SIG Combibloc Group Aktie

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So in the unlikely event of an emergency, please follow the green exit lights and [indiscernible]. On these words now, I would like to hand over to Ann for the Q3 Trading Update. Ann, the floor is yours.

Very good. Thank you very much, Christoph. But you need to give me the club, please -- Messy. Good morning, everybody, here in the room and also on the webcast, and thank you very much for making time to see us today. We appreciate your time, that especially during such a wonderful Autumn day you find -- found your way to this app location. So as Christoph already mentioned, I will now guide you through the Q3 update, and I will do that probably a little faster than we normally do that because there's much more interesting stuff to be presented as a capital markets update, afterwards.

Also, I wanted to invite you to stay with us for lunch because we're not only having the leadership team that you will see presenting today, but we also have a number of senior leaders of SIG joining us for lunch, so in case you're interested to ask them questions. Please feel free to do so.

And with this, I would go directly into the numbers. And that's now a little complicated because I need to memorize everything much more difficult than a normal quarterly trading update. So forgive me if I miss to mention one of the numbers. You see them all on the slides or in the media release. And also forgive me, I won't say all the time that the comparison is against last year's without nonrecurring charges. So take this as a given that's what we compare against. So really operational performance against operational performance.

Now Q3 revenue came in stronger than what we had anticipated going into the quarter, at constant currency and constant resin, the growth rate was 6.5%. And within that 6.5%, we had Aseptic Carton achieving almost double-digit growth. We had Bag-in-Box, Spouted Pouch, a negative 4.6%. [indiscernible] 17.4%. Again, that's a very steep increase compared to last year's Q3. [indiscernible] from lower raw material costs from inventories that we had on stock. While the third quarter has underlying material cost really at the elevated level as stocks have been consumed.

Also, the surcharges have ramped up and had a stronger contribution in the third quarter compared to the second. And of course, that is what kept the margin basically then stable. It also translated into very nice adjusted net income of EUR 94 million. So that's also a significant increase compared to prior year. And same also for free cash flow was EUR 91 million, also significantly up versus last year.

And I will comment on that in detail when we come to the free cash flow slide. Now this drives the 9 months to a growth rate at constant currency of 3% and constant currency and constant resin of 2.5%. Within this, you see again the different speeds of the business is reflected with a Aseptic carton above 4% growth rate. Bag-in-Box, Spouted Pouch negative 4% and Chilled carton negative 2%. Also for the 9 months, the EBIT margin has increased considerably compared to last year by 150 basis points and also EBIT overall, in absolute terms, naturally increased.

Adjusted net income is now at EUR 228 million, up from EUR 197 million last year. And free cash flow for the 9 months period is positive at almost EUR 60 million compared to still a negative number in the prior year. All of this leads us to updating the financial guidance for the year. We keep the revenue growth unchanged in the range of 0% to 2%, and we upgrade the expectations for the EBIT margin from 15.7% to 16.2% to now 16% to 16.5%.

Now let's take a look at the regions at some detail, and my colleagues, of course, will comment much more on the regional opportunities that we see going forward, but quickly for the 9 months update. So basically, for all regions, the same holds true. Q3 comparables are pretty soft, so that supported performance. But Europe for the quarter came in above 3%, and that is a nice development and a still very difficult market environment in Europe. And we can say the topics that we have discussed over the last couple of months has haven't changed a lot for Europe. Nevertheless, we see some nice momentum from new line installations supporting the result also.

The IMEA region had a stellar quarter with 18%, now taking the total to almost 6% for 9 months. And as we have said that all the time, I believe, since I'm around, we always have quite some fluctuations in the growth rates in that region because life is more volatile in the IMEA region, and that holds, of course, especially through this year. So really, this is an outstanding performance in a very difficult market environment with geopolitical challenges, but it's very much also here driven by volume.

In Asia Pacific, the growth rate for the quarter was almost 5%, taking the total for 9 months to around 3%. The trends are a little different in the Asia region. Here, we benefit very much from innovation with new formats that we have put to market and which are appreciated by customers to also conquer new markets. And also, we have had significant gains, for example, in projects like school milk expansion in Southeast Asia.

In the Americas, we also saw another very strong quarter with 9% at constant currency. As this is the region that has the highest share of Bag-in-Box and Spouted Pouch business, it makes specifically sense to also here look at the number without the resin impact. That is then taking the quarter to 7.6%, 9 months, almost 5%. Also here in the region, the business development was very much driven by Aseptic carton across geographies. So we have seen good developments in the U.S., in Mexico and Brazil and all key locations, basically.

Bag-in-Box, Spouted Pouch was a little softer. But overall, if I may comment on that business for the quarter or the 9 months, if you dissect the growth rate of minus 4% into really what was core and what was noncore. And it's fair to say that the core business is more or less flat, while we have seen the -- what we define as noncore or less attractive pockets of business was double-digit negative.

Now let's take a look at the adjusted EBIT bridge for the development for the 9 months. And here, I would first like to start with FX. Basically, like already in the second quarter, also in the third quarter, FX was a neutral component for the EBIT bridge. Other than that, almost all bars within this bridge have changed quite a bit compared to how the bridge looked in half year. This was expected, so no surprise.

But let's look at the details. So the top line or our top line contribution is significantly higher than where we stood after 6 months driven by the volume that was significantly growing against last year's Q3, but of course, also driven by the surcharges that we have implemented even more in the third quarter than the contribution to the second quarter was.

In turn, you see also that the sourcing bar has become significantly more negative now at minus EUR 25 million. And don't forget the sourcing bar is only reflecting basically the cost increases for the unhedged portion. You remember that per our hedging policy, we try to always hedge a very significant amount of the cost for the next year. And we went with a hedge ratio of around 70% in the year. So basically, this reflects 30% of the raw material cost base moving.

Production also improved quite a bit compared to the half year, and that's no surprise because better volumes make the plants run more efficiently and help the plans deliver a better performance. also waste rates and quality has been better in the quarter. So really an outstanding job done by everybody in the operations in the quarter. Freight costs, on the other hand, continued to trend negatively. So also no surprise, I guess everybody would have expected that.

SG&A, still reflects the underlying restructuring savings of the initiatives that we have kicked out last year in the fourth quarter. However, the comparison against last year looks a little softer than in the half year. And that is basically driven by effect relating to STI and LTI provisions. Last year, we had quite some release of these provisions given the weak performance that we had in 2025. This year, we were in the fortunate position to slightly increase those provisions driven by the good performance that we are discussing today. All of this makes the EBIT grow 12% now for the 9 months against last year and even 17% at constant currencies.

Now here is the two detailed slides with all the reconciliation from reported to adjusted. There's not much that we need to discuss, I believe, on this slide, I would just like to draw your attention to a few numbers. So starting with the minus [ 17% ] that you see in the first column. This basically reflects the unrealized gain of hedging positions that we still have for our raw material hedges. Number slightly smaller than in the last quarter as some of this has been consumed throughout the year, but there is still a gain of EUR 17 million.

And then as we have discussed multiple times, the PPA changes, the amortization related to the Onex acquisition is done. Nothing happening there in this year anymore. And the PPA for the other acquisitions is also on a lower level compared to prior year, of course, driven by the impairments that we have seen last year. Same for the net income reconciliation slide. We just put this in for completeness, I think there is nothing that needs to be discussed on this slide. It's very unexciting overall.

And now let's take a look at free cash flow and CapEx. I already said, free cash flow for the 9 months is at EUR 59 million, up compared to the minus EUR 84 million that we have seen last year. So no surprise, the strong operational performance, of course, has contributed to this. And then also the second topic that we have discussed quite a lot also during this year and last year, is the contribution of the customer incentive payments. You know that we have volume agreements with our customers. And you know that if they grow significantly in volume, we pay them a discount in the following year.

Now in 2025, our volume growth hasn't been very high. Accordingly, we also don't have to pay a lot of incentives this year. That is very different than to a year ago, where we basically had high payouts relating to the high volume growth in the Aseptic Carton business in 2024. I know this is always a little confusing, but that is exactly also the reason why we don't give a guide for free cash flow because it's not easy to forecast. If I should quantify the impact for the year, that's around EUR 60 million positive on that bucket. And split between rebates that we didn't have to pay and also one portion for volume growth that we have seen this year, which leads to higher cash inflows.

The third quarter was also supported by the phasing of working capital. So that was a positive for the quarter, which we expect to reverse to some degree in fourth quarter. We have also discussed that the timing of coupon payments is a bit different than in prior years because of the refinancing with the new Eurobond, so that also contributed. The tax payments were lower by EUR 19 million compared to previous year. And CapEx is also lower by EUR 19 million. As you can see in all the details below.

So overall, PP&E, we stand at 6.3% of revenue. After 9 months, that's at the lower end of the guidance. I believe that also reflects some of the discipline that we have put into the processes. But of course, the big driver here of the reduction compared to last year is that the Indian plant basically is complete and doesn't require any additional spending, while the large -- single largest, biggest project that we still have ongoing is the extension of the Mexican plant where Ricardo will talk about later.

So this takes me to leverage. The leverage has come down to 2.6x. So that is perfectly in line with the game plan that we have laid out. when we were standing a year ago. Gross debt has reduced by around EUR 300 million and net debt even slightly more than EUR 300 million compared to a year ago. The refinancing is very much on track and completed for the year, and we now look at a very balanced maturity profile. This all leaves us to updating the guidance for 2026, as I mentioned before, on the profit line. So we take up the adjusted EBIT margin guidance to 16% to 16.5%, basically moving it up by 50 basis points.

I note that now a question would be why didn't you also upgrade growth guidance? Because at this moment, you already sent a 2.5%. And here, the answer is that the third quarter was its very low comps, of course, has influenced the 9 months number positively. We are a little more cautious for the fourth quarter and don't want to extrapolate, and I think it wouldn't be reasonable to extrapolate the third quarter growth rate also into the fourth quarter. And considering all the volatility in the world, we said this was the right thing to do. Everything else is basically unchanged. But I think overall, this is a nice -- or showcase is the nice performance that the business has delivered over the last 12 months.

I also know that many of the SIG team are dialing in normally to our quarterly update. And we also know that they are registered in big numbers for today. So I guess it's a very nice opportunity to also say thank you to everybody who has contributed to the good numbers so far. And we look all of us together forward to talking to you later when we do our Townhall.

So I think this is all on Q3. I know there will be questions on Q3. We will address all of the questions together in the Q&A session at the end of the presentation. And with this, I would then translate into the CMD part. So as Christoph has said, we have a couple of different building blocks for the agenda for our update overall. The agenda. You see this reflects very much the new segments in which we will report going forward. You have also -- or most of you will have met most of my colleagues who will be presenting their respective businesses today. But there is one person that you don't know yet, and I would love to introduce you all to Chris Jones, who will be running our Global Bag-in-Box, Spouted Pouch business in the future. Chris, if you quickly could stand up and make yourself known. Thank you very much.

So Chris has joined SIG less than a year ago. He's based in the U.S., and he comes with a very rich experience in the paper and packaging industry. And he has collected experience both in operations-related roles, but also, of course, in commercial roads, which [indiscernible] perfectly for the challenges ahead.

Good. So now let me start first by setting a bit the strategic context and giving you a brief update on SIG's vision. So over the last year, I think it's fair to say that we spend a lot of time and effort on focusing to restore execution discipline within SIG and to making sure that we deliver against the commitments that we have made exactly here a year ago. Today, we want to showcase much more on transparency, how we intend to run the business going forward. And also, we want to show you the strength of our competitive positioning and then how this competitive visioning translates into sustainable value creation overall.

At the heart of our strategy stands a very healthy aseptic business. And we have three very clear priorities for the company overall. That is number one, accelerate profitable growth. Number two, improve the returns. And number three, you will hear that a couple of times, creating a simpler and more focused company. So, at the essence, if you split our business into the different product lines, around 80% is the Aseptic Carton business, around 17% Bag-in-Box and Spouted Pouch and 4% is the Chilled Carton business, which we have declared already a year ago as being noncore and for which we are exploring options.

You know how our business model as an aseptic system solution provider works. We have basically a [indiscernible] reinforcing model that starts with filling equipment that we place at customers, filling equipment that provides customers with industry-leading TCO so it's highly competitive and is always ready with innovation to match flexibility needs of the customers to make sure that our customers run operations very efficiently at the lowest waste rates in the industry and also that positions them super well when it comes to sustainability to make sure that they can always fulfill the latest demands of consumers or also regulatory bodies.

We have a recurring revenue stream with packaging solutions in a number of formats. And I think we also have a couple of examples standing out there, so that customers, especially in these times where on the go and smaller formats and proliferation play a big role, more protein comes with much more different SKUs. And our equipment basically helps customers to be able to accommodate all of this. And we complemented at the end with services with a very large global field service network and increasingly also with more and more digital service offerings.

A couple of data points here also. So for the Aseptic Carton, we expect an attractive market growth and Christoph will talk about that in more detail of 2% to 3%. We have outgrown these markets consistently over the past decade by 1 to 2 percentage points a year, and we intend to continue to do so, and we will also explain to you in the later sections why? The market overall is pretty attractive also when it comes to profitability. And couple more KPIs on our offering. So the most flexible machines can do up to 9 different formats on one machine. So that also helps, of course, customers manage their investments better if they can run different formats on one machine.

Lowest CO is the recurring theme. So -- and when we talk later about the NEO launch, you will understand even better also why the output per square meter also a very important KPI. And the new generation of machines is 20% to 45% more competitive here. On technical service. We have more than 700 people around the globe, helping our customers. And also, that is seen and acknowledged by customers. So coming out with an NPS, Net Promoter Score last year of EUR 42 million.

It's also very important to me to mention that what we have promised last year, we really have put into action, and we have delivered on those themes. You might recognize again the 3 themes that we have talked about last year, portfolio optimization, performance improvement and capital allocation discipline. On portfolio optimization. Let me start by -- so we have improved the share of high value-added products in our portfolio, and especially Angela will also talk about this later.

We have executed very consistently on the portfolio portfolio prioritization. That's always a difficult word, prioritization -- on the Bag-in-Box and Spouted Pouch portfolio and in the Chilled Carton business, while we haven't yet closed the efforts to find a strategic solution for this, we are super encouraged by the margin improvements that we have achieved during the last 12 months.

Performance improvement overall. Mentioned in the Q3 update already, we are up 150 basis points in margin, and that is very much driven by the reductions in SG&A that we have kicked off a year ago. And despite the very turbulent year when it comes to raw materials, logistics and everything, we could hold to this one because also here, very diligently, we have executed the unfortunately needed surcharges. Indirect procurement savings are ahead of plan, and we come to that later. We even believe there is more opportunities also into the next year.

Last year, we also said we would close two plants in the Bag-in-Box, Spouted Pouch universe. One is completed, and the other one is underway and on plan. When it comes to capital discipline. So we have implemented a number of new KPIs within the organization that help us to run this more stringently. And it's -- I would say also the new EBIT perspective is fully institutionalized when we discuss business now internally. We also see net CapEx at the lower end of the range and all of this contributing also to an uplift in ROCE, so an improvement in the returns of almost 2 points. But this is not it. So we are far away from declaring [indiscernible]. We are very much encouraged by the progress that we have made so far, but we clearly believe there's more that we can do as a team.

So today, you will hear us talk about the growth corridor. We are confirming the 3% to 5% that we have put out last year, and we believe that we are well set up to continue to outperform also the markets. While we have made great progress on the margin, we believe there is more to do. And it's important to me to say that there is not one silver bullet when it comes to margin improvement, but it's a number of different measures that are partially self-reinforcing, but really a big agenda that we will be driving.

And it's also important to say that this is not just about cost reduction, but this is about creating an organization that is well set up to be even more successful in the future. So this is not about just short term, improvements, but really optimizing the enterprise as a whole, strengthening accountability on all levels of the organization, continuing to have disciplined resource allocation everywhere.

And also to be very clear on the organization is, when it comes to distribution of roads and responsibilities to avoid duplication, and at the same time, ensuring that we do everything super professionally and highly customer-focused. Now here, I would like to briefly summarize and let's start at the bottom right. Our vision is to be or to become the #1 choice in Aseptic Solutions. Where we compete today for deals, we are very, very successful but we want to enlarge that universe where we play. And whenever there is a choice to be made for a new installation, that should be SIG.

There is three priorities overall. Starting with optimizing structures, then elevating performance and all of this we do because we want to excite our customers. So this is about more than just market share gains. We want to really be the preferred partners through innovation, TCO, sustainability service, and we want to continuously and consistently win where we compete.

Quickly talking about optimizing structures. We, today, basically announced the creation of separate organization for Bag-in-Box and Spouted Pouch, so that we can manage the different businesses according to their different needs also in a very transparent way. We will also address the organization overall in Bag-in-Box and make sure that we run it with the leanest possible team. At the same time, of course, we are reassessing all internal structures to drive efficiency but always with customer proximity in mind.

When it comes to elevating performance, we have basically two very strong buckets where we want to optimize further. On the one hand, that is procurement also on the indirect materials, but of course, also on the direct materials. And then we all believe there's more to do in manufacturing and in supply chain. We have defined for all plans, very structured agendas on how to drive performance and operational excellence, and we are executing this as we speak. All of this is complemented with two enablers and there's, on the one standardization, really making sure that we run professional processes supported by modern systems and tools and also make sure that automation plays the role that it should play in the professional organization today.

And last but not least, we are also very much focused on culture, the way how we collaborate as a high-performing team and really with a play-to-win mindset to make sure that we do justice to our product offering and to our teams. So now let me quickly touch on the numbers for the different substrates and the different missions.

Let's start with aseptic carton at the very left. So you see -- or you have seen that before, growth rate after 9 months, 4.2%, margin of the business, adjusted EBIT 19.1%. So the mission here basically is to continue what we have been doing in the past, continue to grow and do further optimization.

On Bag-in-Box, Spouted Pouch. Basically, this business has been slightly declining over the past couple of years and now achieved a margin of around 5% over the 9 months. And let me give you a little color on this one. Many of you will probably remember that this business had an EBITDA margin in the high teens at the time of the acquisition. From there, you need to deduct something like 7% points for DNA. So that brings you to slightly more than 10% EBIT margin as a starting point. factor in additional corporate allocation that, of course, every business and a larger family needs to bear, then you are probably somewhere around 10%. So what you see is basically a clear decline compared to the situation back then.

You also probably remember that we were encouraged by the first successes in the business and markets being very favorable in the first quarter after the acquisition. But then the market downturns clearly have led to lower operating leverage in the end. So that wasn't helpful for the margin. Next to that, also some capability and investment gaps needed to be addressed. And that, of course, took a toll also on the margin. And the mission very much from here is now a turnaround to drive performance up again, while at the same time, making sure that clearly defined [indiscernible] pockets are being served efficiently and innovation is being put to market.

Last but not least, under the nonoperative segment Other, we will, in the future, also report the Chilled Carton business. And when you look at the numbers there, you see this, and we talked about this a year ago. That's a highly competitive market. So growth rates haven't been stellar also here. But what is very encouraging, you see the margin expansion compared to previous year. So while this business is not at the core, we were still able to improve it significantly compared to where it stood a year ago. And that very much goes to cost of goods optimization, both in the field of different board structures that we use now in different paper suppliers, but also stepping up the execution in our own manufacturing facility. This change of the segment reporting, we expect will result in the fourth quarter in a goodwill impairment that is noncash of around EUR 250 million going back to the acquisitions of Shale and of Evergreen.

Important to say that this impairment is noncash and has no implications for our debt capacity or for the underlying economics of the business overall. And while the three businesses really have their unique challenges or unique positions to build on at the moment, I would still also like to highlight again that we believe that the Bag-in-Box business, although it looks a little difficult at this moment, we believe, is a good business and a business that can look even better in the future.

Now important also is that incentives and shareholder interests are aligned, and we have discussed this a year ago, also slightly and said that we would work for the coming year also on adjusting our compensation frameworks a little.

So what is new? In the long-term incentive, we are changing the comparison for the relative TSR from an index to defined peer group and simple reason here is that the index is not being provided anymore. So we needed to find a solution. An external partner has found us the best correlations and basically, this peer group consists of packaging companies, industrial companies, customers and also equipment suppliers.

On the short-term incentive, we have two changes a couple of changes. First, we introduced ROCE as a KPI, as we have discussed already a year ago also. And we changed the nonfinancial KPI from the EcoVadis score, where basically it can't get any better also for SIG with a 96 starting point to different financial targets of CO2 targets, safety targets and customer intimacy targets and NPS. You will also probably notice that the weight of growth has been increased slightly in this composition. And that for bottom line, we now fully focus on the margin and have removed an absolute EBIT component.

All right. So this closes now the introduction. And what we will now do. First, we will have Christoph and Gavin talking about market and innovation. Then we do a deep dive into the regions on Aseptic Carton, where our regional leaders will guide you through the most attractive opportunities that we have identified going forward. Then we will have Chris speaking about the turnaround plans for Bag-in-Box and Spouted Pouch. And then in the end, I will summarize it all and tell you what this will mean for the numbers.

And with this, I hand over to Christoph.

Thank you, Anna. So good morning and a warm welcome also from my side. I'm Christoph Wegener, the Chief Markets Officer and President, Europe at SIG. In this section, we will be focusing on Aseptic Carton, which makes 80% of our revenue and contributes the lion's share of profitability and cash. And my colleague, Gavin Steiner, our CTI and I, we will focus on three topics. Number one, why do we remain confident in the structural growth of Aseptic Carton. Number two, why do we remain confident that SIG will continue to gain market share? And number three, how does our strong innovation pipeline strengthen our competitive position.

Let's start with the market first. The long-term growth of Aseptic carton is supported by four fundamental drivers that drive end market growth and that favor Aseptic Carton as a packaging substrate. Firstly, dairy demand will continue to grow globally, simply by a growing population and by GDP growth. If anything, that is amplified by what we call the worldwide protein wave. So what started a couple of years back in the Western world, mostly in sports nutrition has really proliferated across the world, we see globally and in all consumer segments and increasing demand for high protein products, which is driven by a trend towards healthier food, but also accelerated by weight loss drugs and is portions -- food portions get smaller, protein density simply has to increase.

On the packaging side, we see a lot of growth in portion pack, and that is simply a function of growth in the emerging markets where smaller pack sizes. So 350-milliliter and below are the prevalent packaging size. And Aseptic Carton is the most cost competitive packaging solution for sensitive products with long shelf life. We'll deep dive into that later.

Further, we see continued interest in sustainability, regulators, food and beverage companies retailers and consumers are concerned about the environment, and that favors packaging that allows ambient distribution, which is low in energy and lower in CO2 emissions. It favors packaging that is designed for recycling that is low in CO2 that is made from either renewable or recycled material. And Aseptic Carton ticks the boxes of all of those, which is why we say it is the most sustainable packaging substrate for sensitive products.

But let's deep dive into these important statements. And I said more consumers, higher protein demand, more milk consumption. And that fundamental link is one of the most important growth drivers of Aseptic Carton going forward. And this is the data to support it. So you can see on the y-axis Milk Protein consumption. And on the X axis, GDP per capita. Now you see structural difference in diets. So you have the Western diet, which tends to be richer in milk. So that's the European, the American bubble up there. And you see Asian diets that are a little less rich in milk. But all of these markets have one thing in common, is GDP per capita grows, so does protein consumption.

And what coincides with economic development is typically urbanization. And when you have sprawling urban centers in emerging markets, you simply cannot provide milk from dairy farms around the town. Supply chains get longer, and therefore, ambient distribution gets more important. Now the key question is, which packaging substrate will capture that growth? And I said Aseptic Carton is the most cost-effective and the most sustainable packaging substrate to pack sensitive products for long life.

Now you have two dominant technologies in that segment. So you have Aseptic Carton and you have Aseptic PET. And here, we've chosen our DomeMini, our latest innovation, which we call the carton bottle, and we compare it against an Aseptic PET bottle, both portion pack where we see most of the growth happening. So shape and convenience, they're very similar. They have center spout, easy to consume on the go. But in wait, they're very different.

DomeMini has 40% less weight than an aseptic PET bottle. And material still is the biggest portion of packaging cost, respectively, DomeMini is 30% to 50% less expensive than Aseptic PET. And by the way, here, we have just taken average resin prices from '23 to '25. We haven't even factored in the spike in raw material prices that we've seen in the Middle East crisis. Less material also means lower CO2. And hence, we do say Aseptic Carton and portion pack is the most cost competitive and sustainable solution.

Now the question is which company will capture all of that growth? And SIG over the last 10 years has outperformed the market throughout every economic cycle. So we had a period of growth from 2016 to 2019, where we over delivered and outperformed the market, and we certainly also had a period of soft markets driven by a pandemic, the great inflation, trade wars, real wars, but still, we have delivered 2% volume growth through market share gain.

Revenue was even higher based on pricing. Now due to the four trends that I mentioned, we believe that Aseptic Carton will return back to a structural growth of 2% to 3%, and our ambition is clearly to continue outperforming the market. But market growth is not the only factor in our growth model. We have market share gain. We still have attractive white spaces that we can enter. We increasingly see growth opportunities in technical service, and we have value uplift through mix and pricing, as we have executed in the last two years of soft market environment.

Now that's a multifactor growth model that is really the foundation of the resilience of our growth track record over the last 10 years, and that gives us confidence to continue to deliver the 3% to 5% topline growth. But if we say market share gain and entry into white spaces, that requires that we have a differentiated superior product offering. So what do we do to ensure we keep that lead in the marketplace. So as Ann mentioned, we have a system offering, an integrated system offering. So we are filling systems. We have packaging, the unique sleeve system that is designed for our filling machines and they offer technical service to keep the whole system running.

And we innovate simultaneously in all three elements of the system. On the filling machine side, we are in the process to launch our new Neo series of filling machines. So we are increasing the speed of our filling machines by 25% to 40%. That allows our customers to produce more. It reduces the unit cost, therefore, so higher output on the same asset. But what is also important, we've designed them in a way that they are faster, but still in the same footprint. Because if you want to gain market share, you need to replace filling machines. And we don't want our customers to move walls to increase their space in their filling rooms. We want them to plug and play with our new machines.

And even our fastest Neo series comes with a strong points of SRG, volume flexibility, industry-leading waste rate, high technical efficiency. On the packaging side, we are in the process to launch our Tirol portfolio of [indiscernible] barrier solutions. This allows us to offer the most sustainable Aseptic Packaging Solution as the only player that has really industrialized that and gain share in markets where regulation gets tight to consumers and retailers get more focused on sustainability.

We also have unique shapes. I mentioned the DomeMini that can play in premium segments and help our customers to bring their premium products and the right packaging to the market. On the service side, we have established a global platform of technical service. Our field service engineers are providing services to filling machines in more than 100 countries on this world. And each year through our customer satisfaction surveys, we hear that our service delivery is superior to competition. But that's the core service. We see quite some growth opportunity in digital solutions for Technical Service, and Gavin will share more about that shortly.

So in a way, our integrated system remains competitive. We heavily invest into all three elements. And the more filling machines we will sell, the more packaging material we will sell, the more service opportunities we will create. But it's not just a superior offering. It's also the way how we bring it to our customers that creates long-lasting customer relationships and customer loyalty. And here, we focus really on joint value creation together with our customers. And that means their success is our success. We help them to identify market opportunities in new beverages market opportunities in new channels. So every day, our marketing teams that are embedded in our customer organizations are having innovation workshops. They discussed with our customers, market trends, market opportunities.

Up to September, 344 of such workshops have happened with our customers. And once we have identified the joint opportunity, we can help them in our tech centers in Dubai and Germany and China to develop these new beverages. We can advise them on the right packaging format for a premium product, a premium pack for a commodity product, a commodity pack. And we do even joint market studies to find the right sizes, the right price positioning and we invest into AI tools to help them to become even more effective in selling our joint products. And it's really that joint approach that creates long-lasting customer relationships and loyalty.

And with that, I would hand over to Gavin, who will talk more about how we deploy our innovations and how they enhance our product offering, how it expands our digital service and also our cost effectiveness.

Thank you, Christoph. Thank you very much. Ladies and gentlemen, it's a privilege and pleasure to be here with you today and with all of those guests online, too. A lot has been said already by Christoph around the area of innovation. But let me steal your attention just for a second. What does the word innovation conjure up in your mind?

Is it the next big breakthrough? Is it a product development that substantially changes the world. What does the word innovation mean to you? Does innovation in our area where you're talking about incremental changes across the system warrant such a big change. And the answer could be different. Yes, we all look for it and in R&D, that is a dream [indiscernible] but as a system enterprise, innovation comes in incremental changes that develop a competitive advantage across the ecosystem.

What I presented to you last year was a road map of renovation. Christoph has highlighted one of the really interesting parts around the filler, the sleeves and the services. If you look there, we have a discovered, developed deploy color coding. And on that, the real power of innovation is not the big breakthroughs. It's the incremental knowledge that we bring constantly into this ecosystem that changes the way we behave as an end-to-end business.

SIG Neo platform has gained a lot of momentum, a lot of interest on the deployment of that knowledge that's been created over the past, culminated into the new machine park that we dub SIG Neo and that deployment is gaining traction. I'm going to cover a little bit more detail on the next slide around what platform upgrade and unification means.

You can see 2026 is the start I presented this last year and I must say that we have traction and speed on all of these initiatives on time and full. The sustainability initiative, which we bring to the sleeves, the alu-free, that's with the paperization journey that we're on is also gaining a lot of traction, a lot of interest in the markets, and you heard and you will hear from other colleagues about the deployments that are happening.

So really proud about the innovation so far and the SIG promises that we made. And then a little teaser at the bottom there. The service, Christoph mentioned about digital. There is something around digital that everyone talks about AI and all the buzz words, but I want to bring to life something unique that is built on build blocks over the past. And we -- if you can see the time line there, we're commissioning something called Digital One, and I'll bring them to life in a second.

So continuous innovation and not isolated breakthroughs is what we're doing. Platform unification and upgrades. Ladies and gentlemen, this is really leveraging what we do to deliver more to the customers and reduce complexity in our ecosystem. So the knowledge that SIG has with more than 10 platforms of fillers across the world, reducing that down to a unique set of highly performing, best-in-class fillers then, which we get down to 5. Look what it unlocks. And this project has been going on with the teams, taking all that knowledge and bringing it into reduced efforts. Once you've only got five platforms, cost reduction, not only from building of these machines, but also the training, development and deployment, enhanced level of IT/OT. So this is the security levels where we have to deploy patches to the world, if there's any security issues. When you have a unified platform, that's a lot simpler and a lot more efficient.

And it also comes back to me, it helps my deployment and innovation, because we've got plug-and-play methods now which can fit across the five platforms. So ladies and gentlemen, that's the ecosystem that we are looking at with the platform upgrade and unification project, and it is really a priority for us and the team. So simplified to scale and standardize to accelerate.

Moving on, this is what I had the teaser on the first slide for you all, around Digital One. So what if every filling machine that we connect, what if every filling machine that we connect makes every other connected machines smarter. Digital One is exactly that. We've been building modules. And you're going to see in Latin America, my colleague will present a couple of these modules that have been in development for years, Digital One has been connecting different parts of the process. Our fillers are fully connected.

And with that, a unified AI native platform evolves. And this brings with us a single interface to the customer, customer enhancing getting value from the digital data lakes that we have and retrofitting that into the customer base, not only on efficiency performance, TCO, but also on the quality management, root cause analysis. And imagine all of those connected fillers coming back with that data to us to enhance our ecosystem as we grow. Fabulous, this is digital one, and we've been building this over years. Now you're going to see the rollout as we go forward. So every connected filler makes our digital platform stronger.

All of this culminates and so R&D is normally measured Well, some people like to [indiscernible] on the cost, okay? But the cost of R&D is probably not the right metric. It's how much value we generate. The cost should be irrelevant if you're generating the growth and the value R&D has many times been thought of as the creative crazy people who just invent stuff. That's how many people see me. We are very enthusiastic and we create a lot. But ladies and gentlemen, R&D is very structured. We have in SIG, a Discover platform, a developed platform and a deploy. Those three are very structured. We allow the crazy inventions around the discover. We have to test, we have to prove. That then translates into the developed and then we accelerate in the deploy.

So, looking at the scalable model, many people ask me, so how do you see AI, artificial intelligence, the modules in R&D, we leverage that significantly. And we have only touched the tip, let's be honest, this journey every week changes. But for us, in R&D, we've seen acceleration in lead times, in development, in modules that we can reprogram our coding, our deployment of the coding. It is really a game changer. So, as digitalization accelerates, and you see it there as a foundation within R&D, we really see the value of this growing.

So in summary, ladies and gentlemen, this is SIG's innovation model. This is the future proof, and it's not the how breakthrough. My first question on innovation to you all. But it is a system of incremental innovation that changes the game. So that in a nutshell, my colleagues are going to bring to life some of the deployments, some of the things we are really proud of.

And I hand back over to Christoph to summarize. Thank you very much.

In summary, we remain confident in the structural growth of Aseptic Carton of 2% to 3% in the midterm. We are innovating across all elements of our system to ensure that we will continue to deliver above-market growth. We have key innovations coming to market in all three elements of our system. We are on track to deliver them. The Neo series are filling machines, the Tirol portfolio of alu-free full barrier solutions. We're bringing SIG Digital ONE to the market that allows us to scale, service solutions, digital service solutions and also lays the foundation for further growth, and we have innovations focused on cost efficiency basically slashing the number of equipment platforms from 10 to 5 with the respective scale effects and cost effectiveness.

Now we have all building blocks with that in place to continue to deliver top line growth. And in the next section, we will share with you how we have translated the growth model and our innovation pipeline into regional growth strategies.

I'll be joined on the stage by my colleagues, the Regional Presidents. And we will look at each region step by step. Now I've said aseptic carton market is structurally attractive, but growth opportunities differ region by region. They're different by product, by geography, by channel, by category. So that is why we've translated our product portfolio, our growth model and the opportunities into regional strategies really targeted at delivering above-market growth and focusing on the most attractive opportunities in the respective markets.

We will start with Europe. As President, Europe, I will guide you through the details of that. And then I will hand over to Abdelghany, our President IMEA, followed by Angela, our President, APAC; and last but not least, Ricardo Rodriguez, our President, Americas.

But let's start with Europe. So Europe is SIG's home market. It really combines strong profitability with large size. In 2025, that has contributed EUR 933 million of revenue, which makes 30% of the group's Aseptic Carton revenue. So it's the largest geographic segment. Over the last couple of years, we've delivered 6% annual growth in an overall flat market. which is a testimony to the ability to gain market share in Europe based on our offering, our strong customer relationships, but also pricing discipline.

Now if we take a look at the European market, there are three important trends that really shape the market. Number one is packaging regulation. So over the last couple of years, the European Union has really introduced what I would call the most ambitious regulation to drive transition towards more sustainable packaging. We had packaging and packaging waste regulation, extended producer responsibility, single-use plastic directive, corporate sustainability reporting director and I could go on and on and on.

But eventually, it's all really targeted at driving a transition in packaging towards packaging that's designed for recycling, that is easy and cost effective to recycle that it's lean and wait and low in CO2. And aseptic carton really is perfectly positioned to benefit of that transition.

The second really important trend is the power of retail. We see large retailers to increasingly consolidate on national level. We see a lot of growth in private label taking market share from brands and retailers interestingly have even more ambitious packaging guidelines, even more ambitious requirements to pack their private label brands. And some of them even explicitly express that.

So we have [indiscernible], which is one of the largest pan-European retailers that now in their packaging guidelines specifically says they prefer al-free Aseptic Carton as a more sustainable packaging option. So retailers are really a driving force that will also create more pull for sustainable packaging.

And last but not least, Europe as a market might be flat, but there are pockets of growth. specifically in liquid food in value-added dairy, so high protein-fortified milks, but also in plant-based. So in summary, Europe remains a large market, an attractive market for SIG with market share gain opportunities and with trends that really play to our strength. And that's what we have built our growth strategy around these trends and innovation that allows us to gain market share.

Number one, we are, as the leader in the industry with an allo free solution, we can be really the catalyst of that transition and can gain share in delivering a solution that no other company has industrialized, which is Aseptic Carton without aluminum.

