong balance sheet will enable us to do it.

The next question comes from Hai Huynh from UBS.

Just checking if you can hear me now?

Yes.

Sorry, I ran to some trouble earlier. So my question is on working capital. Q1 was much less negative than last year. So can you unpack what drove the improvement, especially on the payables and whether this is mainly timing, does that change anything in the cash flow dynamics seasonally for 2026?

No. Look, we are with our 3 value drivers and the second one, so we just talked with Cole, about the first one, growth. But let me then talk to the second one, capital discipline. We are continuously making good progress on that value driver. So for us, cash delivery is super important in all times, but specifically in times like now, so -- and we are also here looking at all the various drivers for cash and CapEx is one, and that's the easiest one to see, but working capital is another one, which is super important for us. So we believe that if you specifically talk payables, we always look at payables and receivables together, and we believe that we should have similar days outstanding for either the payable or the receivable side. And of course, we will have to ensure when we talk raw materials, Maria and Cole had questions about the impact of raw material. Of course, there's the one work, which is the passing through and making sure customers win but there's the other side of it, which is that there will be a negative impact on our working capital because of the increase. I think that's obvious and understood by you, Hai, but I just wanted to make sure that I make this point not to confuse you when we have Q2, Q3 calls going forward. So if that continues, we will see that impact -- that will be a negative impact on the working capital side. But generally, if you take this on to the site. Generally, we are clearly improving our working capital management. It's high on our agenda as CapEx is and as other points in our capital disciplines are.

I have 2 left, you don't mind. One on Flexible and one on Fiber. And apologies if this is repetitive as I've been dropped off the call a couple of times. But firstly, on Fiber, how sustainable is this current growth in Fiber ag and food packaging, what does the order book look like? And are there signs that pricing may normalize after the recent run?

So look, on Fiber, we feel very good about our position. We have a really good quality, very good contact with our local and regional customers. We were on, if you think about our operating model and again, when I talk value drivers. The third one. So I answered Maria really and Cole on the growth. So the first bucket of it, I answered then Cole specifically also on the second bucket and also for you on working capital, second bucket, capital discipline. And now if I think about the accountability model. Of course, the Fiber segment was the first one on -- into that bucket, working really on making sure that the local and regional accounts are served very diligently, and we have made significant progress on that side over the last 12, 15 months. So kudos to the team on that one. That is why we are so strong on both the volume and the pricing side on the Fiber part. I make sure that in every call and I did it today, but let me stress that one high again. We are investing quite a bit behind our Fiber segment. We've done it last year, it was the only segment where we increased CapEx last year significantly. We have again matched our CapEx in the first quarter to last quarter. So again, we are investing behind Fiber because we need more capacity. We are investing in a number of regions. We are investing in Egypt. We're investing in the U.K. We are investing in Czech. We're investing in a number of our regions to ensure that we get more capacity because our Fiber business is traveling strong and more capacity would enable us to get to even more exciting growth numbers for our Fiber business. If you think Fiber and maybe a point, I'm sure you know this high from former discussions, but I can't resist telling you. Of course, for us, that's mainly ag, but it's not only the ag business. We are starting to really focus also on fruit. And a lot of our investments and a lot of our activities are going also into fruit packaging, which is going to use the same raw materials, the same machineries, but it's a market where we are currently very small in, and we believe we can grow the food packaging market with our rough molded fiber products nicely as well.

That's on the Fiber side. Did you have a question on Flexibles? Maybe I missed that question, if you wouldn't mind repeating it, Hai.

Yes, sorry, I got dropped again, but I managed to catch your answer. And then just on Flexible. You mentioned a few big contract wins a few quarters ago. When does that start to meaningfully at? Is that within this year or that's more of a longer-term point of view?

We are pretty confident that it will start happening this year. So we have successfully trialed. We have successfully now qualified. So we will start seeing this in 2026 already, Hai.

That was all we had time for today. Thank you so much for attending. And again, as normal, should you have any further questions, please feel free to reach out. With that, we wish you a great day. Thank you.

Good afternoon, everyone. Welcome to Huhtamäki's Annual Sustainability Results Call. My name is Kristian Tammela, VP of Investor Relations. With me, I have Rahul Nene, our Head of Sustainability Center of Expertise. He will first present today our sustainability performance in 2025 and then talk and present more in detail the strategy and next steps for us. After that, we have time for Q&A.

And with that, I'm handing over to Rahul.

Thank you, Kristian, and hello to everyone who is dialing in. As shared by Kristian, I'm Rahul, and I head the Center of Expertise for Sustainability at a group level for Huhtamäki. And I would like to begin today's call by going through a few highlights on our 2025 sustainability performance. As you can see, across various pillars of sustainability, we have seen good progress happening. And I would like to first emphasize on something that I'm personally excited by, which is our updated climate targets.

In 2025, we updated our climate targets on Scope 1 and 2 short term to be aligned with the 1.5-degree trajectory on Scope 1 and 2. What this means is that we are becoming more ambitious on our GHG reduction targets in absolute terms. While we did this on Scope 1 and 2, we also updated our targets on Scope 3 and I'll talk about this a bit more as we go through the presentation.

While this is more in terms of the targets, the actual performance, we increased also renewable electricity to 60.6% at a group level which also impacted a reduction in terms of our Scope 1 and 2 emissions by 4.5%, again, something that I will deep dive a bit later on.

Moving to other topics and KPIs and the environment, something that we are proud of, which is the waste management that we have, about 84.6% of our non-hazardous waste went to recycling. That's again an improvement over our 2024 numbers. And that also helped us reduce our waste to landfill. Earlier, it was 5.5%, and we have reduced it to 4.7% in 2025.

Moving to our social pillar. We have a strong performance on safety with 4% reduction in our total recordable engineeries and we also have a higher employee engagement participation, again, an uptick from our 2024 performance. Moving to product sustainability. We increased the percentage of raw materials that were either renewable or recycled to 67.9%. This helps in moving our products to a more sustainable structure, but also helps reduce our Scope 3 emissions. So it is also one of our decarbonization levers on Scope 3, and I will also talk about it briefly a bit later.

Talking about the G of ESG, that is the governance. This is something that we really focus on and is one of our value systems in the company, taking one indicator, which is our code of conduct for our employees. So 98.5% of our employees completed the new updated code of conduct training, which again was an improvement over the 2024 performance. So this is more or less a high-level highlight on our performance across ESG. And what I'll do is now I'll do a bit of deep dive on each of the topics.

Starting with Climate and Environment. As shared earlier, while we updated our climate targets, we also continued on our progress on our GHG reductions, focusing mainly on Scope 1 and 2. As you can see, Scope 1 plus 2 as compared to 2024, we reduced by about 4.5%. So that continues our progress on absolute GHG reductions independent of the production growth. In terms of renewable electricity, which is one of our key levers for decarbonization, we improved our performance from 59.1% to 60.6% in 2025. And that, of course, you can see reflected in the Scope 2 reductions. In terms of waste, from 81.6% to we moved to 84.6% of non-hazardous waste being sent for recycling. All of these actually also help our scope 3 reductions, which helps finally on our targets that we have now taken on Scope 3.

Again, I'll discuss on the next slide. From a percentage of fiber, that is dependent on forestry, which is the virgin fiber or then the fiber that we used, which is recycled waste, about 98.8% of our fiber use was either certified or recycled. There's a slight change as compared to 2024, but that's more coming from the product mix.

Going a bit more in depth on our climate targets, as I was speaking earlier. Earlier, we had climate targets that were aligned with the well below 2-degree trajectory. So they were slightly less ambitious. And if you could -- if you can see our performance till 2024, we had been doing really well. And now we have updated our climate targets to a 1.5-degree trajectory aligned for Scope 1 and 2 for the short term. At the same time, we have committed to setting a net 0 target for 2050 and we will be setting this target by October 2027. On Scope 3, we have committed to reducing absolute Scope 3 emission by 25% by the year 2030. And for both Scope 1, 2 and Scope 3 we have a new baseline, which is a 2022 baseline. The good news about this is these targets were validated by the science-based target initiative at the end of December.

Now while this validation definitely seems like just a tick mark, actually, those who are aware of it, this process is quite cumbersome and quite in-depth. We know companies that are stuck in the validation process for months and months together, but we were able to quite sail through the validation process, and that's actually a testimony to the robustness of our data management around emissions and the decarbonization levers that we have. So that's a good news that's coming from us. And then we are looking forward now to engaging with our suppliers to reduce our Scope 3 and then, of course, working on our own operations to reduce our Scope 1 and 2 emissions further. To just give a flavor on the kind of projects and initiatives that we are taking to reduce our Scope 1 and 2 in line with business realities, I would just like to highlight one project, which is coming out of India. In India, we are investing in a solar farm through a model, which is called as a group captive model, where we, along with a developer, we form a legal entity, which is a special purpose vehicle.

And we invest in a solar farm that's around about 100 kilometers from our existing plant in Khopoli. This plant generates solar energy to the tune of 50% of the renewable -- sorry, 50% of the total electricity requirements of Khopoli plant, and it replaces it by solar energy. While it replaces it with renewable energy because we have invested in this kind of a model, it also gives us a certain leeway on the grid electricity charges so that the investment actually has a return of less than 1 year. As you can see from the slide, the total investment amounts to about 320 KEUR, but whereas the annualized savings are about 600 KEUR. And this is something that we want to highlight that these are the kind of initiatives that now we are looking out where we can reduce our GHG impact. We can transition to renewable energy, but also support the business.

For example, the total benefit out of such a project is that we will reduce our annual emissions by about 9,000 tonnes, which is about 2% Scope 1 plus 2 emissions of the entire group. So in one action, we are reducing this impact with a return on investment that's less than 1 year. Moving to other topics, which is people and product, starting with people and health and safety. We have a lost time injury rate on a 12-month rolling basis at 1.23. This performance is more or less in line with what we had in 2024. And if you look at the total recordable injury rate, we achieved 2.57, which was a reduction against our target, which was of 2.66.

Moving to product. As I shared earlier, we improved the percentage of renewable and recycled materials as part of our total raw materials. We moved from 66% to 67.9%. And as shared earlier, this helps us reduce our Scope 3 emissions as well. Specifically talking of product sustainability. And as you would know, our company's North Star is to be the first choice of sustainable packaging solutions. We have a wide array of sustainable products that are available to our customers. And here on this slide, I just want to present a few of such examples, which we present to our customers as potential sustainable solutions. As a company, we have options across various materials.

So we say that we don't really focus on one material, but we choose a material that is sustainable as per data and as per infrastructure and regulations in a particular region. But you can see across our flexible food service, North America and Fiber Packaging segments, we have a wide array of potential solutions that could be presented to the customers.

Starting with our blueloop solutions with high barriers on PE as well as paper-based in flexibles to our egg cartons in fiber-based packaging, to our icon packaging in North America to our foodservice packaging, an example is ProDairy. This is what we bring to the table, where we deliver functionality, sustainability as well as financial commercial benefits to our customers.

Specifically talking of 2025. I would like to highlight a few examples where we have been successful in delivering on the customers' requirements when it comes to sustainable packaging solutions. An example is ProDairy product range. This is more for our yogurt and dairy applications. This kind of application is quite tricky because it requires stiffness in terms of being able to stand on the shelves and having a good fit with the lead, it needs to have good moisture barrier to -- especially in chilled conditions because they are stored in, say, refrigerated environments. And then that generally pushes the plastic content of such solutions to more than 10%.

But to comply with the regulatory requirements in EU, we have been able to develop a product range targeted on this application with less than 10% plastic content is 100% recyclable, but still delivers on functionality.

Moving to flexibles. We have had some success cases with our recyclable flexible packaging solutions made out of polyolefins. Typical applications where we have been successful are hair color, pet food and soup packaging and that helps us meet our customers' ambitions of transitioning to recyclable packaging solutions. Fiber Packaging, which 100% uses recycled paper as a raw material, that's a business segment that we have grown, and that actually pushes our actual supplies to our customers on sustainable solutions quite up. These solutions are recyclable or home compostable, take away literally newspaper waste away from what could be a landfill or composting and then make usable packaging out of it. So applications such as eggs, fruits and berries, these are typical applications that we find use of with these solutions, but that also helps us deliver a strong performance on our sustainable packaging solutions.

All in all, putting this all performance together, we are widely recognized by the most popular ESG disclosure agencies across CDP, EcoVadis, MSCI, Sustainalytics are examples where we disclose voluntarily and you can see the performance. I will not read through everything, but quickly going through it. On CDP, on climate, forest and water, we are rated B throughout EcoVadis, we are rated gold for the fifth year in a row now. And if you can see, even within being rated as gold, we have moved from a score of 75 to 79, so we have progressed. MSCI, we continue to be rated at A. And under Sustainalytics, we continue to be rated as a low-risk company. So this was just of our overall performance on sustainability, some of the key KPIs that we have progressed and how this is getting perceived even by the disclosure agencies.

Next, I would just like to speak a bit on our sustainability ambition, how we are planning to implement sustainability in the years to come and then across the business segments. However, before I go into the exact sustainability ambition and go into typical KPIs and sustainability-related indicators, I would like to start with the overall profitable growth strategy of the company. As shared earlier, our 2030 ambition is to be the first choice of sustainable packaging solutions. And how we deploy this is through our value drivers, which is profitable growth, disciplined capital allocation and accountability and speed of execution. Now it is in these growth levers that we work with sustainability. So the way we look at sustainability, sustainability needs to support all of these growth value drivers, which ultimately supports the growth of the company.

Now starting with profitable growth. Of course, our entire sustainability performance across climate, deforestation-free supply chain, product sustainability and social sustainability helps us deliver on our customers' requests and expectations on sustainability. That ultimately helps us support our profitable growth with them. From a perspective of disciplined capital allocation, an example, like I shared of the Khopoli project, these are the kind of projects that we are trying to implement so that we have a disciplined financial allocation in terms of our resources. We get the maximum return on them, but also are able to progress on our sustainability ambitions. And coming to the accountability and speed of execution, this is something that we have spent time clarifying in terms of our internal ways of operating on sustainability.

It is absolutely the business segments that are accountable to drive sustainability prioritized basis the impacts that they have. This is absolutely critical for success on delivering sustainability because sustainability no longer is seen as something that is external to the business but has to be integrated well into the business planning. And that's why we are excited by ensuring that the accountability lies in the businesses. With this background, I would just like to recap how our ambition is placed at a group level.

As shared earlier, focusing on climate, our 2030 targets are now aligned with the 1.5-degree trajectory on Scope 1 and 2. And then we also have Scope 3 targets of 25% reduction by 2030 and a commitment to set net-zero targets for 2050. From an environment perspective, critical topics that we focus on are deforestation-free supply chain, waste reduction, waste disposal and the use of water, specifically in certain technologies that we have. Talking of social responsibility, we want to act as a responsible employer, and we continue to strengthen our processes to manage human rights across the value chain. From a product sustainability, this speaks directly to our North Star to develop solutions that are circular.

Overall, in terms of the way we do the governance and processes, it's a framework that we -- that is based in our value system and our ethics and compliance to ensure that we mitigate any risks, and we don't have any negative impacts. Now this -- while this looks at the overall group picture, if you go into a bit more detail especially in each of the business segments that we have, one can imagine that the production technologies that we have in each of the segments are very different from one another. A very quick example for you to understand this is, for example, in our fiber packaging. We use 100% recycled paper. We use water in our production, whereas if you look at flexible packaging, there is absolutely no water usage in our operations. So having a common objective, a common target across technologies does not make sense for us.

And so we spent time in 2025 to really prioritize and focus the topics that are most important for each of our business segments. And then these priorities have been now built up to form what we are seeing as a sustainability ambition for the entire group. And this is what I would like to discuss in the next slides. As you can see, these are some of our priorities at a group level, starting with climate, deforestation-free supply chain, traceability on fiber, human rights, 0 accidents. And then you can see a few words which are saying as minimizing and maximizing. And the reason they are there in this manner is because these are the topics which have differing impacts the basis the technology that we have. And I'll discuss this in a couple of slides.

So what we have tried to do is we have to -- we have tried to separate our sustainability ambition into 3 parts, which we call as core common and distinct. We see that there are certain topics like climate, where all of our production technologies, all our business segments have an impact, and we need to have a group approach and a group target on those topics. Whereas there are other certain topics like water consumption, where only a specific set of technologies and specific business segments have an impact, and we want to focus our actions on those topics only in those segments. So we don't have overarching targets on these KPIs for all business segments, but on certain topics that are very relevant to a particular business segment, then we have only a segment relevant KPI and a target setting. What this helps us to really do is focus and prioritize our financial human resources on actions that are most relevant to the technology rather than having a common top-down approach on sustainability.

And this is what I'm trying to emphasize. While looking at the group picture, if you refer to the couple of slides earlier, where I spoke about climate, environment product, you would not see much of a difference because at a group level, we are still focusing on all those topics. But the way we are implementing is very much closer to the business. The priorities that you see over here are agreed in our bottom up, starting from a factory level to a business segment and from the segment to a group. The target setting has been done in terms of what is relevant to that particular technology and not necessarily having a common group target across all technologies. And I think I have emphasized this earlier, but again speaking, the accountability to deliver on these KPIs on these targets is very much close to the operations with a central team that is acting as a center of expertise to guide the segments on technical topics and overall direction to take.

With this background, I just wanted to share how this ambition is now distributed across segments. I will go through environmental, social and governance topics. As you can see, some of the topics have been marked as core. And as shared earlier, these are the topics where we see that there is impact and relevance to all technologies, all segments within the group, whereas some of the other topics have been nominated as common or distinct. And these are the topics where we see that only specific segments have an impact or have a potential to improve. So I'll just go through what they mean for us. On the environmental side, product sustainability and climate are topics which we see as relevant across our group and hence, they are core, and they will have group targets and they will have a group approach which is relevant and applicable to all segments.

On the social, health and safety, being a responsible employer and human rights are topics that we see have relevance across our segments. And then from a governance, conducting business responsibly and then managing impacts and risks in the value chain and in our operations from a way of business -- way of doing business perspective is something that we see relevant across our technologies. However, if I go into specific segments and technologies, all the places where we use raw materials, which are dependent on forest, which is basically virgin fiber, that is where we have a strong focus on deforestation free and conversion-free supply chain. So in brackets, you can see certain names of our segments. So our Fiber technology, our Foodservice and North America, these are the segments that use virgin fiber or recycled fiber and need to have a focus on this work stream whereas waste generation and disposal, we see that our major challenge is coming from fiber technology and certain factories in North America.

So we have a focus from a waste generation disposal in these places, whereas we are focusing on water consumption in our fiber technology plants where -- which is the only technology in our group, which uses water for production. So that's where we are really focusing our efforts in terms of reducing our water consumption. Just to clarify, this does not mean that these are topics that are not at all relevant for other technologies or businesses, but this is where our attention in terms of improving our progress -- progressing or improving our footprint is. While other segments, they continue to monitor and report on these KPIs and all of these numbers are still taken together at a group level for reporting.

And last but not the least, there are certain priorities that have been considered as absolutely segment priorities relevant to a specific technology, which we have called out as distinct. And as an example, you can see the solvent use in flexible packaging. This is something that we use only in flexibles and has a relevance over there. So while the group may not have a target on solvent use, flexible packaging as a segment is highly focused on reducing our origin solvent consumption and recovering our solvents. So all in all, this is how we have set up our sustainability ambition. And we hope that with this prioritization, clear accountabilities and focused resources, we are able to progress further on all our KPIs and indicators.

With this, I stop my presentation and now I open up for any question and answers that you may.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers.

All right. There seems to be no questions today. And again, reminding you if you have any follow-up questions, you can always reach out to the IR team. With that, we'd like to thank you for your attention and wish you a great day. Thank you.

Good morning all, and welcome to Huhtamaki's results call for the fourth quarter of 2025. My name is Kristian Tammela, VP of IR. Today, we have a presentation, as usual, first, by our President and CEO, Ralf Wunderlich; and then by our CFO, Thomas Geust. After that, we will take Q&A.

And let's get started handing over to Ralf.

Thank you, Kristian. Good to be back, and good morning also from my side. Look, I'm going to give you the high-level overview about the business also by segment. And then Thomas, as always, will walk you through the financials.

Look, the volatile market environment continues. Geopolitical issues, tariffs, very strong ForEx movements over the year was continue, so you name it, we had it during the year and unfortunately, also in the quarter. I am, however, really proud to say that 2 of our segments continued to see volume growth in the quarter and for the full year. That's really encouraging for us to see and hopefully we'll get the rest of the 2 other segments to follow in the future.

Look, I mentioned already the FX impact, which we have seen, just to give you an idea that in the quarter -- last quarter '24 before we started '25, the U.S. dollar to the euro was at EUR 1.04, it finished the year at $1.17. So you can imagine how much only the impact on the U.S. is, and Thomas will walk you through later on also on the other currencies impact. We are really, really proud to see that our adjusted EBIT margin improved second time in our history, above 10%, both in the quarter and the full year at record highs. So really pleased to see that. I'm also really pleased to report that our adjusted EPS at EUR 2.48 is a repetition of last year and with that also at all-time high levels. The Board of Directors will propose at the AGM a dividend increase and it will be a dividend increase if approved at the AGM to EUR 1.14 per share.

We started the year when I talked to you exactly a year ago, about our 3 value drivers because we wanted to be simple, pragmatic about what is really impacting us going forward and we have defined them and presented a year ago, and we followed through those 3 value drivers during the year. I can tell you now they are well established and really helping us to deliver shareholder value. Number one, and that's always going to be important, but especially important in a volatile market, which we are currently seeing is our focus on profitable growth. And we want to support it by using all levers, organic and inorganic levers. And it's an approach which is going to be very much linked to our customer relationships. We've got to strengthen the intimacy with our customers and drive their partnership forward with us.

On the inorganic side, we are looking at bolt-ons, which makes sense for us, either because they're exactly in the geographies we want to win, in the markets, the substrates we want to play in and with management teams where we have a great cultural fit. So we had one last year. We announced on the 24th of April, our acquisition of Zellwin Farms and I'm proud to say that, that acquisition and integration is well on track and delivering as we were expecting it. I mentioned before, that we saw volume growth in 2 of our segments, that's, of course, very pleasing to see in the current environment. But it's also good to see if you talk about profitable growth, that our Flexibles segment is progressing really well, and we have launched turnarounds, and I'll cover that later when I talk about the Flexibles business. But to preempt, we are really proud with what we are seeing happening on the Flexibles segment side.

Moving on to capital discipline and how we allocate capital to the segments. We made it a point last year that after a few years of heavy investments, more than EUR 300 million, EUR 320 million per year, we needed to actually be much more disciplined on how we allocate capital and making sure that we allocate it to projects which can deliver growth, can deliver efficiencies. And of course, we will continue to support our businesses when it comes to maintenance. And then remember, our formula 30%, 30%, 30%, 10%, and then there's a 10%, which we will continue to invest in safety and sustainability to ensure that we have our license to operate always in place. Now the outcome of this year is really, really good to see. We have significantly lowered our CapEx. We have still invested in growth projects, which we needed to, especially on the Fiber side, and we continue to be very, very disciplined with a very strong focus in this area.

Now third one is more on how do we get there, and that is about accountability and speed of execution. We wanted to empower the segments that they have a very clear accountability and drive their segments in the way they need to and still offer from the center, language, coordination, expertise whenever it's needed. That is going really well. We have implemented this now globally in all our segments, slight differences in the segments depending on what they need in their regions or segments overall, but it's going really well. The one area where we said we're going to leverage much more the power of Huhtamaki is procurement. We've put first of April a global procurement organization in place and again, also here, we see great achievements and a really good start to that new operating model in procurement.

Changes are now completed. The businesses are empowered and we are really proud to see good progress on that side. You can't do anything without a very strong global executive team. And there was a lot of change and a lot of new people coming into the team last year. Today, I'd like to introduce you to 2 new members of the team. After waiting for a long time of Katariina, 6 months, we waited for her. She joined us first of January comes with a very strong background and we are extremely happy to have Katariina now with us on the global executive team. And now we are waiting for Riikka. Riikka will join us not later than June this year. Riikka comes with a very strong background again, and she's got to be our EVP Sustainability, Corporate Affairs, Legal and our General Counsel. So that's our team, super happy about our team, and we are ready to go forward.

You know that sustainability is important. We want to be the leader in sustainable packaging solutions, and we are moving clearly in that direction. We made really good progress in most of our areas which we are focusing on to take renewable and recycled materials. We went up 2 points to now almost 68. Renewable electricity, same thing. We also moved up on renewable electricity, we are now almost at 61%. Waste recycled, non-hazardous waste, we went up even 3 points and now almost at 85%. Certified recyclable fiber, we are flattish, just down actually here, which is very much driven by a mix of our different geographies. We improved our greenhouse gas emissions and we improved our total waste to landfill.

Last but not least, and I'm really proud to see that we are at a record with regards to our health and safety. So we are looking at total recordable incidents and lost times and on TRIR, we again improved, and we are now at an all-time best here for the company. We will give you more details in our sustainability results call, which we offered you first time last year. So this time, it's going to happen on the 23rd of March and Rahul, our Head of Sustainability, will present and update you there. Hopefully, many of you can join us for that call.

Now let's go to the business performance. And I mentioned currency before, and that's, of course, a big driver during the year. So first thing, if you look at net sales, we can see that almost 6% in the quarter headwind of currency. And here again, main one, the U.S. dollar, which in the quarter was at $1.18 million. So if you look at the organic part, we are approximately 2% down in the quarter, but again, the big hit comes from the currency to end up at EUR 981 million for the quarter. Similar picture, but not as accelerated as in the quarter, is there for the full year. Full year, the currency, it was 3.2%. So you see again the acceleration in the quarter to 6%, but of course, it's a significant hit of EUR 125 million for us. Overall, organically, we are down 1.3%. Give you an indication, over the year, the average rate for the U.S. dollar, as an example, is $1.13.

Now looking at some of the key financials here. If you look at net sales, and we saw it on the slide before, so comparable net sales down a couple of percentage points. Adjusted EBIT finished with EUR 103 million. Now if you add up the EUR 4 million impact from ForEx, we would have ended up comparable to last year at EUR 107 million. Very strong margin performance 10.5%. So that's a really strong margin performance and stronger than last year as well and a very strong free cash flow in the quarter, significantly up versus last year.

Similar picture for the full year. As I mentioned on the slide before, from a comparable net sales perspective, we are down 1.3%. Adjusted EBIT EUR 405 million, but you add the -- sorry, the EUR 9 million FX, so EUR 405 million plus the EUR 9 million FX, we would comparably end up at EUR 414 million, so very much in line with last year's number and a margin of 10.2%, even higher than last year, second time in our history above 10% and the highest ever. So really happy to see that margin improvement. Our adjusted EPS was EUR 2.48. So the EUR 2.48 again, is same level as last year and the highest in our history. Very strong cash flow with our focus on capital discipline, we achieved EUR 311 million, that's EUR 95 million up on last year.

Let me go to the 4 segments now, and let me start with Foodservice. Foodservice, we saw solid margin performance with a very strong cash delivery, albeit a soft top line. First, the quarter, as I mentioned, it is a soft top line, but we were able to grow in Middle East Africa, and we were able to grow in Eastern Europe. Overall, we see a decline on a comparable growth perspective because Western Europe and the U.K., which are big markets for us, were weak. The segment worked really hard on cost management, and that enabled us to still deliver a very strong margin of 9.8%, which is in line with last year's quarter margin of 9.9%, and it delivered EUR 46 million of cash. So double the cash of last year, so strong cash performance of the segment in the quarter.

If I look at the full year for Foodservice, very similar picture on net sales and very similar pictures on actions to improve profitability, so call it self-help activities. Raw material was stable. But again, very, very good outcome from the cost-out projects, the segment did launch and execute on. And we saw a margin which improved over the full year to 9.3%. So even though we had a very soft top line, we were able to improve margin to a healthy 9.3% in Foodservice. Especially happy to see that the focus on cash also for Foodservice really played out EUR 131 million, that's EUR 30-plus million stronger than the year before.