Number two, with our unique filling technology, we can benefit and enable our customers to grow in liquid aseptic food. We have an al-free solution that can help our customers to grow in plant-based and we all know consumers of plant-based, they're not just concerned about their health, but also about the environment. So we have a perfect match of a good pack and a good product. And we do see opportunities in value-added dairy, where premium formats like DomeMini can really play a significant role.

The last growth opportunity that we are really looking at is asset replacements. I mean Europe has an aging asset base. We estimate that about 20% of all aseptic carton filling lines are older than 20 years. So they are clearly at their end of life. And here, again, our new platform comes into play. We don't ask customers to move walls, we just ask them to swap machines preferably with an SIG machine.

So let me deep dive into the first two growth opportunities, and let's start with sustainable packaging, mean we are not new and alu-free. Most of you know that. We've had this product out for a while. And we have shown with 10% growth per annum above market growth. But the solution we had didn't have what we call a full barrier. So we could play in white milk, and we could play in moderate climate conditions that were less challenging on the barrier needs.

Now this year, we've launched [indiscernible], which really unlocks a lot more categories as well as geographies. It's really the full barrier that now allows us to address the full addressable market for sustainable structures. And as you can see, that has been received by our customers with quite some interest. Not only in the first 6 months of this year, we were able to double our growth in alu-free.

So alu-free is really is the answer to a lot of the requirements by retailers, by regulators by food and beverage companies. It reduces CO2. It reduces material complexity. So we go from three structures, paper, plastic and [indiscernible] two, easing the recycling process. But also, and that is really lately a hot topic in the exchange with our customers it increased strategic supply chain resilience. Now we've all learned about choke points of global trade.

If you look at alu, the ore comes from one African country, Guinea, and a lot of alumina that is imported into Europe comes from China. So removing a volatile raw material that also has a very concentrated supply chain increases the resilience of the product supply chain itself. So it really hits the nerve on a lot of topics. Then I said Europe as such is rather flat, but there are these pockets of growth.

I mentioned liquid food. And here, Aseptic Carton really is growing beyond its traditional dairy core, replacing cans and glass. And we have shown quite some good growth, 5% over the last year in this category, and we will continue to grow so based on our ability to fill highly viscous products to fill particulates.

Then on the private label side or on the plant-based side, I've already mentioned that there's a lot of dynamic also in private label. I mentioned that alu-free is a perfect pack for plant-based products. Now we can also provide the barrier that is needed to pack alu-free -- sorry, to plant-based in alu-free.

And last but not least, value-added dairy, where we now have an offering of DomeMini, which we are deploying the first time in Europe, that really opens up that category in Portion Pack also to our product offering. And in the last 12 months, we have placed filling machines precisely in these segments with APIs as one example. It's the largest tomato producer in Spain. And they went for SIG technology for its volume flexibility.

As you know, that's exactly our strong point, and a lot of these tomato products are packed in different volume sizes. So again, we are combining volume flexibility with our ability to fill highly viscous products. And [indiscernible] Milk, a major dairy group from Austria that has a significant export business in value-added dairy. And we plan to continue with this strong product offering to grow in these segments and as such, also diversify our category mix within Europe.

So in summary, Europe is not an easy market. It's not a high-growth market, but we have the right product offering to continue to deliver growth even in this market and with the size and our market share we continue to see headroom to continue our growth trajectory.

And with that, I would hand over Dr. Ghany to cover IMEA.

Thank you, Christoph. So good morning. I represent IMEA. And I think each and everyone in the room is very much aware of the situations there. I don't want to go in details on the stuff that you see on the news, but let me give you some color of what are we facing there.

So, we have some situations. Ships are rerouted, ports are congested, airports are attacked, civilians are losing their lives. Materials that used to take weeks today takes months, if arrived, tough situation. But what really matters is what we SIG have been doing over the last 9 months. Every single demand every single sleeve, every single spot that we have received have been delivered on time to each and every customer in our factories.

Our service engineers, despite all of these challenges have been standing in our customer factories, making sure that our customer products hits their shelf and there is no missing back. My name is Abdelghany Eladib. I represent SIG India, Middle East, Africa for the last 10 years. I come with 20 years before in the FMCG world, in the same beautiful region. And if I say one word, and I want to say this word to my people, I have never been proud or prouder of a team like what I am today, the team is really doing fantastic.

So if I want to give you some color about the region, what do we really characterize it? Resilience is the name of our game. Passion and passion to win is what we brief. Customer intimacy is the name of our game. That's my people. But it's not only that the region is a phenomenal region. It's the fastest-growing region in Aseptic Carton in SIG. And we're here to win that, and you will see that. And it's not only growth that is in pockets of India, Middle East, Africa. You'll see that across the whole Middle East, Africa and India, and we're terrible charging it with the sub-Saharan frontiers.

And last but not least, we are proving, and I will show you that in the coming slides that technology innovation is another success story that we bring in it in India, Middle East, Africa.

Let me take you a bit into what is India, Middle East, Africa. Our region is 86 countries. We're currently present in 1/3 of that. And before I talk about population growth and actually, we represent more than half of the world population. Let me give you a bit of a geography. If you put this region in million kilometers were 63 million kilometers. What does this mean? You can actually fit the two Americas. You can fit Australia and you can fit EU in this region. So what are geographically spread. And it's not that. I mean, this region is a hot climate region. It actually lacks an infrastructure of a cold chain.

So what would be the solution? It's SIG, Aseptic carton. And this is what you will hear what we are actually bringing into this region. So, what are the characteristics of our region. I've talked about the geography, but I actually want to tell you some kind of demographics. It's the fastest population growth region. From an economic point of view, from a GDP point of view also, it's the rising middle age income. So all of the fundamentals are there, consumptions are there. And you will also hear that per capita consumption of dairy is the lowest.

We're talking in some countries, less than 2-liter per capita per person a year. In some countries, it's even less than one glass of milk per year per person. For the number, huge opportunity. So that is really a fantastic opportunity. Over the last 5 years, we've really had a CAGR growth of a stunning 9%. Last year, acetate closed at EUR 414 million. And if you put the 9%, you will see that over the last 5 years, we've delivered more than EUR 100 million of Aseptic Carton revenue growth.

If you take our numbers and look into the distribution of our business, you will see 55%, as you see in the graph of our revenue is mainly dairy based, 44% is juice and 1% is food. 55% dairy, and that's a fantastic, very affordable best nutrition that you can offer to this region. So it's our engine of growth, and we're really driving that. You can always challenge me and say, hey, hey, 1% food, that's weak. And I tell you that is another opportunity that we are conquering. I've talked about the consumption. I've talked about 2-liter per capita, so that's a huge headroom that we are actually leveraging.

I think I talked in the beginning about the volatility of the region. I think each and every one of you knows the region, probably more than I do. So you might see some kind of volatility in over a quarter. But what you really need to take out is that the opportunity is there. The growth potentials over the year is there. And I think my 9% is the clear proof points.

So if I would like to really double down on our three characteristics profile of this region, I would call it #1 growth that is here durable and for long term. That's number one. I'll say number two, is that demographics and economics are in our favor. And number three, I'll talk about the technology that is really accelerating our growth in this region.

So let me take you into the first perspective. Our growth, we definitely want to grow in line of market. In reality, as you've seen, the 9%, we want to outbeat the market growth. And how do we do that? Our system, as I said, is the best offering that you can have for a hub climate that lacks a cold chain infrastructure. So if you think about what will be the best pack, stable, shelf-stable, sustainable pack, SIG comes into the place.

And if I would give some statistics over the last 5 years, in the Frontier Africa and Sub-Saharan Africa, we've tripled our customer winning our filler deployment in the region. What does this mean? Africa is now on the edge of sub-Saharan Africa is now on the edge on the scale to really establish investment and build local capacity. And we're there there to pick the strategic customer which will be in a strategic hub location to really build the right SIG Aseptic capability to cater for the local demand of the country but also act as a hub of the neighborhood countries. So we're very specific to really attack that.

Second, technology. In Middle East Africa, our customer factories are full. Lines are really at capacity. They want to grow. Demand is growing, but Middle East, Africa, getting permits is a bit challenging. It's low. Investment to build the factory for a next line is also high. So what's the solution? Here comes Neo. And I'm so proud that we have brought into the globe and in Middle East Africa last year, our first slim line, the 15,000 of 1 liter. And that's a fantastic thing. Christoph talks about we can place that line without moving the walls of the factory.

And suddenly, the factory is producing not 4 quarters, not 365 days. We've increased the output from 12,000 to 15,000. So automatically, we give back to our customer 1, 3 quarter a year. So funny enough, SIG IMEA, in 1 liter, our year is 5 quarters or actually our customer production is 5 quarters a year, and that's really phenomenal. And I'll talk more about that, and I'll share much more examples of that on the technology.

Third element in the growth, which is also phenomenal is food security. All of us have lived into the globalization before. I think with the current challenges with the current turmoil, I think now we're going back into localization. And specifically, in my region, lots of factories now are thinking that we cannot rely on imports because of the geopolitical tensions, because of the currency challenges and so on and so forth, we really need to build our current infrastructure. And that's big. That's big. This is a decision that comes on a generation. That's a decision where critical customers sit talks with government and make this kind of critical once in a lifetime.

And the great thing we are sitting on these decisions and our customers speaking to us, and I'll give you much more examples of that. So if you put that together, you'd see fantastic things. You'll see growth potential. You'll see technology that really delivers. And you will see demand is driven by customers pulled by government, and we are benefiting out of that. So that's growth.

I'll move into the next one, demographic and economics. Proud to say, I mean, region of the highest population growth, but it's not only population growth. Our region is young, 26 years old. So that's a huge potential. That's the customer that's making choices for what they drink, what kind of pack they drink, what kind of product they drink, and that's the decision that they give also to their kids.

GDP of 5%. So population growth, GDP growth. And as Christoph said, with the rising income, families move from loose milk into packaged milk and from packaged milk into shelf stable. And the choice is SIG because we offer a multi sizes, multi shapes on the same line. You will see on that Slide 3, clear examples of the Frontier Africa entry. [indiscernible] in Ghana becomes a hub, [indiscernible] lines in [indiscernible] and it's actually built to serve all the neighboring countries, Nigeria, Senegal and so on. You will see group [indiscernible] -- sorry, [indiscernible], you will see that in Senegal is also building their infrastructure to serve all of their countries around. And [indiscernible] but not only you'll see Libya is actually growing, you'll see North Africa is growing and so on.

And last but not least, technology, as I said, IMEA before. I mean, we're used to technology gets to be developed in the I would say first world, I mean, Europe mainly because engineers are there, R&Ds are there, and then we take it for deployment. We are now taking the lead in deploying that, and that's a big deal. When a customer puts his trust in SIG IMEA to put a technology for piloting for validations and it delivered 15,000. That's a trust that we have earned, that's a trust that the customer has given us.

And I'm proud to say they have stand up, this big customer last year of Middle East. In Galford, proudly praising our great performance delivered by that, and they have signed the second line, which is actually in startup now. I just came back from South Africa, where I actually met in Durban another customer of mine, proudly, I mean, farm gate -- okay, started up 2 lines 1 year ago. Both of them is 1 liter, 12,000. And even before I leave, he said Abdelghany please, I want to replace my 12,000 by 15,000 because my factory is [indiscernible] we've signed an LOI. And before I come back into the flight, I met Faircap"and they said, we need to really move into the capacity into the next level.

So NEO is really accelerating the growth. Not only we're bringing the [indiscernible] our 24,000, putting it into 32,000 in the Middle East. So I talked about the 1 liter where we converted the quarters into 5 quarters. And here comes the exam our single serve, where we actually converted the 1 year by adding 1/3, 120 days extra in the same year, you can do the math. You can do the math. It's not only a more output. It's the same crews, it's the same energy and this factory is really on steroids. So, we're really now on the edge of deploying technology, proving technology and really anchoring that success in Middle East, Africa, which we have done before when we started our digital transformation with asset health monitoring and we've rolled it out.

So if I want to leave you with a few words about my region. I would say our success stands on our resilience. We don't only think of a plan A. We always have a Plan B, C, D, and E because we know something will happen wrong and it does happen wrong. So we need to be ready for that. Growth is there, and we're ready to take that. Technology is anchoring that, and I think very [indiscernible] is in the number. And I joined SIG 10 years ago, and I would say one word before I give it back to Angela, I'm very, very much positive now on the future of SIG in IMEA now with what I see with the customer reception, with the growth that we're potentially 10 years versus 10 years ago.

Thank you for your trust, and I hand over to Angela.

Thank you, Abdelghany. Okay, so let's move into Asia Pacific. My name is Angela Lu. I'm the Regional President for SIG in Asia Pacific. So APAC is our second largest Aseptic Carton region. And it is a very, very dynamic market in the world. Following a period of softer market conditions, as we all know, we now see that the region is coming back with a more attractive growth trajectory. Why this is happening? Because we see the rising incomes of the middle-class families, and also the premiumization, the emergence of the new consumption occasions and channels.

So with this, that we are more positive than the categories is coming back to a better growth trajectory. What is the more interesting in this trend for SIG is that the demand is increasingly driven by higher-value categories instead of just the volume expansion alone.

And then the consumers are seeking for more convenient, functional and then differentiated products, which creates the demand a wider range of products that is covering from the different product pack size, formats and propositions. And this is playing exactly into SIG strength because of our system flexibility and also the innovations such as SIG's DomeMini is able to allow our customers to respond to the consumer trends quickly and also capture the market growth opportunity.

And then this is also enable SIG to continue to gain market share in the market while the market is retaining back to the growth. So let's look into the details in the region. EP has a very, very and geographic coverage, as you can see from here and also a very dynamic market. Consumers are also changing in the region. So we see that the consumers are increasingly health conscious and demanding for functional products. So those products with a high-protein lifestyle, nutrition, and they are rising and also we see the higher demand in those type of products.

While it coexist for the consumers demand for indulgence product. Urbanization, the rising incomes. And also, we have a lot of increasing in the single person households. And at the same time, an aging population as well. And all of this, they demand a variety of the product covering different price points, different types of proposition. All of those trends are very attractive for the category for our customers and essentially for SIG because those trends is driving the categories in value up and also coming back to the growth, while all of these demands for the customers, they demand a product packaging that is able to differentiate in the market that is able to offer different pack size, capturing different price point in the market.

While at the same time, as you can see that in APAC, we have a very broad manufacturing, commercial and innovation footprint. So this enables and position us very well to capture those market opportunities supporting our customer. So with all of this, we believe that SIG is positioned very well in APAC to retaining to a stronger growth trajectory when the market is coming back.

Let's look into the growth drivers. So we have three complementary growth drivers that put down here. Number one, packaging differentiation. So as I mentioned, the demand for the premium and value-added products are increasing in the market. And these require a differentiated and also distinctive packaging that is able to stand out on the shelf.

So SIG DomeMini is a perfect example for that. Because of its unique bottle shape, it's able to support our customer to position it with a premium pricing and positioning and stand out on the shelf. As a result of it, the success of the success of this approach is reflected in Eli's commitment for more than 10 DomeMini lines already up until now.

Second, flexibility. Flexibility remains very, very important for us in the region. As I mentioned, APAC is a very diverse region. We have consumers spending from across different income levels and also with the different age, different size of the family group. So that requires really different product pack size, formats. And also, we are now seeing a rising emergence of the new consumption channels and also occasions. So the snack shops in China has been rising significantly. The school milk in Indonesia is also increasing dramatically. So all of this -- we worked with our customers together to co-create new products, capturing those opportunities.

Up until the -- just for the first half of 2026, we have already launched more than 100 new products, leveraging SIG's flexibility across the different pack sizes and also the formats. This has contributed for more than 5% of total AP volume in the first half of the year. The third geography expansion. Although China remains very important for us as the single largest market in the region, we see our growth strategy is more and more diversified into the Southeast Asia market. While also in addition to that, Philippines and Cambodia are offering very good growth opportunity for us to build in the additional growth because in the Southeast Asia, overall dairy penetration remains low, and we see a significant growth trajectory.

Just in Philippines alone, in the last 5 years, we've seen a 24% growth year-on-year in the market. So, let's move into the example of the SIG DomeMini closely and see that how our customers leverage this platform to position themselves to create a new segment into the market and driving premiumization.

In the left side, this is an example from Eli. Eli has launched a totally new segment in the premium dairy market in China and created a new consumption occasion for the consumer. Since its launch is being extremely successful. And as a result, we have already secured the commitment from Eli for more than 10 feeding lines. We are also at the same time expanding and also scaling it up in the rest of the region. So from the right side, you see the examples. So it is ranging from nutritional drinks in Vietnam to the high-protein bring health genes and also ready-to-drink coffee in South Korea.

We are also seeing that more and more premium value-added dairy products flavor milk in China as well. What is extremely interesting for this opportunity is that this is creating the value, not only for the category growth premiumization is also creating value for our customers and for SIG.

Flexibility, so we kept talking about the flexibility again and again. But I just want to show you here that flexibility is not just a technical feature it is really a real powerful growth driver for us, especially for AP. In Asia Pacific, majority of our cloud products are in the single-serve formats, which is more on the gold consumption. And as you can see here, we have launched more than 100 SKUs in the region in the first half of the year. and from those products, this is below 125 ml up until to the 1,000 mL and many of them are built on the single platform.

So with this, our customers is able to launch the product quickly into the market and also reduce their cost of innovation, increased speed to the market. As a result of this, we see the asset utilization increasing for our customers. We also see that they have increased their return on the invested capital. At the same time, SIG benefit from the increased volume output on the installed base. So with this, we are very confident that we are able to continue driving the growth, leveraging on the system flexibility, and this is going to give us the recurring revenue growth in the future as well.

And thank you very much. And with this, I will pass to my colleague, Ricardo, to introduce about Americas.

Thank you, Angela. Good morning, everyone. My name is Ricardo Rodriguez. I run the Americas region for SIG since 2015. So America is a high-performing region with significant opportunities for further growth for [indiscernible] and this performance is anchored in, first of all, resilient categories. It's a huge asset market. where we are deploying differentiated technology where we have superior [indiscernible] and where we are deploying a lot of innovation as well.

So we will cover next. So these strengths are reflected in numbers. So we have a strong performance in terms of market share expansion and also growth in general. And we have still plenty of firepower to grow further. And this is especially thanks to the very nice work we have been doing on expanding the production capacity in the region. That's what I want to share with you today. So let's have a closer look at the Americas region in numbers.

So as mentioned, this is a large and diverse asset region in the world with 22 billion liters underpinned by resilient categories such as dairy, complemented by beverages and also food. The region generates over EUR 0.5 billion in revenue. And there, we see an amazing track record of 8% CAGR or 8% growth CAGR in the period 2021 to '25.

We have an installed base of 180 filling lines and two production units, important production units, one for the South and one for North America. And now I would like to highlight two dimensions that are very critical for this success. First, scale and flexibility they matter. So customers need solutions that combine high productivity, format and size flexibility and a competitive.

Second, innovation. So we are deploying new packaging formats, high-speed filling technology and very advanced digital services, digital solutions that are enabling SAG to move beyond a traditional supplier role, so increasingly to increasingly become a partner, a very strong partner of our customers in terms of driving growth and driving productivity in their plants.

Let's now take a look at the most attractive opportunities and how we are translating our competitive position in traditional growth with clear focus on 3 major priorities. I will start with the one at the middle with Brazil? So Brazil is one of the largest dairy markets worldwide with around 9 billion liters, where we are strengthening our position in core categories, through our high-speed filling technology. So first of all, we start with the family sizes. This year, we are deploying our latest innovation, our SAG -- new SAG MID-15 [indiscernible] platform, which allow us to compete and to win in this segment running at 15,000 pictures per hour.

In portion packs, we are already succeeding and doing an amazing journey with our high-speed platforms, which combine this superiority in very competitive CO with the -- this is very important with the unique size and viscosity flexibility of our filling lines. in very practical terms, what do I mean. So the same filling line can handle very different products with different sizes ranging from the very liquid the chocolate milk to very viscous product like sweet condensed milk. And definitely, it makes our position a lot stronger with our customers. It improves their flexibility, operational flexibility and confirms our superior value proposition and Spirit [indiscernible].

Then I would like to talk about priority #2, which are the patchy markets. And patchy stands for Peru, Argentina, Chile, Colombia and Ecuador. It means they are the important markets in South America. Our strategy there is to grow with the national champions and to expand into new markets. So between 2021 and 2025, we achieved amazing annual growth of 30% compared to a market growth of roughly 2%. This demonstrates the potential of combining our superior technology, our superior show with very focused commercial execution.

Priority #3 is growing in Mexico and in high-value niches in North America, the U.S. and Canada. Mexico is already a market where we have proven to be very successful, having delivered 5 percentage point share gains in the last 3 years, okay? This is really amazing. This performance reflects our success with the leading there players. We have presented a very attractive value proposition supported by the local manufacturing. So in the U.S., Canada, our approach is different as we focus on attractive high-value opportunities, particularly with co-packers, we operate with co-packers and they produce for brand owners as well as for private label companies. Based on that, we are expanding our presence in broth, food, broth and in high-value beverages with special focus on food service in general.

That said, let's now take a closer look on Mexico and understand how we are executing one of our critical dealers. Mexico is a very clear example of how our strategy is translating into measurable results. In 2023, we started local production in Queretaro, replacing an important base model with local supply platform. This has fundamentally improved our competitive position, and the results have been significant. So our production volume increased fivefold, while our market share rose from 17% to 22% -- 22.8% to be more precise in a rather flat market. So our next expansion phase is already undergoing. We'll double production capacity to 3 billion packages by 2028, and this will include further vertical integration.

Queretaro is a regional hub nowadays, serving not only Mexico, but also customers across the U.S. and Canada. For SIG, this creates an attractive platform for our continued growth with efficient supply, local supply in the region and also improved scalability.

And that said, we know that manufacturing alone is not enough to create a sustainable competitive advantage. And we know that the real value comes when we combine it with innovation, with execution and with long-term partnerships. And this is what you see in the next chart with Nestle. So we have a long-term partnership with Nestle, which is an excellent illustration of how we create value together.

So product innovation. First of all, solutions for iconic brands and also sustainability. Over the years, we have consistently brought new solutions to Nestle. In Mexico, we have expanded into new applications into new categories such as culinary dairies, through the introduction of our high-speed filling lines in particular, the SIG MINI-24.

In Brazil, our collaboration includes solutions for iconic brands like [ Neska and MSA ], where packaging, innovation and the size flexibility have supported product differentiation and growth. And then an element that I'm particularly proud of sustainability, and this stays very close to my heart. So our collaboration goes a lot beyond the product itself with Nestle. It includes paper straw conversion. We were the first ones to deliver this solution to the market and also initiatives to strengthen recycling infrastructure in various municipalities, especially in Brazil. So we are doing a joint journey with Nestle on that. Together, these elements show how strategic partnership convert our capabilities into durable value creation to our customers.

So they also explain how we have conquered 100% share of wallet of the Nestle operations, [indiscernible] operations in Mexico. And also we have conquered 100% in various categories in -- of Nestle in Brazil, like [indiscernible].

Let me now turn to a new frontier of our value proposition that was initially explored by Gavin with digital services. So digital services is strengthening customer relationships. They create loyalty. They differentiate our offering and they create opportunities for additional value-added services. We have built a modular solutions on a common data platform. So basically, we are connected to -- we have an open platform, and we are connected to the complete process end-to-end in our customer manufacturing area. And we help customers improve operational performance, quality assurance, food safety, and this is across the entire manufacturing process, so with end-to-end scope.

To give just two examples, we can support active OEE management and also to do end-to-end to implement end-to-end traceability. It's a very complex and advanced application, including certification of origin. We are proud of the progress we already achieved we have already achieved. So we had two customers in 2021. This year, we will finish with 25 active sites of our customers with our Digital Service Solution deployed and in use.

At Santa Clara, which is the #1 -- the latest enterprise of Coca-Cola in the dairy world, located in Mexico, we are targeting a 10% OEE improvement for the complete plant using these solutions, using our digital solution. This scalable model combines standardized technology, cloud deployment and selected technology partners.

Well, so -- what I would like you -- I would like now to conclude Americas with three messages. So first of all, the Americas combined meaningful scale, large scale with attractive opportunities for SIG. Second, we have demonstrated the ability to execute. That's what we have seen in Mexico, in Pace, in Brazil. So the market share gains in Mexico the expansion of Queretaro and the long-term partnerships with Nestle, for instance, they provide tangible evidence of it.

Third, we are strengthening the foundations for future growth as we are deploying high-performance filling technology. We are expanding our production units and also we are deploying digital services. to create additional value for our customers. Our ambition is to translate these advantages in sustainable, profitable and value creation growth and long-term value creation for SIG.

Thank you very much. And with that, I hand over to my friend, Chris. Please, Chris.

Thank you, Ricardo. Good morning, everybody. My name is Chris Jones. I'm the President for Global Bag-in-Box and Spouted Pouch -- excuse me, new to the stage this year. So thank you for coming in person, and thank you for being here online. We are going to walk through the turnaround plan for the Global Bag-in-Box and Spouted Pouch business. So this represents about 17% of SIG's total earnings. You've seen the data from Ann this morning that was reported and showed that we have under delivered in this business for the past few years in both revenue and earnings.

So that said, we still remain very confident in this business based on the underlying market characteristics, which we're going to walk through today and then, of course, our position in those markets as well. So here, you see the headline across the top. Globally, it's about 2,200 employees for Bag-in-box, Spouted Pouch, about EUR 551 million in 2025 for revenue and you see a slightly decline in our CAGR that we've talked about already this morning.

But if we pivot down to the market characteristics, let's talk about those. So what we're seeing in the Bag-in-Box side, and Bag-in-Box is going to be largely a food service side. Then we're going to talk about Spouted Pouch, which is more on the retail side.

So, if I start with the Bag-in-Box piece, where we see the growth coming in the market there is in the foodservice business, both in syrups as well as really in the dairy sector, which is where we see some stronger growth that I'm going to talk to you about a little bit later in the presentation. You'll also see a shift to new beverage formats largely United States. And why do we call it the U.S.? It is our largest market for this business. So that's why it's quite relevant to this presentation. So you see a shift away from traditional sodas into dirty sodas.

You see a shift into [indiscernible] see a shift into coffee blended drinks in quick service restaurants. Additionally, there's a huge push for automation on behind-the-counter services. So where is that coming from? I know we've been talking about dispenser technology for a couple of years, but it's really accelerating with online ordering and online apps. So the food service guys need quicker ways to get the same product out of the store because they have customers coming online, they've got customers in the store. So they're looking for ways to speed up service, which is where we play.

Now I'm going to pivot over to the -- sorry, to the Spouted Pouch side and talk about that from a retail perspective. I Spouted Pouch, which there are some in the back of the room, if you haven't looked at them, it's all about convenience, out-of-home meal replacement, on-the-go healthy snacking. So you think about it in your backpack of brief cases today in your kids' lunch box, put it in a healthy stack snack. Where it really plays where we're trying to play is in the Aseptic [indiscernible] of this because then you get the clean label piece. You can do that without having preservatives in the product, which is a huge push today. People want a clean label of ingredients in what they eat.

And then, of course, you've heard all my colleagues talk about the shift to this healthier focus from GLP-1s and smaller portion size and also inflation, just having smaller portion sizes as well. So where does SIG fit in this market perspective? So, we have the market outlook here for the next 5 years on the bag and box side at about 3% growth. That's heavily driven by the foodservice piece, which you see is about 46% of what we do in that space. And that's what I just talked about.

It's the QSRs, it's the new beverage trends, the shift to smart dispensing and the shift from regular to aseptics, specifically in the dairy cycle -- or the dairy sector, excuse me. So where are we positioned in that? We're the #1 player globally in it. And from a profitability perspective, where we're trying to grow is by offering -- differentiate ourselves on our innovation and our films our innovation and our fitments, our innovation and our filling machines, both aseptic and non-aseptic. And we're -- we rate the profitability on this business, I would say, today at a medium. We see it growing in the Aseptic and the dispensing area. There's growing from a smaller base, but that's where we see more profitable growth coming from and it's an area of expertise for us.

I shift over to the Spouted Pouch side, the outlook from a market perspective, there is 5% growth. This is all that healthy lifestyle I just talked about and on-the-go snacking, the trends that's out there for nutrition is food in smaller portion sizes. Today, we're the #2 player there. We're really trying to differentiate ourselves there. It's a bit of a crowded field today in the non-aseptic area. We are in the aseptic. We have a foothold in Aseptic, in the Spouted Pouch today. We're trying to accelerate that with our innovation of scale-up of speed on the filling machine that will be -- we have a prototype now. It will be commercial in 2028. I'll talk a little bit more about that.

As well as first industry-first in-line sterilization capability. So that means you can sterilize the pouches in line with the filling process not done via a separate process. So that's where we're trying to play, which we see as more of a niche and a high competitive or highly more highly profitable area with extreme growth. So we're going to take a minute.

Just look at the financials. We've talked about this this morning Ann talked about the dip in revenue and earnings. And I think the walk away from this slide from my perspective is we recognize it. We acknowledge it. We have a plan and we have a dedicated team in place, and I'm going to talk about that next. So we have a dedicated team already in place. We have the midterm ambition to raise our EBIT from 6% to 8% to 10%, and we're going to do it in three ways: excite our customers with growth elevate our performance and an optimized structure.

So let me talk about those three for a second. If we talk about exciting our customers, it's all about scaling our innovative solution. On the Bag-in-Box, I told you it's new film, recycle-ready products new fitments, new technology and the filling equipment. On the Spouted Pouch. It's all about scaling our new product development there and our innovation road map on the higher speed in-line sterilization generation three spot filler. From a market perspective, we're on a pretty concentrated focus on the dairy market and the food service market. That's where we see the growth opportunity.

And then from the team perspective, we're going to leverage this through a global team versus the previous regional structure with global focus on Bag-in-Box and global focus on Spouted Pouch each to make sure that we're serving those markets appropriately because there's different from a foodservice perspective to a retail perspective.

From a performance perspective, you heard Ann talk this morning, we've already announced the closure of two sites in Bag-in-box, One of them is complete. The other will be completed in '27. We're going to continue to look at that footprint, to look for opportunities to optimize it in any way needed to match the business conditions that we're in. We're also going to look at outsourcing. As we go through our manufacturing footprint, if we don't have a competitive advantage by making something ourselves, there's opportunities for us to outsource that and perhaps not have to reinvest capital in that equipment that was making that.

Continuous improvement. Again, this is going to be globally coordinated from a best practice sharing to make sure that we're spreading the best practice for improvement on OEEs and whatever it may be across the globe and get the best performance out of our operations. And then along with that, the disciplined capital management to make sure that we are investing in things that match our innovation road map or a growth road map, and we have dedicated our focus of capital in those areas.

The structure piece. As I said, the new leadership team is in place. We have an innovation road map. We have a growth road map, and we have a cost savings road map as well. It's a leaner organization with a global focus versus the regional focus with about 1 or 2 percentage points of advantage. And then we're going to still share the back office of SIG. I'll talk a little bit more of that in the slide coming up as well.

So I wanted to talk a little bit about dairy and our position to grow in there because this is obviously important sector to us, not only on the aseptic carton side that you've heard my colleagues talk about but in this area as well. So you heard me talk about Bag-in-Box and the market growth there of about 3%. We see, from a market perspective, a little higher growth on the dairy side. So you see the 45%, and I'll call more of our core customers and established markets, but more importantly, you see the 8% CAGR for forward-looking in some of our emerging markets.

And we are covered globally in this business in the sense of U.S. and Europe are our largest markets, but then we've got operations in India. We've got operations in Australia and New Zealand, we've got operations in China ready to serve the world. From a -- I think what's important to point here too is when we see this growth in Dairy coming, this is where our Aseptic expertise was in play. And it's really important to point out that these aren't customers we have to go and find. We know these customers. We're doing customer -- doing business with these customers today. So it's about leveraging our relationship with these customers to grow our business.

On the Spouted Pouch side, you see high single CAGR outlook there is what the market is reporting. We're already in this market, as I said. We've got footholds in Asia, in the Americas, in Europe. And our plan here is really to leverage our new technology that's coming with the industry-first in-line sterilization and the high-speed filler. The spill -- the filler that's in prototype form now, be commercial in '28 is 3x faster than the filler we have in the market today. So there's a lot of excitement in the industry about this. We were at Trade Shows talking through this, it's got a great future from our perspective.

Let me talk a little bit about the structure. So if you see there on the left, I've talked about the network optimization. We closed one facility in Latin America, one in Europe that's in the process of closing now. I've talked about the fact we'll obviously continue to evaluate that footprint. Continuous improvement is huge for us. to make sure that we're cost competitive and get the best cost advantage out of our facilities.

If I pivot over to the structure side, this is just a high-level look at the structure. On the left, you see three commercial areas. We simplified it a little bit of where we want to put our focus. We are globally leading the effort for sales on Bag-in-Box and Spouted Pouch as I said, each -- so focusing in those seats over there are going to double hat and have a region, but also make sure there's global oversight for our sales activity. And why that's important is we're dealing in these core markets with customers. We want to make sure we take that knowledge and our approach and how we sell and expand it into these emerging markets in the same way to get the best result.

In the middle, you see the functional areas, the supply chain, the manufacturing, I've already talked about the coordinated activities that have to make sure for best practice share, and we're doing the right thing. We obviously have our global marketing is there as well. That's the start of our sales pipeline to push into the sales regions on the left. We have product management and change management. And those are some new things as well. The focus there is to make sure that we have a dedicated team pushing our growth road map, pushing our innovation road map to make sure we deliver and continue to deliver.

And then on the far right, you see the shared resources. This is the BSC that we've talked about, the back office things of SIG. So if you think about this new structure, it's really focused dedicated to commercial, marketing, manufacturing, supply chain, project management, while still leveraging the SIG back office for efficiency.

So, in summary, I want to leave you with three things to walk out of this room with. Number one, we're positioned for growth. We have a growth road map in place. We have innovation pipeline in place. We're the #1 and #2 player here. And we're projecting based on what the Mark's saying, 3% to 5% growth in this area.

Number two, we've got a team focused on cost and efficiency. That is key to this business, they'll turn around the earnings that you guys have seen. So we've got a dedicated team with a lot of experience in this area focused on how do we become more cost competitive. What's the best footprint for us, what are the assets to invest in.

And then third, final, we have a clear ambition for the midterm to raise our EBIT, as I said earlier, from 6% to 8% to 10%.

Thank you. Now I'll turn it over to Ann for closing remarks.

Thank you very much, Chris right. So now very easy to summarize everything that you have heard so far. So again, as a reminder, we have three priorities: Number one, exciting our customers because that's how we make money. How do we do this? In the Aseptic Carton business, we continue to outperform the market in Bag-in-Box, Spouted Pouch, Chris has just summarized the growth opportunities that we see there. And we will continue, as Gavin has described to front run on innovation.

On rating performance, it's all about driving procurement efficiencies, both on direct and on indirect materials. And we will continue to optimize our own manufacturing footprint but much more how we run our operations ourselves. And of course, we will make sure that we continue to leverage our BSS and work on automation.

Last but not least, we have heard today also that we optimize our structures by separating basically into different teams to run most professionally to different businesses by their different needs. And also, we will continue to streamline our internal structure. All of this, again, supported by standard and standardized processes, more modern tools and a reignited culture.

Let's summarize quickly where the growth will come from 3% to 5%, where we are confident. And as Christoph has talked about it, the different pillars will be different in every given year. reflecting the market circumstances, but what will contribute is market growth, that's share gains that's conquering more white spaces that is driving further our service portfolio, and last but not least, also the value uplift.

What is very important was this wonderful business. Every additional dollar or euro that we make in revenue translates directly into the bottom line with a drop-through rate of around 30%. So it's an important driver for earnings growth.

Summarizing again the performance improvement measures and the structure optimization. So we will continue to work under the 3 headlines that we had introduced already. We will continue to further evolve in the measures that we had taken already and where we have additional stuff that we're going to tackle now in the next couple of quarters. And we have two new topics that we really prominently add to the agenda that is the organizational setup and that is optimizing the direct procurement.