Moving swiftly on to North America. And North America is one of the two segments where we see volume growth. In a market where consumer confidence was very low, it's extremely pleasing to see that we were able to continue to have volume growth, not just in the quarter but also for the full year. You might remember Q3, so we had a very weak Q3 and we were hoping and we were seeing then that we saw operational improvements. We saw strong volumes coming in the quarter. So we were happy to see that our margin bounced back to 12%, 12.1% in the quarter. So volume up. We continue to see, as mentioned during the year, pressure on price. So pricing was down. And also North America in the quarter had a lot of focus on cash and delivered a very strong operating cash flow outcome in the quarter.

Moving to the full year. Same thing I mentioned before, volume growth for the full year, that's encouraging, but negative impact overall on comparable growth because of the pricing impact. So just negative here overall on comparable growth. Now operational costs increased, and we continue to focus on taking cost out in North America to make sure that we keep our margin profile, which we promised to you between 11% and 12% going forward as well. Now our RONA is still at a very healthy 15% margin, even though it's down on last year's record performance of 19.6%.

Let me move to Flexible Packaging. We have seen a significant margin improvement in Flexible Packaging during the full year and also during the quarter. With the lower volumes, which we see during the quarter and during the full year, are offset by better pricing and better mix. So really, really strong focus on getting our mix right in Flexible Packaging. Lots of activities on the cost side. And you will remember that we put 2 of our units there under turnaround activities. We talked about India and Turkey. And I'm happy to report that we have very, very strong positive impact from our turnaround activities in those 2 units. That enabled us to deliver a very strong margin in the quarter and a very strong cash flow in the quarter.

For the full year, it's a similar picture. Lower volumes, but great improvement on the overall product mix, which we are selling, turnarounds going absolutely in the right direction. So as does the cost-out projects which we are running there. That enabled us to come with the best ever performance in Flexible Packaging, over 9.2% EBIT margin, also the absolute number of EUR 115 million is an all-time high as RONA is and as the cash delivery. So we are very pleased to see Flexibles going in the right direction.

Last but not least, let me jump to our Fiber Packaging segment. Clearly, a very strong profitability performance in the quarter and in the full year for our Fiber segments. Net sales, just shy of last year in the quarter. But if we look at the overall product which we sell, that is, in fact, increasing comparably by 4%. Machine sales is down slightly, but overall comparable growth up 4% which enabled us to come to an adjusted EBIT of 15.4%. So very, very strong performance and a margin of 15.9%, which is stronger than last year as well.

For the full year, we were able to grow comparably at 8% in the Fiber business and improving adjusted EBIT in absolute by 16% and growing the margin to 13.3% for the full year. That enabled us to grow our RONA to a very strong 18.4% in the Fiber business. You will have noted that we spent more money on the Fiber side than last year. And we did this because we see lots of opportunities to continue our growth story in the Fiber Packaging segment. So with our approach on capital discipline, putting money behind very profitable projects, we are aligned, so we are super happy to continue to invest.

Let us move on to the financial review. And Thomas, if you could take over from here, please?

Thank you, Ralf. I will take over now. Yes. And if I look at the big story of the year, which is really the currency movements, highlighting the fact, again, that it's a translational impact for us as a company, but given the big exposure to the U.S. dollar, obviously, the movements have been very significant.

If I take the quarter alone, roughly 47% of the impact on the full year top line came in the quarter alone. And Ralf already alluded to the fact that Q4 2024, we still had a U.S. dollar at $1.04. And if you look at the average rate for the full year, it was at $1.08. Average rate for 2025 is $1.13 and as you see from the slide, we had a closing rate of $1.18 on the U.S. dollar at the end of 2025. Today, I think or yesterday, though, currency was at roughly $1.19.

Highlighting also the fact that we account for the balance sheet on closing rate, while then the P&L is being translated on average rates. But as you can also see from this slide, all -- basically all other currencies were also trending negatively throughout the year. So explaining that, it's not only North America getting the currency, it's also the other segments, but as said, translational. The transactional, we are taken care of by our hedging policies.

If I take a bit of a deeper dive into the P&L, I would say that the positive side of the year is our very, very continued -- strongly continued management of costs. So with that one, we were offsetting some of the negative development of top line, value-add remained strong. On the operations side, we were able to offset a lot of the salary inflation, but not fully. So without a growth, we still have a negative impact out of salary increases despite having done significant work on that topic as well.

You see from this slide also that our finance cost is at EUR 60 million versus EUR 71.4 million previous year. This is the outcome of a continued debt decrease as well as the benefits from having become investment grade rated, and therefore, having a more favorable position when it comes to interest rate negotiations. The adjusted income tax at 22.4%, so roughly 22%, quite similar to previous year's levels, so maintaining that one. And then obviously, as an outcome, our adjusted EPS, as Ralf already said, we are happy to see it remain on previous year's level EUR 2.48, which as he mentioned, is an all-time high.

Cash flow is something I'm significantly proud of for the year. We had a very strong EBITDA conversion to cash. You will see that the capital expenditure obviously contributed well. We said already that it doesn't impact our future growth. So we have stayed very capital disciplined when it comes to how we manage that part of the story without compromising the future. You will also see that taxes had a significant positive impact when it comes to this one. This is mostly timing related and also one on some treatment of losses. Then if we have -- then we see the net financial items basically close to previous year's level. And as you see from this slide, we had a negative full year impact of working capital. However, also here, looking at Q4, we had a good development from Q3, where we were still at a very significant lower level compared to previous year. So Q4 development, all in all, one can only conclude that the cash flow generation was really strong.

And with that one, obviously, we get the benefit of a continued deflation of our net debt. So we are down at roughly EUR 1.2 billion, down versus previous year, with a net debt-to-EBITDA of 1.9x, so we have come down from the high of 2021 when we were at 3.1x and with a net debt of roughly EUR 1.5 billion. So we have delivered on the promise to after an acquisition make sure that we take care of the cash flow generation in a way that maintains the balance sheet on a strong level.

When it comes to loan maturities, you can conclude from the previous slide and this one that our liquidity and combined renewal of financing puts us in a very strong position when it comes to managing our future balance sheet when it comes to debt. We did a number of transactions during 2025. And with that one, we landed at an average interest rate of roughly 4% when it comes to gross debt. So good development and a good position when it comes to maturity, good position when it comes to ability to also act on future capital needs with the EMTN program that we launched in 2025. So quite happy with our financial position all in all.

And looking then at the balance sheet. Here, again, the currency impact has a significant impact on the asset development. Here highlighting here what I didn't mention on the previous one that our gearing is now at 0.61. The return on investment is slightly down versus previous year, mainly actually due to the asset levels in Q1. And as we calculated the return on investments on a 12-month rolling, it comes with a lag. You see, however, the return on equity slightly improving versus previous year. So also here a favorable development.

As mentioned earlier here today, our Board of Directors is proposing a continued increase on a year-on-year basis in our dividend. With EUR 1.14, we would have a payout ratio of 46%. You can compare that to the previous year's levels so remaining on -- just in the middle of our payout ratio guidance. And with EUR 1.14, we would have increased our dividend for 17 consecutive years, which I believe is the longest for companies listed on in Finland.

Track record when it comes to delivering towards our ambitions in this market environment, we have, unfortunately, not been able to meet the expectations when it comes to growth. We have been, however, done a very diligent job on the other elements. So profitability for second year in the lower end of the corridor and return on investments, I would say, despite a slightly lower level versus 2024, moving in the right direction. Those still being below. And then our net debt-to-EBITDA really at the low end of the corridor or even slightly below. And then as said, continuing to deliver dividend in proportion to our ambitions.

Finalizing here with the outlook, the outlook is for 2026, basically, the same as for 2025 and also the short-term risks and uncertainties remain, from a content point of view, unchanged.

So with this one, I would hand over for Q&A.

[Operator Instructions] The next question comes from Lewis Merrick from BNP Paribas.

Starting just on Foodservice packaging. From a top line perspective, growth was quite soft during the quarter. I mean, you mentioned the softness in Western markets and specifically the U.K. being the driver of that in the statement. Can you just elaborate on whether you think this would destocking or simply just soft underlying demand? I just got 1 follow-up.

Yes, thanks, Lewis, and good morning to you too. Yes, look, it is mainly a really soft market. Our customers tried with promotion to bring traffic back. Some of them did achieve that. And in fact, with those, we saw good numbers, but most of them did not. And that clearly impacted us, as I mentioned, especially in Western Europe, and in the U.K. In the other markets, we saw good growth. But we were hoping for more promotions to bring people back into the restaurants, which did only actually occur in a couple of our customer cases. So a bit disappointing with how the promotions ended up at the end of the year. But look, they will fight as we know, and they will continue to fight our customers, and we will continue to support them.

And just on North America, one of your peers has been quite challenging competitive dynamics right now. Just wondering, are you seeing any increased competition at the moment in some of your North American end markets?

Yes, nothing now stronger than what I reported to you before in our quarterly calls, Lewis. So we see clearly that with the overall consumer confidence levels going down, volumes not being there. Many of our competitors and suppliers also not seeing volumes. We clearly see pressure on pricing, but we saw that during the year, and that obviously was a decision we had to make on whether we are going to fight for the volumes or just let them go. We decided that the high level of margin, which we have seen in the years -- a couple of years before, they were artificially high from a time where it was exactly the opposite direction. So we decided to stay in the market. That's why we did grow volume in North America, but we had to give price for that. That will flow on year-over-year perspective into 2026, but we are not seeing more fight now than we have seen during the year 2025.

The next question comes from Robin Santavirta from DNB Carnegie.

Yes, I have 2 questions. First of all, if we look at your margin and cash flow in Q4, you had again a very strong performance, but the comparable sales is still in negative territory. So my question is, first, what is the comparable sales outlook for the Flexible Packaging and Foodservice business going into H1? And the second question I have is related to North America. We see some of your customers complaining about adverse weather patterns or snow storms in January, is that something that will impact your business in January?

Robin, thank you for the 2 questions. So as you will appreciate, we don't give outlook numbers on volume for any of our businesses. So let me just tell you on especially Flexibles, which was core of your questions. In '25 and the quarter, very similar picture. The segment decided to go after profitability rather than any volume was important for us after years of 6% or last year 7% EBIT margin to make sure that we bring this up. One of the activities out of 3 really was mix improvement. So a strong focus on mix on products, which makes sense for us going into what we call blue loop more sustainable products. where we have capacity built.

So that was really important for us from a mix change. A lot of that mix change came with substitution from prior non-sustainable products to now blue loop products and a better overall margin level. So that's one of the activities mentioned, the other one was our cost initiative taking cost out. And the third one was really the turnaround activity. So overall, Flexibles did focus on that. Look, that focus is not over. You know my words on that, one year doesn't actually give you a trend. So that focus will continue to make sure that we deliver and deliver on what we have now achieved in 1 year in Flexibles.

Second question was about the weather in North America. Look, it's a timely question because, frankly, we did experience very severe weather conditions in North America in January, which absolutely impacted our business. We had to close temporarily 5 of our sites and 2 of our distribution centers. So for days, those were shut. So of course, that is going to give us an impact. We are assessing the impact currently. But as you will appreciate, it's a one-off impact and the weather is happening fortunately, onetime, but there will be clearly an impact for our North American business in January due to that. We're now back running in all our sites, Robin.

That is very clear. Can I just try on Flexibles and Foodservice? Just to get a feel and some color on order intake. Just trying to get to the point, are you seeing any signs of a bit better order intake bit better volume outlook? Or is it still a bit more of the same in terms of volume outlook? If you can share some color on that?

Yes, Robin. So a very similar question than before. So very similar answer rather than going into specifics, guidance of outlook, don't want to go there. Let me answer in, as I tried for Flexibles. So the picture on what we are trying to do with our overall product mix, which we did in '25 or started in '25, we don't see any reason why we would change that. And on Foodservice, we are so much dependent on the traffic and our customers winning with their promotions and their activities. So that's really what we are doing there.

Our activities, if I may just add one word, on both, but frankly, also for the other 2 segments on winning customers, new customers, new -- more local, more regional customers are starting really to pay out. We are -- it's a long process, of course, if you don't supply them, but we are starting to see that impact. As an example, in Foodservice, Middle East Africa, we did see really good progress with local and regional customers, even more so in Eastern Europe, where we saw really some great improvements. To give you an example in Poland, we saw with 1 specific local customer, some really good traction.

The next question comes from Hai Huynh from UBS.

I have a couple. The first one is on North America. Are you starting to see any benefits from tariffs, meaning competitors having pricing pressure and they have to pass on prices and volume coming to you? Are you seeing any signs of that yet?

Look, the tariff situation is going in so many different directions currently. What we are seeing is that clearly, if you also look at Q4, our retail business, we had, as expected, a good quarter on retail. So it came back into the season, Thanksgiving as well as Christmas clearly was good for us. And a lot of that is because, first, the seasons were good for retail, but secondly, there was a shift from some of the Chinese imports and the shift of some of the extended polystyrene imports towards products, which we do.

Overall, on the tariff situation, Hai, if I may answer a bit more general, overall, as we really produce and sell, so we buy, we produce, we sell all in the U.S., we don't really have so much of an impact. Competitors coming from the Far East who have currently a huge trouble on tariffs, are absorbing a lot of that currently as they are waiting for the final outcome or we see a bit of a shift from, for example, China to Vietnam. So I would say, overall, the impact on tariffs during the year for us not significant.

I meant more in terms of the benefit from competitors having pressure, but it's clear that you mentioned some of the shift happening in Q4. On the free cash flow, could you help me a little bit on how I should think about it in 2026? I see some negative working capital impact in '25. So what are the building blocks, I guess, to help us think about next year? So CapEx, I guess, will remain moderated. How do you think about working capital?

Yes. So focus on both CapEx and working capital was significantly increased during '25, and there is no reason to believe it would not continue. We are, of course, seeing some of our customers putting pressure on us with regards to payment terms. So we are, of course, now having actions in place also to look at inventory and payables to offset or hopefully more than offset that. So we are pretty positive with the overall development during '25 on how we are managing working capital. Thomas alluded before that we have had some really good progress in Q4 already. So that's very encouraging.

And you are spot on. No reason to believe that we would have a different view on CapEx. That allows me maybe to stress one important point. We are not saying no to CapEx, which doesn't make sense, where we see profitability improvements where we see efficiency improvements, where we see growth opportunities, we are investing. The examples I gave, Fiber is a great example where we are growing, where we need capacity, we are putting it back in. So don't feel like we are just cutting CapEx for the sake of doing it. We're doing it because that's good management of a disciplined approach.

And my final question. So 1.9x EBITDA now, your CapEx remain moderated, you are focusing on working capital. So free cash flow, I see a strong free cash flow, but then you're below your target of 2 to 3x. So what are the avenues here that you might explore for the next year in terms of spending cash?

Thank you for that question. So we have been very clear on our ambition to be in the range of 2 to 3x. And we have also in our profitable growth bucket being very clear around the M&A agenda. So I would say it's quite clear with the organic side, we are more on a continued deleveraging path. So clearly, for that sake, we are continuously looking into the M&A field as well. And of course, seeing that M&A landscape is quite favorable at the moment.

The next question comes from Cole Hathorn from Jefferies.

The first is just on understanding how your raw materials and costs are developing. Would you mind talking about Foodservice and then North America separately, because I imagine besides labor inflation you should be benefiting from lower paperboard and polymer prices? I'm just like some color on how you're thinking about that into 2026. And then secondly, maybe on the commercial side following on after the cost is we have seen promotional activity. And how do you make sure that you don't concede price if you are getting a raw material tailwind? What are you commercially doing to try and minimize that price giver?

Thanks, Cole. So look, overall, on the raw material side, I think it's important to remember that other than in Fiber, in our 3 other segments with most of our customers, we have an automatic pass-through. So you would see this an impact of that maybe on the top line, but not really on the bottom line. There's a bit of timing impact here, but there's no real impact. So if we see paperboard prices going down, you would also see that we have to pass them to our customers. So the impact, again, other than a bit of timing advantage or disadvantage, you wouldn't really see.

And maybe the advantage on the advantage is then taken out with regards to your inventory valuation. So we don't see this as a big impact at all. We have had a few raw material substrates, which went the other direction, just giving you an example, aluminum, which is also a substrate, which is quite important to us, went in the other direction. So we don't see currently any significant move for 2026 from what we have seen and what was negotiated in the last quarter. So on that side, no real impact.

And then the one on promotional activity. Customers have done a lot of promotional activity. I know you mentioned it for Western Europe that we hadn't quite seen that benefiting volumes. But are you seeing any of that in North America? And how could that potentially benefit you and your footprint there?

Yes. So both promotions happened in both North America and in Europe. In North America, we saw more of a positive impact for us on the Foodservice side. I have to say, so we participated and did win more of those promotions than in Europe. And you're spot on, we've got to be super disciplined on pricing with these promotions because temptation to say we win the promotion and we afterwards might also get them the volumes following that temptation is there. It doesn't always work that way. So for us, with regards to promotions, it's important we want to participate, but we've got to be disciplined on pricing. Otherwise, it's super, super difficult for us to maintain. Our take Foodservice, Global Foodservice, really difficult for us to keep our margin profile, which, as you have seen, we have improved during '25 to 9.3%.

And then finally, just on your retail plates business, you've obviously got the premium Chinet brand, which is well regarding the U.S., but there has been some capacity additions in the lower price point levels from Georgia Pacific. So I'm just wondering how is that development been in retail plates. Have you seen any down trading from consumers or any disruption in that market, considering it's a higher-margin business for you?

Yes. So we have seen that for us because, as you're rightly saying, the premium Chinet wasn't really impacted by the Georgia Pacific/Dixie investments, which we have seen. They are more competing with the imports. So they would be more competing with what I mentioned before, imports and/or the transformation from extended polystyrene towards paper. So that's more where you would see an impact going from left to right for Georgia-Pacific volume we assume. For Chinet on the other side, don't really have that. So Chinet more premium. So who wants to buy a Chinet consumer will go with Chinet. So we didn't see that impact there.

The next question comes from Pasi Vaisanen from Nordea.

This is Pasi from Nordea. To start with the market. So could it be even a realistic scenario that your organic volume growth would be a positive in the second quarter of this year, mainly due to kind of investments you have made and also do the easier comps coming from the last year? So the question is that is the underlying market stable or still declining?

Yes. Thanks, Pasi. So look, we have invested in the past, but we have also invested this year. Even if CapEx is lower, we still have invested, and we have invested for a reason. We have invested because we believe that we can generate growth with those investments. We were with our operational issues in North America, we were hoping to be at a better point with some of the investments which we did in prior year. So no reason to believe that we wouldn't see a positive impact from that going forward. And then, of course, we -- I guess, not just us, but we are all hoping that the huge headwinds which we are seeing in the consumer, low consumer confidence levels are starting to turn.

So of course, that would give us a tailwind. And you're, of course, right with lower comp in the second half that would help, I guess, the overall market and us. So we are positive that the investments which we did clearly in '25 and the progress we are making on investments made in prior years will start showing us positive impacts going forward.

Yes. Excellent. I hear you. And secondly, when looking at the crude oil price, that has actually stepped down roughly 2 years in line. So is the plastic price is actually the reason for an improvement you have seen in Flexible segment?

Yes. Pasi, I think question very similar to what we got before. We would see with the impact on oil, we would see, of course, that some of the resins will be impacted and would be impacted to go down a bit lower. But in Flexibles specifically, most of our contracts actually have an automatic pass-through. So whatever we would see here now maybe on a slightly positive side and in other years, slightly on the negative side is only an impact of a very short period because then it's passed through. So you might see it in value, but you don't see it in margin even on value add.

So I think on that side, we've got to be clear that, again, Fiber is the exception here where we don't have pass-through automatic clauses, but for the others, impact of raw material timing, yes. But overall, I would say, there are clearly not the reason why we have had flexible packaging advantages in '25 versus the prior year.

Okay, I see. And maybe lastly, so have you seen any progress in India? Or are you going to make a kind of decision regarding your presence in India during this year? So is it going on track according to plans?

Yes. So it is, in fact, outperforming what we were hoping to achieve. So we are super proud with our 2 turnarounds. Our colleagues from India, I think, have announced their results a couple of days back. So I would encourage you to have a look at that. So India specifically, you can see. We are seeing significant improvements in our Indian, never say significant, I mean, significant improvements in our overall Indian performance. So very happy with the turnaround activities in India and Turkey, just to add, even if you didn't ask about Turkey, and Turkey.

The next question comes from Pallav Mittal from Barclays.

So firstly, can you talk a bit more about your Foodservice operations? Your comparable sales were down 7% and you have highlighted weakness in Western Europe and U.K. It seems like you're losing market share because I don't think the underlying demand is down 7%. So any comments on that would be very helpful.

Yes. Thanks, Pallav. As I mentioned, Western Europe and U.K. down, and those are our largest markets, so the impact of them is greater, and we can't offset with the growth which we have had in Middle East Africa and Eastern Europe that decline. Look, it depends on who your customers are. So with our largest customers, we in fact did grow. But then with a number of our not as large customers in Western Europe and the U.K., unfortunately, their promotion activities did actually not play out as good as they wanted and/or we -- because we wanted to be disciplined, we didn't participate in the promotions for the right reasons that we need to maintain our margin level. Once it's down, it's super difficult to bring it up again.

So some of those decisions were our decisions, some of those decisions were our customers' decisions. But if you look at the bigger picture, market share perspective, I don't see that. I don't see us losing over -- maybe in a quarter, but over a medium to longer term, I don't see us losing market share with our customer base. So don't look at the overall Foodservice market, but really look at what we are doing, our product ranges and our customer base.

Sure. And secondly, if you could talk a bit more about your market conditions across segments so far in the quarter? And I appreciate your comments around the winter storms in the U.S. But if you could quantify whether it is likely a EUR 10 million impact or a EUR 20 million impact, any sort of quantification would be very helpful.

Yes. So we are -- so getting back to what I -- I think it was Robin asking that question about the weather in North America, we are still evaluating, but we know it will hurt our January results in North America. And that's a one-off. We understand that. Clearly, in some of our markets, cold weather is not helpful. Of course, if you come to summer times, that's where we have, of course, more interest in beverage as an example than in wintertime. So cold winters in general, aren't super helpful, but we are in early February now. So giving you an idea how the quarter is looking would first be wrong because we don't give outlooks. And secondly, I just really don't have any facts to support anything stronger here.

And I know that -- sorry, just to just allude to, you will appreciate that Q4 proved to be a very, very strong quarter for us. So we are, of course, really happy with the outcome of Q4 overall.

Sure. And if I can just ask 1 follow-up on the capital allocation. So you did say you could look at some bolt-on M&A, but given your net debt EBITDA at 1.9x, is share repurchases on the table? Or that is not a discussion point at the moment?

Yes. So we are -- I think Thomas made the point, of course, and we started the journey last year where we wanted to drive profitable growth with all levers. We are actively looking at bolt-on opportunities for us. We did one last year, why one and not two, three or four because we got to be super disciplined. We're only going to do them for bolt-on if they are accretive in year 1. That's clearly what we are striving to get to and we continue to work. We have a very healthy pipeline, and we are actively looking at that. But we are only going to execute if it is the right thing from a returns perspective for us.

So -- and of course, the discussion on how do we return capital to share shareholders is one which the Board is always entertaining. And the one thing the Board is now proposing to the AGM is another dividend increase. As Thomas said, it's the 17th year in a row, if approved by the AGM that we are increasing dividends. That doesn't mean that the Board is not discussing and evaluating other opportunities to return capital to shareholders.

The next question comes from Cole Hathorn from Jefferies.

I'd just like to follow up on the commentary around the M&A landscape is attractive. How do you think about M&A when you think about the Huhtamaki business because you have over time rationalized some capacity where you had too much supply. So I'm just wondering what segments are attractive to you? And how do you think about M&A to make sure that M&A is accretive, and you don't buy any excess or all the technology for the business?

Yes. Thanks, Cole. Of course, super relevant question because we have -- and you know that, we have free capacity in a number of our segments and factories. So we would not and never entertain a discussion to add to free capacity, idle capacity, even more idle capacity. So we wouldn't do that. So when we look at M&A, other than the strategic fit, other than the fit of the products, the substrates and the geography, we are, of course, looking on what do we have already on the ground, what could we do by investing organically. So that's always something which we are analyzing before we come up with the decision.

So take the one we did last year, as an example, that was in egg fiber packaging in Florida. So it was interesting because in Florida, in that state, we didn't have any egg fiber production but it was something which was already very profitable and fast growing in that region. So even though we had free capacity in Hammond, we couldn't deliver from Hammond into Florida. So it made absolutely sense for us to take that on. And again, it proved to be the right steps. So summarizing Cole, we are, of course, analyzing what capacity do we have. Could we invest organically? Or does it make sense for us to add with an acquisition capacity in certain areas.

And then maybe just following up on that, it's clear to say that it's a buy versus build market when you look at kind of upstream in the paper and packaging space, but in your landscape on the downstream converting, I imagine that the competition is still a little bit more competitive for those converting assets. Is it a buyer's market out there? Or are people still looking for decent prices for their assets?

No, it's currently, I would say, it's a buyer's market currently. Look, there is, of course, now since a couple of years or certainly during the whole of '25, a very low volume market. It's clear that whether it's destocking, whether it's consumer confidence, but it's a market which is not growing and not just for us but for everybody. So of course, there are competitors out there, which are struggling. Our margin is super healthy. Our EPS is at an all-time high. Our cash flows are very healthy. So of course, we are in a good position here, but we will continue to be disciplined. Let me repeat this because it's an important message internally and externally. Only because it's a buyer's market and there might be opportunities, if they don't come with the right return profile, we are going to pass on them.

All right. That was all for the questions for today. As always, if you have any follow-up questions, please feel free to reach out to us here at the IR team. And with that, we would like to wish you a great day, and thank you for attending.

Good morning, all, and welcome to Huhtamäki's Q3 2025 Results Call. My name is Kristian Tammela, VP of IR. Today, we have, as usual, a presentation first by President and CEO, Ralf Wunderlich; and then followed by our CFO, Thomas Geust. And after the presentations, we will have a lot of time for Q&A. So without further ado, let's get started and handing over to Ralf.

Thank you, Kristian, and good morning also from my side. Thank you for dialing in. And I'm starting with an overview of higher level of the group. Very happy to share with you today that we saw profit improvements for the group, specifically driven by 3 segments: Flexibles, Fiber and Foodservice in a what we see as still pretty volatile and soft market environment.

Also happy to share that we have both, in the quarter as well as year-to-date, seen strong volume growth in 2 of our segments, namely Fiber and North America. The margin improved to now 10.3% in the quarter. And for the first time, all of our 4 segments delivered greater 9% EBIT margin.

Headwinds from FX, especially the U.S. dollar, persisted, impacting our top and bottom lines. We have seen a weak quarter in North America, and we'll further comment on this in a bit when we come to the segment presentations. I'm also proud to see that our 3 value drivers continue to progress very well and are showing impacts.

Let me use that as a bridge then to the drivers. Driver number one is growth. And we want to use all levers, which we have to drive profitable growth. First one, organic. Initiatives which we kicked off are very focused, and they are focused on both the JKAs, our global key accounts as well as small and medium customers, especially the later one where we have a very small share with, are in focus, and we are starting to build good relationships in all our segments.

As I mentioned before, we have seen volume growth, both in the quarter and year-to-date in Fiber North America. And of course, that's in a volatile and soft market, very encouraging. On the inorganic side, we are proud to say that the integration of Zellwin Farms is tracking very well, and it's delivering both top line as well as bottom line as by promise.

We're also managing our pipeline actively. It's a long pipeline. And as you know, we are focused on small bolt-ons. So that will take some time, and we will do that in a very disciplined way.

Second point and second driver is capital discipline. After significant investments over the last years and with very disappointing growth after those investments, we have started to be much more disciplined already at the back end of last year.

We continue to be very disciplined, and we are going ahead with the guideline of 80-80-80-10, which is EUR 80 million approximately for growth; EUR 80 million for productivity; EUR 80 million for maintenance; and EUR 10 million for, what we call, license to operate. That context will continue. But we are ahead of our target, and we might end this year at a lower number, as you can see from the Q3 track, which we have.