Also, again, as a reminder, the larger contributions will come from procurement optimization and from manufacturing excellence, while there will, of course, also still be additional contributions from SG&A and R&D efficiency improve.

Now looking at the margin guidance for the midterm. We increased it to above 18% today, starting from the 16% to 16.5% that we have introduced earlier for 2026. There will be a meaningful contribution from growth and mix, as I have described before, with the drop-through rate of 30%, and there will be a meaningful contribution from performance improvements and structure optimization.

Important to note, we see margin improvement potential across all substrates, probably the most intuitive improvements will sit with Chris, as you have seen in his presentation. but also in the aseptic pouted pouch, we see further potential to upgrade. So what does this mean for our capital allocation framework. No change compared to what we have presented last year. We will, in the first place, continue to invest into the business and drive accretive growth. That means we invest into CapEx that we need to accommodate growth. We will invest into CapEx that we will need to improve productivity. And of course, we will also continue to invest into innovation.

Second priority is that our commitment to a strong balance sheet and the prioritization of deleveraging in the short term. that's especially important in the current environment with raising interest cost, obviously. But I think we have shown pretty good progress during this year, and we are confident to drive this road map further.

And last but not least, we are also committed to a shareholder-friendly capital policy with an attractive and also growing shareholder distributions over time. We had already summarized the increased guidance for 2026, and the strong development of the business and the effectiveness of the measures that we have taken in the last couple of months has lead us to also being very comfortable to already say today that we would want to -- or we will want to propose to the AGM in next spring, to, again, have a dividend paid out to shareholders in the range of 30% to 50%.

And again, as mentioned before. So we believe an attractive and sustainable dividend payments, and we expect that this will grow over time. Now summarizing all of this in the new midterm financial guidance. We confirm the 3% to 5% revenue growth, organic growth at constant currencies. We also increased the adjusted EBIT margin to above 18%. And we set ourselves a target for Aseptic Carton to be above 20%.

No changes on net CapEx, 6% to 8%, including lease payments, no changes to the leverage outlook and also no change to the dividend outlook. In summary, so we have seen -- or I think you have seen a very experienced, very committed and very ambitious team, that is super committed to make this agenda happen. Multiple growth drivers that SIG can leverage going forward, attractive margin profile of the core Aseptic business and potential in the other businesses, and a very good return profile, which we will further support with very much discipline in our capital allocation.

The transparency by the new substrate reporting will also support us here. And you also remember the business needs low working capital overall, which makes it a very, very attractive business. And with this, we are at the end of the prepared remarks, and I would ask all my wonderful colleagues to come back to stage so that we can do the Q&A. Good.

Maybe we start with taking questions from the room, and then we will also have questions from people on the phone. So First question from maybe Jorn and after -- state please your name and your company.

It's Jorn from UBS. Three quick questions. The first, and where are we in the growth path in Aseptic carton and where are we in the cycle, there was a peer it was more delicate. Is this now bottoming out across the board? And this is also confirmed by your filler pipeline, '26, '27? If you can comment on this?

Yes. So as discussed before, I think it would be too early and too hopeful to extrapolate what we have seen in the third quarter because the third quarter, of course, also benefited specifically from the low comps. But overall, I think as some of the colleagues have mentioned that we believe that the market is improving sequentially. It's not yet at the 2% to 3% growth rate that we consider being the normal structural growth rate for the market. but it's clearly better than what we have seen last year.

And in major geographies, I think we are hopeful that we have reached the law, but never raise it too early. When we talk about the filler placements.

Let's also take a couple -- or take a step back here. You have heard quite some talking about the output and an additional quarter in the IMEA region with the higher productivity of some of the assets. So the filler placement will continue to be an important leading indicator, of course, for us. But it's more and more -- I mean it has been difficult before already, but it's going to be increasingly difficult to predict just from an outside modeling, water filler placement number really means because there's so much variety and value.

There's so much variety in output per hour that it's just not one is the same as another one. For the year, our filler placement, I think -- so we said earlier long that probably this year, we're going to be rather in the lower half of the range that we normally give with 60 to 80, and we would still confirm also this outlook for the time being.

And then two quick follow-ups. Just in Aseptic Carton in Dairy, what is the 1 liter play Manila? And how is this category doing? And what are these specialized nutrition, high-end protein [indiscernible] in terms of revenue share and growth, if you separate these two things?

Yes, Christoph, do you want to take that?

Yes. So the 1-liter carton plain vanilla is the majority of our Dairy business, right? It's -- so in Europe, it's for sure, the majority in all -- I would say, in all other regions as well. But the premium segment that is emerging, I would say that is, again, probably Asia and Europe is leading in that part. And I think the DomeMini example speaks to really massive investments also from large players going into that segment, but it is still a small portion.

And then the last question, sorry for this, on the cost initiatives because it should contribute around 150 basis points on your margins for the midterm. Can you give us the two key initiatives, concrete examples, what you're planning there, what you're doing and when you would expect this is executed on?

Yes. I think as we have laid out in this slide with the contribution of the building blocks. Number one is the procurement initiatives and here again, we have more potential on the indirect, although indirect has contributed already in 2025 and '26, but we have another good program for '27 lined up. And then optimizing also the raw material spend going forward. And we're very encouraged by the contribution that you have seen in the Chilled Carton business, where margin has improved following such actions.

And we're going to continue to do the same also in the Aseptic Carton.

And then the other big thing is the manufacturing excellence. We think there is stuff for us to do. We have gotten better already this year when it comes to waste in our own production and quality improvements, but definitely, there's more that we can do. And overlaying all of this, of course, is the turnaround agenda in Bag-in-Box with a sizable plan for Chris and the team.

Manuel Lang from Vontobel. I have two questions, as we're limited to. So first, in Aseptic Carton, I see you're targeting as well market share gains of around or even more in the future. That's a little bit of a step-up compared to the last 10 years. Just wanted to clarify what makes you so confident on that, even though the market in general is maybe a bit more challenging?

And then second one, maybe if I could add this from the wording on the dividend policy, I just wanted to confirm if you commit to a regular dividend per share increase or if this is really dependent on the payout ratio and could eventually be limited by that?

Yes. So what we said on the dividend is that we see a range of 30% to 50% of adjusted net income as a payout ratio. And of course, with earnings growth over time, that number will then also, in absolute terms, increase. And then on share gains. Let's clarify the numbers, and then, yes.

Exactly. So I think I showed on the slide, the last 5 years, the market was flat in volume, and we have delivered 2% per annum growth. So I would say that's volume. So it eliminates the inflation of the price adjustments. That's probably more representative of our ability to gain share. So we are more saying we will continue on the same track. And I think with all the innovations that we have shared, that's backing up our statement that we are confident to continue gaining share.

[indiscernible] from Momentum Alternative Investment. You have just one question. In China and IMEA what share of the store fillers are actually running third parties lives? And are these nonsystem players putting any pressure on your margins. So if you can comment on the competitive landscape in this region, which I understand are also the faster growing for you.

Yes. Maybe let's start with a broader answer. -- the competition environment, yes. Christoph?

So we have -- there's no industrialized solution for sleep copies in -- globally, we can say that. The -- regarding the competitive pressure, I would still say that indirectly, the [indiscernible] material is, of course, it's an alternative. I mean the customer can decide between 2 systems. And if there's a lot of price competition on one system that has an indirect effect on us. That's the more important one. And here, we have to, of course, ensure that we stay competitive within the range of what TCO can deliver. And that's more the market dynamic that we have an eye on at the moment.

This is Gabriel Simoes from Goldman Sachs. So, my first question would be on the hedging side. So this is something we've seen helping the results this year, given the whole volatility we've had plastics and aluminum costs. I just wanted to understand how much of that is going to roll over and what's the expected impact for 2027, if you're already hedging a significant portion of what you need for 2027? So that's the first question.

And the second one would be on the sourcing side. So especially on the paper, on the -- this is one of the initiatives that you mentioned in the past that you were going to conduct going forward. I just wanted to understand whether that has changed at all or if you're making progress in that front to add more potential suppliers?

No. So that hasn't changed at all. And yes, we believe that we do nice progress over there. But of course, that will continue to keep us busy also over the next couple of quarters because this is not just exchanging raw material that very often requires testing and requalification, but it's well underway. And that's why we also call it out so specifically as a contributor to the future margin development. Now the hedging is a complicated exercise because actually, I mean, we do hedging in order not to gamble, but still this year, it felt a bit like don't go in too early because you might lock into high prices, and that's definitely not what we wanted to do.

So we have tightened the pace of execution quite a lot compared to years before. We now basically review every few days, how prices have developed and how the spread is being -- is developing, to then make our choices. And our normal policy, you know that is between 50% and 80%. That's what we target to achieve.

At this moment, we still -- for next year, spend significantly lower because we felt it doesn't make sense to lock in the two high prices for the moment. There's still a couple of weeks to go, but let's see where we end, yes.

Cole Hathorn from Jefferies. Maybe just following up on that point. It might be a little bit too early to look into 2027. But a lot of those hedges have rolled over. What kind of price increases are you thinking about for customers? Have you started that negotiation yet? And just how are you protecting the margin for 2027, just like your initial thoughts. I know you haven't given 2027 guidance.

Exactly. I would say it's a little early for the 2027 guidance. And we would come with this, of course, in February as always or early March this year. But indeed, fourth quarter and first quarter is always the moment when you have these discussions and the things that we need to address is that we need to convert the third [indiscernible] of this year into fixed price increases and that we need to basically also discuss with customers the 70% hedged share of this year, what it means for next year. So pricing will be an important element in the growth equation for next year, but it's too early to give a concrete outlook on the numbers there. Although in the first region, we are out with price discussions already. And there, we would look at, I would say, mid-single digit, high single-digit discussion for the year.

And then when I think about in the context of global consumer staples, keeping 3% to 5% top line growth is an attractive growth driver. And I mean you talked about a 2% to 3% Aseptic market, you're growing 50% of the market, taking share that is ambitious growth. But when I think about your pricing into next year, one of my concerns in the past of SIG is you have a great business model in the as you know your costs in many ways ahead of the year and your price just whatever your fixed costs are divided by your number of volumes. What is the risk that you priced incorrectly because you're too ambitious of growth and you don't deliver those volumes and you actively price your cartons indirectly? How do you manage that going forward?

I think, of course, you can always be wrong, but what helps you to not be wrong is if you really have great transparency on the different number items that you need. I mean, that you have good discussions with your customers on prospective volumes that you have good discussions with your suppliers and that you have a feel for the market on where some of the raw materials might go.

And then in the end, of course, that you have a number of self-help initiatives lined up. So that in case things go wrong, you can also react quickly. I feel we are well set up when it comes to transparency. I feel all of you are also very close to customers so that our long-term partnerships help us also to have constructive discussions. But that said, always something can go wrong. But then as Abdelghany said, we have a plane even ready.

Chiara Di Giammaria, Berenberg. I have two questions, if I may. The first one is on margins. You finally disclose margin by product so much appreciated, but could you give some indication on the EBITDA margin? Because I'd like to understand in terms of if we look at now versus historical levels, is the margin for Aseptic Carton improving or deteriorating?

And then the second question is you mentioned the benefit of the Aseptic Carton versus PET. But if we look at the shelves, especially some protein lines are impassive bottles. So what is your discussion with customers looking like?

Let me start with the DNA share that you need to consider. Probably you remember that before last year, we had a guidance net CapEx, including leases of 7% to 9%. And I guess that's a nice proxy that you can use also to figure out the detail between EBIT and EBITDA. And as discussed, we have narrowed that corridor to 6 to 8, I don't know, 18 months ago. So of course, over time, that will also come down. I think that should help you on the first one and then the second one, Christoph, again to you.

Yes, you're absolutely right. If you walk into a retail store here in Switzerland, you'll see a lot of PET, but this is Europe. Let's not forget that. So that PET is typically not aseptic -- you'll see that also on the shelf life. It's 30 days on average. But if we look at Asia, there's no chill chain established as such. So I mean, Gilis a good example. They produce an inamongolia, it's got to be shipped to the population centers, which is along the coast ride.

So having said that, still, in Europe, we do believe that there is opportunity to bring differentiation because what you see is a shelf full of plastic, it all looks the same. So a carton really stands out, right? So there, of course, the ambition [indiscernible] chain is already there. It's an infrastructure you can use. You don't need to invest in, you will use it. But if you want to drive differentiation, if you want to have the bigger pack, some of those customers will consider to change and that's also what we are driving.

This is Paco Ruiz from BNPP in Spain. Two questions. The first one is how we should understand the midterm for you on your guidance. And if the current restructuring that you are doing in some business will have some impact in absolute sales, not in organic sales in the future? And the second question is on the daily cost? You talked about Aseptic growth not about what [indiscernible] of growth of the Dairy product itself. I mean, facing some headwinds on GLP-1s on uses consumption, et cetera. So I mean, if you could give us a light of what we are considering in this 2% to 3% growth in Aseptic, what is the underlying growth of Dairy?

Do you want to start?

Yes. So we talk a lot about dairy because 2/3 of the product we pack is actually dairy. So it's the majority. Then we have 20% is NCSD noncarbonated soft drinks, so juices and 10% is liquid food. The dairy and outlook is quite robust, I would say. And that's what I shared. On liquid food, we also see growth replacing cartons -- sorry, replacing glass and cans. Then there is, of course, also organic growth simply driven by higher consumption in emerging markets, Middle East, for example, but also Mexico.

Now NCSD indeed is a challenged category. I would say more so in Europe, where health concerns are more prevalent than in other regions, but that is not going to be the growth driver. But you have two categories that make up more than 70% of the business where we do see growth.

And Christoph, you need to go back to -- because the first question was a bit missing in the beginning. Yes.

I mean the first part of the first question is how we should start midterm order to get the 18% margin? And also if -- I mean the restructuring that you are doing in Bag-in-Box, Chilled Carton, it will drive some sales dropping in the coming years?

Yes. So no, should we see a range in the portfolio, for example, like we find a super partner for the Chilled Carton business. then, of course, we would take that out of the elite and that's why we call it organic growth. So that's why we have this guidance. And then on midterm, that's a fair question because last year, we gave you a midterm guidance of more than 6.5%.

To be fair, we already said last year, this is a short or midterm. And I mean, it's good that the short term midterm was now very short. The new midterm, I would say, I would expect as a normal midterm as you would normally also expected 3 to 5 years, something like that.

Torsten Sauter, [indiscernible]. Actually, I'm afraid I have 2 very technical questions. First one, can you give us a little bit of a sneak preview of feeling what IFRS 18 is going to do to your financial presentation statements, where is it going to hit you maybe get us a qualitative feeling? And then secondly, I understand that last year's write-downs have reduced the starting asset base and thereby let we lower depreciation, which has given EBIT a bigger uplift in EBITDA. Now in what sense are these Q4 impairments, which are pretty considerable affecting depreciation in the years to come?

Not at all because that's a goodwill impairment, so that doesn't have any impact on depreciation, amortization or anything. Then the first question was -- sorry? IFRS. So of course, IFRS 18 is a wonderful project, and the full industry earns a lot of money on this one. But of course, it gives also more transparency, and we have done our simulations also. The major part that will be moving out of the financial part into the operational part is the interest cost for the securitization. And overall, I would expect that should have a negative impact of 30 to 40 basis points on operating profit.

[indiscernible]. I have two questions. The first one, could you please give an update on the proceedings with Lawrence last? And the second one would be on the nature of this midterm guidance upgrade. We have heard now that maybe the term is a bit longer. We've also heard today about the efficiency measures that you are taking. So this 1.5 percentage points incremental increase in the midterm guidance. What was driving the update? Is it also because you now see a bit of clearly through the stormy waters compared to one year ago? What is really what may change?

No, absolutely. So I think we have built a very good pipeline of measures that we are implementing, and we see that this gains traction. And then also as discussed, we see that markets are also improving a little. And of course, that with the drop-through also supports us on the margin. So that's on the one hand. And then the litigation or arbitration process is ongoing, nothing new, no new findings. You will see that also reflected in the Q3 financial reporting. And yes, we all hope that this will, at one point, come to an end, but it's always difficult to forecast when this exactly happens.

Chris Arnold, ODDO BF. Also 2 questions from my side. First, again, on the goodwill impairment, this EUR 250 million, could you make a comment on how you divide that between the bag-in-box pouch versus the chilled carton business?

Yes. I think it's very clearly weighted, of course, to the Scholle business because not only that the business was much bigger, but also the impact on that front is bigger. Very clearly. It's a 90%, 10% or 80-20, something like that.

Okay. And any guesstimate about the divestment process? I mean, are we thinking of likely to have that happen in '27 or it will be a longer process?

So difficult to forecast. You have seen that this is a very competitive and difficult market, but we continue working through different options, and we will update as soon as we have something to say. But in the meantime, we manage the business very professionally, and the team in Asia has done a very good job there, keeping customers happy and making sure that also all of us are happy by the better margin development.

And maybe just on Europe, I mean, the 6% average growth, I mean, that's quite impressive. How do you expect? I mean, what can we believe yes, what's possible going forward? I mean the 6% looks really high, right?

Indeed, it's a very strong result and a testimony to the performance of the European team. So I would say -- I mean, there's 2 things, right? Number one, there's, of course, pricing in it. So it's not just volume driven. And number two, we -- there was an investment cycle that was triggered by the packaging regulations, specifically the single-use plastic directive. I mean a lot of old lines had to be either upgraded or replaced. Customers opted in a lot of cases for replacement, and we were able to win a lot of these replacements. So that's an investment cycle that we were riding in the past years. We don't see that imminent in that magnitude. But as I said, we do see a pipeline of aging assets that have to be replaced, and we will continue to take advantage of that.

Any other questions?

Just a quick follow-up this time on the debt. How much of your debt is floating? And what are you targeting midterm in terms of between floating and fixed rate?

Yes. So it's around 50-50, slightly 52-48 or so. But I think -- and that is also our target. We -- at this moment, we don't see that we should change that dramatically.

One follow-up as well for Chris. I just wanted to get your diagnostics on what happened to the bag-in-box business in the U.S., in particular, but like globally? And how much of the plan for the turnaround also relies on the market actually improving? How much of that is like driven by own actions?

I'm not going to speak in history since I wasn't here for all that. But I think what's relative moving forward where I see the large opportunity, certainly, you heard me talk about growth and innovation, that's huge. But I think the underpinning piece that is really important for us to execute moving forward is the cost competitiveness, right?

That's going to help us not only with that growth plan to perhaps regain some share that we may have lost. It's also going to help us as we maybe look at some businesses outside of our core market to help us be cost competitive and growing that. So I'm not going to go backwards because that wasn't here. But I think that the dedicated growth plan and then really the cost competitiveness is going to help us achieve that. That's where the focus is.

Okay. I think we have one question also from the phone, and we will take this question now. So operator, please.

We have a question from Mr. Pallav Mittal from Barclays.

Can you hear me?

Yes, we can.

In terms of Q3, can you talk about the benefit from surcharges and resin and how we should think about that going into Q4?

Yes, sure. So we had discussed that Q3's growth rate at constant currency and constant resin was 6.5%. And there is, of course, a major component of volume considering the lower comps of last year in this, but there is also a very clear contribution from the surcharges or from pricing net, I would say, between 1% and 2%, probably closer to 2%. And I would expect the fourth quarter trading on a similar level. All good, Pallav, or any other question?

Sorry, I have a bad line. If I can ask one more in terms of your cash and capital allocation. Can you talk about the free cash flow generation capability this year, I think last year, you were talking about a $200 million number this year. Given a better performance in the first 9 months, how we should think about that? And then over the next few years, is EBIT growth a good sort of proxy to use? And then also you are reinstating dividend from next year, and it seems you're deleveraging. So how should we think about share repurchases?

Okay. Pallav, we couldn't hear everything that you have been saying. But -- so I would say, first, free cash flow is not a guided metric for us, and that's for a very good reason because you have seen the fluctuations that are driven by the customer incentive payments. But overall, last year's free cash flow was EUR 190 million, and we said we are confident that this year's cash flow is going to be higher. Maybe you want to also take a look at where consensus stands and probably there is room to upgrade that even further, reflecting the performance that we have seen operationally. What shouldn't be extrapolated is just the very good development that we have had year-to-date because, as I said, there is also some favorable working capital phasing in the third quarter. But for full year, it should be very clearly above the number of last year.

And then the other questions, I didn't really hear. So the line was super bad. I'm sorry. Pallav, maybe we can take the other questions later as a follow-up because really it's difficult to hear you.

Okay. So thank you.

[indiscernible].

Alessandro. So yes, dividend reinstatement, we will propose it as said, in next year's AGM. And we are -- feel very comfortable that we continue to be on a good track for the leverage reduction as we have laid it out, including this reinstatement of the dividend and the share buyback. Share buyback is not on the agenda for the moment.

Cole Hathorn from Jefferies. Chris, just looking at the bag-in-box business specifically, you've had a chance to come in and look at it properly. And you've talked about the foodservice business. I'm just wondering how you're thinking about the other segments from a strategic standpoint. Is there a way to kind of move out of the non-foodservice-focused bag and box segments? And are there any efficiencies on kind of the manufacturing footprint or sales footprint there?

They are absolutely in play. Today, we were -- the presentation, we were focused on where we see a lot of the growth in our core markets. That's the, I think, conservative message we want to put out there. But we are absolutely pursuing nonfood opportunities. I think everything is on the table because to your point, if we can be cost competitive and then add some more volume to our operations, it obviously helps us everywhere. So they're absolutely in play, yes, and important.

And then I'm not sure who's the right person to ask this question probably, Christophe, but I'm thinking about the smaller pack sizes that you're talking about and flexibility for the SIG Group system. Historically, smaller pack sizes and on-the-go consumption has always been at a higher profit point for these businesses. And when I think about consumers under pressure, we've seen lower kind of on-the-go consumption. We've seen consumers under pressure. You've talked a lot about smaller pack sizes and on-the-go consumption. So I'm just wondering how you're thinking about that? And is that a key kind of value and mix lever that is going to be driving profit performance for SIG going forward?

Yes. So I would say in emerging markets, absolutely price points, we call them even magic price points are key, right? So they are almost set by coin age. So you have INR 5, INR 10 in India and similar price points also in other markets. Now the beauty of the flexibility that we offer is you can actually downsize without investments, right? And that makes the system, the SFG system unique to Tetra Pak.

So a customer can go from -- and they are actively using that. They're going from INR 200 to INR 180 or from INR 180 to INR 160. So they reduce the product to stay within these price points that allow consumers even when in an inflationary environment to continue consuming -- so I would rather say that we have the right system and solution there and it has helped us in the last years to actually gain significant share in the emerging markets with that proposition.

Maybe Angela to add from an Asian perspective.

Yes, that's right. So as just now Christophe mentioned, on top of it, also the competitions among in the market are very strong. The channels, actually, they would like to have a differentiated pack size. So it's not only the price point itself, it's also the differentiation for the products and the different channels. And that's why having the flexibility. In the past, we have never seen that the customer using the entire range of our pack size.

Now I think it's more and more different sizes and every single one, the customers are using because the channels are becoming so diversified. Consumer demand and different points are becoming also more and more comparing to before.

On the bag-in-box and spouted pouch, you have a target of 8% to 10%. Can you share with us how you would stand in terms of return on invested capital in that business?

Yes. So we will also, of course, when we report 2026 numbers, give some ROCE numbers by segment. But it's very clear and very obvious that the majority of the ROCE that we show today comes out of the aseptic carton business and that within bag-in-box, spouted pouch and also chilled carton, by the way, you will rather see a very single-digit number, but we will disclose that with the full year reporting.

I meant more in future perspective, once you, let's say, once you reach the 9%.

But that doesn't change a lot, I believe, on the return on capital employed. Yes, you move up with the margin improvement, but it will still be far away from the aseptic come.

Then I have 2, if I may, 2 quick questions on Mexico and Southeast Asia maybe. In Mexico, you will build laminator, right? So do we have to expect another EUR 100 million investment and then 3 years of underabsorption because that machine has a huge volume that you don't deliver in the first 3 years or...

Yes. So I guess the answer is no because we have learned from mistakes also, and it's, of course, included within the CapEx guidance that we have given. And a large part of that money is actually already out of the door because we are in the construction phase. But Ricardo, do you want to add on the capacity utilization for the Kito plant?

Capacity utilization is very high in Mexico. We are running -- in fact, we started the plant, as mentioned, 3 years ago. We increased production 5x. Now we are duplicating again. And by 2028, should be ready. And by 2028, we should have also extrusion running, right? So -- and it means -- and that's a plant that we run 24/7, very high use of capacity.

But then it's also fair to say that we don't need in the next few years, additional extrusion capabilities probably. So we are well set up -- after that one.

And the one in India, is it...

The one in India hasn't happened actually after the review last year, we have redirected the order for the one in India to [ Qeritaro. ] So it's now in Mexico.

All right. Good news. I'm aware of that. And then maybe on the Southeast Asia because we're speaking about India, U.S. talking about some opportunities, Philippines, I don't remember. Cambodia, yes. Cambodia -- so should I frame this. In India, it didn't go very successfully. as far as we can tell. So why will it be completely different in the Philippines and Cambodia.

Yes. So in Southeast Asia, actually, we have a very, very strong coverage already in many of the countries, and we have a strong market share in Indonesia, Thailand, Vietnam market already. Indonesia has a very low dairy consumption still. And also, we see the Indonesian market ramping up significantly driven by the higher income level and also driven by the country's school milk program, building on those success. And then now we also see the additional geographic expansion opportunity in Philippines and Cambodia. So in those markets also, we have a very strong manufacturing base that is based in Thailand. So that is where that we have a very efficient manufacturing efficiencies to cover the entire ASEAN countries. That's why I think we are very confident that we are able to continue to grow those stronghold Southeast Asia countries and expand into the new geographies, Philippines and Cambodia.

And maybe one comment on India, Abdelghany.

You mentioned it did not go quite well. Actually, we are revising our strategy in India. So first of all, the very good news is the plant in India is fully functioning. It's actually a vertical start-up. -- okay, in terms of output, in terms of quality, and there is a lot of great focus that we're actually leveraging from my colleagues in terms of how can we really be the lowest cost among the group. So that's point one.

Point two is we also changed our strategy in terms of the plant in India to be not only India for India, but also leveraging India capacity for the group. So we're now leveraging that for export potentials into EMEA and into Asia Pac, and we're looking for that. And then last but not least, I just want to comment on the market in India, which is very important.

And just for your perspective, a few years ago, India was going through exactly like Europe, a very, very high investment cycle. And we were riding that in terms of bringing lines and so on and so forth. And we were actually proud to bring almost 50 lines. And then we had all the challenges of the weather, of overcapacity in the market. So we're now redirecting our strategy into we want to grow profitably. We do not want to outgrow the market and burn margins. We would actually pick our choices. Don't forget that India will be the dairy of the world, and we are actually focusing our strategy into the big dairy corporates to win with them and win rationally with them. That's my takeaway in India.

And you have successfully increased the share of dairy in the portfolio in India.

We actually now moved from a 16% dairy participation 3 years ago into today, almost 1/3 of our business is dairy, which is phenomenal. Why? Because it also balanced the loading on the factory versus the juice, which is mainly concentrated on a season, which is mainly 4, 5 months a year.

Okay. We have another question from the call. We now have a question from Mr. Detlef Winckelmann from JPMorgan.

And apologies if this question has been asked already. I lost a little bit of time as I was moving from the web phone on to the telephone. Just when we get to bag-in-box and spouted pouch, if I take a look over the last 5 years or so, obviously, we know the margins have been under pressure and we know the revenue has been under pressure. But if I look at the deltas, it looks as if it's price and volume or maybe even a bit of mix that hurt you as not just volumes. So just curious in terms of your recovery going forward, how much of that is getting the customer mix right, your pricing strategy right? And how much of that is just filling up new capacity through market share wins? That would be my first one.

Chris, do you want to take it?

Yes, sure. I think looking forward, from a pricing strategy, I do think that's important to make sure that we have a global pricing strategy in place. So yes, I agree with that. I think, as I said earlier, it's about cost recovery to also drive those margins, which will also help us regain some share because yes, we've definitely lost some share. And the focus is not only to grow in our core markets, but to regain some of the share that we've lost in our core markets. So I think that answers the question.

Cool. And then maybe just one follow-up, if I can. I think this might have been asked because I caught the back end of it, but just in terms of competition in the likes of China, we're seeing potentially in India now with ramp-ups, potentially even into parts of Africa. If I look at all these ramp-up and capacity investment pipelines, -- my sense would be that they want to fill up capacity as quickly as possible. That always creates a little bit of a market share competition issue. I'm just curious around there. Is it from your side, is more about the volume side, pricing side? How do you guys keep against that or push against that competition level? Just any color would be great.

Yes. Let's start again with first. Of course, the segment that is more under pressure from all of these developments is the roll fat system and not the sleeve fat system, not ours. But of course, as Christophe said earlier, also, it's an indirect competition. And basically, there's a couple of things that we need to get right. to make sure that we stay ahead of the game. That starts with innovation and continuous differentiation and that ends, of course, with being competitive so that we can fully play to the strength of our system and making sure that the TCO remains very compelling also in that environment of competition. So all in all, I would say, as always, never become complacent, make sure that we do the right things in the right pace fast, and then we will handle this.

Can I ask a follow-up on the bag-in-box business with respect to the change in mix that you are sort of operating. You mentioned in your introduction, I think, maybe referring to the Q3 results, yes, that the noncore part of the bag-in-box was down double digit. And the core part of the bag-in-box, which I assume is the dairy part of the business.

Yes and syrups.

And syrups, dairy and syrups were kind of flattish. So this obviously drives the negative sales, but how long will this situation last? Are you going to phase out completely this noncore business just by organically not catering to that market, meaning we sort of have, I don't know, another couple of years of headwinds, but you're exiting presumably a bad business. So I'd just like to understand a little bit better...

I can take that. Yes. So I mean I think we certainly had some managed exits of business that wasn't very profitable for us, right? So as we move forward, I don't see us carrying that into '27. That's going to happen for the most part this year. And then we start fresh going forward.

So I do see growth, as I said, in some of these other areas in foodservice and dairy and spotted pouch that's going to take us back positive. We do not -- we're not projecting a decline, and I don't want to get too forward-looking, so I'm sorry, Annie, on those pieces, but we intend to bounce on that and come back. And I think what I would say with some of those markets is as we change our cost position, some of those may come back into play again. I mean that's possible.

Yes. And just to complement this, of course, the portfolio actions that we have discussed became effective in 2026. And I think that's important that we take note of that. And as Chris has said, we should take the corner now pretty soon on this one.

Okay. Last one then. On the installed base of fillers in CombiBlock, my understanding is that you should actually not install any fillers. That will be the best solution for you. You grow on the installed base because those fillers are not utilized or very badly utilized. So your case should not be to come here and tell us that you install 90 fillers every year, but maybe that you install 10 and you grow 3% to 5%. I would say then I calculate another cash flow.

No, no. So I would say it depends. So of course, there is occasions when a customer opens up a new facility. Of course, you want to be the one who places the machine there, and you want to be the partner for that investment and you want to gain that share. Now is it from a -- would it be the most attractive business case if all of a sudden, volumes across the board would grow 10% and the installed base is utilized even better than what it is today? Of course. But it's not likely that you will see this broad step-up in the market at one point in time. So it will always be a mixture of making our customers more successful and helping them also to gain more volumes.

I think Christoph has explained some of this also how we support customers finding new ways to grow our Angela also with the formulation support that we give to customers. Of course, that's wonderful. But whenever there's an investment that is to be made, we want this investment to be made with us. Of course, we want to be the partner for the customers very clearly. And don't forget the customer doesn't make such an investment if they don't have a business case behind it also. It costs them also quite some money. Yes. and we agree to that. And we believe that we have room for improvement there also, and it's one of the initiatives also indeed that we are working on in detail to drive the installed base even more than what we do today.

Okay. Is there another question in the room? Yes.

Yes. Maybe one question about the leasing and the financing of the new machine. Is there any thoughts that you can maybe do that more profitable for SAG or reduce the leasing expenses? So I was wondering a little bit in the connection to the new machine selling, if you can do anything on the financing side of your clients.

Yes. I think we have optimized the way how we place machines in the market quite a lot. Remember that the net filler CapEx has declined quite substantially over the last couple of years. And in most cases, also, by the way, the interest expenses that relate to such a leasing are borne by the customer. So that's not on our books.

I have another follow-up. And so that will probably be not a very net question. You gave us a 30% drop-through of your top line to EBIT, but you refrain to give us a free cash flow conversion because you mentioned that the more you sell, then you have to give back premiums or rebates, I don't know how you call them.

So these rebates are not in the EBIT because otherwise, you will be also in a difficult position to give us a drop-through ratio. Yes. So do you know what I mean? So why we have a guidance of a 30% drop-through in top line and EBIT, but you are refrain to give us what would be the free cash flow conversion. These rebates you give car that order more are not in the EBIT, are below the EBIT.

So I think we have discussed this quite a lot over the last 2 years, especially. Let's take a step back and go back to 2024. In 2024, we had a volume growth in aseptic carton of 6%. In 2025, we had a slightly negative flat volume growth in aseptic carton. So a delta of 6% between 2 years. During 2024, we have collected a lot of cash from customers because they paid basically the list price for the products that we sold to them.

And we gave them back their rebates that they were entitled to because they reached the threshold in 2025. If you also recall the fluctuation of free cash flow, EUR 290 million in 2024, EUR 190 million in 2025. So that's quite a fluctuation, and most of this was driven by these incentive cases. And I have mentioned also for this year that not having to pay these volume discounts for '25 lower volume, but collecting some money for a better volume development this year is again another delta of EUR 60 million.

So if you want to look at -- and free cash flow, I mean, always varies by period. If you would want to give a guidance on the free cash flow for this business, I think you could only do an average over a number of years. But then an average over a number of years can have the luxury or be a pity that you have the wrong cutoff between the years and you have exactly the same phenomenon. I think we kind of address the challenge not too badly by giving more details on what the fluctuations because of the customer incentives is so that you understand also better what the underlying free cash flow is.

At least I would hope that this is perceived to be an improvement. But really, I would refrain from giving a free cash flow guidance. It is an important metric for us. Of course, you've seen it's also a very big building block in our incentives, and we run after every cent, you can take that for sure. But really, it wouldn't be serious to give a guidance there. All right. It looks like...

It looks like there's no question anymore. There's no question from the call. No.

No. Thank you very much.

Thank you very much for all your presentations. Thank you for listening so intensively and for asking the questions, and we look forward to continue to update you regularly. And now I would like to invite you all for some standing lunch if you still have time. We're happy to take additional questions in case you have any. Thank you very much.

Ladies and gentlemen, welcome to the SIG H1 2026 Results Conference Call and Live Webcast. I am Mathilde, the Chorus Call operator. [Operator Instructions] The conference is being recorded. At this time, it's my pleasure to hand over to Christoph Ladner, Director, Investor Relations. Please go ahead.

Thank you, Mathilde. Good morning, everyone, and welcome to SIG's half year conference call. I'm Christoph Ladner, Head of Investor Relations. Hosting the call with me today are our CEO, Mikko Keto, and our CFO, Ann Erkens.

In today's conference call, we will refer to the presentation that is available for download on our website. As always, I would like to draw your attention to the disclaimer and cautionary statement on Slide #2.

The call may contain forward-looking statements containing risks and uncertainties. These statements are subject to change based on known or unknown risks and various other factors, which could cause the actual results or performance to differ materially from the statements made in the call.

And having said that, let me now hand over to Mikko.

The first half of 2026 was characterized by challenging market conditions. These included uncertainty related to the conflict in the Middle East, higher raw material and freight costs and continued softness in some of the end markets. Against this, we, SIG delivered slightly positive revenue at the constant currency and improved profitability and substantially stronger free cash flow.

But let me start with a few key takeaways. First, revenue increased by 0.8% at constant currency and by 0.4%, excluding resin pass-through effect in the bag-in-box business. Aseptic carton, which is most of our business, grew by 1.6%, while soft market conditions continued to weigh on chilled carton, bag-in-box and spouted pouch. Secondly, profitability improved further. Adjusted EBIT margin increased by 80 basis points to 15.6%. This was supported by improvement measures we initiated in 2025 and disciplined surcharge execution.