Third driver for value for us is accountability. We have changed to now empower our segments. We will have faster decision-making and faster speed of execution. We have also decided that tax and treasury will remain in the center and now procurement is also handled directly from the center for all our segments.

The reason for that is that we will see direct bottom line impact by those 3 functions. All other functions are supporting the segments and are guiding our reporting, our coordinating, our controlling and ensuring that at Huhtamäki, we have one language.

Let me swiftly go to the business performance. And let's start with net sales. As mentioned, similar market conditions in Q3 as we had in H1, pretty volatile and very soft demand. With the FX impact now accelerating in the quarter and now over 4% or EUR 44 million in the quarter alone, we have a very, very negative impact just from FX alone. And you see the acceleration by comparing quarterly numbers to year-to-date numbers, where year-to-date, we are at approximately 2%, but in the quarter, it was more than 4%, as mentioned just a second ago.

Our organic growth continues to be impacted and stands now at minus 0.9%, just under 1% year-to-date. Again, I would like to stress that we are seeing volume growth in North America and Fiber, and we are actively working also in the other segments to come back to volume growth. Good to see that [indiscernible], and that's what we call the acquisition line here is delivering on the top line, as I mentioned before, also on the bottom line.

Now looking at the profits. And we see that the adjusted EBIT was standing at the quarter at EUR 100.3 million. If we add the EUR 4 million FX impact, then we would be, in fact, 2% above last year quarter and spot on year-to-date, if again, including the FX impact, which for year-to-date is over EUR 5 million. Our quarterly margin increased now to 10.3%. And even year-to-date, we are double digit at 10.1%, which is again slightly ahead of year-to-date last year's margin.

We are very proud to see our EPS growing 2% year-to-date. On a side note, if you would adjust the quarterly EPS by the currency, we would also have a 3% EPS growth in the quarter. Capital discipline is allowing us to have a very strong support from capital expenditure, which, of course, is impacting -- positively impacting our cash flow. So you see that we are 26% down quarter-over-quarter on capital expenditure and 18% down year-over-year.

Now going to the segment specifically. And as always, let's start with Foodservice. The demand in Foodservice remained unchanged versus H1. On a comparable FX, we are spot on last year. And I want to stress that because it's after 8 quarters of decline, it's the first quarter that we are now back on being spot on with the prior. The increase in net sales came especially from Western Europe and Middle East, Africa, supported by price and mix improvements.

Adjusted EBIT is above 9% margin again, both in the quarter and year-to-date. This is, of course, also driven by cost focus, cost management and margin management, and that will remain key. Our adjusted EBIT is 5% ahead of prior in the quarter and just at minus 2% year-to-date. And Foodservice continues to focus on cash flow. And again, here, capital discipline is supporting a very strong operating cash flow delivery.

Now North America. North America had another strong volume quarter, and I want to stress that even though the North American numbers are disappointing that the volume was strong in North America, and that was driven by mix, by pricing and by volume. But pardon me, the mix impact in the quarter was negatively as the price impact was negatively. So volume positive and price/mix negatively. So the total comparable growth in the quarter stands at minus 3%.

Year-to-date net sales stands at minus 1%. So the disappointing EBIT was impacted by, as I mentioned before, by price, by mix and by cost headwinds, specifically operating cost increases, transport, energy cost increases. I encourage you to look at the full year margin as, again, the quarter was impacted by those very high impacted on the transport, energy and other operational cost increases.

So we are running at a margin of 11.4% year-to-date, which, as anticipated already earlier in the year, is driven -- clearly driven by pricing, which we were holding on for 2 years after the spike of raw material prices in '22. So this is now the more normalized EBIT percentage, which we are seeing.

Moving on to Flexible Packaging, where we have a much stronger story to tell. Even though the volume side continues to be soft, we continue to focus on price, mix and turning around our underperforming units. And we are seeing in the quarter and year-to-date encouraging results on all of those elements. We have had unfavorable FX, but again, strong price and margin management.

We were able to increase the EBIT in the quarter versus last year by 28% with a very strong double-digit margin for Flexibles in the quarter. However, here, the EBIT absolute and relative was impacted by raw material decreases, which we will need to pass on, on Q4.

Hence, also here, I would encourage you to look at the year-to-date EBIT margin, which is more what we see our business currently traveling at. But even that one is 2 points ahead of what we have seen last year. So we are now at 8.8% margin. Flexibles also delivered very strong cash flow, and we also were very disciplined on the capital expenditure side.

Let me move on to Fiber Packaging now. Fiber Packaging continues to show very strong performances as they have done in the 2 quarters prior to that. Net sales was driven by volume, price and mix and resulted in a strong quarter with 9% growth and year-to-date, even a double-digit 10% growth. Net sales growth, combined with cost management, drove also a very strong EBIT improvement, again, both in the quarter and year-to-date.

Our margin stands now at 12.6% for the quarter and similar at 12.4% year-to-date. As Fiber is performing very well, we continue to invest. In fact, Fiber is the only segment where we have seen growth in capital expenditure. This is again totally in line with our capital discipline, where we want to invest behind those segments, which are performing very well.

Thomas, would like to pass on to you to give us an update on the financials.

Thank you, Ralf. And I'm starting off with the main topic actually for the quarter, and that is the currency. Currency and its negative translation impact to our results is visible clearly in both top line and in EBIT. You can see it accelerating to EUR 44 million net sales impact in the quarter, EUR 4 million in EBIT; and year-to-date, EUR 66 million and EUR 5 million on EBIT.

I would like to remind you here that our P&L is valued at average rates, while the balance sheet is valued at closing rates. So we see the impact immediately in the balance sheet while we come with a lag in to the P&L. Of course, the biggest currency impact will come from the USD. There, we have a drop now of the USD to a $1.12 average rate, while we, in the closing rate, already see the $1.17. Looking at the currency last -- yesterday and today, we are roughly at $1.16.

So USD, obviously, being a very important currency, but you can see that we are trending negatively on basically all currencies in the closing rates and only Thai baht and British pound is positive in the average rates. I would like to remind you also about that in our top 10 country revenues, we have only Germany and Spain denominated in euros. So currencies are and will remain one of the core topics when it comes to translation of profits. So the main impact in North America, but also in Flexibles, you will see significant currency -- negative currency impacts.

Then moving on to the more detailed P&L and adding on top of what Ralf said, we are still seeing tailwind in value add. Otherwise, I would say the core of our continued positive profit development operationally really comes from the activities we have done ourselves. You will find that on personnel costs, we are still up year-to-date. But actually in the quarter, we were trending already positively compared to prior year, just as one example.

The EBITDA is progressing ahead of EBIT, indicating that we are seeing a strong operational performance in our profitability, but also showing that we still have assets available for delivery. Other items in the P&L to address is the net financial items where we had a few one-offs last year, partly explaining the significantly lower finance cost; however, we are also moving downwards on finance cost from a structural point of view.

The tax rate remains at roughly previous year's level. So we are at 23.4% of tax rate. So also there, a consistent delivery. So if you look at the EPS, I would claim that despite the hit from the currency, we have made a good job at maintaining the EPS at roughly previous year's level on the quarter and actually improving year-to-date on EPS.

Moving to the cash flow. Cash flow progress since the low Q1 has been good. We have now -- you will also find in this bridge that the sort of abnormal or nonoperational items, proceeds from selling assets and the CapEx part are balancing each other off.

So one could say that the cash flow development comes purely from the operative activities as well as from lower taxes. So progress on cash flow is good. We are anticipating also quarter 4 to be a positive cash flow quarter. So good development based on our capital discipline also in the cash flow -- on the cash flow side.

Net debt to EBITDA, you recall that we got an upgrade from S&P on our rating. We are nowadays a BBB- company. That is really driven from the discipline we have seen on deleveraging our net debt. We are at 2 in the end of the quarter. So similar level as previous year and staying very focused on this key parameter.

Gearing is at 0.65. And as you can see, we have sufficient cash and cash equivalents available at the amount of EUR 328 million at the end of the quarter. On top of that, we obviously have our revolving credit facility available. Another element, which we have been focusing on in order to be a predictable company is obviously working around our loan maturity structure. We have highlighted on this page the key events we have been going through this year.

So in June, we signed a EUR 150 million Schuldschein. You recall that we entered an EMTN program for bond issuance program. And under that one, we issued our first bond in the quarter. And in connection to that one, we also set out a voluntary tender offer for repurchase of some of the outstanding bonds. So a disciplined approach in order for us to have a predictable maturity available in our loan facilities.

Moving over to the balance sheet. In the balance sheet, obviously, the translation impact of currencies has a significant impact. You can see that alone in the equity line, we have a EUR 232 million negative impact. I would also highlight that on the working capital, we are up roughly EUR 67 million. And with that one, I would highlight that core items come from, for instance, receivables. So working through this balance sheet towards the end of the year will be core, including delivery of the inventory.

Looking at then the return on investments, you remember me highlighting that this comes with a significant lag. So we are slowly but surely moving towards our long-term ambition, which is a 13% to 15% ambition on return on investments, adjusted return on investments. Beyond that one, we are continuing now in the threshold of the 10% to 12% on adjusted EBIT.

We are in line with our net debt-to-EBITDA ambition. And as you recall, we have paid the dividend this year in line with our ambition as well. So the only part we are really still lagging is the comparable growth. And with the comparable growth, we would also see a positive development into our return on investments. Our outlook and short-term risks remain unchanged.

And with that one, I will then open up for Q&A.

[Operator Instructions] The next question comes from Lewis Merrick from BNP Paribas.

Just starting with North America. As you went through a somewhat disappointing quarter for profitability, you mentioned pricing and costs. Can you just explain those various parts in tad more detail? And equally, what gives you confidence in the margin bouncing back to the year-to-date levels as you spoke of? And I've got one more to follow.

Very relevant question, Lewis. Thanks for asking that. So let me start on the pricing side. You will recall that in 2022, the raw material prices spiked and then we saw reductions of those over the last few years. We were able to hold on, on those advantages, those pricings for quite a while. With now a softer market, that was just not possible anymore. So we had to go back and pass on those benefits back to customers. We anticipated this the whole year. So that happened.

Now as you can also see, and I mentioned that we benefited from getting more volume, not just maintaining, but growing volume in North America, which is a soft market currently. So we are very convinced that, that was the right move for us to do going forward. So that's now at the level which it should be, so I'm confident on the pricing side going forward.

On the second point, on cost, there are a few points I'd like to mention, which might give you some comfort. Number one is there were some costs: energy cost, transport costs, which did hit us in the quarter quite a bit, but we see those getting more in line in Q4 and then going forward, number one. Number two, we did prebuild quite a lot of inventory in the quarter for the seasonality. Seasonality is now again much stronger in North America. We saw at Easter already, when we had the Easter seasonality, and we are seeing this with the order intake now also for North America Q4 already.

So seasonality is strong. We had to build inventory, which increased our cost as well. As did and part of that was, of course, also building inventory for our new -- or our 2 start-ups, which I mentioned, Paris and Hammond, and the additional volumes, which is great news, unfortunately, came with increased cost as we are ramping it up. We had to increase our cost to make sure that we are ramping it up correctly those 2. So those were costs which, again, we will manage going forward, which gives me also confidence.

And then lastly, again, with the seasonality, I think the way to look at this really is if either you look at the year-to-date margins or, in fact, you say it's H1 and H2, where Easter can vary between 2 quarters impact and the same then, of course, Q3, Q4 with a very strong Thanksgiving seasonality, which can or cannot impact the end of Q3 strongly or the beginning of Q4 strongly, depending on when you start building your inventory. So with other words, when our customers are then ordering from us.

That gives me the confidence that I see Q3, Q4 together, and I see the year-to-date numbers that we will get the cost back under control, especially in Paris and Hammond, the 2 start-ups that we have the pricing now at a level, which we think is the new level going forward and that we will manage, again, the demand of the seasonality better.

Very clear. And then just on Flexible Packaging, clearly, great to see the improvements in profitability in that division. My math puts that -- at least part of that down to improvements in the Indian entity, but it would seem there is improvements elsewhere also. I know you mentioned cost tailwinds, which will then need to be passed on in the next quarter. But can you just give a bit of extra color on what drove the improvement there this quarter and also equally on the sustainability of that going forward?

Yes. Also, that's a very relevant question, Lewis. So I think on Flexible, there are a number of points. Really, it's not just India or Turkey, the turnarounds, which are, of course, helping us, especially if you compare this to, frankly, the years before, not just prior. So that's helping us, and that's -- we are seeing this now in every quarter. Q1, we saw a bit; Q2, we saw more; Q3, we see that. So that's helpful.

But we are seeing also the same in other units. Flexibles, because of soft demand started cost-out programs early in the year everywhere, not just in those 2 where we have the turnaround teams, but in every unit. And that's now giving us the benefit on the cost side on Flexibles. They are very stringent on managing margin. They don't take any more negative margin orders. So they are very stringent and diligent and disciplined, I should say, on the management of their margin. So that's really great to see.

And as I mentioned, we had in the quarter specifically a very positive impact from raw material where we saw a decline. And you know that Flexible is, in fact, the segment where we have to pass on most with automatic clauses. So we will see that impact now reversing in Q4. So we think, again, it's the other direction than North America, but we think the way to look at Flexible is more like the year-to-date margin, which we are super proud of because it's a 2 point ahead of what we have seen in prior year.

The next question comes from Samu Wilhelmsson from Nordea Markets.

Maybe only one question for me. Given now that the inflation is now, of course, waiting on end demand for branded products. And according to my understanding, customers for you are most like big brand companies. So I was wondering that could you comment on your -- either your willingness on or your ability to try to gain these like smaller local customers to combat these kind of problems arising from...

Yes, that's great. Thanks for that question. Look, we -- on the smaller and medium-sized customers, which are under focus, we have lots of activities kicked off, and we see good discussions. I got to be transparent that those discussions will take time before we see the benefits. This is not -- never going to be a quick win. We just needed to start it, knowing that they are, of course, supported by competitors since years. So we know it's a starting point, and we know that those discussions will end up in better relationships and then eventually, we will get our chances.