Thirdly, free cash flow improved more than EUR 100 million to negative EUR 32 million. Main drivers were improved operating cash flow, including lower customer incentive payments given the low volumes of '25 and lower capital expenditure.

Based on this solid performance, we are confirming our full year guidance. While developments in the Middle East continue to create volatility in the freight and raw material markets, our surcharge mechanism is allowing us to offset the cost increase. So we can say this has been successful in the first half of the year. A good portion of these higher costs only started flowing through our P&L during the second quarter, and we continue -- and continue into the second half of the year. Since our last update, we opened a new business service center in Mexico, where transition is underway.

Let us now look at the first half financials in more detail. Revenue was EUR 1.56 billion. Reported revenue declined due to the negative currency impact from the first quarter, while growth at constant currency was positive as we just discussed earlier. Adjusted EBIT increased to EUR 244 million and margin expanded to 15.6%. We are especially proud of this point. Adjusted net income was broadly stable at EUR 133 million. Free cash flow improved by more than EUR 100 million year-on-year despite the normal first half seasonality. Return on capital employed increased to 25%, reflecting stronger profitability as well as the effect of impairment recognized last year.

The second quarter provides a more current view of the underlying development, and we were pleased with the progress achieved despite the geopolitical uncertainty. Revenue grew by 1.5% at constant currency, supported by strong performance in the Americas and resilient demand for aseptic carton. Currency impact was neutral for the second quarter. Adjusted EBIT margin increased by 100 basis points to 17.5%. Free cash flow turned positive at EUR 32 million compared to the negative EUR 50 million in the second quarter '25. Overall, the quarter demonstrated resilience of our business model as well as our execution capabilities in difficult market conditions.

Then we have a few comments about markets. Europe remained challenging in terms of revenue. But on the other hand, profitability benefited from a number of positive factors. Revenue declined by 3.1% at constant currency and constant resin in the first half. This reflected pressure in the ambient juice market and low participation by our customers in the UHT milk tenders. One clear positive was continued success of our Terra, aluminum-free solution offering. Volumes increased by approximately 25% in the first half of the year, demonstrating strong customer acceptance for this product.

SIG Terra now generates about 10% of volumes in Europe, which means that there's a high demand for the product. Softer demand for non-system applications impacted bag-in-box and spouted pouch. Despite the revenue pressure, adjusted EBIT margin increased to almost 25%. The margin benefited from favorable raw material costs in the first quarter, positive hedges recorded in our procurement entity, which also belong to the segment and other segments and lower depreciation and amortization.

Then we turn into IMEA. The India, Middle East, Africa region remained resilient despite the geopolitical situation. And we are particularly proud of the team in IMEA, how they manage the situation. First half revenue increased by 0.3% at constant currency and constant resin. We successfully passed through the most of the increase in the raw material and logistics costs. It also continued to win new business, securing 13 filler contracts during the first half, keeping the pace of last year. There was occasional supply chain disruptions related to the regional situation, but our teams managed them effectively and maintained service level to our customers.

Adjusted EBIT margin improved to 17.7%, supported by efficiency gains and lower depreciation and amortization through -- partially offset by adverse currency impacts.

Let me turn into Asia Pacific. First half revenue in Asia Pacific increased by 2.4% at constant currency. China and Southeast Asia continued to benefit from our pack-size diversification strategy and premium innovation, including DomeMini format. This supported further market share gains. In the second quarter, challenging market conditions for chilled carton and softer bag-in-box and spouted pouch volumes weighed on performance, while aseptic carton demand remained resilient.

Adjusted EBIT margin declined due to foreign exchange effects and price pressure, particularly in China. Efficiency initiatives partly mitigated these headwinds while the chilled carton business delivered substantial margin improvement.

Then the Americas. The Americas delivered excellent performance and delivered strongest regional growth in the second quarter. Revenue increased by 4.4% in the first half and by almost 10% in the second quarter. On a constant currency and constant resin basis, first half growth was 2.9%. Growth in aseptic carton was broad-based. It was supported by strong refresher demand in the United States, continued momentum in dairy and market share gains in Mexico and successful pricing and mix initiatives in Brazil.

Bag-in-box and spouted pouch also returned to growth in the second quarter, driven mainly by syrup and dairy applications. Margin improved to 13.5%. Price increases and additional efficiency measures more than offset higher raw material and freight costs. Overall, region picture confirms the resilience of aseptic carton and benefits of our operational and commercial actions.

And at this point, I will hand over to Ann for a more detailed financial performance presentation.

Thank you, Mikko, and good morning, everyone. Let me start with the adjusted EBIT bridge. The improvement in adjusted EBIT and margin is one of the key highlights of the first half. Adjusted EBIT increased by EUR 11 million to EUR 244 million. On a constant currency basis, EBIT grew by around 10% in this first half. Note that while FX was still a headwind in the first quarter, it turned to neutral in the second quarter. Top line benefited from the timely implementation of surcharges to address the raw material and freight cost inflation that we saw following the escalation of the crisis in the Middle East.

We believe that this underlines the value that our solutions deliver to our customers in our long-term partnerships. We appreciate the constructive dialogue in this challenging situation as we expect more headwinds to be absorbed also in the second half of the year. As you might remember, sourcing contributed a positive EUR 5 million in the first quarter. This turned negative in the second quarter as the unhedged portion of higher raw material costs started to kick in and inventories that had been purchased at lower costs were consumed.

Operational performance was particularly strong. Production efficiencies and SG&A savings from our improvement measures initiated last year more than offset inflationary pressures and higher freight costs. Lower depreciation following the prior year impairments also contributed. As a reminder, the D&A impact will annualize after the third quarter, reflecting the timing of the impairments recognized last year. Overall, the bridge shows that our improvement measures are delivering tangible and increasingly visible benefits.

Now turning to the adjusted EBIT reconciliation. Profit for the period increased substantially to EUR 134 million. The main drivers were the unrealized gains on commodity hedges and the end of the Onex purchase price allocation amortization after the first quarter of 2025. Net finance expenses were broadly unchanged. Income tax expenses increased substantially versus prior year H1, mainly due to a higher share of profit in higher tax countries, higher nondeductible expenses, including interest in Germany and also some phasing effects. The largest adjustment was EUR 21 million of unrealized gains on commodity hedges. The year-on-year comparison also benefited from the cessation of the Onex purchase price allocation amortization after the first quarter of 2025.

We also incurred approximately EUR 4 million of restructuring costs related to regional optimization initiatives in Asia and the new business service center in Mexico. As in previous periods, we present these adjustments transparently to provide a clear view of the underlying operating performance. There's not a lot to discuss on this slide. Adjusted net income was EUR 133 million, largely unchanged from last year. And as there are very little adjustments in H1 2026, reported and adjusted net income are almost the same.

Moving on to CapEx. Net capital expenditure, including leases declined to EUR 96 million or 6.2% of revenue. The decrease mainly reflects the completion of major investments in India last year. At the same time, investments in filling lines increased as we sold more higher-value filling lines to support customer growth and prepare for future volume opportunities. We continue to expect filler placements in 2026 to be broadly in line with 2025, means in the lower half of our normal corridor of 60 to 80 placements.

The Mexico expansion project is progressing according to plan. It will support regional growth and improve efficiency through greater localization. The project is expected to be fully completed around the end of 2027. Free cash flow was negative EUR 32 million in the first half, an improvement of more than EUR 100 million compared to last year. This will reflect our normal seasonality, while free cash flow was already positive at EUR 32 million in the second quarter. The improvement was driven by higher operating cash flow, mainly due to lower customer incentive payments for lower volume growth in 2025 as well as lower CapEx.

Let me take you through the main components of the year-on-year improvement. Number one, lower customer volume incentive payments had a positive effect of approximately EUR 40 million to EUR 50 million. Number two, the base effect in trade working capital in a similar magnitude. Number three, coupon payments had a negative effect of approximately EUR 18 million to H1. And number four, lower tax payments contributed approximately EUR 8 million.

The inventory level increased as we intentionally build some safety stocks in response to supply chain uncertainties. Depending on developments in the Middle East, there may be an opportunity to normalize part of this position as the year progresses.

Finally, let us look at leverage. Gross debt declined by almost EUR 240 million compared with June last year, while net debt declined by almost EUR 290 million. This reflects the improved free cash flow and the dividend. The bond issuance in April and the agreement signed in June to replace the U.S. dollar term loan have largely completed our refinancing needs for 2027. They have also strengthened our maturity profile at attractive terms. Reported leverage remained at 3x as last year's nonrecurring charges still affect the last 12 months EBITDA calculation. Leverage under the group's covenant definition, which provides a clearer view of the underlying development, improved to 2.8x from 3x in June 2025.

And with that, I hand back to Mikko for the outlook.

Thank you, Ann. Let me conclude with the outlook for the full year of 2026. Based on the solid first half performance, we are able to confirm our full year guidance. We continue to expect revenue growth of 0% to 2%, and adjusted EBIT margin between 15.7% and 16.2%. Net CapEx, including leases of 6% to 8% of revenue and an adjusted effective tax rate of 26% to 28%. Uncertainty remains around freight and raw material costs related to the developments in the Middle East. Our first half performance significantly derisks our delivery of full year targets, but the risks remain in the business because of geopolitics.

We remain focused on cost discipline, operational excellence and accelerating growth in aseptic system solutions where we see the greatest opportunity for value creation. And we'd like to invite you to our Capital Markets Day, which is scheduled to be on October 27 at The Circle Convention Center in Zurich, and we look forward providing a deep update on our strategic growth and growth opportunities and financial ambitions.

I'd like to thank you for your attention, and Ann and myself are now happy to take your questions. Let me move into the Q&A, please.

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

It would be 2.5, if it's okay. The first one would be, please, on your volume outlook for the second half. I mean you have easier comps. I mean what indications you get from customers here? Also, what is your initiative to stop the juice bleeding in Europe here, if there's anything you can do against this to tackle this?

Second question would be, please, there are always, of course, the discussions with non-system suppliers and competitive environment. Can you give us an update what your volumes in aseptic carton actually did in Southeast Asia and in China over the last 3 to 6 months?

And the half question just technical one, the EUR 10 million lower group function expenses. Is this now the new run rate? And what was driving the fact?

So on the volume outlook for the second half, let's first take a step back. I would say, volumes in aseptic carton overall, if you exclude some one-off impacts that we have had in the first half of 2025, where we also had some equipment sales in aseptic carton, I would say we see mildly positive volumes in the first half, and we believe that this will also continue into the second half. But of course, as you said, Bjorn, the baseline, especially in the third quarter is a little lower. So overall, I think we expect a sequential improvement.

Then on the juice topic, indeed, that is -- so the soft demand for juices in Europe that is a topic that has been accompanying us for a number of quarters now. Difficult to say when this bottoms out. But we don't expect that this category will come back into full swing pretty fast. Nevertheless, also, as a reminder, the volume -- the share of juices in Europe is -- I mean, the majority of the business, let's put it easily, is in dairy, of course.

And I might take a question, Jorn, for the system supplier and Asia Pacific, China. We see our position to be extremely strong in China, which is one of our core markets and our position and system supplier. And we've seen rather positive market share development and the opposite. And the challenge more in the China, in particular, is the price level that it's more difficult to increase prices because of the competitive pressure. But our system supplier position, providing kind of sophisticated fillers and feeding our fillers fully with our carton is working well in China. So China proves that we can be competitive. And the challenge there is more that price increase opportunity is more limited because of the competition.

I think we said earlier also in the script that in China, the volumes in aseptic carton have been pretty resilient. And then on Southeast Asia, maybe one to call out, which we also discussed in the first quarter, that is the new Indonesia [indiscernible] program, where we see also in the second quarter a significant contribution, and we're very happy.

So we're optimistic about our Asia position, which is, of course, one might say one of the most competitive markets. And I think if we do well there, then we typically do well in rest of the world as well.

Okay. And then last on the group functions overall. I think -- that's not a topic to really consider from my point of view. I mean it includes, of course, some FX impacts also. And then there's intercompany and phasing of IT costs, but I would overall say it's not a new level overall.

Next question comes from the line of Gabriel Simoes from Goldman Sachs.

So my first one would be on the Americas division. So we saw very strong growth in this quarter, ahead of expectations there. So it will be interesting to hear your thoughts on the reasons more specifically for the accelerated growth that we saw there and on the sustainability of this higher growth that we've seen in this region for the second quarter into the second half of the year. And if you saw any one-off events that you would call out here as pushing your growth further there?

And the second question would be on the cost savings. So if you could please give us an update on the actions you're taking to improve the margins, that would be great.

And I would like to particularly know if you've made any progress on the procurement side. So as LPG is one of your key raw materials, is adding more LPG suppliers something you've been discussing? And if so, when should we hear news on that front?

So I might firstly comment the Americas market. I think it's one of our strongest. Our market position is good in Brazil, and it's, of course, the largest market to us in Americas, and it has been going well. And -- but of course, the success in Mexico is where we are particularly proud. And that's the reason why we are also investing more to Mexico. We are taking -- we are building [ extruder ] line in Mexico over the next 1.5 years, a year and to localize it even more.

Americas or North America market is smaller for aseptic, but of course, then in the smaller market, we can still do well, but it's one of our strongholds. But when you, of course, look at quarter-by-quarter, the different markets, that's nature of the global business that depending on the quarter, one market is doing better than the other and vice versa in the following quarter. But I think -- but we are strong in Mexico and strong in Brazil and the U.S. market for aseptic carton is still very small. And of course, we are hoping to do well there as well.

And probably to add on this, in the Americas, we have also been pretty successful in implementing pricing actions, including surcharges. So the team has also done a very good job over there.

And then the second question was on procurement and impact from [ LPB ] supply channel distribution.

So I might actually take that one because it has been defined to be our strategic initiatives, and there's always a delay factor, qualify a new supplier to a new product or to us, it takes on average 1.5 years. And we are, as we speak, working with a number of liquid packaging board suppliers to diversify supply base and at the same time, qualifying existing suppliers to new categories. So it's ongoing work. And typically, we will see benefit in kind of competitive dynamics between the suppliers for some delay. But this strategic initiative that we continue to do.

And I would say the bigger benefits will be then visible in 1.5 years of time on average. But I think even before that, we see some benefits. But it's a long-term strategic initiative and delays is because of technical qualification is quite challenging in terms of kind of technical capabilities of the board suppliers meeting all our requirement for selected formats. But it's ongoing work, it's high priority, and we expect to see midterm significant benefits out of it.

We now have a question from the line of Cole Hathorn from Jefferies.

Could you just clarify on the 1H organic growth number? What's the split between kind of price mix and volumes? Apologies if you said that, I just misheard it.

And then on the surcharges, you did very well to pass along the higher polymer, aluminum and logistics costs. And I'm just wondering how do those surcharges actually work? Could you just give a little bit more color? Did you potentially get a little bit more benefit in 2Q with some more of the costs actually impacting, let's say, the third quarter just because of a lag and we shouldn't extrapolate higher margins into the future? Or how do those surcharges effectively roll off if raw materials come down? I'm just wondering how that impacts your business going forward?

Maybe I can take that and combine both questions into one. So overall, how do the surcharges work? I mean, different to a pricing discussion that you normally have, which we, as you know, have once a year at the beginning of the year. For a surcharge, basically, you need to provide lots of documentation because you really want to discuss an impact that wasn't anticipated before. While when you have a normal pricing discussion, of course, we discuss the value that we deliver to the customers. So that said, that you provide lots of information and documentation also means that we really price for the impact that we have seen in those surcharges and not price for anything higher.

Overall, you're totally correct. So the surcharges have been ramping up throughout the second quarter and not much effective in April, but then much more in June. However, we saw also a similar development, probably even slightly slower on the raw material side. As I also mentioned that in the beginning of the second quarter, we still benefited from old stocks, stock that we had bought at lower cost. And this stock is now consumed.

So it's fair to assume that the material cost level that we're going to see in the third quarter will be higher and balanced by also the surcharges then now being effective for full quarter and not only 2/3 of the quarter. But overall, I wouldn't expect a further significant ramp-up. It's probably more keeping a similar pace.

And then maybe just following up with the margin guidance. I mean it's a very strong performance considering your business is seasonally stronger in the second half. I'd just like a little bit more color if you -- if the margins are robust in H1, what made you kind of keep the margin guidance unchanged?

Basically, I think, if you look at all the factors, what we discussed that we've been able to defend our margin with some of our actions in the first half and particularly in the second quarter. I think those challenges remain and not likely to see significant improvement in underlying conditions regarding whether it's oil, resin price and that of things. So there's still the uncertainty in the market remains, and that will typically negatively impact some of the input costs and factors. So I think it's -- we believe it's a good guidance, and we didn't see at this point, reason's to increase it. I think it's what we believe in.

The next question comes from the line of Ioannis Masvoulas from Morgan Stanley.

First question on the surcharges. Could you quantify the actual benefit to your Q2 growth? That would be the first question.

And the second question is on bag-in-box and spouted pouch, where we saw a contraction of 4.4% better than what you had in Q1. So the question here is, shall we expect that business to turn closer to a stable year-over-year development by the end of this year? Or that's more of a 2027 story?

Ioannis, let me start with the surcharges. So I mean, it doesn't make sense to just look at this 1 quarter number. It's still building up, and it's a low single-digit percentage as a contribution to the second quarter. And on the bag-in-box side, I would believe we should rather look at 2027 to see a sustainable change there.

We now have a question from the line of Pallav Mittal from Barclays.

Two of them. Firstly, talking of Europe, clearly weaker on the volume side of things and some customers not participating in tenders, as you say. But from a margin perspective, can you help us understand the split in terms of the benefit that you saw from lower raw material costs and the hedging? That's the first question.

And then secondly, so far, it seems that you have been able to pass on higher input costs to a larger extent. How should we think about the price minus cost equation in the second half? And do you think you can still pass it on like you have done already? Or do you expect it to be a headwind?

Yes. Let me start with the second one. So price minus cost equation. I believe we have been pretty balanced in the second quarter, but again, also supported by the fact that we consumed stock that we previously bought at cheaper cost. I would expect the contribution to be slightly less positive in the second half overall. But of course, we continue to work on both the surcharge discussion side and second, also on further efficiencies.

And on Europe, indeed, so as we have discussed, volumes were softer. We saw -- the exit rate of the second quarter is slightly a touch better than what you see for the total second quarter. So we would expect that potentially into the second half, slightly better, which then will also contribute to margins. And as discussed, I mean, the margin improvement included more favorable costs in the first quarter on the raw material side. It also includes impacts from the restructuring efforts that we kicked off in 2025, and it also includes benefits from indirect procurement and so on. So I think that's a good description.

And I think all in all, I think long term, Europe is not a growth market. So there, it's important to maintain market share and profitability. And as we commented earlier, we see volume up and down a little bit with our customers as well and their participation rate to certain tenders and especially customers with a large filler installed base, how their volume develop. But it's -- so in Europe, it's really a lot the profitability and market share gain rather than underlying market growth long term as well.

Next question comes from the line of Chiara Di Giammaria from Berenberg.

I have a follow-up question on China. I mean considering your margin decline in APAC, I appreciate your comment on competition, but can you give us more indication? Is this competition increasing compared to last year's? And do we expect this to get worse going forward in terms of price sensitivity, therefore, seeing like China is less of a focus for you as a market?

And the second question is on D&A. This lower level in H1. Should we expect this to be a sustainable run rate for the full year?

I will first comment the China market, this is one of the most important markets to us, and we remain competitive there. And the dynamics just in the market is that there has been a very much competitive pressure in the past, and it remains. But we don't see -- we don't see fundamental change in what's happening in the China. And of course, when I mentioned earlier about the difficulties of price increase is that China has not seen inflation in the economy. So there's not kind of like in the Western countries.

So I think in the lower inflation environment, price increases are more difficult, but we can do other measures in China, for example, reducing our rebate discount levels, we can look at the fixed cost. So there are still levers that we can use also other than price to maintain our competitiveness and profitability. But China is really a measure how well we do long term in the world, and we are doing well in China. So our market position is extremely strong.

Okay. And let me take the question on the D&A. As said earlier in the script, we started -- we had the impairments recognized last year in September. So basically means it annualizes after the third quarter. So half of the impact that you saw for H1, you can also anticipate for H2 still to come on top.

We now have a question from the line of Manuel Lang from Vontobel.

I have just 1 or maybe 2, but on the same topics on your alu-free solutions. I think it's a highly attractive segment. You also gave us some numbers there. But I'm interested if you could give a bit more color on the market in general, let's say, in terms of competition?

And then second, also, maybe in more detail, could you share the volumes or yes, the share of volumes you have in other markets ex Europe and the margin profile also compared to alu solutions, for example, just to understand the acceptance of this format also outside developed countries a bit more.

I think aluminum-free format, the price profitability profile is similar to our core business in aseptic carton. So it's, in many ways, cost price neutral because we knew that when we bring something new to the market, competitive market, we cannot ask too much premium for that one. So we are ahead of the competition in aluminum-free formats, and we continue to ramp up in Europe. And Europe is our focus at the moment. And I think there will be other markets that we will follow, but Europe is a lead market in that. And hopefully, over time, it will become dominantly aluminum-free all the formats.

And the benefit of our solution is that the filler update to support aluminum-free format is extremely fast and cheap. So when customers are looking at the alu-free format, the increased -- so this entry cost is very low from a kind of -- there's almost nonexistent CapEx for that one. So we can fast turn the filler to support aluminum-free format. So that's why we believe that in our installed base, it will take over market share from traditional formats fast. And we are -- it's more or less market making.

We are ahead of the competition, and we believe that it becomes almost standard format in Europe in the coming years. And of course, that creates stickiness of our product to our filler, again an additional benefit from a sustainability point of view. So I think strategically, that's super important development. And we are happy to work with a large volume of customers in Europe to prove technical feasibility of that solution. So we are proud of that development. But Europe is a lead market and others will follow.

Next question comes from the line of Alessandro Foletti from Octavian.

I would like to ask one on the aseptic carton. I mean, is it in Europe, just the weakness, most of that related to juice business or also this tendering is affecting that really substantially. Can you give a bit of a split of the decline there between the 2 elements?

I don't think we really give that level of detail. But if you look at the world, juices consumption is rather on the decline than increase globally, including Europe. And then the dairy part is more to do with our customers and their participation rate and success rate in winning tenders. So that then, of course, when they win the tender or participate, then more volume go through our installed base fillers. And then if they don't participate, then less. So I think structurally, I think juice market long term is weaker than dairy market.

All right. And then maybe a similar one on the system non-system business in bag-in-box and spouted pouch. When you mentioned that it has been declining, I think, in Asia and also in EMEA, I don't remember about Europe, you certainly mentioned the non-system business being weaker. By contrast, in Americas, when you mentioned it's coming back to growth, you kind of underlined the system element and also the dairy, I understand also the syrup was a driver there. But with respect to the system non-system also there, can you share a little bit which direction this journey is going? And how long it will take for you to be, I don't know, 3 quarters system?

I would say we follow very much what we have discussed last October on how we want to optimize the portfolio also, where we said we see the best value in either system solutions or aseptic solutions in the bag-in-box and spouted pouch arena. And coming back to -- so as mentioned -- Mikko has mentioned this in Europe that non-system applications were softer and similar also for EMEA.

And I would say it's a mixture of really -- to a large degree, this is really the impact of portfolio management. But that business typically is lower margin and also not so sticky, and this is what we have seen. So I guess this portfolio optimization will still continue until the end of the year for sure. But it is very much in line with what we wanted to achieve and what we have said in last October. So actually, I think it's going in the right direction overall.

So may I ask a follow-up because earlier on another question, you mentioned that you would not expect this part of the business to come back to growth this year, but maybe next year. And now you're telling me that you think this shift is going on until the end of this year and then by next year, maybe you are closer to where you want to be. So are the 2 things connected then the growth is kind of, yes, market-driven, but partially also homemade because you're doing this shift?

I think we are actually preparing for the Capital Markets Day updating our plan for bag-in-box and spouted pouch. And as Ann said, in those 4 businesses, you have a system business, but there's also a component business. And it's a component, meaning that you can have a closures kind of injection molding business, then you can -- so I think we're also looking at different markets.

So bag-in-box, spouted pouch which are the markets where we are doing well, which are the market where we are doing less well and which are the markets we focus on because all in all, it's a smaller business is one might say is less global than aseptic carton. So I think we need to be more selective there, which are the markets and which are the businesses we want to play and focus on to get basically biggest return on effort.

And I think that's what Ann said that we are looking at the global portfolio and there are areas that we do well and there are areas we do less well. And I think then I think in the Capital Market Day, we want to tell a little bit more about what's the future focus of that business.

We now have a question from the line of from Ephrem Ravi from Citi.

I've got really 2 questions left. Firstly, on the working capital increase. You flagged the inventory increase, it's almost EUR 80 million year-on-year, which is a fairly big amount. Is this going to be structural? Are you planning to keep higher safety stocks going into the future as well? Or is this like a one-off increase in inventory which has been sigh of relief, which did give you quite a lot of working capital headroom if you do?

And secondly, in terms of the fillers, you called out the India 13 new filler projects. But could you kind of give us a sense as to how many new fillers that you sold in the first half globally? And what's your expectations for the full year?

So on the working capital, specifically the inventory, one component when you look at absolute numbers, of course, to also consider is the higher cost levels. So of course, we also value the inventory at a higher price at this moment, and that also contributes to the absolute development. Nevertheless, also if you look at it in comparison to revenue, you see an increase. And as mentioned before, there is an element of safety stock in there and it depends a bit on how the volatility in the markets develop, whether we can build that down until year-end or whether we will keep it at the level.

But you can be sure that we monitor this very carefully and that we track it super closely. Then on the number of filler placements, I mean, we don't comment on the number for the quarter or even for the first half because there's always moves from one quarter to another. So you can't really -- it's not always the full year number just divided by 4. But what we can say or what we also said is we are optimistic that we will land in the usual guidance range at lower half of the range of EUR 60 million to EUR 80 million, similar to 2025. And we wouldn't be optimistic probably if the number for the first half would be significantly off. We can leave it there.

The next question comes from the line of Lia [indiscernible] from AWP.

So you mentioned the impact of the Middle East conflict in terms of price, but I was wondering how could it also impact consumer sentiment? Do you have any maybe ideas about the risks?

And then secondly, is there any update on finding a strategic partner for chilled carton?

Maybe I take the -- we haven't seen negative impact for the consumer sentiment yet. And I think it has to do more to the overall inflation in the countries. And of course, there has been concern that if the conflict will significantly increase inflation, for example, in the developed world. But so far, I think there's no -- from what we see, there's no significant negative impact. And also in the region, we've been doing, I would say, somebody might say surprisingly well in terms of end user demand.

And the challenge in the region has been more with the logistics and sometimes we need to have alternative routes for supply if the port of Saudi is congested. So then we use land routes, transportation by truck. So I think the demand is there in IMEA region as well and Saudi and Egypt being the biggest ones and more impact on be innovative in how we get product and logistics rules and that type of thing, so which has caused, of course, a cost increase to us what we have surcharges for. So in that sense, that's in a good shape, I would say. We have no concern about consumer sentiment at this point is the clear answer.

And to follow up on the question on the finding a strategic partner for the chilled business. So that is not an easy project, and it's well -- it's still underway. And once we have something to say, we're going to also say something on it.

[Operator Instructions] The next question comes from the line of Christian Arnold from ODDO BHS.

Yes. Just one on Americas. I mean this 9.9% growth is -- it's fantastic, I would say. I wonder, is there any positive impact from the World Championship -- Football World Championship. How do you see that?

I think -- I don't think that really -- I think there was an expectation in the market that it would impact a lot, but I don't think it did. So I was actually there. I was happy to be present in the final, but I didn't see any out-of-ordinary behavior there. So it was fantastic final. But we haven't seen it -- I think there was expectation in the consumer businesses or maybe a bigger impact. But I think, of course, it's positive, it's never negative. But then I don't think it's impacted that much as a whole.

And the 9.9% of course, also includes a component of resin and pricing moves. So that also needs to be considered.

We have a follow-up question from the line of Cole Hathorn from Jefferies.

A bit of a strange one, but given all the droughts, et cetera, that we're expecting. I'm just wondering if there's anything that we should be considering for your volume expectations in any of the regions just for -- from a dairy category or anything like that, either a boost on the juice side or kind of a negative impact on the volumes of the milk side?

I think we want to kind of steady the ship because I think it's quite a lot going outside our control in the market, especially in the Middle East. And I think our effort has been to kind of run a steady ship and then kind of cover the input cost increases, logistics cost increases in the kind of market. So I think it's -- some of that uncertainty, as we discussed earlier, will continue in the second half of the year. So I think it's -- that's why we don't really expect anything out of ordinary. I think positive or negative. I think it's -- we want to run a steady ship for the second half.

We have a follow-up question from the line of Ioannis Masvoulas from Morgan Stanley.

The first one is on Europe. Could you quantify the percentage of revenue that relates to ambient juice just to get a better idea of the exposure there? And then the second question, could you give an update on the Scholle litigation, please?

Yes. Let me start with the second one. So the arbitration process is ongoing, and there's a lot of back and forth and document submissions. So let's see when this concludes. Probably it will drag into 2027, but it's not possible to predict this really properly.

And then on the question of the share of juices within Europe, I would say it's around 25%, 30% or something. So it is the juice business within carton.

Ladies and gentlemen, that was the last question from the phone.

We have another question via the webcast. It comes from Allegra Catelli from Bloomberg, and it's about new tariffs that the U.S. has imposed. So what type of impact are you expecting at the Swiss industry to have to deal due to this new duty level? And given that many products manufactured in Mexico continue to enter the U.S. tariff free under USMCA. Does this increase the attractiveness of Mexico as a manufacturing location versus Switzerland or affect future investments decisions for SIG at all. Basically, does the new rate change where production is most competitive for the U.S.

And maybe let me answer to this. So overall, the flow of goods from Switzerland into the U.S. is not an important one for SIG. So we are probably not prepared to comment on this one.

And then on the second one, indeed, that's correct that goods can travel from Mexico to the U.S. under the so-called USMCA agreement and which basically means they are tariff exempt and which we are also benefiting from already with our carton production site in Mexico into which we continue to invest and where major extensions are ongoing, which should be completed by the end of 2027. So that, yes, is a competitive location for us overall.

Okay . There is also no more question from the webcast. And therefore, I hand over to Mikko for the closing remarks.

I'd like to thank you for participating in our earnings call and all your questions. And I think I would like to conclude by saying that the first half results demonstrate our ability to deliver value, even the volatile and uncertain environment. Revenue growth, improved margins, strong executions underscore our resilience of our business, razor-razorblade business model and also dedication of our teams.

As we move through the remainder of the year, we continue to drive operational excellence and maintain disciplined approach to costs. And based on solid first half of the year, we will -- we remain on track to deliver the full year financial guidance. And once again, thanks for joining to the call and showing a high level of interest to SIG. Thanks for that.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the SIG Q1 2026 Results Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Christoph Ladner, Director of Investor Relations. Please go ahead, sir.

Thank you, Sandra. Good morning, everyone, and welcome to SIG's Q1 Trading Update Conference Call. My name is Christoph Ladner, and I joined SIG in April as Head of Investor Relations. With me today hosting the call is our CEO, Mikko Keto; and our CFO, Ann Erkens. In today's conference call, we refer to the presentation that is available for download on our website. As always, I would like to draw your attention to the disclaimer and cautionary statement on Slide #2. This call may contain forward-looking statements containing risks and uncertainties. These statements are subject to change based on known or unknown risks and various other factors, which could cause the actual results or performance to differ materially from the statements made in the call.

Having said that, let me now hand over to Mikko.

Good morning also from my side. We have a lovely morning here in Neuhausen, sun is shining. I'm pleased to walk you through our performance in the first quarter. All in all, we had a very solid start of the year despite a difficult market environment and strong comparisons from last year, our revenue at constant currency was stable year-on-year. And more importantly, we delivered clear improvement in profitability and cash flow. Results are also positively impacted by the actions we announced last September and October, and those, of course, are bearing fruit now in this year. And the focus is cost discipline, execution and strategic priorities.

Looking at quarter 1 in more detail, revenue at constant currency and constant resin was stable year-on-year. Aseptic carton grew by 1%, supported by good performance in Asia and EMEA. And on the volume side, chilled carton had a positive growth of 0.8%. The Bag-in-Box and Spouted Pouch business declined 5.7%, which is, of course, reflecting continued weakness in out-of-home consumption in mature markets. On profitability, adjusted EBIT margin increased to 13.4%, up from 12.8% last year. Also, improvement in cash flow compared to last year.

Strategically, our focus remains firmly on aseptic system solutions and restructuring program that we announced last year and is progressing exactly as planned and of course, ramping up in the first half of this year. We maintain our full year guidance, having initiated targeted actions to mitigate potential impact of the Middle East conflict. Then we'll briefly discuss the Middle East situation on this slide. The EMEA region represents around 14%, 1/4 of group revenue with the Egypt and Saudi Arabia being the largest countries followed by North Africa and India.

As we are aware, the conflict and the closure of Strait of Hormuz has driven prices up for oil and gas and also having impact on energy, transport and logistics. Importantly, we have not seen disruption on our plant in Riyadh, and we managed the supply chain challenges effectively. I'm actually very proud of our team in Saudi Arabia and logistics team who managed the situation well. The financial impact of the conflict in Q1 was limited, but we are seeing raw materials and cost for freight increase, and we, therefore, have initiated mitigation measures, including discussions around surcharges to protect our bottom line going forward.

Then if you look at the quarter 1 financial summary in more detail. Reported revenue declined due to foreign exchange effects, while revenue at constant currency remained stable. Adjusted EBITDA margin improved slightly and adjusted EBIT, which is now our main measure for the profitability, increased to EUR 96 million, translating to 13.4% margin, as I mentioned before. Adjusted net income rose to EUR 48 million and free cash flow showed clear improvement, reflecting lower capital expenditure and disciplined working capital management.

In Europe, revenue declined 4.6% at constant currency. This reflects softer demand in core aseptic carton categories such as milk and juice and also that we had a very high comparison from the year before. Bag -in-Box and Spouted Pouch performed well in the region, but that also benefited from lower comparison from the year before. Positive news is that India, Middle East, Africa revenue grew at constant currency on top of a very strong Q1 the year before. We think that these numbers also reflect a small impact from some customer stocking in the region because of the current conflict in the region.

Aseptic carton growth remained strong despite the geopolitical situation, while Bag -in-Box and Spouted Pouch was down due to high comparison comparisons. Asia Pacific delivered strong performance with revenue growth of 7.8% at constant currency. Growth was supported by channel expansion, increased market coverage through innovative products and the favorable timing of Chinese New Year for this quarter. Chinese New Year, of course, every year will impact China numbers and Asian numbers a lot. We're also seeing continued good development in Indonesia because of the new school milk program in the area. In the Americas, revenue declined by 2.5% at constant currency and constant resin. Growth in aseptic carton in particular, in Brazil was offset by continued softness in the Bag -in-Box and Spouted Pouch in the U.S.

Now I will hand over to Ann, who will take you through the financial performance in more detail.

Thank you, Mikko, and good morning, everyone. During the next couple of minutes, I will take you through our financial performance for the first quarter, focusing on profitability, cash flow and leverage. Starting with the adjusted EBIT bridge. Our adjusted EBIT for Q1 2026 was EUR 96 million, broadly stable year-on-year, while the margin increased by 60 basis points to 13.4%. In this, it has to be considered that foreign exchange rates continued to be a headwind in the first quarter. At constant currency rates, this will -- sorry, at current rates, this will become more neutral as the year progresses.

However, we were able to more than offset this by several positive drivers. Raw material sourcing contributed positively in the first quarter, supported by favorable tender outcomes for polymers. Note that Q1 did not include meaningful unfavorable impacts from the Middle East conflict. Production efficiencies also improved, reflecting operational discipline as well as lower depreciation and amortization following the impairments recorded in 2025. In the first quarter, we have completed also the transfer of the Bag-in-Box operations from Chile to our Brazilian site without any disruptions and also closed the old site.

SG&A benefited from phasing effects and the improvement measures initiated in the second half of last year. More than 90% of the targeted positions have been eliminated by now. The rest of the savings will ramp up within the second quarter. Overall, the impact of lower depreciation for the quarter across all buckets was EUR 4.6 million. We think that Q1 has delivered a significant margin improvement in constant currencies, which confirms the effectiveness of our cost and efficiency actions.

Turning to the reconciliation from EBIT to adjusted EBIT. Reported EBIT increased significantly year-on-year to EUR 190 million, driven primarily by unrealized gains on operating derivatives related to our hedging activities for mostly polymer derivatives and aluminum in the amount of EUR 34 million and also the cessation of the PPA depreciation and amortization of the Onex acquisition that still weighed on last year's EBIT was EUR 21 million. After adjusting for these and other effects, adjusted EBIT amounted to the EUR 96 million, broadly in line with the prior year. The usual net income reconciliation can be found in the appendix.

Let me briefly comment on the key input costs for our business on the next slide. Liquid packaging board sourcing is largely secured through multiyear contracts, as you know, providing decent visibility for 2026. For resin and aluminum, around 70% of the expected annual volumes are hedged for the year. In addition, Bag-in-Box and Spouted Pouch benefit from a resin pass-through mechanism, which is contractually fixed and leads to a full pass-through within typically 3 months. Freight costs remain more exposed to higher fuel prices and container rates, while our overall energy exposure is limited. As Mikko said before, we have initiated the implementation of surcharges to mitigate cost pressures.

Moving to free cash flow. Cash flow in Q1 was minus EUR 64 million, an improvement of EUR 26 million compared to the prior year. Net cash from operating activities improved, supported by lower customer incentive payments following the lower volume growth in Aseptic Carton in '25. Capital expenditure decreased to EUR 58 million, reflecting the completion of the Indian plant and lower investments overall compared to last year. Net CapEx, including lease payments amounted to EUR 44 million, equivalent to 6% of revenue compared to 8% in Q1. Q1 cash flow also included an EUR 18 million headwind from interest payments, driven by the timing of coupon payments following last year's refinancing with the Eurobond.

Turning to leverage on the next slide. Net debt at the end of March stood at EUR 2.2 billion. Net leverage was 3.1x compared to 3x at year-end, reflecting the normal seasonality of our business. Per our debt agreements, bank leverage was 2.9x, comfortably within our limits. Also in April, we successfully completed the issuance of a EUR 500 million Eurobond with a 4% coupon, further strengthening our maturity profile. With that, back to you, Mikko, for the outlook.

Thank you, Ann. And let me close with a few words on the outlook. We maintain our full year 2026 guidance. We continue to expect revenue growth at constant currency and constant resin in the range of 0% to 2% and an adjusted EBIT margin between 15.7% and 16.2%. As usual, we expect a stronger performance in the second half of the year, reflecting seasonality and continued ramp-up of our restructuring and efficiency measures. After a solid start of the year for the Q1, we anticipate Q2 to be probably more challenging. While uncertainty around input costs, foreign exchange rates and Middle East situation remain, we are taking targeted actions to mitigate this.

Strategically, our focus remains unchanged, aseptic system solutions, disciplined cost management and leveraging our strong customer relationships and balanced retail footprint. And finally, I would like to invite you to Capital Markets Day on October 27th this year in the Zurich area. There, we will give more details about our future plans and focus areas. And also that I would like to take this opportunity to thank Ann for the job well done and onboarding me to SIG over the last few weeks. Very big thanks for that one. And then we go back to the operator for the Q&A session.

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

The first one would be, please, on the raw material price situation. How confident are you that you can pass it on? Have you spoken to all your customers already? Did they agree to the surcharges? Or is there still a bulk of negotiations to come in Q2? And then we have to see what is the outcome for the second half? So checking clarity here.

And the second question, if I may, on Europe, the comps it was, I think, 0.5% growth last year. The year before, you had higher growth, but minus -- close to minus 5% organically is quite a bit. What exactly do you think is driving this? Is just really lower consumption per capita? Is it also higher filler retirements? Is this anything else we need to consider here? And do you expect things to improve in the next 2 to 3 quarters?

Thank you for the question. So regarding customer negotiations, we are in the middle of those. And we expect to be more clear about the outcome of those negotiations during second quarter. We try to get most of the cost increases covered, but realistic expectation is that this is probably not 100%. So we do two types of measures, customer negotiations regarding surcharges and then we continue cost discipline and probably further cost out in the second half of the year to compensate that. And I think, Ann, you could comment the European situation.

So on Europe, indeed, the last year's comps were positive and now we're negative this year. And I would first come back to overall, Europe for us is, in general, not a growth region. So we always said this is a region where we believe 0% to 2% is a reasonable assumption in a normal market environment. Now we are faced with, first, lower consumer confidence and not a normal market environment.

And then second, as we have discussed last year quite a lot, I mean, milk prices have been fluctuating quite a lot over the last months and quarters and also the allocation of raw milk into different processing types. And this quarter, we have seen more milk going into powder actually, which has also impacted our results. But overall, I would always point back to the long-term or midterm outlook on Europe. I would always anticipate flat to 2% is what we should look at in general.

The next question comes from Manuel Lang from Vontobel.

I have 2 questions as well. First, on the substrates. Well, aseptic looks much more solid versus the others. But could you help us understand if this is driven by nature of carton in general? Or do you see similar trends in aseptic technology in the other substrates such as Bag-in-Box and Spouted Pouch.

And then the second one on the EMEA region, there, you mentioned the growth of 1.9%. This reflects already preorders to secure supply. So where would you see, let's say, an underlying or normalized growth in the region in Q1, let's say, if you put that effect aside? And also on that topic, how big is the Middle East region, so Egypt, Saudi Arabia together as a stand-alone? Could you quantify that?

So maybe I will start with the substrate comment. As you saw from the result, the aseptic carton is very strong, and that's, of course, 80% of the business. And in other business, Bag-in-Box and Spouted Pouch. And Spouted Pouch, the aseptic technology is still not a volume business for us. So we have developed fillers that can do aseptic pouch, but it's more business development area rather than volume as of today. So we continue to develop technology, meaning the kind of different sizes of fillers for that business, which are aseptic because that was a reason for the acquisition that we can actually bring that aseptic solutions and systems to that market. So it's still not the volume business for us, but that's the idea.

Yes. And so if I take the questions on the EMEA region, yes, we mentioned preorders or slight upstocking just to be complete. But if I should spell out how much this was, this is a very low single-digit million number. So if you deduct this from the EMEA growth rate, probably then we would have been slightly more than flat in the region on top of a very strong first quarter in the year before. But again, just for reasons of completeness, we wanted to also mention this one. And then how big Saudi and Egypt are together, I would say it's around 40% of the total region, something like that. And again, business is ongoing without significant disruptions in the region.

The next question comes from Gabriel Simoes from Goldman Sachs.

So first one on the guidance. So you basically maintained the guidance for the year in terms of growth. I would like to understand the breakdown you expect in terms of the region in that guidance and the impact that you see from the conflict in the Middle East and how much of that is baked into your estimates for the year and the impact you would expect, not only in the region, but also for the other regions, as the conflict basically spreads out in terms of the higher costs and then demand?

And the second question would be on the resin side. So I understand you have a pass-through clause on your contracts, but I'd like to understand how that feeds into your margins, right? So as a portion of your exposure is already hedged. So in other words, my question is that if you pass through only the portion that's unhedged in your contract, and that's already taken into account or if you're passing through the full impact and then actually that's positive to your margins?

So on the guidance growth outlook, I mean, we don't give a guidance now by region. But as Mikko said, I think we had a very, very solid start in Asia. So that's great. We also see the Americas actually not too bad developing right now. So overall, I think probably also considering that there will be some surcharges on the growth guidance, we will probably feel very comfortable with what we have out right now, and we're reassessing that. Our potential secondary impact on volume development in that environment, at this moment, we don't see any changes to our assumptions. But of course, this also needs to be monitored.

And then when we think about the surcharges, of course, we try to pass on as much as possible and also to protect the margins and not just the absolute amount. But as Mikko also said before, I think this -- we're well prepared if we also complement this with additional cost-out measures. And then how does one more time, the mechanism work in the Bag-in-Box and Spouted Pouch business, I mean, that is contractually fixed, that's within a certain time lag, we always have updates of the prices reflecting the latest indices. That's why I said, with an average of 3 months delay, we pass this absolutely through. Hope that helped.

The next question comes from Cole Hathorn from Jefferies.

I'd just like to ask on free cash flow considerations. considering polymer, aluminum, costs are going a little bit high. Just wondering if you're giving any working capital guidance or any particular kind of raw material product that we should think about where it's not just price, but you've got a shortage of raw materials. I don't imagine so, but just to ask the question. And then any other free cash flow items that we should think about that is impacting you in 2026 beyond the working capital?

Yes. I think we have discussed free cash flow quite a bit also during the full year call a couple of weeks ago. Yes, all of these are elements that you have mentioned. And of course, there's moving parts as the year progresses. But at this moment, I wouldn't see that we need to discuss any new items that we need to take into consideration. I think up to now, the equation works as we had anticipated.

Then maybe just using the opportunity as a follow-up then on some kind of prebuying or kind of safety stock. Have you seen this progress through the second quarter? And is this across different regions? Or is it particular to the EMEA region?

Prebuying on the customer side, really that was, I believe, a pretty limited impact even in March, to be honest, when the situation started to evolve. I would say, at this moment, we more or less see really normal developments as we had anticipated also. And prebuying on our side to build additional inventories, we don't think is necessary at this moment. Supply chains are a little challenging, but manageable at this moment.

The next question comes from Alessandro Foletti from Octavian.

Yes. Also 2 of them, maybe 1 on the CapEx. You are trending slightly -- on the net CapEx, you're trending slightly below last year. I was wondering if you can give an indication if this is -- will be driven by lower growth CapEx or higher upfront cash?

So I would say already looking at the first quarter number would be too early to judge because there's always fluctuations when projects are happening within the year. So we don't see any reason to adjust the outlook for the full year on that front. So that said, of course, we carefully look at all CapEx into PP&E as we also discussed that we want to be more efficient on that front.

When we think about growth CapEx to be invested into new filler placements, the first quarter has developed according to our plans. And we don't see at this moment a trend change that we wouldn't land in the normal range of EUR 60 million to EUR 80 million, probably lower half, as we also indicated in the full year call. So no change actually there to be seen.

Okay. My second question I would like to go back on aseptic and non-aseptic. Obviously, in the Scholle business or Bag-in-Box and Spouted Pouch, there's less non-aseptic business. So if you are transitioning away from non-aseptic towards more aseptic, I wonder if you can give an indication how many millions, so to speak, you have to substitute. I have a number in my head, certainly a triple-digit million number. And how long it will take to make that transition until then, I don't know, Bag-in-Box and Spouted Pouch business starts growing again in line with the aseptic trends?

Yes. Maybe I can take that and clarify. So I mean, the Bag-in-Box and Spouted Pouch business has aseptic components in it and has non-aseptic components in it as we also discussed in the October investor update. And also within the non-aseptic part, there is businesses that are attractive and that we want to continue to do for simple reasons, such as also plant utilization and so on. And for example, the syrup business that ends in carbonated soft drinks in the end, in food service outlets. I mean, that is a nice business that is growing, that has decent margins and that gives a very good capacity utilization for our plants also.

So no reason to ever think of not doing this. I think this transition part, from non-aseptic into aseptic is much more a topic for the Spouted Pouch business. And also here, we have shown, I think, with very telling bubble sizes where we stand right now in the portfolio in the October update. So the vast majority of that business, at this moment, is still non-aseptic. But for all the benefits that we have discussed in the last, I don't know, a couple of quarters or years even, I mean, aseptic spouted pouch gives you a product that still looks like the product that you have put in. It gives you a product that still has all the nutrients in. It doesn't need preservatives or sugar, and it doesn't need a cold chain. So there's lots of arguments.

But as we also said, this is a totally new market that needs to be built. We just see customer traction or customer interest there because, I mean, it represents really an interesting opportunity, both on different fronts, as discussed for toddler foods, especially, but then also for health food for sports people and also even for food for elderly people. And putting this into context, until this aseptic spouted pouch will become a triple-digit million euro number, that probably will still take some time, not because we start off a very low base, but of course, the growth rates are interesting and the market is building as we speak, but it still takes time.

Okay. Can I just have a quick add-on in the Bag-in-Box and Spouted Pouch business, the weakness that we have seen this quarter, maybe also last quarter, et cetera, then is more driven by the end consumer market than by the transition from non-aseptic business?

Yes, absolutely. And this quarter, we looked at a weaker business in the Americas specifically, where the baseline was also, to be very fair to the team, a little stronger. But overall, consumer confidence and traffic is not yet where it should be also very clearly. It was a bit better in Europe, but in the other of the smaller regions, I think decent, nothing needs to be discussed on that front. But really, the U.S. in the first quarter wasn't living fully up to the expectation. And I mean, you can also probably attribute it to some degree to the cold weather that we have seen there. So ice cream premixes haven't been too much in demand and stuff like that. But I would say no structural change in the U.S.

[Operator Instructions]

Next question comes from Pallav Mittal from Barclays.

So following up on Europe, aseptic, clearly, you said was impacted by raw milk allocation and also tough comps. But Bag-in-Box and Spouted Pouch was strong. So what is leading to that? And as a percentage of your European segment, how big is Bag-in-Box and Spouted Pouch. So that's the first one.

Yes. So we always said that overall Europe accounts for around 20% of the Bag-in-Box business -- or Bag-in-Box and Spouted Pouch business, and that also hasn't changed a lot. So what helped the development in Europe in the first quarter was, as mentioned, on the one hand, weaker comps. But then also we had a couple of customer wins and equipment placed in the first quarter. So I would say this shows the team did a decent job there.

Sure. And then just on the cash flow -- the free cash flow, so how much of the lower customer incentives on a Y-o-Y basis was a benefit? And then also, I see there was some cash inflow from the sale of land in China. So how much of a benefit was that in Q1 on the cash?

Yes. So we discussed at full year that the customer incentive impact was around EUR 40 million last year. And if you consider that a good part of this falls into the first quarter, that gives you approximately the magnitude of the benefit. Then there was EUR 2 more million coming out of the land sale in China approximately. Those are the positives. And then on the negative, as I mentioned earlier in the script also, there was the coupon payment, which was a temporarily higher impact on the interest expenses in the magnitude of EUR 15 million or EUR 18 million. And that's basically the bridge that you need to take into consideration.

Sure. And then finally, can I just check if there is any update on the litigation case with Laurens Last?

Yes. Yes. There is no update. The progress -- the process is progressing as it was laid out in the beginning, and we don't have any new considerations or any new information at this moment in time.

The next question comes from Christian Arnold from ODDO BHF.

I have 2. You mentioned that you have a positive impact of EUR 4.6 million lower depreciation after the valuation of assets in '25. I mean is that the run rate we can take, so roughly EUR 20 million for the full year? That would be my first question. And the second question I don't know if you can comment, but the EUR 34 million unrealized gain on operating derivatives. I mean, on the back of what you know today, be it your hedging positions, spot prices, to what extent can we expect a similar impact in the quarters or how fast will that impact phase out?

So, I would say, I mean, that's the reason why this is adjusted out because it's nonrealized at this moment. And that means, I mean, it's subject to market fluctuations. So a little difficult to give a forecast there. And that's why I would also refrain from trying to give a forecast on that one. And thinking about the depreciation, so EUR 4.6 million without currency impact in the first quarter. I think it would be a bit too much to just multiply this by 4 because you need to consider that we already started adjusting the asset values in September last year. So I think maximum 3 quarters, even a little less needs to be considered for the full year.

The next question comes from Ioannis Masvoulas from Morgan Stanley.

Just a couple of clarification questions left from my side. First, on the cost development. How should we think about the unhedged polymer and aluminum exposure for the second quarter? Could you potentially provide a cost impact either versus Q1 or year-over-year? I would assume that by now, you should have good visibility, given the typical P&L lags. And I'll stop here for the first one.

I think it's a little challenging to give right now a good outlook for the second quarter. But what definitely we should anticipate is that we see an increase overall when it comes to also surcharges or freight costs that we see. The underlying, as discussed, is hedged by 70% for the month or for every month basically. But I would refrain at this moment to give you a concrete number, but definitely, it will be higher than what we have seen now in the bridge for the first quarter.

And also that there's no direct correlation for the oil price of a day to some of our cost items like logistics. Higher oil and gas prices, of course, will impact a little bit of everything, but it's not a straight line that we can see so that some of the cost items, we see the development then in the second quarter.

Okay. Understood. And going back to the topic of surcharges, just to understand that a bit better, is it the focus here or the discussions around transport and logistics costs related to diesel price, for example? Or are you looking at passing through some of the other cost elements as well?

So we have a model that we estimated cost impact for the -- of this kind of oil and gas price logistics-driven inflation. And we are sharing that estimate with our customers and try to cover that with a surcharge. So we have a model that we are using.

And of course, that model looks at all different cost items, not just isolated smaller topics.

And of course, then it should cover most of the inflation and our target is to cover the inflation impact. And how big part of the inflation impact it will cover, we don't know yet because typical annual negotiations, they are end of the year, start of the year, but this is out of ordinary negotiation cycle. So we don't know the outcome. We will estimate the outcome during the second quarter. And then, of course, as we discussed earlier that we are looking to take some further cost measures to mitigate also the impact of input inflation.

Ladies and gentlemen, so far, no further questions. I would like to hand the conference back over to Christoph Ladner for the written questions from the webcast.

Yes. We have one question from the webcast from Marc Widler from Helvetia. I think it's already answered to some extent. Any news regarding the pending legal case that we said there's no news? And Mikko, have you already talked to Laurens Last or met him?

As a part of the AGM, I was speaking to family member of the company, but it was more meet and greet, but no detailed discussions. And I think, of course, we have ongoing litigation case so that we cannot discuss about that. But then, of course, they are still important shareholder of SIG. So we can discuss about the performance of the company, but not actually the litigation.

And in general, the litigation process, I think I answered earlier, no new news process is going according to plan. What?

There are no further questions?

Thank you very much for the call and then welcome to the Capital Markets Day on October.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the SIG Full Year 2025 Results Conference Call and Live Webcast. I'm Vickie, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. [Operator Instructions]

At this time, it's my pleasure to hand over to Ann Erkens, CFO. Please go ahead.

Good morning, ladies and gentlemen, and thank you for joining us for this full year 2025 earnings release of SIG Group. My name is Ann Erkens, CFO of the company, and until 2 days ago, also Interim CEO. I will discuss the results with you today, and it is a big pleasure to have our new CEO, Mikko Keto, with me on the call today, who joined the company on March 1.

As always, the slides for this call are available for download on our investor website. This presentation may contain forward-looking statements involving risks and uncertainties that may cause results to differ materially from those statements. A full cautionary statement and disclaimer can be found on Slide 2 of the presentation, which participants are encouraged to read carefully.

And with that, Mikko, welcome on board officially. Do you want to say a couple of words as a first introduction?

Thank you, Ann. And I would like to congratulate you and the SIG team for the strong fourth quarter. And that fourth quarter gives a solid foundation to start the work for 2026. And I began my onboarding a while ago, firstly, looking at outside in, the company and the performance, and now, I have pleasure to do onboarding in the company looking at inside out. And there are some really strong points in the company when I look at it, for example, solid foundation through innovation, customer partnerships and delivering value, both to our customers and shareholders.

One key aspect of the business also is customer retention. I can see that the customer retention is high. We have long-term relationships with most of our customers. It means that the lifetime value of the customer is high. I will continue my journey in the beginning to understand the business in more detail, now being inside the company. And I'm looking forward working with you all in the coming months and years to deliver value to shareholders and the SIG organization as a whole. And thank you for your trust and support and looking forward to working with you all.

Ann, back to you.

Thank you, Mikko. Let's start with the key messages for the fourth quarter. In line with our announcement on September 18, our revenue growth has reflected the subdued consumer environment throughout the year. However, we were pleased to see that we saw a sequential improvement in the fourth quarter, resulting in a positive 0.5% growth for Q4. This brought full-year revenue growth to plus 0.1% at constant currency and constant resin, so to the upper end of our expectations, communicated in September.

On a substrate level, aseptic carton grew by 1.2%. It was especially strong in the Americas, which is one of the reasons why we expand the capacity of our production plant in Mexico. The chilled carton business declined by 5.3%, impacted by the competitive environment, especially in China. It is noteworthy though that the situation was improving in the fourth quarter. The bag-in-box and spouted pouch business was negative 3.4%, reflecting the higher comps in the second half of the year.

As announced in September, following a strategic review of the group by the Board of Directors, and in light of the prevailing soft market conditions, we have recognized nonrecurring charges of EUR 351 million pretax in 2025. All charges relating to this review have been booked now. In the fourth quarter, these amounted to EUR 31 million with the largest item being restructuring charges relating to the elimination of positions as discussed at the investor update.

All conversations with the affected employees have been completed in 2025 and the corresponding savings are ramping up throughout the first half of 2026. Also, during the fourth quarter, we could complete 2 asset disposals with land sales in China, the retired chilled carton plant in Shanghai and in Germany. These 2 divestments contributed approximately EUR 17 million as a positive onetime impact to the 2025 free cash flow.

Now, moving to filler placements. We placed 68 new fillers in the year 2025 across all geographies and well within our aspired range of 60 to 80 placements in a year. The incremental growth of fillers in field was 14 as 54 fillers were returned or scrapped at customer sites. The average age of these old fillers was more than 15 years. Total book value was around EUR 1 million. This was normal course of business and has been reflected in the financials as such.

As discussed in the Q3 call, as part of the strategic review, we have also assessed the utilization and corresponding cash generation of fillers in field. This led to EUR 21 million of filler impairments within the nonrecurring items for underutilized fillers at customer sites, respectively, for fillers on stock. Please note, this does not mean that there was a reduction of available capacity in the field.

For 2026, we have an attractive pipeline and expect to place a similar number as in 2025. On the innovation side, the second machine of our new Neo line has been placed in Saudi Arabia. Next to higher speed and output, this machine is also characterized by a very low waste rate of below 0.5%. The Neo line is, of course, also capable of processing the new Alu-free full barrier sleeves, where our rollout continues in Europe and also in Southeast Asia. Terra Alu-free full barrier from SIG is the first aseptic carton that is recognized as recyclable under Korean regulations.

In the other direction, from East to West, we see the expansion of the DomeMini format, which was first introduced in Asia and is now coming to Europe. It is expected on shelves in Europe in the first half of 2026.

And finally, we were very proud that we received for the seventh time the EcoVadis platinum status with a record score of 99 out of 100.

Now, let's take a look at how our business has evolved on the revenue side. We closed the year 2025 with a revenue of EUR 3.25 billion. In reported terms, this is 2.4% below the prior year due to the stronger euro. At constant currency, revenue growth was 0.4% and at constant currency and constant resin prices, it was up by 0.1%.

The revenue share by segment, which is the region, is almost unchanged versus the prior year. Europe with a 32% share remains the largest region. Asia Pacific and the Americas each have 27% share, and IMEA is 14%. For SIG, the largest countries in the IMEA region are Saudi Arabia, Egypt, North Africa and India. By business line, aseptic carton is 79% of our sales, chilled carton is 4% and the bag-in-box/spouted pouch business is 17% of our revenue, unchanged to the previous year. By product, 87% of our revenue is packaging material, and service contributes 7%, was last year 6%; and equipment 6%, was last year 7%.

Moving to the results of 2025 on profit, cash flow and returns. Adjusted EBITDA amounted to EUR 718 million with a margin of 22.1%. Excluding the nonrecurring charges related to the strategic review, adjusted EBITDA was EUR 788 million with a margin of 24.2%. This compares to 24.6% in the prior year. The adjusted EBIT was EUR 442 million with a margin of 13.6%. If we exclude the nonrecurring charges, adjusted EBIT was EUR 500 million at a margin of 15.7%.

On adjusted net income level, we recorded EUR 231 million or EUR 285 million without the nonrecurring charges. EPS declined from EUR 0.81 to EUR 0.75. Free cash flow landed at 101 -- sorry, EUR 191 million for the year 2025 after EUR 290 million in 2024. As the nonrecurring charges in '25 were almost exclusively noncash, there is no need to discuss the number without nonrecurring items here.

Lastly, return on capital employed, ROCE, calculated at a 30% tax rate was 25% and 29%, excluding the impact of the nonrecurring charges. Capital employed is here defined as PP&E, right-of-use assets, capitalized development and IT costs, net working capital and the noncurrent deferred revenue.

Looking at the Q4 figures. Revenue at constant currency slightly grew by 0.6% and by 0.5% at constant currency and resin. Adjusted EBITDA was EUR 223 million, translating into a margin of 24.7%. This includes EUR 8.4 million of nonrecurring charges. Without these charges, adjusted EBITDA was EUR 231 million in the fourth quarter with a margin of 25.7%. Adjusted EBIT was EUR 156 million, translating into a margin of 17.4% and also including EUR 8.4 million of nonrecurring charges. Without these, adjusted EBIT was EUR 165 million in the fourth quarter with a margin of 18.3%. Adjusted net income was EUR 78 million. Excluding the nonrecurring charges, it was EUR 88 million. Free cash flow in the fourth quarter was EUR 275 million, close to previous year's levels.

Turning now to the performance by region. In Europe, full-year revenue has declined by 0.8% at constant currency compared to strong prior year growth of above 6%. We were delighted to see the region showing a growth of 4% in the final quarter of the year. This performance reflects several factors, including lower availability of raw milk for aseptic processing compared to the strong supply conditions in 2024, especially in the second and the third quarter of the year.

In the fourth quarter, the industry observed lower raw milk prices and correspondingly more milk going into aseptic carton. Also, the region benefited in 2024 from the ramp-up of filler placements following wins related to EU regulations on tethered caps in prior years. Throughout the year, export volumes of UHT milk has been lower, and the juice category in the region has also declined, impacted by a weak summer season. Excluding nonrecurring charges, both adjusted absolute EBITDA and EBIT increased in Europe.

Also, margins expanded by more than 200 basis points. The margin was positively impacted by price and by a favorable customer mix due to the lower export volumes. In India, the Middle East and Africa, overall revenue development for 2025 was impacted by a strong prior year comparison of 13% growth, leading to a slight growth of 0.4% for 2025. In the last quarter of '25, revenue growth has been slightly positive, too.

Carton volumes have been impacted by lower consumer demand across the region as well as by higher competition and the monsoon season in India. Bag-in-box and spouted pouch revenue growth has been strong in the region, including in India. The EBITDA margin without nonrecurring charges came in at 26.8%, slightly ahead of the previous year. FX headwinds in the region were more than offset by pricing. The EBIT margin was slightly below the prior year, as it was impacted by additional depreciation of the India plant following its start-up.

For the financial year 2025, revenue for Asia Pacific declined by 1.7%, both on a constant currency basis and on a constant currency and constant resin basis. Continued market softness in the region and the competitive environment in chilled carton impacted our revenue performance last year. Also, the later occurrence of the Chinese New Year in 2026 had an impact on volumes in China, particularly during the fourth quarter, making Asia the only region that did not record a positive volume growth in Q4. Still, we were able to continue to outperform the market in China with product innovation and flexibility.

Southeast Asia, Japan and Korea continued the growth momentum despite the market downturn. We recorded strong filler sales and also have a good pipeline for 2026. The adjusted EBITDA margin without nonrecurring charges was negatively impacted by product mix and SG&A costs. The adjusted EBIT margin was additionally impacted by the annualization of the depreciation of the new chill plant in China.

The Americas were the region that recorded the highest growth in 2025 with 4.4% at constant currency and 3% at constant currency and constant resin. Aseptic carton growth was especially impacted positively by liquid dairy in Mexico. Also, we saw price increases in Brazil and a higher service revenue. In the bag-in-box business, share gains achieved in the U.S. in dairy and in syrup could mostly offset declines in wine, the retail business and non-systems businesses. In this segment, the margin both on an adjusted EBITDA or EBIT level was impacted by unfavorable foreign currency movements, investments necessary to enhance capabilities and wage inflation.

On this slide, we have summarized the breakdown of the full EUR 351 million nonrecurring charges that were recorded in 2025 in connection with the strategic review and the market softness. After the EUR 320 million recorded by the end of the third quarter, the fourth quarter saw an additional EUR 31 million. The total of EUR 351 million is well within the guidance range of pretax EUR 310 million to EUR 360 million, which we provided in September. We also indicated that around 90% of this amount will be noncash with the cash outflow mostly occurring during 2026. We expect the '26 cash impact to be approximately EUR 25 million.

The split by bucket of the nonrecurring charges is as follows: EUR 107 million is an impairment to the value of the bag-in-box and spouted pouch businesses, reflecting weak consumer sentiment and business performance. This has affected the recoverability of acquisition-related assets. EUR 86 million of impairment concerned the value of the chilled carton business. This principally reflects the weak market conditions in China, which has impacted the recoverability of the assets.

EUR 82 million relate to the reassessment of the required operating capacities in aseptic carton within the context of the current weaker market environment. This includes production capacities in India, selected equipment in China and some filling lines across locations, where, as discussed on the first slide, impairments related to low capacity utilization.

Under the headline innovation, around EUR 62 million is associated with the reassessment of the group's innovation portfolio, including the impairment of equipment that is no longer required and the impairment of capitalized development costs relating to projects that have been stopped following the strategy review.

Finally, a charge of EUR 14 million mostly covers the restructuring costs related to the elimination of a low 3-digit number of positions in SG&A and R&D. Our annual report summarizes all relevant information in Note 4 of the financial review, and additional details are presented in the Notes 7, 9 and 12 to 14.

Let me now remind you about what we discussed in Q3 on the presentation of the nonrecurring adjustments. In line with our standard definitions, charges included as part of adjusted EBITDA are those where regional management is held accountable for the delivery of returns on customer projects, such as filling line investments or product launches. As you can see from the graph on the right, this portion amounted to EUR 69 million.

Charges excluded from adjusted EBITDA include noncash, unrealized derivative positions and noncash impairments of intangible assets. In addition, we also take charges below the line that relate to footprint or capacity rationalization as well as rightsizing of the organization. Any such booking below the line needs group approval and rigorously follows our standard definitions. Charges excluded from adjusted EBITDA amounted to approximately EUR 281 million for the period, taking the total nonrecurring charge recognized in 2025 to EUR 351 million.

Next, let's take a look at the EBITDA bridge for 2025. EBITDA was affected by a negative EUR 44 million relating to the currency impact, which reduced the EBITDA margin by 60 basis points. Excluding FX, the adjusted EBITDA without the nonrecurring charges increased by EUR 12 million. This improvement of EUR 12 million was mostly supported by EUR 42 million contributions from top line, which reflects price increases and favorable mix impacts. In addition, raw material costs were overall lower by EUR 9 million in '25 compared to the prior year. This was mostly due to the polymer category.

On the other hand, production was negative EUR 10 million as the lower volumes in the second half led to unabsorbed fixed costs and lower efficiency. In addition, SG&A was up EUR 17 million in '25. This included wage inflation and growth investments in the first half of the year, which we have reduced in the second half due to the softening of the market.

Turning now to adjusted EBIT. As of 2026, we will report our business performance on an EBIT level as introduced during the investor update in October. We believe this enhances transparency and relevance, and at the same time, will support our management teams around the world to take better capital allocation decisions.

In the backup of the presentation for this earnings call, you can find a summary of 2024 and '25 EBITDA, adjusted depreciation and amortization and resulting EBIT by region. The adjusted EBIT margin '25 without nonrecurring charges amounted to 15.7%, below the prior year number of 16.5%. Naturally, also here, there was a negative impact of FX on the margin, 70 basis points.

In absolute terms, adjusted EBIT without nonrecurring charges was EUR 511 million with the improvements in EBITDA, discussed before, being offset by additional depreciation of EUR 12 million, driven by the PP&E CapEx in India and China as well as by the filler placements.

In this slide, we show our usual reconciliation between reported EBITDA and adjusted EBITDA. For '25, you can see the impact of the nonrecurring charges on the relevant line items with the right-hand side aligning to our definitions as discussed on Slide 13. Same as in Q3, other includes costs for the renewal of the group's IT systems and consulting charges for the strategic review.

Under the column for nonrecurring charges, other reflects penalties related to the delay in the further expansion of the group's production facilities in India and the charge for the CEO separation. The gain on sale of PP&E and other assets of EUR 5 million primarily relates to the asset sales in China and Germany.

Following the methodology presented on the previous slide, here we show the impact of the nonrecurring items on net income and adjusted net income. Profit for the period without nonrecurring charges was EUR 208 million in 2025, including all nonrecurring charges, the group recorded a loss of EUR 87 million for the year.

On adjusted net income, as stated in the last quarter, the Onex PPA amortization, which arose from the acquisition accounting when the group was acquired by Onex in 2015, was fully amortized as of the end of Q1 2025. As such, this line will be 0 going forward. We have added for your reference, a slide to the backup of this presentation that summarizes the amount of the Onex PPA and all other PPA by year and also shows the impact on gross margin, SG&A and EBIT.

Please note that also all other PPA is expected to be lower in '26 following the impairments in '25. As a disclaimer, the '26 estimate is, of course, subject to FX fluctuations throughout the year. In summary, the delta between the reported and adjusted KPIs will be smaller going forward.

Net CapEx, includes -- including lease payments in 2025, amounted to EUR 200 million or 6.1% of revenue. While CapEx for the plant in India following the completion of the first phase was lower, we continued to invest into the expansion of our Mexican aseptic carton factory given the strong growth that we have seen in the region, America North.

Please also note that the cash inflow from the sale of land and buildings in China and Germany of EUR 16.9 million for the group's definition is included in net CapEx. For the 68 filler placements, EUR 173 million CapEx was spent. The upfront cash ratio has been slightly lower at 71% in '25, but still at a good level. Net filler CapEx as a percentage of revenue was 1.5% after 1.1% in the previous year.

Free cash flow amounted to EUR 191 million in 2025 after EUR 290 million in the year before. This was driven by the lower adjusted EBITDA versus prior year, which included a significant FX headwind of EUR 44 million, as discussed before. The other significant negative impact laid in the higher payments for customer volume incentives in 2025, which were a result of the very strong volume growth of 6% in 2024. As an approximation in the balance sheet, the provision for customer volume incentives decreased by EUR 39 million in 2025.

On the positive side, tax payments were lower by EUR 11 million in the period. Additionally, 2 favorable impacts that were of a one-off nature supported the cash flow: one, the already discussed EUR 17 million for the asset disposals in China and Germany; and two, lower interest payments as for the new bond of 2025, interest payments only occur once per year. Overall, interest payments were lower by EUR 27 million. Net working capital as a percentage of revenue improved by 100 basis points as accounts receivable were lower. This was offset in the operating working capital by the lower liability for various customer incentive programs.

Turning to debt and leverage. Net debt at the end of 2025 was EUR 2.144 billion. The stronger euro helped to reduce the reported net debt by EUR 43 million. However, the free cash flow earned in '25 was lower than the dividends paid in '25. Our interest expense was lower by EUR 15 million versus previous year. This was driven by more favorable underlying market rates, and on average, lower utilization of the revolver, partially offset by the higher coupon of the new bond.

The net leverage ratio at year-end stood at 3x after 2.6x in the prior year. The net leverage ratio was influenced by the lower adjusted EBITDA and also by the nonrecurring charges. As per the determination rules of our net -- of our debt agreements, which, for example, exclude the impact of impairments, the net leverage ratio stood at 2.8x.

In line with the initial guidance that we had provided at the investor update in October, we expect a similar market environment as in 2025, resulting in an outlook for revenue growth on a constant currency and constant resin basis of flat to 2% for the year 2026. We feel encouraged by the sequential improvement and return to growth in the fourth quarter.