So we have started that knowing that we will not get a small or a short-term impact, knowing it will be relatively small this year, and then we will see this ramping up over the next years. So -- but it was important to start. And yes, you are right, with the global key accounts, of course, they are seeing and you have seen their numbers, and you will see more reports coming out shortly. They are having similar issues on relatively soft demand as well, which is then what we are seeing as with most of them, we have long-term contracts.

So there is -- a quick share win is always going to be, again, difficult. So we are supporting them. We believe that they will come back, and we are sure that demand will come back, but we don't see it coming back at short term.

The next question comes from Maria Wikstrom from SEB.

This is Maria Wikstrom. I wanted to touch upon the North America, given that I think the kind of soft guidance, I mean, earlier have been that the margins on North America around 12-ish level, and now we were a bit above 10% in Q3. So how should we -- I mean, see, is this around -- I mean, if we talk about like annual EBIT margins in the coming years, I mean, is this still valid? Or has something changed in the profitability of North America?

Yes. Thanks, Maria. So I think we are very consistent to how we guided after the Capital Markets Day a few years back, the North American profitability, which was between 11% and 12%. So we are at 11.5% now. We think, again, if you take -- which will be seasonality driven a strong Q4, that we will be in that range of 11% to 12%, and that's the way we are thinking about North America going forward.

The 13.9%, which we have seen last year as the highest was clearly impacted by a pricing, which we were holding on after the raw material spikes a few years back. So the 11% to 12% guidance, which we have given some time back is how we see this, and we are very confident that we will deliver on that.

Okay. And then I wanted to touch upon, given that the North America is kind of like 3 different businesses. So if you could talk about the volume development, I mean, in Retail Tableware and Foodservice and then the Retail Packaging, please?

Yes. So we don't give specific volume guidance, but I give you a flavor. And the flavor is that from a volume perspective, we are doing well in all our different segments, which we are driving in North America, specifically well in Foodservice. But again, also on the Retail side, we are pretty happy with positive volumes, and we are seeing seasonality. So the next quarter is the big quarter as a reminder. So we don't have huge variations. We have volume growth year-to-date and in the quarter in North America, I'm pretty proud of that.

All right. And then my final question on CapEx, I mean, which was down year-over-year in Q3. I mean, is this kind of the quarterly run rate we should expect, I mean, for the Q4 as well? Or is this something specifically why the guidance -- why the CapEx figure was lower in Q3?

No, you should always expect in packaging that the last quarter is the highest quarter with regards to CapEx. So there's always a ramp-up over the year on CapEx projects coming and then, of course, also being paid to our suppliers. So that one, you should expect a stronger Q4. But I think our overall capital discipline is showing clear improvements year-over-year. So that would be the flavor I would give you.

Significantly down towards previous year though.

The next question comes from Hai Huynh from UBS.

I have a couple of questions, please. So on Foodservice, are you seeing any early signs of demand stabilization for -- within Q4 in the U.K. and Northeastern Europe? And on Fiber Packaging, how sustainable do you think the strong volume growth in egg and food packaging is?

Yes. Thank you, Hai. So we see early signs that take our largest customer that the promotional activities are showing impacts. So how sustainable that one is, the next quarters will show, but we see that, again, who is doing promotions sees traffic coming back and sees there an uptick. So that we have clearly seen in the quarter, specifically in the 2 markets you mentioned, and there specifically in Western Europe. But also in the U.K., promotions are showing first results, but Western Europe even stronger. So it's a quarter we are super proud of the quarter being flat versus prior.

As I mentioned, 8 quarters in a row negative. But it's too early to tell that this is going to continue. So I would say we think it's still going to be relatively soft before demand really comes back, but we also see that promotions are increasing and increasing. And towards the end of the year, again, we are hopeful that our customers will do their promotions. And of course, we will support those.

On Fiber, so the strong growth, which is really driven by all 3 elements: by volume, by price and by mix. We see this now not happening in 1 quarter, but we see this now happening for the whole year quarter after quarter, in fact, month after month. So we are very confident that our segment is strong, well prepared, very close to their customers. They are working, as a reminder, not with global key accounts. They are working pretty much with local small accounts.

And they know how to build relationships with those. They know how to serve them well, and that's clearly showing the benefit now. And I mentioned also that we are investing behind Fiber. So we are confident of the Fiber performance, that's one. I wanted to mention on Fiber as well that we -- wasn't a big impact, but we had a fire in one of our 3 South African plants at the end of the quarter. So this is going to be back in Q4. That plant, it's not material, but just as a factual update on you on the Fiber side, as you are asking, Hai.

Sorry, and I forgot one last question, if you don't mind. So net debt EBITDA now 2x at the bottom end of the range. And you mentioned capital discipline. So are you planning to deleverage further then? Or are there other spending or returns that you're considering?

Yes. Thank you again for that one. So you might remember, Hai, we presented our model on how we are thinking about allocating capital to shareholders. So we have a number of things we are considering. Number one, where we think we have the biggest impact is how can we invest the capital back into the business to continue to grow profitably in our business.

Second one, and we have now opened again up the lever of M&A. So we are actively looking at M&A. We did one in April this year, but we are continuing to look at other opportunities. And again, we will be very disciplined. It's super difficult to predict if and when something will happen, but we are prepared if it does. And then we are considering, of course, returning money to shareholders via dividends, which we always did. We are very proud of our long track record of increasing dividends year-over-year. So that's extremely important for us.

And of course, we are not excluding other means, which, of course, are up to the Board to discuss, but we are not excluding anything here. So the target is not to be at lower than 2x. We are now at that very bottom end. The target is to be between 2 and 3x, and we are considering all levers. Thomas, anything you want to add from your side?

No, I think you covered it all. So organically, we are still moving towards a continued deleveraging. So we want to use the capital wisely.

The next question comes from Calle Loikkanen from Danske Bank.

I have a couple of questions. And firstly, I mean, it sounds like you're not expecting any major improvements or major changes in demand in Q4. But what are you kind of seeing for 2026 in terms of demand? Are you kind of optimistic for next year? Or what kind of discussions do you have with your customers and so on?

Yes. Calle, thanks for looking ahead. Yes, we -- of course, we see the market being soft on the one side, the market being volatile on the other side. We are seeing that the -- look, the geopolitical issues didn't all go away. So that's still, of course, impacting everybody. Of course, we are seeing that the tariff discussions, even though they don't impact us directly in the U.S. are not improving consumer confidence at all yet. So we are seeing those headwinds. And we -- until the world is changing, we don't see those really helping us.

But on the other side, we see that our 3 value drivers are starting to help us. So I made the point about in a soft market, we are having 2 of our segments improving volume, growing. That's really important. We see the other 2, of course, working really hard on making sure that they get closer to customers, new customers, which, of course, this year was always going to be a difficult one to have an impact. But of course, we are super optimistic that this will start showing an impact going forward.

We have started, and I mentioned that over the year to really kickstart our investments in the U.S., Hammond and Paris, which is now already showing impacts on the volume side, unfortunately, with increased costs in the quarter. But of course, we are seeing those volumes going to help us going forward into 2026. We have invested, Calle, as you know, in lots of blue loop investments where we still have capacity, and we are actively out in the market selling them.

We have a couple of multinationals, which gave us already contracts where we see increased volumes for next year. So yes, are we optimistic for next year? We are. But on the other side, just to make sure I don't lose that point, we are seeing still a market, which is soft, and we are still seeing geopolitical issues in many places, which aren't helpful at all.

Yes. That's very helpful. And my second question was actually on the capacity ramp-up in the U.S. I was wondering that are there any kind of numbers or anything that you can provide in terms of what sort of help you've got from the new capacity in Q3? Anything of the impact in Q4 and perhaps onwards as well? So any kind of additional numbers or anything on that would be helpful.

Carl, we are not giving numbers on those specifically. As mentioned over the year, and I continue to make sure I mentioned that we started at a very low point early this year. We are nicely ramping this up, and we are, of course, getting quite a bit of help. So Hammond is now contributing in the quarter. Paris will start contributing then next quarter onwards.

The next question comes from Morayo Adesina from Barclays. Can you hear me?

Yes, Morayo here on behalf of Gaurav Jain. Just 2 questions to clarify some things on North America. So you mentioned the seasonality in Q4 that is upcoming. Does that mean that you're then expecting an uptick in volume performance in Q4 in North America versus the volumes that are already improving in Q3? And then I just wanted to touch upon the unfavorable sales mix that you highlighted in the report in North America. Could you just clarify, which of the subsegments are making up this unfavorable sales mix?

Yes. Thanks, Morayo. Yes, happy to answer those 2. Let me start with the first one. Yes. Clearly, for us, Easter, number one, and Thanksgiving, even more so are the very -- the 2 very big seasonalities in North America. Thanksgiving is going to drive retail sales, specifically in North America in Q4 as it does in every year, and we have no reason to believe that it wouldn't in Q4 this year. So we are optimistic on that side. There's no doubt about that.

On the mix side, I think it's important to see that retail is our largest segment in North America. And as retail is also a high-margin business. That's, of course, with being the largest with regards to volume and the highest margin with regards to the margin side, it will impact positively the mix in Q4 for our North American business. And the focus on branded products also will help us because also there, we see higher margin. So both of those questions, I think, we can give you some comfort.

Thank you for attending this event. There seem to be no further questions. But as always, we remind you that if you have any follow-up questions, feel free to reach out to the IR team. And with that, we hope you have a great day, and thank you from our side.

Thank you.

Thank you.

Good morning all, and welcome to Huhtamäki's Investor Call for the second quarter of 2025. My name is Kristian Tammela, VP of IR. Today, we will have a presentations first by our President and CEO, Ralf Wunderlich and then by our CFO, Thomas Geust. After presentations, we have time for Q&A as usual.

And with that, handing over to Ralf.

Thank you, Kristian, and good morning also from my side. Look, it's a quarter which is showing stable performance in a very volatile environment. Many things did happen during the quarter. Clearly, the market uncertainty continued. The consumers continue to be also cautious. The geopolitical tensions continue to be effect. U.S. tariff situation didn't clarify in full neither during the quarter, and we are seeing a very weakening U.S. dollar. And still, we were able to deliver a financial performance, which is in line with previous years and which is showing volume growth versus Q1 this year. We were upgraded also from S&P with regards to our credit rating, and we are now investment grade.

We acquired Zellwin Farms and integrated them over the quarter already into our North American business. And we finalized our program to improve efficiencies. There is notable progress in our 3 focus areas, which I talked to you over the last 2 quarters already, and I'll do that in a couple of slides again. It's good to be in a defensive market. People, consumers still want to eat. They want to drink, enjoy their lives. So it's good to be in a defensive market, and we are clearly seeing this in these uncertainties that we can still deliver. The actions which we took over the last few months are going to continue and are making good progress. So we talked about profitable growth and using all levers. We talked about the disciplined capital allocation, which we are now doing much more focused. And last but not least, the accountability and speed of execution.

Let me give you a couple of examples for each of those 3 focus areas. On profitable growth, A couple of examples I would like to give. One is we did an M&A. We acquired Zellwin Farms as just reported on the earlier slide. But we also concluded a couple of relatively important 3-year deals with large FMCG customers, which we will see the impact starting late this year already. On the capital discipline side, we continue to focus on both working capital as well as CapEx, and you will see a strong cash performance in the quarter.

And then finally, on accountability and speed of execution, we have implemented in the first half the change of our operating model. It's now much more focused on the segments to increase the speed of decision-making, and that will, of course, help us also going forward.

Very happy to report that we have now finished and concluded on our program to take out EUR 100 million of costs. We did this ahead of time. It was a 3-year program. And after 1.5 years, we were able to deliver on the EUR 100 million. We were also able to deliver with a lower cost to achieve. We said that we would spend EUR 80 million or less, and we finished it with EUR 73 million. So very pleased with that achievement. And of course, it helped us significantly to offset inflation. Now during the quarter specifically, we continued to work on our cost reduction in all 4 areas. Let me repeat those 4 areas for you.

Number one was around sourcing. Number two was around material efficiencies, so specifically waste reductions. Number three was labor productivity; and number four was footprint. So also here in the last quarter, we were active, and we continued to restructure our production here specifically in the Foodservice Packaging segment. It was important for us to optimize our footprint according to the demand which we are seeing and to ensure a profitability which is meeting our expectations.

Sustainability and being the leader in sustainable products continues to be our North Star and is really important to us. You see here the dashboard which is helping us and guiding us to make this a reality. Let me point out a couple of things. Number one, we were awarded with EcoVadis Gold during the quarter. Two, we continue to make good progress on renewable and recyclable materials. 2/3 of our portfolio are now renewable, recyclable or compostable. So the good progress which we made over the last years continues and again, a couple of percentage points improvement only in the quarter. Also strong improvement on renewable electricity, specifically in fiber in North America, we saw strong improvements there.

Last but not least, we are making progress also on greenhouse gas emissions. So a 10% improvement year-over-year on the greenhouse gas emissions, specifically driven by Scope 1 and 2, and we get more and more actions also for Scope 3.

Let me go through the business performance now. The quarter saw net sales organically growing. In fact, if you exclude currency and even acquisitions, we are a positive flat number here of EUR 1 million. That's encouraging, specifically as we had a negative organic growth in the first quarter. But you also see that the currency impact is now getting much more significant for us. Two of our segments did see also volume growth during the quarter. For the half, it's a very similar picture. As I mentioned, we recovered a bit on the organic growth side in the quarter. So the half year number reduced slightly and is now pretty flat. And also here, we see the currency impact.

In both cases for the quarter and the half, you see the positive impact of Zellwin Farms, our acquisition, which we did in April this year. Some more details. So excluding the negative impact of FX, our key financials are in line or slightly ahead, in fact, versus prior year. So top line, if you add the EUR 34 million, which I showed on the other slide, you see that we are slightly ahead for the quarter on net sales. The same is true adding the EUR 3 million impact of FX in EBIT. The same is true also for our adjusted EBIT, which is slightly ahead of the same period last year. We continue to have a strong margin over 10%. And our EPS for the quarter is flat, whereas our capital expenditure was reduced by 10% versus the same period last year. That's supporting what I said before with regards to capital discipline. Similar picture for the half. Here, I'd like to point out that also for the half, we are still double-digit 10% margin, and we are making good progress on EPS, which is growing by 3%.

Let's move into the segments now, and let me start with Foodservice. Clearly, Foodservice is still a soft market, and we are seeing this and experienced it both in the quarter as well as in the half, very similar picture in both cases. But still, we did a lot of work on cost out and the segment was able to still deliver a strong margin for the quarter of 9.6%. In fact, the margin was stronger in the quarter compared to same period last year. Capital expenditure was lower. Hence, they were able to deliver a stronger operating cash flow in the quarter. Very similar picture also here for the half. Still seeing a margin of 9%, which is very encouraging in a market where we have negative growth. It shows that we are doing a lot of work also here on the operational side to protect our margin. So once growth will come back, we will see a lot of leverage, specifically on the Foodservice packaging side.

Let me move to North America. Clearly, the impact of the FX is mainly not only but mainly related to our North American business. So if you take the impact of FX out of the net sales number, we would see a strong growth of over 3% in the quarter, mainly driven by very strong volume growth in the quarter, which is encouraging both with regards to what we told you last quarter, the impact of Easter, which this year was later than last year. So we saw that coming through, which is encouraging, but also the other segments, Foodservice and consumer goods in North America did see growth in the quarter. We had negative pricing, though, hence, the comparable growth of 3%.

Our adjusted EBIT margin continues to be at 12.2%, which is impacted by a number of factors. Number one, it's impacted by the ramp-up of our new facilities, the one in Hammond and the other one in Texas. Paris, Texas. So both of those are producing costs in the ramp-up, but not yet showing the sales on those. And we also see inflation, which we are going to work hard on productivity improvements. Capital expenditure, very similar to what I talked about when I talked about Foodservice. So here, we are below last year as well and also delivering strong operating cash flow in the quarter.

Let me move on to Flexible Packaging. Flexible Packaging continued its trend of delivering stronger results. We are both in the quarter and for the half now over 8%, currently standing at 8.3% for the half, which is 2% higher than same period last year. So the improvement in our turnaround facilities continued and shows also the impact there. So cost measures are really helping us. And we are seeing first signs of volume improvement also in Flexible Packaging, which is encouraging. In both quarters, we are seeing an EBIT improving by EUR 5 million. So for the half, we are now at a EUR 10 million absolute improvement versus last year. Segment delivered on cash flow and is for the half ahead of last year's half.

Finally, going to Fiber Packaging. Fiber Packaging continues to deliver solid sales growth, both driven by volumes and pricing. Net sales is growing by 10%, as I mentioned, driven by both volume and pricing. And adjusted EBIT is at a strong margin of 11.8% in the quarter. That's impacted, if you see the comparison by significantly lower sales of our machine segment, which is part of Fiber Packaging. Operating cash flow, even though we had capital expenditures, which are going to help us to drive that segment even further was higher than in the same period last year, but still they were able to deliver good operating cash flow.

I'd like to point the attention to 2 things. One is that the impact on the avian flu in Australia is fading away. So we believe that end of Q3, there will be no impact anymore on that. But we had a fire in one of our South African factories, which, of course, as it happened in the last month of the quarter will have an impact to us. We believe that we will be able to be back in full production in the next 6 weeks.

Let me now pass on to Thomas, who will give you an overview about our financials.

Thank you, Ralf. So moving over to the financial review. If I look at the delivery so far, we highlighted clearly that the USD is now especially the USD, but as you see from this presentation, also many of the other currencies are from a translation point of view, impacting our reported results negatively. You see the acceleration in the quarter going from -- to EUR 34 million on top line, minus EUR 3 million on EBIT and then for the first half year from EUR 23 million on top line and EUR 2 million negative on EBIT. So from that perspective, you get a good view of especially the impact of the USD, which from a low point at 102 in the beginning of the year has moved now to 118 as the latest number.

The impact is seen on the income statement, but as you will see later on, the impact is even more clearly visible on the balance sheet as the balance sheet is reported on the closing rate of the quarter. So as you see here, USD average rate still at 109 while the closing rate for the quarter was at 117. But as you see also some of the other currencies are trading negatively for us.

Some deep dive into the P&L. I would say the positive side here is that we are maintaining a good conversion and a good discipline when it comes to our sourcing activities, which have been helpful for us in defending our result in this still pretty moderate market environment. You can see, however, that despite that, as Ralf already alluded to, we are maintaining the levels of EBIT. If you adjust for what I just highlighted on the currency impact, we are basically flat. I would highlight that we are getting some benefits versus previous year from the financial items, so finance cost side, and that is helping in accelerating our EPS, adjusted EPS above the EBIT growth levels.

So these are the levels which we are wanting to highlight from the operative point of view. Obviously with the impairments we did, we have significant deviations between reported and adjusted results. You will see the main impacts in the cost of goods sold that's where the biggest impact is. You will see on the R&D line and you will see in Other Income. So that's mainly related to where the main impact of from the impairment.

moving to the net debt to EBITDA. I would say we are tracking on the 2-ish level, though the reported is 2.1 net debt to EBITDA. We have an increase in our net debt coming from 2 things. We have including the increased lease liabilities, the lease liabilities from our Paris, Texas expansion. And then, of course, we had the cost of the acquisition of Zellwin Farm. But I would say we are still tracking and still trading on a very good level when it comes to leverage.

You also see that our cash and cash equivalents are on a high level. That's partly due to the issuance of the Schuldschein for which we had the funds at the end of the quarter and obviously did not have yet by the end of the quarter, the possibility to utilize all of that cash for mitigation of other loan items. From that perspective, if you look at the average maturity, it's at 2.9. It was on 2.4 previous year. As I have said earlier, we are working always diligently to maintain a good structure on our maturities. Obviously, we are happy to have the investment grade now from S&P, which is both helping with finance costs, but also in attraction of potential bond investors. So with the maturities coming up, we are obviously evaluating when and how to go to the market for additional funding.

If we take the free cash flow, free cash flow generation at a good level. So the quarter was good after a weak start to the year. And as you can see from the negative side, the change in working capital, you will see on the balance sheet side, it's up roughly EUR 50 million versus previous year. So with the EUR 37 million previous year change in working capital, that's also an outcome of a very favorable situation at the back end compared to the back end of 2023. But working capital CapEx goes within our capital discipline category, and we are working tightly on managing this throughout the year in a diligent way as possible.

When it comes to the asset side, here, you see the impact of the USD. So on the equity alone, we have a negative translation difference of EUR 223 million. So with a significant part of our assets in USD, the movement in the dollar rate obviously moves significantly also our balance sheet. Here you see the working capital, we are up EUR 56 million versus previous year, as I alluded to on previous slide. And then the net debt, mainly driven by the items I referred to on the previous slide. Return on investments roughly or exactly actually on previous year's level. And here, I would say, what we need in order to drive that further up is top line -- top line supported profitable growth.

So next, moving into our long-term ambition, comparing this one to previous year's same period, which is not on the slide, it's a pretty similar picture. So we are still trailing behind on top line, though the quarter was basically flat or slightly positive from a comparable growth point of view. The EBIT margin defended at 10%, so in the low end of our ambition corridor. And then the other parameters are trading on roughly the levels where we have been.

On the outlook and short-term risks, we have no changes.

So with that one, I would open up for questions.

[Operator Instructions]

Next question comes from James Perry from Citi.

I'd like to ask a couple. Firstly, on Fiber Packaging. Obviously, you mentioned the strong 10% comparable growth in Q2 when other businesses are low single digits. What's still driving that performance would you say? And do you think the conditions allow for sustained growth of a similarly high level throughout 2025? Or is this mostly short term and due to easier comparison basis? And secondly, North America, you mentioned the positive volumes and higher interest in domestically produced products. I know it's difficult to determine, but do you have any sense as to whether customers are looking for a temporary workaround or are they interested in long-term contracts, would you say?

Thanks, James. Let me start with the fiber question. So we are seeing since many quarters that the fiber volumes are strong and showing good growth. That's specifically true for the egg part of what we are doing here. So we actually believe that the investments which we are doing in fiber will continue to help us and support our growth ambition on the fiber side. So number one, we believe that the Australian avian flu, which is going to fade away, as I mentioned before, will help us in that market. The investments which we are doing in Europe should help us in the European market. So I foresee if there is no new avian flu coming up anywhere that we will continue to see for the foreseeable future good growth in the fiber area. And we are supporting this with investments. You have seen that fiber is the only segment where we have invested more than last year in the first half.

North America is seeing growth, which is mainly coming from a couple of things. First area are the investments which we did last year. We start seeing, it's early. So we believe we will see more end of Q3 and then in Q4, but we start seeing the positive impact of the investments which we did. So one in Hammond which is also on the fiber side and also here specifically for the egg market, we see -- we continue to see really good interest from our customers. They have signed up not just for the short term, but for the medium term as well. So we see that in the states which are committed to continue with their sustainability approach that we see that those markets and those states will continue to help us with our growth. We will see that and that's going to be helpful.

We see also that with our Tier 2 customers in North America, which we are supporting very strongly. We still see for the foreseeable future growth. So also on that side, we are pretty pleased. And our investment on the carton side will help us there as well. So you remember that we are doing an investment as we speak in Texas. So that one will help and will support our growth ambition. And we have also here signed up customers. So we believe on that side, it's good. The big unknown for all of us and clearly for [indiscernible] as well is what is the impact of the tariff discussion of inflation in the U.S. that's difficult to forecast. But currently, we don't think there's any short-term positive behavior. We see the trends which I described continuing for the time being, but clearly something which we are monitoring very closely.

Next question comes from Lewis Merrick from BNP Paribas.

Just starting off on volume, can you talk a bit about what you're seeing early on in July across mainly in Foodservice and Flexible Packaging divisions? Are there any notable changes there relative to current trends? And perhaps can you maybe quantify an exit rate on the quarter in those divisions?

Thanks, Lewis. Look, July is seeing a continued trend to what we have seen in Q2. So we don't see here a significant change in either direction. So that would be an unfair statement to make. So we believe that if the market comes down in Europe that we will start seeing in Foodservice in Europe towards the end of the year an improvement, but we need the market to help us here. So that's one thing, especially in the U.K. Western Europe, frankly, in Q2 was already a clear improvement. But the U.K. is our largest market in the overall European segment which we have. But it would be unfair to describe in July there is a great improvement.

Flexibles, I believe that the contracts, which I alluded to before, which we did win will help us at the very back end of this year. They are really contracts for the next 3 years. And then there's always a time to qualify and to start delivering. So we will not see any impact on those, certainly not in Q3 and maybe at the back end of Q4. But these are good contracts with very large multinationals. So they, of course, are very important to us in our Flexible segment, which is doing, as I mentioned, a good job on cost, a really good job on cost. So they are ready to take on volumes. You know that they have invested heavily in blueloop. So once the volumes are coming, we will see this improving even faster and stronger.

And just one more. On the restructuring done in this quarter, are you able to quantify the benefit from this restructuring?

Yes, look, the immediate benefit of that is part of what we have disclosed. So the EUR 100 million which we delivered a part of the benefit is in there and will continue. So the savings which we did to deliver the EUR 100 million will continue. So also there, maybe that's the point I should make here, Lewis, is we are not stopping with cost initiatives. We are not having this in this program anymore, but all of those which we did in the 4 areas and other areas will continue. Productivity in packaging is very important.

So we will see the impact of the restructuring which we have done in the quarter. a small number in the quarter, and then that will help us going forward as well. It's an adjustment, as I mentioned, it's an adjustment to the volumes which we are seeing in Foodservice. So it was important to maintain our strong profitability to do that adjustment and to get the lines really in one area only. And it's important to continue to be competitive. If you don't do these things, we won't be competitive in the market anymore.

Next question comes from Maria Wikstrom from SEB.

I have 3 questions. I'll take them one by one. So I first wanted to touch a little bit more on the volume growth in the North America market, you described the impact of the new investments. But could you be more specific, talk about the volume trends in retail tableware as well as Foodservice, please?

Yes. So we see the volume strongest. So I'm talking about the half of the quarter because in the quarter, it's important to understand that we had on the retail side, a shift from Q1 into Q2. So I would really ask you to think about the retail part as a half year. okay? So that's one comment I want to make. We see overall that in the retail space, we continue with our [ TriNet ] to perform really strongly when we come to the holidays. So we see that, and we see that consumers still really like our high-end TriNet product there. So that's why I was talking about, look these at the half for the retail business. So that's number one.

And we don't see this going anyway in the wrong direction for us on the retail side. Foodservice and consumer, we see a more positive picture. Consumer really driven by the investments which we are making. So that one makes us think really positively about Q3 and Q4 and then going forward, where we will see the impact of those investments much stronger. And Foodservice, we are clearly winning. We are clearly winning. That's the segment in North America, we are doing the best on the volume side because we have chosen customers, the Tier 2 customers, which are winning in that market and are growing in that market. So we feel good about that. You know we don't give specific volume numbers for any of our segments. So I have to unfortunately stay a bit vague here, but I hope you get the message.

Yes. Perfect. And then I wanted to touch upon the pricing outlook in North America. I think you referred that the raw materials, I mean, besides aluminum have been, I mean, relatively flattish. I mean how is the pricing outlook with the -- I mean, Tier 2 customers, I mean with the -- with your big retail customers.

Yes. I believe that we have needed to use the pricing leverage to gain volume. So I mentioned that very early on in the year that the margin we were seeing before were driven from my perspective with very high pricing, which did not allow us to have sustainable growth. So I believe the margins you are seeing now are the ones we can think about going forward. And that is driven by an assumption of flattish raw material pricing. And that is what we are currently seeing in most, if not all of our raw materials. So we see that -- and it's, of course, also not only but also driven by a relatively volatile market. We are not the only packaging company which is seeing that. So our suppliers clearly are seeing that as well. And hence, we are not foreseeing any significant change on the raw material side. So pricing, I believe we will continue to see a similar trend in North America as well.

That's very helpful. And then my final question, I mean, is on the relatively high impairment you made and you commented specifically that this EUR 39 million relates to the restructuring of the Foodservice. And then you mentioned that there was some contractual compensation. Can you be more specific? I mean, who was this contractual compensation paid for and how much is the cash impact?