We said in October that we would see the '26 EBIT margin improve versus the '25 margin, excluding nonrecurring charges, and we expect to land in a range of 15.7% and 16.2% this year. In line with our usual seasonality, adjusted EBIT margins and free cash flow will be higher in the second half of the year. As always, our guidance is subject to input cost changes and foreign currency volatility.

The guidance for the adjusted effective tax rate is 26% to 28%, and net CapEx, including lease payments, is projected in the corridor of 6% to 8% of revenue. On the dividend, as highlighted in our communication of September, the Board will propose to the AGM to support the payout in '26 for the year '25.

Our midterm financial guidance is laid out as follows: Revenue guidance for constant currency, constant resin growth is in the 3% to 5% range, reflecting a normalization of market dynamics in the midterm. The EBIT margin will reach a level of above 16.5%. Guidance for net CapEx, including lease payments, remains at 6% to 8% of revenue, and there's no change to tax expectations.

We will focus on cash flow generation and deleveraging to improve our balance sheet. In the midterm, the group targets a net leverage ratio of around 2x, and we have set ourselves an important milestone of achieving 2.5x by the end of 2027. The company remains committed to returning cash to shareholders and expect to reinstate dividend payments in a corridor of 30% to 50% of adjusted net income in the coming year.

In summary, SIG has a clear path forward for value creation. With our strong business model and innovation capabilities, we can build on multiple growth drivers. We have executed the cost adjustment program that we described in October, and there are plans in place to further improve our best-in-class margins. Rigorous capital allocation discipline will improve our balance sheet and return profile and foster a robust cash generation.

This concludes the presentation. 2025 has been a challenging year for SIG, but a year that ended on a more positive note. We would like to thank our customers for their trust in our systems and solutions and our shareholders for their continued support for the company. And finally, a heartfelt thank you to the SIG teams around the world for their hard work, dedication and commitment.

And we are now happy to take your questions.

[Operator Instructions] The first question is from Ioannis Masvoulas, Morgan Stanley.

Mikko, congratulations on the new role. And I'd like to address the first question to you, if I may. SIG has already done a lot to reposition the business and cut costs over the past several months. Where do you see the biggest opportunities to go even faster and deeper on the self-help journey? And what could this entail for additional cost cutting or potential changes to the business mix? And I'll stop here for the first one.

So, of course, I started on Monday, and I've been looking at, as I said in the beginning, firstly, outside in. I've been looking at the benchmarks, the KPIs from outside. And I think we can still improve our competitiveness. And I'm trying to look at the value creation short term and longer term. And of course, the idea is that the long term, we build a stronger foundation for the kind of -- for the coming years.

And of course, the areas what I'm looking at is still organizational efficiency. I'm looking at the performance cuts. I'm looking at the purchasing program and also opportunities to simplify the business and how business is done. And when looking at the benchmarks, how we comp against other companies and peer group and typically targeting best-in-class, but I'm just in the process of doing that. And I think I will be working with the SIC team to look at all these areas. But basically, target is to be extremely competitive in terms of efficiency, performance culture, purchasing and looking at ways to simplify the business.

No, that is helpful. And good luck with the new role. Then the second question is just on the guidance. When I look at the EBIT margin that you managed to achieve for 2025 at 15.7%, excluding the one-offs. And then, looking at 2026 guidance, where the low end is pretty much at the same level. But then, you are indicating top line growth of between 0% to 2%. So worst case the top line is not going to be worse. And then, you have taken some costs out in '25 that should really fit through in '26. So what would get you to the bottom end of that range, assuming you're still able to maintain the revenue at, at least stable over the next 12 months?

Yes, Ioannis, thank you for the question. And I understand your view on this guidance, and I think it makes perfect sense. I would also call it cautious guidance. But we also have seen, especially in the last couple of days that the world remains very volatile and -- let's first start the year, and then we see how this develops.

The next question from Jorn Iffert, UBS.

My questions would be 2 to 3, please. The first one also for Mikko, if I may. You were saying you want to focus on to improve competitiveness. What do you mean with this exactly? And what are the action points to do so? Because we thought that SIG is gaining market shares over the last couple of years. So what exactly you think needs to improve here? This would be the first question.

Second question, if I may, on the competitiveness, you said in the 2025 release that you are facing more competition in some regions. Can you say from where is this coming from? Is this coming from your key competitors? Is it coming from non-system suppliers?

And the third question, just a technical one, please. Can you help us what do you expect on average selling prices for 2026 and on the raw material price situation? And what you're budgeting?

Maybe I will start and then hand over to Ann. And when I talk about competitiveness, our track record is good. If you look at the customer retention, we don't really lose customers, and the lifetime value of the customer, if you think that we place a filler, the lifetime value of then the packaging material and then services is really high. So in that sense, we are competitive. And of course, the foundation is a piece of equipment or technology, which is absolutely unique, and there's nothing matching that one. So the kind of starting point is good.

But, of course, we are facing all the time competition, so we cannot -- it's part of the performance culture that you always need to look ahead. You can't be complacent at any given time despite our position is good. And when I talk about competitiveness, I would look at still the organizational efficiency, are we at a good level in all the KPIs? And I'm just started, so I will be diving into details in the coming weeks and months. Are we efficient organization how we run the business?

And then, of course, looking at competitiveness in products, looking at competitiveness in packaging material, looking at competitiveness in service. And all those 3 areas, they have a slightly different kind of how you measure competitiveness. One is the technology, one is the product cost, and therefore, also the purchasing program is a very important factor to us.

And then, of course, as a part of the overall competitiveness has to do with organizational efficiency, is there ways to simplify how we run the business? Because typically, simple is more effective and efficient. But I will dive into all KPIs. And I think it's more, as I said, creating that we are competitive also long term because, as Ann may explain in more detail, we are facing, of course, competition from non-system suppliers for the packaging material. We've been defending that well because we are not losing any customers. But of course, long term, it's a race that we need to be competitive with the piece of equipment. We need to be competitive in packaging material. We need to have a value-add services so that customers see the value of our technical support and spare parts. So it's going all across.

And maybe if I can add on increased competition, I have mentioned that on the slide for Asia, specifically on the chilled carton business, where we said additional capacities have been placed in that market in the last 2 years, and that's also why we think it's not the perfect place for us to be active in the future assuming that probably a follow-up question will then be where we stand on finding a strategic partner. Let me also comment here. The process is well underway, and we would update as soon as we have something to say.

And Jorn, you have also asked on sales price development and raw material cost development. So on the price side, as always, we will have regions that will see price increases, driven by inflation, especially, and we will see others where it's probably more stable. And on average, for the group, I would not believe this plays a major role in 2026. Following now really 4 years of increasing prices, I think that has also demonstrated the value that we capture with our customers. And why is that at this moment considered also to be absolutely the right thing because the raw material situation for us this year is not so much a discussion topic. But of course, we also monitor that situation carefully now with the situation evolving in the Middle East.

I would also like to remind you that we have fixed long-term contracts on the paper side. So we know what the price outcomes will be on that front. And we apply hedging for the aluminum and polymers. But of course, there's always an unhedged portion, which then fluctuates with the market. But at this moment, you don't see us overly excited on that front.

And one clarification question, please. You mentioned one-off restructuring cash cost in '26 of around EUR 25 million, right?

Yes. Overall, cash impact of the nonrecurring charge is EUR 25 million for '26.

And the next question from Alessandro Foletti, Octavian.

Yes. Mr. Keto, I also have a couple, one by one. Maybe on the market in the Americas, or maybe more specifically the U.S., you mentioned that you saw certain categories up more related to dairy in bag-in-box and spouted pouch with others down. Can you give an indication of what's the size of these 2 categories? So we can sort of understand, I imagine one is growing faster than the other one or old categories going down, new categories coming up. So we can have a view on when this whole business can become positive. And the same question on the system, non-system split of sales.

Yes. Thanks a lot, Alessandro. On the Americas bag-in-box, spouted pouch, indeed, as we said. So -- and also, as we have described in the investor update, there is different product lines below. So going into food service, going into retail and also more industrial applications. And although the market overall for food service is not yet super exciting and picking up, we believe that we have held up very well and also improved our -- we had share gains in the foodservice segments, especially in dairy, but also in syrup.

But then, the retail business, which is largely the wine business, has been soft. Wine as a category is a little alcohol in general, is a little under pressure, and also non-system applications that we still had in the U.S. have not been very much growing in 2025. But overall, on a net basis, I think this came out slightly positively for the Americas, and that's why we are okay with the development in this year in the given market. And overall, for the U.S., I think also the growth of aseptic carton, again, coming back to why we are expanding the factory in Mexico has been very satisfactory.

Okay. But is it fair to assume that sort of the old declining category still represents 80% of your business, and the other one, the new and growing as more 20%? Or am I far away from this?

No. So I would say, overall, the Foodservice business is clearly more than half of the bag-in-box, spouted pouch business, absolutely. Yes.

Okay. Right. And then, I have a question on your dealers. You mentioned you will install around about the same number as this year. Now you have made some impairments last year. Can you use some of those fillers that you have impaired now for the growth that comes this year? And does it have an effect on your CapEx then?

Yes, of course, I mean, we will not scrap anything that can still be used, not as is normal practice also. We have always done it that way, and we will continue to do that, absolutely. So, yes, and if that reverses, we will, of course, also call that out specifically.

Okay. Okay, good. Maybe one final one. On the free cash flow, in the bridge, you mentioned already a couple of parts, but maybe can you give an indication of what can be expected from the working capital in 2026?

Yes. So if I should build a bridge for the EBITDA of 2026, I would assume that the EBITDA, in line with the earnings guidance, should be broadly the same, considering that we will have 1 quarter of FX overhang because the depreciation of the euro only started basically in April last year. I would believe that working capital definitely will not see negative contributions again in 2026.

And then, on the other hand, you also need to consider that the land and asset sales, of course, won't repeat and that we will have the one-off of the restructuring or reorganization that we have called out with EUR 25 million. And I think all of this should make you land slightly above EUR 400 million probably.

Right. That's very helpful. Maybe one very final addition. When you speak about the working capital, not seeing another contribution, you speak about the net working capital or the all-included operating net working capital?

Sorry, all included operating working capital -- yes.

The next question is from Benjamin Thielmann, Berenberg.

Welcome aboard, Mikko. Two questions from my side, if I may. We can take them one by one. First one is on the filler placement. You mentioned, Ann, that in '26, we can expect a similar number of fillers being placed, and in '25, 68 new fillers in '25, 54 were replacement and scrapping. I was just wondering, can we assume a similar mix in 2026 as well in terms of how many new fillers are coming on top and how many are being replaced on the customers? That's the first one.

Yes. No, Ben, thanks for the question. So first, I would say when we talk about filler placements, really the number of new placements is always the more important one because that is placement for customers that have a clear plan to sell something. Otherwise, they wouldn't put out the money for this filler. So -- and capacity of newly installed fillers, of course, is always higher than capacity of old fillers that we take out of the market. So on a net-net, it's an estimation that net increase of fillers, but the capacity added is always more.

So what do we expect as replacement or retirement for '26? It's always difficult to quantify in the beginning of the year. But I would not expect that it's going to be a 0 or a very low number. So it's normal course of business. You always have some coming back. And the longer the company is successful in the business, of course, also the more likely it is that some of our fillers placed in the market are aging and are being replaced by new fillers of our group.

Okay. And then maybe a follow-up on the filler placement, we got -- we have seen a very strong run rate in the last couple of years. If I look back to 2018, the filler placements in '25 and '26 are below the average run rate in the last couple of years. And there was an impairment, partly because of underutilized fillers on the customer side. Is that something that worries you as of today, the customers maybe have invested a little bit or overinvested in particularly the years around COVID and shortly after, and we should get used to a lower run rate? Or do you think this is a temporary lower run rate?

Ben, I think we always say 60 to 80 new placements in a year is the corridor that helps us to continue our market share's gain trajectory. And yes, the number has been elevated a couple of years ago, but that also was on the back of the introduction of new EU regulation, where our customers, especially in Europe, had to revisit their fleet and then made more often a choice for SIG than normal.

And also, considering the fact that we have a USP with the flexibility on sizes that we produce on a given filler, that also attracted significant attention of customers, of course, and continues to do so during the time of inflation. So I would rather explain it with positive one-off that we have seen in the last couple of years than with -- we now see a negative environment. It's within 60 to 80, everything is good enough to sustain our pace.

Okay. Perfect. And then maybe a last one, if I may, would be on competition. It seems that pricing is not a big issue for you guys in 2026, which is clearly good. I was just wondering, has anything changed in the competitive landscape recently? We have seen that, for example, Lamipak has launched a gable top carton. Is there anything that you would flag? It seems like you continue to gain market share if I look at the numbers of your peers. Any pressure on pricing from any new competitors? It doesn't seem like it, but I'm a little bit surprised. Any color on how you view the competitive landscape as of today compared to maybe last year?

Yes. I think the competitive landscape overall hasn't changed. The non-system suppliers have been around for many years. They basically provide roll-fed systems, not sleeve-fed systems. So -- but that said, we always need to, of course, be vigilant, make sure that we remain competitive and that we drive innovation in the market so that customers want to choose SIG also for the future. And that is exactly what we do. So we're never going to become complacent or stop innovating and driving our system forward. But at this moment, I wouldn't see any reason to be looking at the world differently than before.

The next question from Pallav Mittal, Barclays.

I'll take it one by one. So firstly, you highlighted Americas was strong and one reason was the growth in Mexico. Given the environment in Mexico at the moment, we have seen some staples companies highlighted as a tough environment. So how should we think about that for SIG in 2026? Are you seeing any impact on your operations so far?

Pallav, no, our operation in Mexico is running stable. And, of course, we monitor also this one very carefully because the safety of our teams is the most important thing for us, but we don't have any disruption there or any problems to report at this moment.

Sure. And then secondly, sir, I mean, at the top end of your margin guidance, EBIT margin for this year, 15.7% to 16.2%, you will be quite close to the 16.5% guidance that you have for your midterm. And given that you're not expecting any significant market improvement this year, is it fair to think that the margins could be much higher than that 16.5% that you've indicated in the outer years?

Yes. As we have discussed in the investor update in October, we see this midterm guidance really as a midterm guidance and not as a long-term guidance. And, of course, as Mikko has indicated, the company aspires to get better every year. And, of course, we also would target a higher number. But we will update once we get there. I think until then, the 16.5% is a nice yardstick to use for the time being as a midterm guidance.

And I think, of course, there's still a cost inflation in the cost base every year. There's 4 -- depending on the market, 4% plus inflation on the SG&A, which is kind of coming to all the companies. So it's putting pressure. But, of course, we are looking at competitiveness long term. And I think we will detail that, then maybe later in the year, what is our long-term plans. But I think it's good to understand that there's also cost inflation, of course, in the cost base of the company, which is putting some pressure.

Sure. Mikko, congratulations. And lastly, if I can just squeeze one in, is there any update on the litigation? Any updates on the core? How should we think about that?

No. There is no update on the litigation process that is running as per the timeline. And we also have not come to a different assessment of the case, and it's still considered to be a contingent liability, and you find it disclosed in Note 33 of the annual report.

The next question from Manuel Lang, Vontobel.

I have a question regarding the midterm outlook as well, more on the growth side. There you see some growth returned in the last quarter to positive territory, but you still expect muted growth this year. So what's the current indication or, let's say, run rate, if you will, that you see on the end markets in the different substrates and regions?

And then maybe a second question, more specifically on India, you mentioned the region was impacted by weather effects last year, but what's your view on the utilization of the plant in India currently, and also, let's say, midterm?

Manuel, so on the midterm -- sorry, on the guidance that we see right now, 0% to 2%, indeed, I said that we saw a strong sequential improvement in the fourth quarter, gives us confidence to be in this guidance range in 2026. And if we should discuss this by region, I think we should expect that Europe continues to be on this normal level that you should expect from a mature market. Americas, ahead of this, of course. Asia, I think we have reached something like a bottom level. So let's see how that continues in China.

And then, India, Middle East, Africa, I would have said up until Friday, of course, they will return to growth and will be our strongest growth region. And the team in the region is very familiar with disruption and lumpy development. So we're very confident that they will handle the situation also under these circumstances in a decent way. So -- and then -- yes, I think that's the outlook on the growth side.

And on India, indeed, last year, we have discussed, like many companies, quite a lot, the longer monsoon season, which impacted revenue growth. I mean, I can't give you now the weather forecast for in 2 months or so. But at this moment, we see a slightly more positive development from India, but definitely behind the expectations that we have had a couple of years ago, but it will be definitely a positive contributor to growth.

Okay. Very clear. I have maybe one follow-up on the fourth quarter growth. How much do you think, if you can share that, was driven by the volume incentives for clients? And what's really, let's say, the underlying improvements in volume growth?

I would say that wasn't really driven by any incentives. And that also you see, I think if you look at the development by region. So really the strong 4%, that we had in Europe, was driven by lower raw milk prices and really more milk being packed in aseptic carton. And also, in Asia, the negative number. I mean, that is a function of the occurrence of Chinese New Year. So I think the rebates really didn't play a role too much. That said, of course, the fourth quarter remains our largest quarter, and probably also, will continue to remain our largest quarter in the future.

We have a follow-up question from Ioannis Masvoulas, Morgan Stanley.

Just looking at Slide 4, where you show the growth -- revenue growth in bag-in-box and spouted pouch at negative 3.4%. Could you give us an idea what the underlying revenue growth would be if we were to exclude the noncore parts of bag-in-box, especially wine, just to get a sense on the earnings power of what you consider or revenue growth power of what you consider as core?

Yes. Ioannis, I don't want to now kill you with all the details, but it's very clear that the core segments within that portfolio, of course, have performed much better than the minus 3.4% that you see for the overall. Still, we need to consider the market environment in food service, especially in the U.S., which has not yet been growing significantly again. But I think you see the clear spread in the growth rates between the 2 boxes, if you want. So the core business was slightly positive.

We have some online questions, so if I could address those, please. Your guidance, does it include the guidance for revenue 2026? Does it include any perimeter changes you anticipate as you look to exit noncore operations from Charlie at BNP Paribas?

Yes. So our guidance for '26 on the growth side is an organic growth guidance. Should we achieve any divestment in the year, of course, we will exclude that from the perimeter.

And an additional one for Charlie, what depreciation and amortization charge do you expect in 2026, including or excluding amortization of acquired intangibles?

Charlie, I would point you to the backup slide that we have provided. I hope that, that would be helpful for you also.

Then, Christian Arnold from ODDO. Could you quantify the negative effect of the later timing of Chinese New Year compared to the previous year? And does it mean that you will have a positive impact on Q1 2026 in the same magnitude?

Christian, thank you very much. So it's, of course, impossible to perfectly quantify it. But indeed, as we saw a weaker Q4 in Asia Pacific, we should expect a slightly better Q1 that basically builds on the positive seasonality here.

Overall, let me again come back to how do we say -- how do we expect the growth for '26 to play out between the different quarters, please take -- continue to bear in mind that we had a bit of a special seasonality in '25 with a much stronger first quarter and also stronger second quarter. So I would expect that the comps also play a role in the seasonality of '25, but there is this positive one probably from Chinese New Year running against it.

And also from Christian, could you tell us to what extent you are changing -- increasing your prices in 2026?

Yes. I said, we believe that price increases doesn't play a big role also on the back of not too much inflation on the raw material cost side for '26.

And then from Ashish, Citi, how do you think about restructuring charges in 2026?

Yes. So all the restructuring charges relating to the measures that we have announced at the investor update in October has been recognized in 2025, and we will just see the cash outflow relating to this still in the first half of the year, probably.

That's all. Very good.

Okay. Operator, do we have any more questions on the line?

At the moment, there are no more questions.

Wonderful. Then, thank you very much for your questions, everybody, and for your time this morning. So I hope you take away, SIG has a clear path forward for value creation underpinned by a resilient business model and strong customer relationships. We remain firmly focused on disciplined and consistent execution, and we appreciate your continued interest in the company and look forward to updating you on our progress over the coming months and quarters. Have a wonderful rest of the day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Good morning, ladies and gentlemen. I'm Ingrid McMahon, Director of Investor Relations, and welcome to SIG's investor update. We're delighted to see so many of you here in the audience today, and we have a very large audience participating online. So thank you all for joining.

Before we start with the presentation, please note our disclaimers and also in case of an emergency, the access are directly behind you and please switch off your mobile phones.

So coming to the agenda for today. We will start with an introduction from our Chair, Ola Rollén. He will summarize his insights and expectations since joining the company in April. Ann Erkens, our CFO and Interim CEO, will follow with strategy and execution. Christoph Wegener, our Chief Market Officer, will talk us through our exciting growth opportunities; and Gavin Steiner, our Chief Technology Officer, will detail how we are setting the standards for packaging with our aseptic technology. Ann Erkens will then follow with and talk us through our financial framework and guidance. Thereafter, we will have time for Q&A, followed by a live lunch.

And with that, I'm delighted to hand over to Ola.

Good morning, everyone. So my name is, you can say, Ola Rollen, or I'm Swedish. And I spent most of my career with a company called Hexagon, started as CEO in 2000, stepped down in 2022. I'm now the Chairman of the Board of that company. And I also run my own private equity company on the side. And then as of April of this year, I assumed the role as Chair of the SIG Group. And SIG is slightly different from what I do normally. You can see a picture here of me and my brother, I'm to the right, just pointing out. And -- but I find this company quite interesting.

First of all, think of the mission. You've been following this company much longer than I have. But what you can do with an aseptic technology is just amazing for people and consumers around the world. I have a passion for Swiss German engineering as well. Think of everything from watches to precision machinery. And I think I learned that in 2005 when we were the first company to launch a hostile takeover here in Switzerland on a company called Systems, which is very similar to what SIG stands for. The system I don't need to talk about the razor blade model. For me, it looks like software company with ARR and you build the base and then you harvest what you sell.

Management team and Board, great people and the Swiss business culture is really nice too. So I think it was an easy yes -- to say yes to join the Board of SIG.

Now you could ask yourselfs why am I standing here today? The challenge should not be in a capital markets event. And I've done my fair share. I've actually calculated I've done 100 interim reports. So I've had my fair share of you guys. But we Secret stepped down in August, and we've been running a search. We're now very close. Unfortunately, we can't give you the details, but I can talk about the profile.

So our next CEO will have CEO experience, run a company of sufficient scale, global experience, been exposed to engineering because the engineering capital goods is very different from like consumer goods. Execution experience, successful turnarounds and profitable expansion, that is what we're looking for. And obviously, capital markets experience as well. I think we're in a situation [indiscernible] But now I want to talk a bit about -- my experience over these past 6 months. So let's do the good and the bad and the ugly.

What's good about SIG? Why are you interested in this company? Well, what I found was we have to say in Sweden, which is, "Don't spit against the wind. You will only get wet." So if you can stick with the wind, i.e., follow the megatrends that we see in the economy, you're far better off than if you try to fight these megatrends. And if we look at SIG, what we actually can do with aseptic packaging on a growing consumer base, the need for sustainable packaging and the shift towards protein-rich foods, which is like a 2 billion consumer problem, growing demand for dairy. And specifically in the bag in the box segment, we see a demand for food service automation. And I've been studying this a lot about the demographic shift in the economies of Europe, America and Asia. And that's why Hexagon launched that robot that you saw and why people are talking about humanoids. Now we're already faced with that problem in food service.

So zooming in on the aseptic technology, the fact that you can store a product for up to 18 months without cooling is in itself a miracle. That means that you can reduce your energy consumption, you can reduce the CO2 footprint, and we're all going to have to do that eventually. And we know we talk about recycling and building a sustainable ecosystem where our economies are using the waste to create new products. And we believe that we can reduce the waste by up to 10% by using the aseptic technologies. So there are some really strong factors why this industry is moving towards aseptic.

And then if you look at SIG itself, there are only 2 companies on this planet, one Swedish-based that we won't mention. And then it's SIG that can do a carton with an aseptic barrier. And how we win in this market is, for me, it was brilliant when I looked at the technology. We have a sleeve fed system, which creates flexibility for the consumer instead of a roll fed system. The total cost of ownership doesn't go up in spite of having the sleeves. We're actually competitive on that as well.

Sustainability leadership. You will hear later today us talking about how we're now taking decisive steps to make all our products recyclable. And the aseptic innovation we've talked about, that is at our core. So really exciting growth opportunities as a newcomer, I believe we can continue to gain share in the carton business through differentiated offering. Because when you're 2 major players, it's very hard to fight on price.

We have a huge opportunity that we will discuss today, and you've probably heard about it, but now it's for real, and that is launching an aseptic spouted pouch. That opportunity could be almost as great as the carton business. Leading transformation towards automated recyclable aseptic food service systems in fast food chains. That is another great opportunity that we are going to explore. So this is what I've learned. There are really positives about the 3 substrate strategy, and we're going to discuss that a little further.

The other thing I've learned is we got great management talent. We have 150 years of experience between these 8 individuals in relevant industries. And that's a great starting point. But it wouldn't be a story without challenges, right? So the share price is down 50%, then everything can't be hunky dory, right?

So what went wrong? And what are we trying to address? Well, I think I can paint a picture in one slide. SIG has spent EUR 3.4 billion in CapEx investments, either buying companies or investing in equipment over the past 4 years. Now that has generated a free cash flow increase of EUR 57 million. It's really painful, but I know you know math. If you divide EUR 57 million by 3.4, you get 1.7% return. And this is at the core of the problem, and this is what we need to resolve. So if we just look at the acquisitions, bag in the box, we see gaps in the product offering. We see gaps in our go-to-market capabilities. We have invested, but we need to focus much more on automating the workflow to bring down the cost of goods sold and improve the return on these investments. So it's really an operational reset for us to focus on profitable segments and then methodically working through the workflow and address costs that we can take out and make this a very competitive business.

When it comes to spouted pouch, you could say non-aseptic spouted pouch doesn't make sense for a company like SIG. It lacks the characteristics that we're looking for, system sales, aseptic, sticky product. But with the help of SIG's R&D and 2 years of relentless innovation into the spouted pouch segment, we now have a product that is recyclable, it's aseptic and it's a systems product. So now suddenly, aseptic spouted pouch is a core business.

When it comes to chilled carton, that does not fit the agenda for a company like SIG either. We are not differentiated enough. We can't command a high enough price on the chilled carton to make the returns we are looking for. And on top of that in '25, we've seen macro uncertainty. All industries are now faced with macro uncertainty. And you only need to go to the German automotive industry, and you know what we're talking about. It's political, it's geopolitical, it's new competition from Asia that everyone needs to get acquainted with. And that leads to cautious consumer spending, which in turn has led to muted growth across the packaging industry. And we've especially seen that in the second half.

So if I am to summarize my first 6 months with this company, I would summarize it like this: Great products, great people, great technology. The foundation is here to create a super successful company. Yes, we have a past, EUR 3.4 billion in investments on top of that EUR 600 million in dividends. So think EUR 4 billion with EUR 57 million return. That's not good enough in my books. Weak end market demand. But you know what, life is like this. And this, if you change it around and you say, this is a great opportunity for a reset, and that's exactly what you're going to do. And if you reset the company near the trough of the business cycle, you're going to make a lot of money when demand comes back.

So there is a strong future for SIG. And what are we going to focus on? Well, we will use the core advantages that we see from the carton business. And just to repeat those, system solutions, you need a sticky business. You can't just sell machines or packaging. The system is what makes the nice returns. We already have a global sales platform. We're present everywhere where it matters. We have a broad service offering. It's not just selling sleeves. You need to have the service organization to back up an installation. We do have the aseptic technology. We are literally an innovation engine, and we will not stop innovate, as you will hear from Gavin later. And the sustainability expertise in the packaging industry is second to none. Now if you take all this, you have a really good foundation for continuous growth in aseptic carton. But what we can do is we can take this transfer it into aseptic spouted pouch and aseptic recyclable bag in the box products for food service. So it's a very, very dedicated effort in bag in the box.

So when it comes to execution because you can stand here and show nice slides, but now the proof is in the pudding, as the English say. And we're going to move to EBIT because we think this company hasn't focused enough on the cost of capital. So when you start measuring internally and externally on EBIT, you put a price on CapEx, and that is absolutely important. Capital allocation discipline will be an outcome from that. And we will focus on returns. There are no M&A ideas on the horizon. This is very hard for me to say with my history, but it's absolutely true. This company, it's not on top of our agenda to do any M&A. Improved cash conversion and reinstate the dividend. That is our promise, and that is what we're going to focus on.

So if I am to summarizing my first 6 months with this company, I would say we have a fantastic opportunity to drive value. And SIG will become a leader in aseptic sustainable packaging systems. We try to capture everything we do in one line. And that will drive world-class products and margins. Proprietary technology will defend us and create high barriers to entry. We can offer the lowest total cost of ownership for our customers in spite of might -- we might not be -- the upfront price might not be the cheapest. But over time, we can prove that if you work with us and you work long term, you're going to make money as a customer, too. And at the end of the day, all of this will generate attractive growth and returns for our shareholders, and that is the ultimate target with a listed company.

So with that, I'm going to leave over to Ann, and she will take us through the strategy execution. Thank you.

I'll spend a couple of minutes on strategy execution, especially for the next 18 to 24 months. Just as a reminder, on our strong global platform that we operate, that positions us super well for long-term value creation. Ola mentioned already, we are facing attractive end market trends. We have a unique solution system that we operate, and we differentiate with aseptic technology. And all of this positions us very well to operate also very profitably in the future.

I would like to spend a couple of minutes on how we operate our system solution because it's important that we all understand this and are on the same page here. First, let's look at the separation of revenues into the different streams. For 2024, we had 7% of our revenues with equipment; 87% with packaging material. That's, of course, the core of everything that we are doing; and 6% with services. Services is also an attractive business for us, and we look to build out this even further. You can imagine that this is also a margin-accretive opportunity.

When we think about our system, we differentiate by using a sleeve fed system compared to roll fed with competition. And why is this actually great? And why does this help to create also a barrier to entry. With the sleeve fed approach, we do 4 production steps in-house for our customers. So we do that at scale for all customers, means we do this very, very well. And we have optimized this over several decades. There's lots of IP involved and lots of trade secrets. So -- and that's something that you can't copy so easily even if you tried. And if you tried it and wanted to do it, I mean, not only that it will take you lots of time to catch up with the excellence that we have in-house when we run those processes, you will also need lots of CapEx, which creates an additional entry barrier.

So I would say the sleeve fed system really differentiates us from competition. And it's very flexible also. As long as the footprint of the package is the same, you can run with a very short change over time. exactly on the same machine. And you know in this industry, it's all about the output that you generate in a given time frame. So the more you get out, the less time you need to spend on changeover, the better for your total cost of ownership.

And with the inflation environment that we are currently in and probably also continue to be in for the next coming years, when customers want to respond to this with shrinkflation, they are super well equipped with our flexible systems.

And talking about flexibility, an additional important angle, of course, is on our systems without any retrofit, you can operate the classical packaging sleeve, but you can also operate the up and coming. And we are very proud about the growth rates also in this segment, the non-allo sleeves, which Gavin will also talk about later a bit. So no additional retrofit, you can run this over the installed base, whatever any legislation will put you up for.

And it's also important to take note that the net CapEx that we have to invest into filler placements. You know that we always co-invest with customers has been decreased quite a bit over the last couple of years. It was a little more than 1% of revenue last year. And that is because we are more successful in negotiating upfront cash contributions also from our customers. And you remember probably we discussed last year also that we have put this in place even more stringently so that we get this cash also even earlier.

Now this all helps to entertain long-term customer partnerships, and we're very proud about really those long-term partnerships that we have with customers. And that goes across the portfolio. Our top 10 customers are with us for more than 30 years, and that is across substrates, both on the aseptic carton, but also in bag-in-box and spouted pouch. And you see that we partner really with all the relevant players, be them global customers or regional champions or also local champions. You know that we lock in our relationship by placing the system solutions for typically 6 to 7 years on the aseptic carton side and more than 90% of the customers also renew those contracts into a second cycle.

On the other substrates, we are still developing the systems approach, but we see that this is really getting traction. And you can calculate that on bag-in-box spouted pouch, where we have a system solution in place, the current contract time line is about 3 to 4 years already. All of this delivers us more than 90% customer retention, so we hardly ever lose a customer.

And there's numerous examples of how we support our customers, and I don't want to run you through now a lot of them, but at least 2 small examples when you think about, for example, Almarai, which is a leading dairy player in the EMEA region. They have partnered with us now for their asset renewal cycle over the next 5 years, and they were the first to place our new NEO filler, which gives you 15,000 liters output in an hour. And that is 25% more than the old machines.

Also in the bag-in-box side, we partner with customers and drive innovation with Coca-Cola. We have been driving, especially in America South, but also in Asia, mono material or monolayer material, which is good for recycling. And with this, we also support Coke in their initiative on the sustainability side, which is called a world without waste.

Now Ola has outlined a lot of challenges that we have ahead of us, but we have also done a couple of things pretty well in the last couple of years, which has helped us building a strong foundation. We have continuously grown our market share to around 25% now. And with this, we are the clear #2 globally. And we are very confident that we can also continue this journey over the next couple of years and continue to grow our market share every year.

We have expanded over categories and channels. So you find us now with a global #1 position also in bag-in-box and foodservice. And in spouted pouch, we hold the #2 position. Over the years, we have also improved our regional footprint from being very Europe and Asia centric to now being well distributed across the globe with around 30% in Europe, in Asia and in the Americas and a little more than 10% in EMEA.

So our multi-substrate strategy positions us for further growth. So we're not only limited to aseptic carton, but we have created now avenues where we can serve also more consumer occasions and more categories. and also different channels. And those channels also will give us access to structurally higher growth markets because any outlook for foodservice will position us at a higher growth rate than the classical retail business where you have the carton business running.

Now I wanted to talk also about how we want to drive value creation going forward. Three big pillars: Number one, portfolio optimization, performance improvement and rigorous capital discipline. When we think about portfolio optimization, this is all about focusing our portfolios and investments on the best opportunities and which we typically find in our aseptic applications. Aseptic is complicated, as Gavin will explain also later one more time. And of course, any problem, any complicated problem that you solve, you can command better margins than for easy things.

We will also continue to optimize our noncore segments for value, which doesn't mean that we don't like them or that we're not going to continue them. But naturally, the opportunities are more prominent in the aseptic space. So over time, the noncore parts will lose share.

On the performance improvement side, we're going to address a comprehensive cost program, and I will go through the detailed pillars on the next slide, but this is all about adjusting our structures to the current market environment and optimizing how we run operations and supply chain.

And last but not least, we have defined a very clear and also very disciplined framework for capital allocation and adjusted a couple of internal processes also to make sure that we really invest into the earnings accretive opportunities that we have on the table.

And last but not least, we have already started to change KPIs over the last 12 months, but we're going to take an additional step now moving on the bottom line from EBITDA to EBIT and also focusing more on return KPIs.

Now let's look at some details for each of them. Here's how we're going to optimize the portfolio. No surprise, you will find us with the strongest part in our aseptic core, which we expect in the midterm to be 90% of our portfolio. And that includes, of course, the aseptic carton business, but also aseptic spouted pouch and bag-in-box. Nevertheless, we will also continue to keep running non-aseptic businesses as core because part of the business is synergistic. And that can be basically twofold. Number one, those categories can be entry categories into customers that can later then open up more aseptic business. Or number two, you would run it over the same assets, and we want to sweat our assets, of course, in the best possible way. And that is why it makes sense to also keep a couple of non-aseptic businesses. We will also have still a very small share of other solutions in our portfolio, and that share will naturally decrease over time simply because the growth rates will be much slower in those segments.

And then last but not least, we're looking at finding a strategic partner for the chilled carton business because as Ola has described before, there is not too much synergies with the business, and we can't really capture the margins that we seek for this business.

To give you a feel for how big this business is, it's around EUR 120 million to EUR 130 million in revenues. And we basically operate in China, Taiwan and in Korea and also in those 3 countries have own factories to produce the respective material. And it's about 300 people that are employed in that business.

Now performance improvement program. We have launched the performance improvement program already a couple of weeks ago. And that will include or is including SG&A and R&D cost reduction on the back of really driving more automation in what we do and more standardization into processes. And I mean, no surprise, and we're not the only company, but in light of the current market environment, of course, we need to adjust our structures and also work on making our R&D work even more effective.

To give you a flavor for what we're talking about, so we're taking out about 5% of our employees in that population, and that translates into a low 3-digit number of colleagues or positions that we will make redundant. On the procurement optimization side, we have started already this year by driving a new governance and a new operating model for procurement on a global basis. And we are also specifically addressing all our indirect spend, which is a significant basket also of cost.

We're using category buyers now to make sure that we really do the best deals in a structured way across the world. And also here to give you a feeling of the magnitude, already this year, we have addressed freight cost that way, and we have optimized our freight costs quite a bit, which also has contributed, by the way, to the margin stability that we still see despite the lower volumes that we have had this year. And we believe, on average, we will take out in that basket also 3% to 6%. And we have used things like e-tenders and auctions, new tenders where we were very successful and just more digital tools also to compare cost better.

And last but not least, on the manufacturing side. So we have defined now clear road maps for every plant with a 3-year rolling horizon for conversion cost optimization to basically balance out inflation. And as Ola has mentioned it before, especially on the bag-in-box side, there is room for further operational improvement also through automation.

We are also optimizing our supply footprint further. A couple of weeks ago, we have announced the closure of a Dutch site in the bag-in-box space, which will take out cost also for next year in the mid-single-digit million euro amount, and we continue to look at further opportunities also.

All of this together will give us 150 basis points margin uplift. So our EBITDA margin without nonrecurring items will be above 24%, so 24% to 24.5% for this year. And we target to achieve this 150 basis points net uplift after inflation so that we reach more than 25.5% adjusted EBITDA in the midterm.

But now let me translate this from EBITDA also into EBIT. Our depreciation and amortization is around 9% points at the moment. So the starting point would be above 15%. And then if you add back the EUR 150 million, you come to 16.5%. Why do we do this? I think very clear, we need to increase the visibility of capital allocation decisions externally, but also internally to our teams. And we have done so also in the past. I mean, every project had postmortem calculations done in a very disciplined way. And we can also say, I believe, with pride, we always hit time lines when we did CapEx and we hit the budgets. But of course, that's always only a snapshot in a given moment. And if then utilization doesn't land where it should or is temporarily down, that's not so much in sight of the teams anymore, and that needs to clearly change also to generate learnings for future investments.

I believe using EBIT has also the additional advantage that it includes both the deferred revenue portion of our lease accounting, but also the corresponding depreciation of the filling lines so that basically, that is all equaled out in the bottom line. We have introduced this already internally in January and our STIs for 2025 are already sitting on EBIT because we really believe this will make a difference.

Now in summary, we have a strong global platform, and we have defined a very clear path forward. And now I would like to invite Christoph to the stage to give us more detail on how we're going to drive growth and how the market opportunities look like.

The exciting market opportunities for SIG that Ola already mentioned. I will first give you an overview of the broader packaging market and then zoom into our 3 strategic substrates, aseptic carton aseptic spouted pouch and bag-in-abox. And then I will also talk and more importantly, about our plan to win in these respective segments.

So let's talk about the wider packaging market. I mean, undoubtedly, the packaging market has faced significant headwinds in the recent past. Raw material cost inflation, food price inflation, macroeconomic uncertainty that certainly affects consumer confidence and holds them back from splurging and it holds back our customers from investing. But nevertheless, even if the waters are choppy, one should not forget the strong undercurrent of the packaging market, population growth, GDP growth. And with that, ultimately, a higher demand for protein, and that protein needs to be packed, and that's where packaging comes in.

Now SIG and with our core portfolio, we are playing in geographies like emerging markets, in technologies like aseptic and channels like food service that are forecasted to outgrow the wider market. And that will be an important driver for us to show above-market growth. I will take you through each one of these substrates in a minute. But before we get there, let me also share with you how we deploy our multi-substrate portfolio at our customers and how we create value for our customers and for us with it.

Now if we shift perspective and look at the food and beverage market from our customers' perspective, they have one objective, and that is to sell as much product as possible. And they think in 2 dimensions. Number one, channel coverage. So the more sales channels I can sell my product through, the more product I can sell. And number two is channel penetration. I will talk -- I will first talk about channel coverage. Essentially, if you think about channels, I mean, they're all targeting 3 basic consumption occasions. Number one, in-home; number two, on the go; and the third one is out-of-home dining. And you have 40 channels that serve these different occasions. Now we are the only player globally that has aseptic packaging systems that can address all of these 40 channels, and we can do that on a global scale. And that's a significant value that we can bring to our customers to unlock their growth strategies. And to give it an example, so Troll is a dairy customer, typical SIG customer, 2/3 of our revenue is in dairy. It's a Brazilian dairy. And for your perspective, Brazil is the second largest UHT market in the world after China. So a very important market for us. Troll is the fourth biggest player in that market, so what we call a regional champion.

Now up and until 2024, Troll was only playing in the in-home occasion served through retail and predominantly focusing on white milk. So if you think of this matrix of channels and categories, they really only played in 25% of that chessboard. After a couple of strategy workshops with them, and that's really the customer intimacy that we have with our customers, we define with them their strategies. They decided to venture into food service, a new and growing category in Brazil. They installed an aseptic bag-in-the-box filler from SIG, packing ice cream mix, a growing category and serving that to McDonald's. So they're widening their channel coverage.

They also decided to venture into new categories, cheese spread, yogurt spreads. Those are consumed at home. So they're increasing their channel penetration, and they're using our spouted pouch solution for that. And with these two investments, they are now playing on 50% of that chesspot, but that is only half of it. So there's a lot more to gain. And there are a lot more customers like Troll. But that gives you a bit of an example of how we deploy our substrate portfolio and how it really at our customer base unlocks value for them and for us.

But let's take a look -- closer look at aseptic carton, 75% of our revenue as shared.

Now also aseptic carton had its fair share of headwinds. So we are coming out of a period of growth, decline, growth decline driven by what I mentioned before, cost inflation. But we see a more normalizing inflationary environment, and we see that demand is coming back in the midterm. So we do see it returning back to its structural growth that we've seen before, which is 3%. But we will outgrow that market, and we are confident to do so. And why is that?

Because we are deploying a very exciting innovation pipeline, and that will really strengthen our positioning as the total cost of ownership champion, the sustainability leader and the aseptic innovator. But let me take you through that step by step. So we are now launching what we call the Neo series of equipment. It's a Neo series of filling equipment that has the highest output per square meter in the industry. We've deployed our first machine this year at Almarai, 25% higher output. And why is it so important, output per square meter. Because we can't build huge machinery and put that into shiny, big new plants. You can do that, but you're only serving a part of the market. We want to replace equipment, competitor equipment. And a lot of that is in brownfield plants. And when you replace equipment, you want to drive up efficiency, you want to drive up output. And that is where our Neo series comes in, 25% higher output same footprint.

We have started to do that with Almarai on our slim format, which is the biggest selling format in 1 liter. We're rolling that now out next year to Brazil to our square format, and we don't stop there. The next step is to roll it out to Portion Pack, which is most of our Asian market. So we're really bringing a solution to the market that will give a boost to total cost of ownership and help us to win more deals, gain share.

Second, sustainability leadership. We've been for quite a while, the leader in alu-free carton. Why is it important to remove aluminum. That is 25% of the carton CO2 footprint. So it really offers a more sustainable alternative.

Now what held us back is the barrier. So the solution that we had didn't have exactly the same light oxygen and water vapor loss barrier as alu has. Now thanks to our R&D, we've cracked that. We now have a full barrier solution. And that means we can unlock new categories like juices, which are oxygen sensitive. But even more importantly, we can go into new geographic regions of the world, hot climates where our previous barrier was not good enough. We started to launch it in China. We've brought it to South Korea this year. It's the only aseptic carton in the market that is labeled as recycling easy, thanks to our -- to the fact that we remove aluminum. We brought it to Southern Europe, and we are opening up the juice category. So with that innovation, we can really increase the momentum of alu-free deployment.

And last but not least, aseptic innovation. So we have a set of unique shapes of unique carton shapes that are IP protected and that really help our customers to stand out on the shelf. One example is our DomeMini, the carton bottle. I mean, the bottle is a perfect shape, extremely convenient. That's why it's been around for centuries. We've brought it to the carton. That plays really on the premium end. But we also have formats like our xSlim, where you can run 9 different volume sizes from 90 milliliter up to 200 on the same machine. And that really caters to affordability. It caters to shrink inflation. It really helps customers to weather that storm to offer competitive price points on the shelf and to grow their market share.

And in reality, 1/3 or every third machine in the last years has been one of those innovative shapes, which you can only buy from SIG, and that's really a testimony to the strength of our packaging portfolio.

Let's go to aseptic powder pouch. So that's a technology and a market opportunity that I'm personally very excited about, but more importantly, our customers are very excited about. Now to explain a little bit the market opportunity, I'm going to get a little bit more technical. You don't need a food science degree for that. I also don't have one, so I'm going to keep it quite simple. But basically, food and beverage categories, you can segment in 2 key segments, low acid and high acid. High acid means that products are very robust. They have preservatives by nature, which are the assets.

Think about lemon juice. Lemon juice doesn't go bad as quickly as milk.

Milk is low acid. No preservatives, perfect environment for microorganisms to grow. Now treating a high acid product and making it shelf stable is, therefore, simpler. Technologies like hot fill where you bring the temperature of the product up to 95 degrees centigrade and you fill the product and the product actually sterilizes the pack, very simple. It's very different for low acid. And the fact that 90% in the spouted pouch market is high acid product, it's not because of the consumer preference. It's not because 90% of all consumers prefer Apple pure, which is high acid over yogurts or banana pure, which is low acid. There simply is no technology yet available at industrial scale that can bring aseptic to the spouted pouch. And that's really the code that we cracked. So treating it at high temperatures only for seconds and then pre-sterilizing the pack, just like we do it with carton and thus extending the shelf life also for low acid products.

And this is a significant market opportunity. So we can, for our customers, really open up this space of highly nutritious, dairy-based, vitamin-rich products. And we're going to do that in 2 steps -- 3 steps, apologies. Number one was really the -- what I would call the technical proof of concept. We've done that in the last 2 years. We placed our first-generation aseptic spouted pouch filler. Still a very costly technology, and therefore, we focused on more the nutraceutical space, but it established that the technology works and that there's a market for it. The second step, which we have started just this year, we've brought our second generation to the market. That uses in-line sterilization, which brings down the cost of the system significantly, but it's still low speed.

The third step really is to bring a high-speed solution to market, which we will do post '27. And with that, we can really unlock the mass market. We can deliver aseptic technology at a competitive cost and really unlock that low asset space of products.

Last but not least, bag-in-the-box. And undoubtedly, also this segment of our market has had its fair share of headwinds. But it's very important if we want to also understand the future trajectory and the growth potential that we unpack that box. And I'm going to start at the bottom of the list. So basically, bag-in-the-box plays in 3 market segments. It starts with industrial.

Industrial are very large bags, 220-liter, 1,000 liter, and they're basically used to fill agricultural produce. Think about tomato. And they are sold to the agri business. So very different from where SIG traditionally plays. Now this segment, we see growing with a wider packaging market, but definitely not outgrowing it.

Then we go to retail. Retail bag-in-a-box is mostly used for wine. Now wine has 2 problems. Number one, people do consume less wine. And number two, it has a demographic problem. The younger generations are even consuming less. And if wine is bought, it's rather bought on the premium end, which typically is filled in bottles. So this segment, we see stagnating, maybe even declining. But where we are really excited, and that's where we will focus our investments and our efforts on is food service.

Now food service is -- growth is driven by 3 factors: Number one, QSR growth.

And if you follow McDonald's a bit 4 weeks back, they announced that they will actually increase their global store count from 40,000 to 50,000. So they're adding 25% more stores. All of those serve Coke. All of those have bag in the box. So there is an organic growth in that market. But there are also additional growth accelerators. So we see dairy and also new categories like lemonates, ready-to-drink coffees moving into dispensers for speed of service. And also they require aseptic. And that really is our strong point. And that's where we believe we can bring an edge to the market and unlock a significant share gain opportunity. And I'm going to walk you through how we want to do that.

So basically, we have a great filling platform, the -- SureFill42. It's in the industry, the fastest. It brings the strongest aseptic performance. But we had a couple of problems to roll it out globally. It was mostly sold in the U.S. Number one, cost, we brought that down, thanks to our assembly capabilities and reengineering capabilities in China. Number two, we had to do a technology upgrade to get CE certification so we can also sell it in Europe. And number three, our customers, especially new customers, they simply expect a service offering around it. It's a different thing if you already have 10 bag-in-the-box fillers in the U.S. and you're buying the 11th one. Then it's the first bag-in-the-box filler like a Troll. They expect the same technical service offering that we also have in carton. And we've built that technical service offering around that. So we can really -- and we have started to really roll out that platform as a system, so packaging equipment and technical service across the world. And you see here a couple of logos. I mean we can now say we actually have on each continent in Asia, in the Middle East, Africa, in Europe, aseptic shurefill platforms up and running.

But it's not just the TCO and the aseptic innovation that we bring. We're also the leader in the transition of bag-in-the-box to mono materials, so bags that are designed for recycling. And the sustainability discussion in the last years has been a bit more colorful, let's say. But I can tell you, when we talk to our customers, they don't slow down. And together with Coke, who was the largest player in bag-in-the-box, we are spearheading that transition to sustainable structures, which are products that are IP protected and which we are rolling out with Coke now in Asia as well as in Europe. So in a way, we are really recreating the winning formula that has been the source of our success in aseptic carton, systems that are leading in TCO, leading in sustainability and in aseptic performance.

So let me summarize. When it comes to the market, the fundamentals are still intact. Population will continue to grow, GDP will continue to grow. Demand for protein will continue to grow. And we have with aseptic a solution that can address that. In aseptic carton, we are very, very convinced to continue gaining market share based on the innovation pipeline that we are deploying, the new platform, fastest machines in the market, the Terra program, alu-free full barrier only solution in the market. With spouted pouch, with aseptic spouted pouch, we can create an entirely new market, a blue ocean for SIG, where we are the only player with an industrialized solution. And in bag-in-a-box, we will focus on where growth really is, and that is in food service, and we will focus on applications and categories like dairy where aseptic really matters and where we can deliver a competitive edge.

Now I will hand over to my colleague, Gavin. He will share more about the value of aseptic and why it really matters as well as the exciting technologies that will be unlocking these market opportunities.

Science behind the nuts and bolts and the material. It's a pleasure to be here with you this morning, and I'm Gavin Steiner, heading up as the CTO for SIG. So first of all, if you allow me, I'd like to start with a quiz because my colleagues have already shared with you a lot of the technology and the science. You don't need to answer the quiz, but the thought is what does aseptic filling technology bring to our customer, our consumer and the environment? What does aseptic filling technologies bring?

You've heard a lot of it today. So just to consider that, I'll highlight 4 areas for you. And those 4 areas are extremely important. The first one is around quality. Aseptic filling technology is a gentle technology. And that gentle technology allows us to maintain up to 5x the nutritional value if you're comparing to other conventional technologies, 5x the nutritional value. For example, it is able to protect or less impact on vitamin A and vitamin C, which are heat sensitive. Those can be retained at 90% in the pack.

Color, for example, if you ever leave a banana out after you've cut it open, it probably goes brown within a few hours. As Ola and Christophe mentioned, we get a shelf life of 12 to 18 months, keeping that wonderful color yellow alive. So it has a very important aspect around the maintenance of fresh-like appearance. That's a differentiator for aseptic filling technology. Sustainability, as you get a 12- to 18-month shelf life, you also get a value chain -- significant value chain improvement, which is around the logistics going from refrigeration to ambient. You can just do the math there, we're talking about 60% CO2 reduction.

Looking at the shelf life itself, another wonderful value of it is the preservation of food, less food waste. Now looking at our technology in SIG, we spoke many times this morning about the flexibility, the total cost of ownership, the sleeve-fed system. Those are all very unique items that I'm quite proud of in the R&D area of the nuts and bolts as how that all comes together. And that obviously offers us a point of differentiation. But now let me build this into so what? How does R&D look when you look at this ecosystem of bag-in--the-box, spouted pouch and beverage cartons. I've been asked many times what are the synergies that we have between them.

Let me bring this to life for you. We have one R&D in excess of 450 scientists, both engineers and polymer scientists, so the nuts and bolts again and material. Bringing to life this carton, aseptic, spouted pouch and bag-in-the-box environment as one group where we share the technologies of sterile, of processing of efficiencies and of filling and of sealing. There's obviously a synergy there. Now looking at that synergy, the flexible sleeve system and aseptic beverage cartons, as we spoke about many times, if you look at that, there we have the unique opportunity of interchanging on the go within a few minutes, different format sizes. That is unique, and that is one of our differentiators.

Now the science of that is applicable to the spouted pouch and a little bit less to the beverage -- to the bag-in-box, okay? But looking at that, we have in all of these seating technologies. And there, we are innovating actively because the seating technology actually is a breakthrough because we are able to put new materials, sustainable materials into the current machine base, new sustainable materials into the current machine base with minimal investment, programming changes. I think that is really incredible.

And looking at that cutting edge allows us to deploy what both Ola, Ann and Chris have mentioned around this new barrier technology, alu-free packaging. It goes on to the current machine base. Competition are not so lucky. So ours works with our sealing technology development. So we have a full barrier property. I'm going to touch on the full barrier in a second again.

Now in this ecosystem, we also have a connectivity opportunity, digitalization. Beverage carton, as you can see there, already, 60% of the machines are connected. The connection on spouted pouch as it's in its infancy and in bag-in-box is an obvious one for us. And that science, the OT, the IT infrastructure is something which we will be leveraging going forward.

Now all of this is underpinned by a strong IP.

There's 270-plus families in the SIG portfolio. That is a fair number of intellectual properties that we have on the cards. However, ladies and gentlemen, IP is only one part. That's the public part. The more important part is the trade secrets. For a system, how do we do all of the different steps? And for me, that is extremely valuable. So we have both. It's a good portfolio, but at the same time, we also have a strength of intellectual property that is not declared, so the trade secrets.

Taking this into a little bit of more practical solution. Christoph was talking about the spouted pouch. Let me just bring this to life quickly. This is actually on a Generation 2 machine. This is a banana pure, but if you were to look at it, it is yellow. Generation 1 started out in a very simple way, leveraging the knowledge of the bag-in-box business, off-line sterilization. It was a quick introduction to test the theory. So you take the material, you sterilize it, you transport it to the factory, you fill it, leveraging the bag-in-box knowledge into the first part. The second step, Generation 2, which we just -- this is one of them, that was taking the aseptic in-line sterilization technology that we have and bringing that into the Generation 2. Logistics improvement, transport improvement, efficiency improvement, everything into the Generation 2 machine, which you see in the middle there.

Generation 3 coming in 2027 is where we leverage again the aseptic technology of multilane filling capped application and advanced sterilization technology at higher speed. So this is just showing you the question, are there synergies? Do we leverage in R&D? Absolutely. And the team have done a great job on that.

Okay. Christoph mentioned this, so I can go quite quickly. But I like the picture. If you look, this is -- we're talking about the material back to the beverage carton, this one here, taking the aluminum out. Again, aluminum is an amazing barrier. If you hold up a piece of aluminum foil, no light goes through it, no moisture and no oxygen. Take it out and you have a permeable piece of paper, okay? It doesn't really work. Christoph said we have a breakthrough. We have the equivalent barrier properties now in this pack that is equal to aluminum without the aluminum. So you get all the benefits of it. That, ladies and gentlemen, was step 1 in the R&D.

I spoke about this 2 years ago in terms of our step 2, which I'm going to talk about now. But look at the difference there. We get a 60% lower CO2 footprint of this generation, I call it Generation 1, so the alu-3.

Looking at the deployment Christophe already mentioned, we've gone live. So this is not just theory. This is actually working. But what I want to share with you -- you can read this slide. This is not the alu-free version. This one in my hands, ladies and gentlemen, is the 85% fiber content.

So alu-free was a precursor. Now 85% fiber content. Why? Why would you ask me, would we take the paper content by reducing the polymers up? Because the model of SIG is to fit into the current systems, whether it's our machines. I also extend this into the recycling industry. If we can fit into what exists today, we don't need to educate or train or change behaviors. That is the easiest way. If we had to create a new behavior on recycling, I think you all know what that means at home. You've got to try and tell your better half where to put a new piece of packaging, it doesn't work so well. Put it into the paper recycling is what the journey is about.

85% was step 1 -- sorry, it was step 2.

Step 1 was alu-free. Here is an 85%, and there are 2 comments on the slide there. I'll ask you to read them. So from EcoPaper, we've done an industrial trial, super impressive. This is recyclable in their facilities, and we're working with [ Freezenampina ]. We also had an amazing feedback to us.

Okay. So that was step 2. And then as we promised, we needed that in the science world to unlock Step 3, 90%. Now 90% includes the fitment. That has to be total fiber content of 90% in our pack. And that unlocks -- the dream is that we get into the paper stream. So you can see the full value chain as we move, step 1 Alu-free, step 2, 85%. We needed the science. We've got it.

Now step 3 will be to finalize that, and we said that was by 2030. I hope you followed that journey, okay? So that was a quick one of where we're going now. But you might say, so what about the bag-in-box and spouted pouch? Here, the mono polyolefin journey has also -- it's been ongoing. We're accelerating not only the pouch materials are all recyclable.

Mono-materials is the drive, and we have a whole lot of options available already on mono-materials. Also for the aseptic filling. This includes the cap. The cap and the pack are all of the same material. And therefore, that certification to fit into the plastic recycling facilities where they exist. We can debate that one, at least we've opened up the opportunity that this is recyclable and the materials are recyclable.

So ladies and gentlemen, we know that we have the industrial or the industry pressure to move. We have the consumers' requirement to move this. We have the right pipeline within the R&D coming forward. So future-proofing what we need for the business. Not all the science is there. I'm not going to stand up here and say I have everything. The 90% paper content, there's still some challenges, and that's what we paid for and why we get up in the morning. But that journey is really -- it's going well.

Looking at the environment, the regulations that are coming at us, we are preparing and we have prepared the ground for the future. So based on that, I'm going to now hand back over to Anna, and she will see and present the implications of all of these R&D as well as the financial points. So thank you very much.

Let me summarize the financial framework and the guidance for the next coming years. So -- but before we get there, we have now defined a very clear and disciplined capital allocation framework. And really, we're going to continue to invest into the business organically with CapEx, but focusing on earnings accretive growth. We are also very committed to a strong balance sheet and to a shareholder-friendly capital policy with prioritizing in the near term deleveraging.

Now what does this mean in numbers? On the revenue growth side, and this is organic revenue growth with what we have. For 2026, we expect a growth range of flat to 2%, reflecting the continuously still subdued markets, but assuming and being very confident about SIG's capability to outperform the market.

In the medium term, we look at getting back to a 3% to 5% growth corridor with markets normalizing in the medium term as well. Looking at the margin development for the adjusted EBIT margin, we expect for next year to be above 2025 without the nonrecurring items, of course, and in the medium term to achieve more than 16.5% EBIT margin, which, just as a reminder, translates into more than 25.5% EBITDA.

On CapEx -- net CapEx, including lease payments, we look at the corridor between 6% to 8% going forward. And all of the above should result or is expected to result into a leverage path, which should get us below 2.5x by the end of 2027. And we target to come to around 2 beyond.

On the dividend side, we are pausing the dividend for 1 -- or we're proposing to pause the dividend for 1 year.

So '26 payout for 2025. And after that, we see us coming back into a corridor of 30% to 50% payout ratio of adjusted net income of the year before, committed to returning cash to shareholders also.

I would also like to remind us that, of course, the interest of management, Board and shareholders are well aligned with the incentive systems that we have in place. And you see the graph. So the Board receives 40% of their compensation and equity. And for management, the variable portion is between 55% and 70% and of course, consists of a short-term incentive and a long-term incentive, very much focused on total shareholder return development and on bottom line and growth.

I would also like to highlight because we've had the one or the other time, the question that what you find in the compensation report shown under LTI is, of course, the amount at target, so at 100%. You need to read the text to see that already for the last cycle ending in '24, the achievement was 46% on that front.

And you can imagine that for the next 2 cycles, that will be a very low number probably. So in summary, we are well set up with market trends that should support us also going forward. There's multiple growth drivers across different markets, across different substrates and categories. The business does have a very attractive margin profile and has further room to grow the margins, and we have a clear plan in place how to do that, and we're going to drive robust returns with the business.

And with this, we come to the end of the presentation, and I would invite all my colleagues here back to the stage for Q&A. And yes, we would like to use, of course, the time most efficiently, but also we will be around at selected conferences in the next couple of weeks, and we look very much forward to continuing also this discussion on a one-on-one basis with everyone. Please, guys come back. Ingo, do you take the questions with the mic? Wonderful.

It's Jan from UBS. I would start with 2 questions and then go back in the queue. The first one would be, please, the cash conversion target. You said you want to improve cash conversion. This is part of the plan for the next 2 to 3 years. With all the securitization on net working capital, with the accrued liabilities, is anything changing?

And is there a path or can you give us more details if there's a path to a EUR 250 million plus equity free cash flow over the next 2 to 3 years? Because the leverage targets would imply the equity cash is more staying around EUR 200 million for the next 2 to 3 years. This would be the first question.

That's for you.

Yes. Thank you. So I'm not sure that I come to exactly the same math than you. So I wouldn't see that this means you stay at a free cash flow level of around EUR 200 million, but of course, bring it significantly above the EUR 200 million and with this also improve the conversion rate -- cash conversion, sorry. So yes. So EUR 200 million sounds a bit too low for me over the next years.

Just for '26, can you give us -- you gave a guidance of top line on margins? What does it mean roughly for 2026 on the equity free cash flow before the one-off cash costs?

Yes. So if we -- sorry, look again here at the specific guidance that we tried to already put in place now for 2026. And of course, we will detail it further, as always, when we publish our full year earnings early March. But -- so we see in the market environment, a growth that will be positive. But in that corridor 0% to 2%, we will have a margin that will be above 2025 levels.

And of course, considering all of the above and also considering that 2025, free cash flow is impacted quite a bit by the volume payments that we have this year for the significant growth of 2024. We would see, of course, free cash flow for '26 also being above '25, absolutely.

Then maybe going to the second question, in terms of execution, which you want to improve in general, what do you do with the structure of the company, the regional management, the regional reporting lines, the regional setups, the regional processes? Is there any material changes happening here?

I can take that. So we -- I think the regional structure works really well for aseptic carton. When it comes to bag in the box and spouted pouch, that is yet to be determined.

I mean, can you give us more details about execution improvements on the regional structures? What exactly is top management doing now here that things are improving versus the previous?

One of our top priorities is obviously to get productivity out of the North American footprint for bag in the box. So that is one of the areas.

And you do this with the same people you had before? Or is there anything changing you have plans to change things?

That would obviously not be something we discuss here.

Alessandro?

Actually, I have only one for now. On the capital allocation, I'm not sure I understood really well what you mentioned because it sounds like the EUR 3.4 billion investments over the last few years were like all wasted.

I would like to understand how much of that you would have done anyway because you are still having to grow your combi block business with your fillers, et cetera, plus you opened a factory in China. I'm not sure that one is completely impaired because it was wasted money. You have opened a factory in India and in Mexico, same thing.

So can you put that EUR 3.4 billion figure in context, what will generate returns in the future of that? And then what will not be necessary going forward, which maybe comes into cash flow then afterwards.

Do you want to take that?

Yes. No, absolutely. So I think if you recall the slide, the large portion out of the EUR 3.4 billion was relating to M&A. So -- and that, of course, needs to be taken separately. If I look at the CapEx that was put in place, I totally agree. There is -- you always have CapEx when you want to continue to run a business.

And if you want to grow the business, of course, you also have additional CapEx. And if I look back over the last couple of years, would summarize that, for example, the plant that we have built in Mexico was an outstanding investment. It's already full now, and we have to extend it, and that's a good thing that we extend it.

And of course, that's part of -- or included in the guidance going forward as well.

We have discussed 2 days ago that we had a couple of impairments looking at the current market development and also looking at how demand has picked up specifically in the one or the other geographies.

And in hindsight, you would probably have approached one of those growth markets with a slightly smaller investment than what we have done -- or what we have put in place already. And also if you look at China, I mean, we are super well set up for growth bouncing back in China. But at the moment, probably we are slightly over dimensioned there. That's probably the 2 things that I would discuss specifically on CapEx.

I think the filler CapExes that we have put into the market, by and large, have demonstrated the value that they should have demonstrated. And you know that we do this in a very diligent way with very clear business cases for each and everyone. And also here, the impairments that we have discussed on Tuesday, which were really on a minor part on the filler end. This is relating again to a soft market environment right now where we have pulled back fillers from customers that are underutilized. And for us, internally, the rule is if we don't place them within 12 months again with a new customer, we would, of course, take the hit.

And in the current market environment, it's a little more difficult to place fillers, and that's why the smaller impairment also on that side. But bigger picture, I would be very happy with the fillers that we have placed.

Maybe on the EUR 1 billion then CapEx, is there a way to tell us how much of that maybe was a little bit too over hasted or too quick, et cetera? And let's say, maybe 80-20 rule, maybe it was EUR 200 million out of EUR 1 billion. Does it mean that over the next 3, 4 years, actually this EUR 200 million would come kind of on top -- that's normal free cash flow generation.

No, absolutely. And that's what you see reflected in the new guidance that we move from 7% to 9% to 6% to 8%. I think that's a good proxy for it.

Ioannis Masvoulas from Morgan Stanley. Just a couple of questions from my side. The first, if we look at the filler placements for this year, the 60 to 70, I guess, the lowest since COVID. Going into next year, what should we expect given the weak market backdrop and the fact that you mentioned some of your customers have machines that are underutilized?

And then the second question, you addressed a lot of topics today, and that's very much appreciated. One topic you haven't discussed about is the lawsuit Mr. Lawrence last. Now given the management changes, given that you're reviewing many parts of your strategy, is there any way you could potentially readdress this topic and potentially find a way forward without us having to wait an extra year for a resolution?

I think if you take the filler question, I can take the lawsuit.

No, absolutely. And I would ask for a little more patience before we give a concrete guidance for 2026. I think it's fair to say that we have a robust pipeline that we look at. But we, of course, also during the budgeting phase, now need to make up a bit of a risk perspective or risk profile on what we see for next year, and we will communicate then on that specific detail also with the earnings release for '25.

Yes. And when it comes to the lawsuit, it's an arbitration actually. And in an arbitration process, there are 2 things it's secret and you enter that process with one idea. And over time, you massage your ideas to come closer and closer and closer. And I think that's where we are at in that process. And that's pretty much as much as I can say.

Pallav Mittal from Barclays. A couple of questions. So coming to the very first point, Ola, that you were making in terms of a new CEO search and it being very close. Very clear that you guys have laid down the medium-term guidance, but how should we think about any risk in terms of reset of expectations by the new incoming CEO? That's the first one.

And then secondly, in terms of your filler placements, are you seeing any risk from the nonsystem suppliers? We have heard a couple of names like Lamipack in India, then Shield Pack in China. Is it something which is impacting your growth in the number of new fillers that you're placing every year?

I'm going to take the first question, and then I'm going to pass to Christophe and Anna to answer about NSS. I would be greatly disappointed if the new incoming CEO isn't changing something about the company, right? So we should expect him or her to put their personal touch to this.

What we've been doing for the past 6 months is following a logical decision tree. When you enter into an organization, there are some really obvious low-hanging fruit that we have addressed, and that is regardless what management you would put in place.

So I think that is what we present to you today, and that will lead to a 1.5% EBIT improvement. Beyond that, we obviously need to ask the future management at Capital Markets Days like these, what is your vision? How are you going to outgrow the market? How are you going to make it even better? So I think that is for the future CEO to answer. And now to NSS.

Yes. On the NSS side, I mean, that has -- that part of the market has been established years or even decades ago. So and you see people coming in, people leaving the space again. And I don't want to say that we are complacent or anything.

But -- and of course, we monitor the space very carefully, but we feel very comfortable that the system solution and the tech service and the material that we bring to the party at the total cost of ownership that we can deliver to customers is appreciated and will not impact us significantly going forward also. I don't know whether you have anything to add there.

Yes, maybe one point. I mean we talked a lot about innovation, and it's noteworthy that, for example, the alu-free structure is a proprietary IP-protected structure. And as we transition to more mono-material, recyclable, more complex structures, that is a technology shift that those companies can hardly replicate because they don't have the same R&D and experience in the system as we do. And that, by the way, applies also to all other substrates, and you see that in other areas of the packaging industry as well.

Christian Arnold from ODDO BF. Looking at this chart here, the dividend payout, you're going to target the 30% to 50% based on adjusted net income. The adjustments on net income, will that be the same nature, what we have seen in the past? What has changed here?

No change to the adjustments. So I mean, on the net -- so between EBIT and net income, I mean, it's mainly the PPA that is still between the 2. So no changes. And I think we have detailed that also quite a lot in the Q3 call 2 days ago on how we think about adjustments that, of course, everything where we hold ourselves accountable or the regional management that is not being adjusted.

But if we take larger decisions to optimize the company like footprint decisions or also severances, we take that below the line because we want people also to take those initiatives promptly and on time and in full and not think about -- then I don't hit my target for the year.

So that's why we take that below the line, but very transparent also, of course. And the other below-the-line adjustments that we had before and we continue to have are the noncash items on the derivatives and so on as always no change in structure here.

And the second question would be on the noncore bag-in-box business, which I understand is linked to your clients in the industrial space and retail space. What's the end game here? Is it a downsizing? I mean you are talking about optimizing the value. Is it a rightsizing, a downsizing? Is it actually a disposal at the end of the day?

I would say we, of course, evaluate all different paths here. But what you should take away from the slides as we have discussed it, the growth will always be below average, as Christoph has shown, and that is why naturally, the weight of that part of the portfolio will become smaller over time. That, for sure, you should take away.

And then, of course, you want to run those businesses as efficient as possible. I think that makes all the sense of the word.

So it could be that in 10 years' time, you still have actually the clients in your portfolio.

Yes. I would leave that open for the time being. But yes, let's see.

This is Ben from Berenberg. A follow-up on Christian's question on the bag-in-box business. I understand you guys like the aseptic business more than a non aseptic one, I agree. But what is really the plan with the non-aseptic bag-in-boxes?

Could you really divest it if you find a buyer? I mean, there's plenty of packaging companies that do these non-aseptic bag-in-box. How does it work in terms of like footprint? Would it be easy for you guys to divest the non-aseptic bag-in-box business? Or is that really difficult thing to do because of the footprint overlap between the aseptic and non-aseptic?

I would like to clarify one more time. So not necessarily non-aseptic is not interesting because there is angles to non-aseptic that you would want in any case to have in the portfolio. And again, number one, this is where you create an entry point to customers to then later upsell to aseptic.

And number two, where you use the same assets to produce the bags, whether they go for aseptic or non-aseptic because that gives you better utilization, and that always makes sense. And a very prominent business, for example, is the post-mix business. So that is long established customer relationships that is profitable, and you like to have that business. So it's not black and white, non-aseptic and aseptic on the bag-in-box side.

I think Christoph has described the 2 categories that are below our target ambitions. But again, we need to really see what makes sense, whether -- and you can also argue that you like to have parts of that portfolio because also there, you have very profitable pockets in it. It's really a case-by-case assessment.

And then you need to, of course, take into consideration how entangled your manufacturing footprint is or whether anyone would want to take that over without a manufacturing and so on and so. But I think we should think broad over the next months on that front, but it's not a clear cut black and white case.

Perfect. Follow-up question would be on 2 to -- the 0% to 2% organic revenue growth that you expect in 2026. We have seen in Q3 just a couple of days ago that some markets really struggle under destocking. There is lower demand. The fillers are running on lower utilization rates.

What is the 0% to 2% growth rate next year based on? Is it assuming that destocking across the markets that is taking place right now is mostly solved? Or how could we read it the guidance for '26?