Yes. Look, as you will appreciate, there's a contractual payment which we received is related to one of our parties, we can't disclose the name of that. So we were trying to be helpful by mentioning it in the Foodservice area but we can't be specific and talk about of the party involved here.

Okay. It's just, I mean, a little bit unclear that is paid for the client or I mean another venture, but I'll leave it here.

I'm happy to give you some more ideas about that. So we were -- I think both Thomas and I, we were alluding to the fact that we have to get the volumes which we can produce and the growth, which you can see that we can do this in 1 product line rather than in 2. So we were reducing that because the volumes which we were expecting were lower than they are. So that's why we did the restructuring.

Next question comes from Ben Thielmann from Berenberg.

This is Ben from Berenberg. I actually just have one follow-up question on the restructuring one-off in the Foodservice Packaging division. What exactly were those EUR 39 million out of the EUR 45 million that we have seen hitting your EBIT in Q2? You mentioned it was restructuring related, but was that basically just an impairment of your PP&E? Or any color on that would be much appreciated.

Yes. So as Ralf already alluded to, we are talking about an investment that we were carrying out where we, together with the prevailing market conditions and in negotiations and discussions with the customer came to a level where we concluded that of the investments done, we don't see in the foreseeable future a volume level that would support the levels of assets we have in our asset base. And therefore, we impaired assets. It's mainly related to assets, correct. And then contractual compensation.

Next question comes from Calle Loikkanen from Danske Bank.

I have a few ones here. Starting with the second half of the year. So could you perhaps on a kind of aggregate on a group level, elaborate a bit on what you see and expect in terms of volumes and the pricing as well?

Look, we -- as Thomas has said in the outlook, we foresee a very similar trend in the next quarter to what we have seen in this quarter. So all of that is, of course, assuming that there won't be any other bigger impact coming from either geopolitical side or tariff side or currency side. So if I take all of that as of today, then we don't see the market reacting more positively than it currently is. We will continue, obviously, with our measures. As I said, even though we closed the program of taking cost out, we will continue to work on cost opportunities, self-help opportunities, and we will focus on growth.

We have started our driving organic growth, not just M&A. We have started [indiscernible] and we are -- one of the point I mentioned there was the success with 2 customer contracts which we signed. We will continue to drive really hard on that side. We're not just waiting for the market. We are working on growth initiatives. But do I see those benefiting us short term, so in Q3 or early in Q4, most likely not. Where we see back end and there is no change to that as well where we see back end of the year a positive impact is coming from the 2 investments which we did in North America. We are clearly seeing that they are ramping up the way we have assumed they would. So that impact we continue or we are hopeful that we will see in clearly with the back end of this year.

But on volume and pricing, otherwise, I don't expect any significant change. Pricing would be driven mainly by raw material, and we don't currently have that. And as the market is relatively soft, we don't have many opportunities to go out and increase pricing.

Okay. That's very helpful. And then secondly, you mentioned in Flexible Packaging. that you have been seeing the first signs of volume improvement. So I was just wondering that which markets are you seeing these positive signs?

Yes, we are seeing the first good signs, especially in Western Europe. And as you know, we were working on turnaround also in Turkey. And we see that Western Europe gets support from lower cost materials from Turkey. So they are offering to customers is very often a combination of products produced in Western Europe, mainly in Italy and Germany and then get support for some lower cost volumes from Turkey. So that offering now with Turkey starting to improve is an offering which is appreciated by our customers. So we see Western Europe slightly, okay, that's an important [indiscernible] improving but we see the rest of the world for Flexibles continuing as they did in Q1 and Q2.

Okay. And then lastly, again, looking at the second half of the year and you as a CEO, which of the segment is the one that you would be most concerned about regarding the second half of the year?

I'm not concerned about any of our segments, Calle, because we have very strong leadership in all of those. We've got now also our new leader for Flexible Packaging, who started with us who is really experienced 30 years in this market. So in fact, it's the other way around. I'm really hopeful that our team is going to continue to drive and use all our levers, the growth lever, the disciplined capital lever and also the self-help on the cost side, which will continue. They need to know which one to play at what point. And currently, with a soft market, we can't run away from self-help measures, which we will continue. So my concern is not specifically on one. My actually hope is that all of them will continue to work really hard to make us deliver good double-digit margin with hopefully soon to come growth to you.

Next question comes from Kevin Fogarty from Deutsche Bank.

If I could have 2 questions, please. Firstly, just around the sort of current uncertainties you guys are seeing. I just wondered if you could comment on how is that manifesting itself in areas like food service? Are we seeing kind of shorter ordering cycles? Clearly, kind of volumes are a bit more challenged there. But just maybe if you could put a bit of color into how customers are behaving there and keeping in mind your comments on greater accountability, speed of execution, et cetera, just sort of how does that business operate in that more challenging environment? I guess, what are you doing differently or what can you do differently is the first question.

And secondly, if we think about where you talk about capital discipline and where CapEx is running at in H1. I just wondered if you could give us a view in terms of what the full year outlook might be for capital spend, that would be useful.

Thanks, Kevin, for those 2. So look, clearly, with a negative growth in Foodservice, the question is very relevant. So let me give you an idea on what we are doing differently rather than just looking at the market and going with the trend of the market. What we are doing differently is that we have significantly strengthened with the new accountability model the sales forces which we have in country. So we are -- of course, we will continue to work with the big QSRs. They are for our Foodservice segment, very, very important. And in addition to that, we are now also looking in our Foodservice especially European portfolio also at the Tier 2 opportunities, which we are having.

So -- and that can be, from our perspective, only done if we are very close to them in the market with sales leaders who are close to them, can form the intimacy, can understand what they need and can deliver not only on the basics, deliver in full on time, in spec all the time, but also anticipating on how they can help them to win. So that change in the operating model is bringing us much closer. Look, we implemented this early in Q2. So we announced this change in Q1, but we implemented the change in Q2. So we see first signs, but it would be misleading you, I would say that we on short term are expecting any positive outcomes. That will take time.

The trust of new customers you cannot build quickly, but you want to start one day. If you don't start, you're going to lose even more time. That's what we are doing to capture growth with customers which we are currently not serving. But we will continue to be close to our big, of course, QSRs. And we will continue to work on innovative products. So we mentioned to you, of course, also the plastic-free cups, which is one initiative which we are driving. You know we are working on the [ lit ] side as well, which is happening in many markets currently. So there are a number of also innovations which we are doing together with our customers, which once implemented and once the trend really starts will help us to grow.

Thanks, Kevin. Capital discipline was your second question. On capital discipline, we believe that we will, for the full year, be below last year. We have a much, much more stringent process now in place. We need to absolutely understand on where the capital is used and for what return purposes. So we are very focused on that part. You remember that we have our 3 big buckets. And of course, in an environment where we see less growth today, but we have free capacity, especially in Foodservice, and there is currently no need to invest in further growth. So that growth bucket is, of course, reduced. The other 2 buckets are not reduced. So we will continue to look at productivity measures, and we will continue to maintain our assets. So those 2 buckets out of the 3 will continue to be served but in an environment where we don't see growth, but we have asset utilization, which is not full, of course, we are cautious on how to invest in growth.

Next question comes from Hai Huynh from UBS.

I have 3, if you don't mind. The first one, I'll go one by one. Now that the EUR 100 million 3-year program is finished, what can you tell us about the remaining margin drivers ahead towards your long-term objective? Obviously, top line in terms of self-help. How are you continuing to drive the margins towards your long-term objectives?

Yes. Thanks for that Hai. So I think our long-term objectives are between 10% and 12% EBIT margin. So we are, of course, very excited that we again delivered the double digit, in fact, 10.2%. So very, very excited about that one. But of course, we won't stop here. We will continue to drive that. But we are in the range of what we have communicated. What we will do is we will not stop working on self-help opportunities. So Boost is going to be an initiative which we will use going here forward to take costs out. And it's important to never stop that. In packaging, you have to do this work all the time. Costs will start growing again. Inflation will kick in. Clearly, personnel inflation, merit increases will kick in 1st of January. So we can't stop. We can't go back and say, okay, we have done it and now we wait a few years. In fact, we have widened it. We have worked in this program specifically on the 4 areas I mentioned before.

We are widening this now to say there are more opportunities, there are more areas. Maybe they don't give us the big numbers, but the sum of all the small ones will, of course, helping us. We have in the program now established a culture of doing this all the time. And that culture is something which is important in any organization, but very specifically for us. So it's not a onetime off, but it's a culture that's embedded in what we do, what our teams are doing all the time. And then we've got to combine this with growth. We don't want to have also a culture which is just looking at self-help. It's needed now because we don't see the growth in the environment we are operating in. But we will clearly have a focus on accelerating profitable growth and using both organic as well as inorganic growth opportunities.

Thanks for that question, Hai.

My second question is on your leverage and the options of spending cash. But the capital discipline head, you're not spending too much on growth anymore as volumes hasn't picked up. You're at the lower end of your net debt EBITDA range, 2.1x. Are you exploring any options on spending cash outside of CapEx and M&A, so shareholder returns above the ordinary dividends? Is that a possibility in the midterm, near term?

Yes. We presented at the AGM our value creation model. And in that value creation model other than what you just alluded to, of course, the first opportunity for us, and we see the biggest return is to invest back into the business itself for the organic and the inorganic growth. And then we want to serve our shareholders and paying back money via dividends. We have more than, I think it's 17 years -- 16 pardon me, 16 years of improved and increased dividend. So of course, dividends are important for our shareholders. But we are not excluding other means anymore. We are open to other means, and we will, of course, always look at what is creating the highest level of shareholder return. So we are not excluding any of the means which we have at our disposal, but we are focusing, number one, can we invest the money back into the business to create shareholder value. Number two, let's make sure our shareholders continue to see good dividend. And number three is what other means do we have if there's still capital available.

Got it. Very clear. And then my final one, just specific on Fiber Packaging. That's one of the few segments that had increase in raw material costs. Typically, if I'm not wrong, you tend to pass prices through, but it takes a quarter lag. So should that mean that we're expecting a slight expansion in margin should because prices will pass through next quarter should the raw materials remain the same quarter-on-quarter in Q3?

Yes. So this quarter margin was impacted in the comparison by lower sales of our machine services. And of course, our big volume quarters are Q1 and Q4 in fiber. So that's -- I think that's one. You will see the impact of South Africa. And I mentioned before, we had a fire there at the back end of the quarter. We will see an impact there in the beginning of Q3. My current estimate is for the next 6 weeks until we are back in full production in South Africa. And we will still see in Q3 also the impact of the avian flu in Australia, which is, as I mentioned, at the end of Q3 fading away. So we see that now starting but we see, in general, always a lag in passing through pricing. We believe that the fiber input prices, the pulp is now going to continue to be relatively stable. It increased over the last quarter, but now we have seen it lately be relatively stable. So hopefully, that's helpful for your model.

Next question comes from Morayo Adesina from Barclays.

Morayo here on behalf of Gaurav Jain. Just a quick one, and apologies if you touched on this earlier and I missed it. In the Foodservice segment, have you started to see increased promotions? I think you were previously expecting this. And I know you've touched on it already, but if you could just recap what your outlook is for Q3 and the rest of the year in Foodservice.

The first one I got about the promotions. Can you repeat the second point, please, Morayo?

Yes, it was just on the outlook for Foodservice for Q3 and the rest of the year.

All right, for Foodservice specifically, correct?

Yes.

So look, on the Foodservice side, we -- and I talked about this before, so let me clarify for you. On the Foodservice side, our big Tier 1 customers are driving promotions, and they are starting to see some improvements. But even our largest customers are still not really seeing volume picking up in a very positive way at all. But they are -- and we know this, they are continuing with their promotions. We are supporting them on their promotions. And we are, of course, hopeful that this will eventually and hopefully eventually is not too far away, start showing some positive signs. So yes, they continue with their promotions, but it's overall still a weak market for our big QSR customers. We -- and that's may be helpful for the -- not short term, but for the medium-term outlook.

We have started to focus much more on Tier 2 customers, smaller customers. We increased significantly our sales forces to make sure that we are capturing them. Some of them will be new to us. That will take a bit longer because we have to prove ourselves first. But we are very sure that with increased local sales forces, that's why our accountability model is so important, we will start seeing traction there. So Q3, I'm not expecting any change of the trend. But of course, we are hopeful that the market will change and then we are a big part of that market that we will start benefiting.

Next question comes from Maria Wikstrom from SEB.

This is Maria again. I had one follow-up question. I wanted to touch upon a bit about this replacement trend, I mean, for more sustainable packaging and namely, if we think about the Nespresso capsules, I mean, where you invested alongside with Nestlé on this home compostable collection. So if you could give us a bit of color, like how is that collection I mean, selling? And are the consumers in a more distressed environment, I mean, willing to replace?

Thanks for that question, Maria, and thanks also for the follow-up. Yes, look, we are really happy that regulation is now much clearer. I think the PPWR, which came out a few years back was not clear at all. And I think now it's so much easier to understand what is going to happen when. So what is clearly playing to our advantage is that we are a multi-substrate supplier. So we are not focused just on paper or board. We are also having options to support our customers, for example, with plastic structures. But -- and when I talk about sustainability and our dashboard, we are driving renewable compostable materials. So whether it's a paper or board or a plastic, that's the trend we are going through. And we are doing this together with our customers.

And of course, if PPWR is pushed out and the urgency to change over a structure, of course, the pace of how fast customers want to do that changes. That doesn't take away the growth. The growth is still there. Maybe the growth isn't as strong and as fast as we were expecting it, but the growth is there. So we are very, very convinced that our strategy of being the leader in sustainable packaging is the right strategy, and we will continue to follow that one through. And we are extremely happy that we have a wide offering, not just a single material offering.

Thanks for the follow-up, Maria.

With that, we are done for today. If you have any follow-up questions, obviously, as usual, feel free to reach out to us at IR. I would like to remind everyone that we are arranging again this fall a site visit this time for the flexible packaging plant in Istanbul, Turkey, and we will be sending out registration link shortly. So feel free to join. We hope to see all of you there.

With that, we'd like to thank you all, and have a great day. Thank you.