I mean it's difficult to estimate when this is perfectly 100% solved. But in any case, we believe it will be less of an impact in 2026. And then we, of course, also look at our strength and our opportunities to outperform the market, and we're going to continue placing fillers and also the fillers that we placed this year, I think, is not a bad number even in a difficult environment. So that's why we believe we can make it into that range.

Okay. And then maybe one last question, if I may, then I give back to my peers would be on capacity expansion. You mentioned that you placed a lot of fillers. I remember last 2 years, we have seen on a gross basis, 91 fillers and 91 fillers again.

Is there the risk that this ramp-up in capacity that we have seen over the last couple of years, not only on a gross basis, but also on a net basis with softer market demand that could last longer than 12 months, let's say, that we could see a bigger gap between capacity and actual demand that supply and demand is going to be somewhat in an imbalance over the next 1.5 to maybe 2 years.

Or do you have the visibility that, okay, utilization rates for the fillers sooner or later are going to pick up again based on how the cycle developed in the past years?

Yes. So I think we clearly expect that the utilization rates will come up again on fillers. And we also absolutely expect that we're going to continue to place fillers. So there -- we don't have any doubt at all. When we think about our own in-house capacities to manufacture sleeves, I mentioned before that we are extending the plant in Mexico even with 2 lines because it's full, and we see really good traction in the Americas region.

So also here, we see that some more investments, and they are, of course, part of the guidance are needed then while on the other hand, more towards the Eastern geographies, if you want, we have ample capacities. And also that's why we have really took the impairment that have taken the impairment that we had to take because there, we have a bit of a misalignment.

Yes. Maybe on this BIB noncore, can you put a percentage number how big that is in terms of sales, just to have a view?

It's a low double-digit percent of the bag-in-box portfolio.

Right. So you said 2 days ago that the BIB aseptic is 30%. Obviously, that would be all in the blue part that -- and then we have the syrup, which is the remaining non-aseptic part, right? And then the rest is grays that you're...

It's small gray ones, yes.

Okay. And my second question is on the in-line aseptic third-generation machine. I'm a little bit surprised I thought it would have come to the market a little bit earlier. Now you said basically you have it, so you have to increase the capacity. And I'm thinking very stupidly just add a couple of lines beside each other. Why is it so difficult?

So it's -- there's a bit of science required in terms of that line speed, and the application of the different filling or fitments into it. The aseptic technology is there. But when you scale it up, we don't -- we're not only putting multiple lines next to each other. That's the easy way. It's integrating it into one. So we're still in the R&D.

So there's some required knowledge that is being built as well as then we need to do the prototype testing because we go out with something which is robust and that would be meeting all the quality standards that we have.

And that requires a cycle of testing, proof of concepts, make sure -- so we're confident it's going to work, and we start all of that work in the next 3 to 4 months in terms of exposure of the machine in its running conditions, and we build that up. And then we do the serial rollout. So it's a process that is required. Otherwise, we go with something that doesn't work.

Okay. And the Gen 2, it's just one prototype in the market? Or are you going to sell it? I mean even if it's lower, it's already providing some value to the clients.

Christoph?

So as Gavin said, we follow that structured process of prototype and then rollout. So the Generation 2 is now 0 series, and we are selling it in Europe, and we'll have multiple placements in Europe.

Thank you. I think, operator, if we can open the lines to the analysts on the phone, please, and then we'll come back to questions in the audience, just aware that many analysts can make it today because of earnings seasons.

The first question comes from Cole Hathorn from Jefferies.

I'd like to just start on better understanding how you sell the sleeves to your customers annually. Would you mind just giving us an overview of how you negotiate and how SIG thinks about the correct price point when you price your sleeves every single year?

And then relating to that, from the outside looking in, you have placed a lot of fillers. Is there not an argument for pulling back more on your CapEx short term? Because my perception is, are your negotiations annually on the price points of the fillers impacted by the low levels of utilization? Or am I misunderstanding that point? It's not impacted by the low levels of utilization.

No, let me start maybe. And definitely, the price negotiations are not impacted by the level of the utilization of a filler, but much more by the value that we deliver to the customer. And also, I would like to clarify that really the investment or the CapEx allocated to fillers has been 1 point something in 2024.

So it's not really a major portion anymore like it used to be years ago, 3% to 4%. So just this as a clarification on the CapEx. And then Christoph, how about you explain how the...

Yes, on the pricing side. So we follow a philosophy of value-based pricing. So we have a very good understanding of each customer, what is their current asset base, what is the speed of the machine and what we bring, and that's why we call ourselves TCO champion.

We bring higher speed, for example, twice as fast as competition and lower waste rates, which are typically half those of competition, and that's a value, and we can actually quantify that value. And that's a value that we share with the customer, but it also at the same time, allows us a premium pricing.

So there's a very structured approach of how we price and how we price competitively, but at the same time, also monetize the value that we bring to customers.

Maybe if I just follow up on that, just to understand the pricing. So you would know at the beginning of every single year, a rough idea of your liquid paperboard costs an estimate of your aluminum and polymer, even though that will change. And then you'll have a specific price point, I imagine, per region, per carton that you'll need to price. And you will tell your sales team to target that level.

Absolutely. And that is a well-established process also, which is very rigorously executed. And we prepare for this, of course, always within Q4. And that's basically the part where we have now visibility of how material costs also will develop going into next year. And just as a reminder, our 3 major categories of raw materials, number one, the APB, so the paper -- there we have multiyear contracts with our suppliers.

So we have good visibility on how this big bucket will develop already now in Q4. And then for aluminum and polymers, you know that we apply a hedge policy where we hedge around 50% to 80% of a given year's demand. And that gives us already now a lot of visibility how prices -- how input costs will develop into '26.

And of course, that is also what we need to know if we want to have the price discussions with the customer, which typically take place in the first quarter of the year because also our customers on the carton side selling into retail, you only have basically once a year pricing discussion with your retail clients. So we need to have basically a fixed pricing horizon with a good visibility for a full year on the carton side. And that is well established and works very well, I would say.

On the bag-in-box and spouted pouch side, it's slightly different because here, and you have seen that since a couple of years, we always state our revenue growth at constant currency and constant resin. Here in bag-in-box and spouted pouch, we pass through the resin price increases or decreases with automated clauses that are defined in the contracts with a lead time of 6 weeks to 3 months.

And there, the pricing works a bit differently, but basically similar approach. We look at the value that we deliver, and that's what we price for, absolutely.

Very clear. And then just finally, as a follow-up on free cash flow. Why did you decide not to give any medium-term targets on free cash flow? And if you're not willing to give medium-term targets on free cash flow, maybe you could just give us some color of how you think about it.

What do you think is a normalized free cash flow level for SIG business? And can you call out that you plan to grow that in line with kind of EBIT medium term?

Yes. No, I think the parameters that we spell out here in the financial guidance already give you quite an indication on where we see free cash flow developing. The probably only moving component that you still need to consider in addition is fluctuations in the volume discounts that we are paying out, and that has been quite a substantial fluctuation between '24 and '25.

If we look at a picture where this is in a closer corridor of 1 or 2 points difference in growth between 2 years, you wouldn't even feel anything on that one. What you should also take into account, and you know that from history that our working capital overall is always negative. So we don't have to invest a lot of working capital into growing further. And I think that should give you enough of an algorithm to deduct free cash flow development based on the guidance here. And I think that's where I would like to leave it also.

Any further questions from the phone lines?

Yes. The next question comes from Manuel Lang from Vontobel.

I have 2 questions. First one on the dividend. I think it's pretty clear in terms of the payout ratio. But I see that you did not reiterate the commitment to a steadily increasing dividend. And I'm just wondering if you could confirm that you're not actually pursuing an increase in every year?

And then secondly, on the midterm guidance, also there, I'm wondering if you could put some number in years on the midterm targets, meaning by when are you planning to realize the targeted growth and profitability increase? And then maybe as a part of that, how big of a onetime arguably margin accretive impact do you expect from the disposal of the chilled carton business?

I mean on the chart, you showed it looks like an almost 1 percentage point increase related to that, probably realized next year? Or how should we look at that?

Yes. So let me start from the back of the question. So our guidance that we have given is, of course, within the current portfolio framework. If we would divest -- or if we divested the GI business, we need to update that. And you can imagine that it would be positive for the overall group margin. Otherwise, we wouldn't look at such a venture, of course. And then you had asked about progressive dividend payouts.

So I think we want to keep a little flexibility here with the 30% to 50% corridor. In the ideal world, of course, this growth year-on-year on year-on-year with also the profit expansion that we target. But then I think we have maneuvered ourselves into a more difficult space with the old guidance. That's why I think overall, the Board and management, we have decided to be a bit more open on this one here. anything else?

And then how long midterm is, I mean, we all know midterm can be 3 years, 5 years, something in between. But the target is, of course, to achieve it rather faster than later.

Any further questions from the phone lines?

No, madam. There are no further questions.

Great. I will read a few from the webcast and then we can return to the room. So from Charlie Muir-Sands from BNB. He asks, do you expect any major changes in the working capital model in 2026 and the coming years?

Clear answer, no, we continue to optimize our inventory profile and that there is still potential, especially in the acquired businesses, but I wouldn't say there's a change in the algorithm.

And he has a follow-up. Are your cartons considered multi-material or paper and the extended producer responsibility schemes in major markets where this exists? Is EU PPWR actually going to shift demand to more easily recyclable plastic packaging?

I can take that one. So to be clear, our aseptic carton is 100% recyclable. It is, of course, paper, plastic and aluminum. But already today, 100% recyclable. It is PPWR compliant. So it can be or it is considered as recyclable also under PPWR. But it's an important question to decomplexify the structure. And that's what Gavin has really talked about. So the sandwich structure, we eliminate one layer, we take the allo out.

It already makes it easier to recycle. And that's what you could see from the recycling mill that has confirmed that increasing that fiber share increases also the value of the recycling. So the journey is very, very clear. I mean, carton is good but we're taking it as SIG to great.

We have one from Mengxian Sun at Deutsche Bank. Could you please clarify whether of your current 2026 or midterm guidance includes any proceeds, specifically positive cash flow generation and margin contribution from the divestiture of the noncore business assets? If yes, to which extent?

Yes. We have taken, of course, a small assumption for divestment proceeds in here, and that's why I gave you a little details on how big the business is in the beginning. But again, the margin parameter, we would update in case the divestment is successful.

Returning to the room then.

I'm happy to hear that you changed the focus on your KPIs on EBIT. I think it's probably a cleaner number. I was just as a remark, a little bit bothered in the last years, the focus on adjusted figures. I always had a little bit of impression that also with this gap unadjusted adjusted figures, yes, that probably in the communication with the investors, you tried probably to -- you had to focus too much on the adjusted figures.

And so I hope that will change also a little bit in the future. So my question, another topic is we see a strong shift in the food and beverage market to non-label products. And I'd like to hear what your position is with non-label products? How much of your revenues is generated with packaging for non-label products?

And what kind of customers you have, like a big player in the market is Aldi, very big player, gaining market share a lot. Is that a customer of you? Or you have other customers to mention in this market?

So Aldi, of course, is not our customer, but the people that supply Aldi. But Christoph, you go and explain.

Sorry, what...

Private label.

Private label. Okay. Yes. So very good question, very good observation. There is clearly a shift towards private label products. These are typically packed at what we call co-packers. So companies that pack for multiple retail brands. We not only, by the way, see that in Europe, but also in China, interestingly. We see that actually as a positive trend because what these co-packers offer is production capacity.

And typically, one size is not the size that everybody uses. So they appreciate flexibility. And that's really where we can -- where we have a strong point. We actually have a very good market share in private label because they also -- I mean, the co-packers appreciate the TCO because what they make, their margin is basically that conversion cost.

And the more they can churn out of their filling lines and the more flexibility they have in their filling lines, the more they can fill, it's all their margin. So it's a trend that actually favors our technology as such.

And how big is the portion of revenues from total revenues you generate with the non-label products?

Truth, I think that's also category by category different, to be honest. So in white milk in Germany, as an example, I would probably venture to say 70% of the market is private label, and we are a market leader in that segment. But it's very, very hard to say to give a global answer to that. That's really difficult.

But as a conclusion, so it's not a bad thing. So private label different to many other companies, private label for us is not a problem.

Can I have a follow-up? In aseptic packaging, how looks the competition landscape in Asia, what kind of competitors you have in this market? Because you just mentioned that there is strong competition in chilled carton, but how does it look, yes, in aseptic?

Do you want to take it?

Yes, I can take it. So I can -- it's not just Asia, but I can give a global answer to that. There's 2 big companies globally that offer aseptic systems for carton, and that is Tetra Pak and SIG.

Now you have these what's called nonsystem supplies. And yes, their share is a little larger in China, for example. But also to be clear, their key focus is on the largest installed base, which are Tetra Pak machines.

Ioannis Masvoulas from Morgan Stanley again. A couple of follow-ups. First on the net leverage target. First question here is that 2.5x or under 2.5x by 2027, you mentioned that includes some divestment proceeds. Does it also include a dividend assumption payment during that year? That's the first part.

And the second part, several of your more diversified packaging peers are very comfortable running at 2.5, even 3x net leverage. Why do you think 2x is sort of the right level for SIG over the medium term?

Yes. I think many of our packaging peers are not Swiss companies. So I think that explains the difference in perspective here. And again, so we are really optimistic with our algorithm that we have laid out here on the guidance slide that we're going to be below the 2.5x by the end of 2027.

And that assumes a dividend payment during that year?

Yes, it assumes a dividend payment, of course, in '27 for '26. Yes.

Perfect. And the second question on the revenue growth target for 2026. Is there any assumption of incremental destocking during next year? Or do you take the view that destocking run its course in '25 and '26, the 0% to 2% is underlying demand growth?

Yes. So as I already tried to lay out in the call on Thursday -- on Tuesday in Q3, I mean, it's not perfectly easy to say this part of the sales development in the third quarter was destocking and this was other market categories or whatever.

So -- but again, so we believe that destocking will decelerate as the year progresses or as -- next year starts. So will '26, of course, still see difficult market environment? Absolutely. I mean, just read the newspaper. So I think there's not much to believe it would change comes January 1, and that's what we have taken into consideration with this more conservative guidance of 0% to 2%.

And I would also probably like to come back one more time to 2025 because, yes, we have seen a super soft Q3. But this super soft Q3 was also a function of a more optimistic start into the year where we were seeing growth rates that were even ahead of our expectations.

If you look at the 9 months period, we were still basically flat, although it's a difficult market environment. So just that we all take this into consideration also and not just purely look at the third quarter here.

[indiscernible] From Asset Management. I have maybe a question to Ola coming from outside with a fresh perspective. What makes the business model a bit special from an outside and also a bit of black box is they don't sell the fillers, they lease them out. They keep it on the balance sheet, write it down. So it matters a lot about the discipline to make the full economics of a filler of a lifetime. And obviously, this is the difficulty.

Did you have a bit of feeling that the whole model was a bit skewed to growth because you had to take down the growth target by a bit, you switch from EBITDA to EBIT. So what was your view? Was there anything too aggressive on the filler installation? Or is it just to get a bit of feeling?

I've been strongly advised to not comment on the past. So let's focus on the future. And it's absolutely our target within the Board to make the adjustments to the EBIT that we measure as small as possible going forward. And as a politician, I stop there.

I'm Samuel Weber. I'm an independent wealth manager. And last time I was sitting in this room, I was listening to Jan Janis explaining how he changed the incentives of the subsidiary managers. And I want to ask you, you're not as decentralized, but can you perhaps give me a bit of an explanation how deeply this incentive change penetrates the organization? Or how this is set up? Does it just affect the top management?

And the second question to the new President. You mentioned you're also an investor on the side. And given the potential you just explained, I expect that you put a big position also privately in SIT stock. So maybe you can also answer this.

I'll start with that. If everyone here in the room share your positions and what you're going to do in the next couple of weeks, I'm happy to share mine. But obviously, I come from something we call the pilot school in Sweden. And that is if you're in the cockpit, you should know the gears and you should invest along with your passengers. So that's about what I'm going to say about that.

And then let me take the incentive question probably. So yes, we have changed the incentive system for 2025, reflecting EBIT instead of EBITDA for everyone in the targets, and that goes across the entire organization. So everybody who is on an SIT, and that is now I have to lie, I think about 400 people globally, but maybe it's even a higher number.

So I don't have that in my head. So -- but it's a large crowd and everybody is, of course, synchronized that the targets that we have at the top also are cascaded to managers at the lower level. And even to a degree that you would find sales targets in the individual targets that are, of course, building up the total that we have as a target.

Miro Zuzak, JMS. I have a question regarding basically your financial targets. In the past, you often failed to meet them, especially on the margin side. Midterm guidance was always corrected down. Also current year guidance typically not met, especially on the EBITDA margin target. Now you could mention many other communication-wise mistakes or I could argue mistakes, which have been made in the past and as we want to talk about the future now, and I have a question.

Have you also basically accounted for this systematic overestimation by giving new lower targets now that you have a buffer in terms of targets that you communicate? And also within this context, you have an inflation buffer on the Slide 31. Could you comment on what you exactly mean by this inflation buffer?

Yes. So I mean, it would not be prudent, I believe, if you build up your midterm target by just looking at all the positives that you work on and looking at everything happens 100% as you have laid it out, I think then you are set to fail. And that is probably also some of the explanations why some of the targets haven't been met earlier. We need to take into consideration that the world keeps turning and that inflation will be there, and we need to, of course, define enough measures so that we compensate inflation and on top, drive our margins further.

And I think that's what we have done in a very diligent way, and this is what you see reflected here. And I don't want to now comment whether this is more conservative than before, but maybe it's always wise to take learnings from the past, I would agree.

Thanks. Just conscious of time. So I think if we take 1 or 2 more questions, and then we follow into lunch.

Just a quick one. Christian Arnold from ODDO BIF again. About the potential disposal of the chilled carton business. You mentioned you would then adjust the margin target. You have not mentioned the growth target or the net leverage target. Would that be just insignificant for these 2 or.

Yes. I would rather consider it's not a meaningful parameter change in that regard. But on the margin, I think it would make sense to reflect the additional uplift.

And last question with Ben.

Yes. This is Ben from Berenberg again. I'm going to be quick so we can have lunch on time. First question would be on Gavin actually. If I would buy a sick filler today, let's say, for aseptic cartons, how many cartons per hour could I do compared to how many cartons could I do 5 years ago from today? Like how did it change or how did the innovation change in the last couple of years in terms of output?

In multiple ways. So the -- we actually presented today that we've gone with the new Neo platform, which is a speed up platform. We've basically taken the current machines with new technology built into it and it's a 25% improvement in the current running rate of that machine.

So all of that knowledge and science has been built over time. And there's new technology, new digital tools, everything that we leverage into it to do a speed up program. And it's on the footprint, the size of the machine stays the same and the speeds are going up.

And maybe if I can add to that one, that's why we are always also focusing more on the gross filler placements that we do instead of on the net number because new machines typically have a significantly higher output than the ones that are coming back technically already.

But then, of course, also utilization-wise, it makes all the difference in the world if you take out fillers that are not really utilized and place them, place new ones with customers who have high ambitions to drive it further, just as an additional comment.

And one additional one on that is we also have kits where relevant that we can retrofit on the current invested base to speed them up with customers. And there is a couple of examples that have been really successful.

Okay. Perfect. Maybe one very quick one on the midterm targets. I mean you're now guiding for 3% to 5% organic revenue growth on a like-for-like basis. the previous targets were like 4% to 6%. You always said, hey, it's probably going to be the upper end of that. So it was basically 5% to 6%. What is the difference?

Like what has changed over the last few years that you say those 5% to 6% are not realistic anymore, but 3% to 5% is it -- there was always India being a big market that has a big share of chilled or fresh milk that is slowly but steady moving towards aseptic milk or aseptic packaging. Maybe just some quick words on why is it 3% to 5% and no longer 5% to 6%?

So I would say it was for me, at least always 4% to 6%. And with the target at one point, probably it lends in the higher end of the range. And if you look back a couple of the last couple of years since the IPO, also in most years, we have hit that range or even exceeded the range.

Now the 3% to 5%, I would understand them also as a reflection of learnings from the past. And should we return to a normal market environment, I think that's a wonderful target to have, and it shouldn't take too long to achieve it.

Thank you, ladies and gentlemen. I think that concludes today, and I invite you to move out of the room to lunch.

Thank you.

Thank you.

Thank you, everyone.

Ladies and gentlemen, welcome to the SIG Q3 2025 Results Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Ingrid McMahon, Director of IR. Please go madam.

Thank you, Sandra. Good morning, ladies and gentlemen, and thank you for joining us. I'm Ingrid McMahon, Director of Investor Relations. And with me today hosting the call are Anna Erkens, CFO and Interim CEO; as well as Jess Spence, Director of Group Finance and Reporting; and Dmitry Lebedev, Director of Group Finance, FP&A.

As I believe most of you are aware, we will be hosting an investor update in 2 days' time in Zurich. At that update, we look forward to discussing the group's strategic direction, including capital allocation and midterm guidance, as was referenced in the company's announcement on the 18th of September. In today's call, we would like to focus on Q3 and the year-to-date financial results and to provide more information about the nonrecurring impairment charges also announced on the 18th of September.

The slides for this call are available for download on our investor website. This presentation may contain forward-looking statements involving risks and uncertainties that may cause results to differ materially from those statements. A full cautionary statement and disclaimer can be found on Slide 2 of the presentation, which participants are encouraged to read.

And with that, let me hand you over to Anna.

Thank you, Ingrid, and good morning, everybody. Let's start with the key messages for the third quarter. In line with our announcement on September 18, our revenue growth has reflected the deteriorating consumer environment throughout the year. In Q3, this culminated with softer volume demand across geographies and channels, including in the emerging markets. Given the challenging macroeconomic conditions and deteriorating consumer sentiment, customers have taken steps to optimize their inventory levels.

We also saw a softer performance from the parts of the portfolio that will be deprioritized going forward as we focus on the profitable expansion of our core portfolio, including, of course, aseptic system solutions. As announced on the 18th of September, following a strategic review of the group by the Board of Directors and in light of the prevailing soft market conditions, we have recognized nonrecurring charges of EUR 320 million pretax in the quarter. This charge is almost entirely noncash, and it is expected that the remaining part of the charge up to EUR 40 million will be booked in Q4 2025.

Associated cash outflows will also occur in 2026, for example, for severances related to adjustments in our structures. We will take a closer look at the composition of the nonrecurring charges in a few slides. Despite the tough market environment, however, we expect to place 60 to 70 fillers in 2025. This demonstrates our strong competitive positioning even in the current market situation. However, these new placements will not be sufficient to offset the currently lower level of capacity utilization across the installed base of over 1,400 fillers.

Looking ahead, we were delighted to see the commercial launch of the first products filled in our next-generation aseptic spouted pouch system with ALCA Corp, a leading supplier of tropical fruit ingredients. The product was introduced at the Anuga Trade Show earlier this month in Cologne and received significant interest. This major milestone is a direct result of combining our experience in spouted pouch systems with decades of expertise in aseptic carton filling, utilizing our in-line sterilization technology.

Lastly, we have an important update on the development of our 85% paper carton. We are very pleased to report the successful recycling trial, which took place at a paper mill in Indonesia in September. The higher paper content lowered the pulp line to half of a standard beverage carton. And crucially, the carton ran within the existing recycling infrastructure of the paper mill and resulted in an improved overall fiber quality and output.

Turning now to the key figures for quarter 3. Constant currency revenue declined by 3.9% or by 4.3% on a constant currency and constant resin basis. Reported revenue was down 6.7%. Adjusted EBITDA for the quarter was EUR 123 million, leading to a margin of 16%. Excluding the nonrecurring charges, adjusted EBITDA was EUR 184 million and the margin was 24%. Adjusted net income was EUR 17 million or EUR 61 million, excluding the nonrecurring charges. Q3 free cash flow amounted to EUR 55 million, which is below the prior year period. This mainly reflects lower business performance, unfavorable phasing of tax payments and lower upfront cash collection, partially offset by better working capital.

Looking at the 9 months figures. Revenue at constant currency slightly grew by 0.4% and was stable at constant currency and revenue. Adjusted EBITDA was EUR 495 million, translating into a margin of 21.1%. This includes EUR 61 million of nonrecurring charges. Without these charges, adjusted EBITDA was EUR 556 million with a margin of 23.7%. Adjusted net income was EUR 153 million. Excluding the nonrecurring charges of EUR 44 million after tax, it was EUR 197 million, in line with the prior year level.

Free cash flow showed an outflow of EUR 84 million. The lower free cash flow performance reflects the lower adjusted EBITDA, including the unfavorable foreign currency movements and higher customer rebate payments given the strong volume growth in 2024. CapEx, including lease payments, was in line with the prior year period at EUR 169 million. Net leverage increased to 3.3x as of the 30th of September. We will provide further detail on net leverage in the second half of the presentation.

Let me put the development of the quarterly growth rates into context on this slide, which shows our initial growth assumptions for 2025 compared to how the year has progressed to date. On the left side, going into the year, we assumed a softer start to the year with neutral to improving consumer sentiment as the year progressed. In addition, we expected the second half of the year to benefit from the contribution of new fillers placed.

Moving to the right side, higher-than-expected growth in Q1 of 3% reflected a slightly more optimistic view from customers on end consumer demand. In Q2, however, we saw a slowdown in momentum, although our half year assumption remained intact. The Q2 slowdown initially appears specific to a few markets, such as India and a softer Europe before Q3 saw a more pronounced decline in orders. We believe that this, to some degree, was driven by customers adjusting inventory levels in light of the deteriorating consumer environment.

Turning now to the performance by region. In Europe, year-to-date revenue has declined by 2.5% at constant currency compared to strong prior year growth of above 6%. This performance reflects several factors, including lower availability of raw milk for aseptic processing compared to the strong supply conditions in 2024. Also, the region benefited in '24 from the ramp-up of filler placements following wins relating to the European regulation on tethered caps in prior years. In particular, Germany experienced a soft third quarter. On the back of higher milk prices, there was an increased conversion of raw milk into cheese. Export volumes of UHT milk have also been lower. The juice category in the region has also declined, impacted by a weak summer season. In bag-in-box and spouted pouch, there's a good project pipeline in the region.

In India, Middle East and Africa, overall revenue development for Q3 '25 was impacted by a strong prior year comparison of 20% growth, leading to a negative 8.2% decline in Q3. For the 9 months of 2025, revenue growth has been slightly positive. The region has seen a slowdown in demand for cartons in the Middle East and Africa in the third quarter. In India, market demand has been lower than expected, particularly impacting the on-the-go noncarbonated soft drinks segment. We have reported this already in the half year. And while the main season is over, the trend is not yet reversing. On the other hand, bag-in-box and spouted pouch revenue performance has been strong, driven by growth in India.

Coming to the Asia Pacific region now. On an aggregated level, the performance of the region has been stable for the first 9 months of '25. However, the third quarter reported negative growth of 1.4%. In China, we have continued to focus on offering differentiated pack sizes and new product launches in aseptic carton. This has led to market share gains in a continuously soft market environment. In chilled carton, especially in China, performance has been affected by the competitive market environment and subdued market conditions, while in bag-in-box, there has been good growth in dairy. Elsewhere in the region, market softness in Thailand and Vietnam led to customer destocking, which was partially offset by a recovery in Indonesia.

Lastly, in the Americas, revenue declined at constant currency and resin by minus 2.8% for the third quarter, bringing the 9-month growth to 2.6%. Year-to-date, aseptic carton has seen good growth in Mexico, Chile, Argentina and Colombia, especially in dairy. This has been offset by customer destocking in Brazil. In the U.S., bag-in-box experienced a slowdown in Q3 following good growth, especially in syrups and dairy in the run-up to the key 100 days of summer season.

The out-of-home dining market has remained soft, reflecting subdued consumer confidence. Bag-in-box has also been impacted by a declining market in the wine category within the retail business and lower volumes of industrial bags. That concludes the regional section. And now let's take a look at the 9-month financials in more detail.

Adjusted EBITDA at constant currency and without nonrecurring charges was up by 1.3% versus the prior year period. The appreciation of the euro, particularly against the Brazilian real, Mexican peso, U.S. dollar and Chinese renminbi has reduced the adjusted EBITDA margin by 50 basis points. The drivers behind the improvement to adjusted EBITDA were price increases and a positive product mix as well as lower raw material costs, mostly due to a favorable polymer price environment. Higher production costs reflected unabsorbed fixed costs and lower production efficiencies due to the weaker-than-expected volumes in the third quarter. SG&A costs were impacted by wage inflation and growth investments in the first half of the year, while Q3 saw a slowdown in the rate of increase compared to H1 2025. After the nonrecurring charges of EUR 61 million, the 9 months EBITDA was EUR 495 million.

Let me now provide more color on the nonrecurring adjustments. In line with our standard definition, charges included as part of adjusted EBITDA are those where regional management is held accountable for the delivery of returns on customer projects, such as filling line investments or product launches. As you can see from the graph on the right, this portion amounted to approximately EUR 61 million. Charges excluded from adjusted EBITDA include noncash unrealized derivative positions and noncash impairments of intangible assets.

In addition, we also take charges below the line that relate to footprint or capacity rationalization as well as rightsizing of the organization. Any such booking below the line needs group approvals and rigorously follows our standard definition. Charges excluded from adjusted EBITDA amounted to approximately EUR 260 million for the period, taking the total nonrecurring charge recognized in Q3 to approximately EUR 320 million.

On this slide, you can see the breakdown of the full EUR 320 million. Approximately EUR 100 million is an impairment to the value of the bag-in-box and spouted pouch businesses, reflecting the weak consumer sentiment and business performance. This has affected the recoverability of acquisition-related assets. Around 85% -- EUR 85 million of impairments confirm the value of the chilled carton business. This principally reflects the weak market conditions in China, which has impacted the recoverability of the assets.

Approximately EUR 75 million relates to the reassessment of the required operating capacities in aseptic carton within the context of the current weaker market environment. This includes production capacities in India, selected equipment in China and some filling lines across locations. Finally, under the headline innovation, around EUR 55 million is associated with the reassessment of the group's innovation portfolio, including the impairment of equipment that's no longer required and the impairment of capitalized development costs relating to projects that have been stopped following the strategy review. As stated earlier, the total charge of EUR 320 million is almost entirely noncash, and it is expected that the remaining part of the charge up to EUR 40 million will be booked in Q4 2025.

On this slide, we show our usual reconciliation between reported EBITDA and adjusted EBITDA. For '25, you can see the impact of the nonrecurring charges on the relevant line items with the right-hand side aligning to our definitions as discussed on Slide 12. Other includes costs for the renewal of the group's IT systems and consulting charges for the strategic review. While under the column for nonrecurring charges, other reflects penalties related to the delay in further expansion of the group's production facilities in India and the charge for the CEO separation.

Reflecting the methodology presented on the previous slide, here we show the impact of the nonrecurring items on net income and adjusted net income. Profit for the period without nonrecurring items was EUR 138 million in 2025. As stated before, the Onex PPA amortization, which arose from the acquisition accounting when the group was acquired by Onex in 2015, was fully amortized as of the end of Q1 this year.

Net cash flow from operating activities mostly reflected the impact of lower EBITDA, including unfavorable currency movements against the euro as well as an increase in customer incentive payments for strong volume growth in 2024. Net CapEx, including lease payments, was in line with the prior year and remained at around 7% of revenue. Year-to-date, there has been a reduction in PP&E expenditure following the completion of the Indian sleeves plant, while net filler CapEx has increased due to lower upfront cash. In line with the group's usual seasonality, free cash flow generation is expected in the final quarter of the year.

Turning to leverage. As you can see from the table, net leverage was 3.3x, with the increase compared to December, reflecting the usual business seasonality. Net debt as of the 30th of September was broadly in line with the prior year period, reflecting a favorable impact from the translation of the U.S. dollar-denominated debt. This was offset by a slight increase in gross debt due to the construction of the Indian plant. The group's debt covenants stipulate a net leverage ratio of no more than 4x reported bi-annually. The calculation is based on net debt to adjusted EBITDA, excluding asset impairments. Based on this methodology, for the last 12 months, the leverage ratio was 3.1x.

Concluding with the guidance for the year. We confirm our revised 2025 full year guidance as announced on the 18th of September. This includes slightly negative to flat revenue growth at constant currency and constant resin. Including nonrecurring charges, the adjusted EBITDA margin for '25 is expected to be around 21%. Excluding the nonrecurring charges, the adjusted EBITDA margin is expected to be in a range of 24% to 24.5%. As announced, given the company's increased focus on capital discipline, the Board of Directors proposes to pause the cash dividend for the year 2025.

Lastly, as Ingrid mentioned at the beginning of the call, this Thursday, we will host an investor update with our Chair, Ola Rollén, and members of the management team to discuss strategic direction, capital allocation and the midterm guidance. That concludes the presentation, and we are now happy to take your questions on the Q3 financials.

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

So I will limit it to two as advised. The first one would be, please, a quick one on the net filler placements. You said gross filler placements between 50 and 70. What do you expect roughly for the net filler placements for this year? And the second question would be, please, on the equity free cash flow run rate. I mean, can you just -- can I just double check, I mean, what does it mean now for the full year, the clean equity free cash flow? Should it be around EUR 150 million plus/minus? And then also, can you advise, is there anything we need to consider in the bridge for 2026, like, for example, the one-off cash cost? Maybe if you can clarify how much it will be for 2026 falling into this bridge.

Jörn, thank you for the question. So on the net filler placements, I guess what you try to understand is how much of the impairments that we have booked relates to fillers. And I would like to clarify here that the majority of the impairments concerned here relate to fillers that we have on stock, for which we are not confident to place them within still 12 months, which is the role for considering impairments given that the market environment is a little softer. And those that are in market where we have taken a bit of an impairment is, of course, fillers that are significantly underutilized, but which customers would like to keep. And that said, altogether, I believe we should end probably net filler placements for the year, difficult to estimate really, but around 40 probably for the year.

And then second question on free cash flow. So you asked where we should consider to land for the year. And I would reiterate the same bridge that we have given already earlier, considering in last year that there was a significant amount of one-timers related to the improvement of filler contracts with earlier upfront cash collection and also building down of filler inventories. Then you need to take into consideration, of course, FX impacts that occurred during the year, and then the very large portion of the customer rebates, and I believe consensus is not sitting too far wrongly at the moment.

And looking into 2026, of course, too early to give a guidance. We will give a very first view on '26 in 2 days' time. But special one-timers that you should consider, correct, that is one-off cash outflows for the severance cost of the transformation. And then I think that's the major part that needs to be considered for next year.

And can you quantify these one-off cash costs is around EUR 30 million, EUR 40 million? Is this something I have correct in mind?

Yes. I mean when we did the announcement, we said more than 90% or approximately 90% will be noncash. So with that, I would land at the same number, yes.

And this is a cash out in '26, right?

Yes, mostly.

The next question comes from Ioannis Masvoulas from Morgan Stanley.

My first question is on the chilled carton, where you report a large impairment, this EUR 85 million is nearly 1/3 of the original purchase consideration for the business. And you've also noted the competitive pressure in China. I appreciate the Investor Day is coming up, but just if you can provide some color on whether this business is fully up for sale. And then the second question, looking at your cost base, we've seen aluminum has been fairly strong year-to-date. Can you remind us of your hedge ratio in aluminum and whether you feel confident to pass through the rising costs next year in light of the weak demand backdrop?

Yes. Ioannis, thanks for the question. So on chilled, so it's correct that the EUR 85 million is a sizable amount, of course, and it reflects really the market conditions that we see, especially in China. I would ask for patience until Thursday before we discuss really the portfolio details. But I guess, chilled doesn't really meet the definition of an aseptic solution business. So potentially, the answer -- you will find the answers on Thursday on that one.

On the raw material costs for aluminum, so our hedge policy hasn't changed, we always hedge between 50% and 80%. And we have done that also last year, and we will continue to do that next year. And looking again into 2026, we will provide guidance, of course, also first indications for guidance on Thursday and then the detailed guidance as always when we have our full year earnings release, which this time is early March. Against the market backdrop, that is a bit more -- a bit weaker, that's absolutely correct. But we are confident that with our very competitive solutions and innovations, we will also be able to pass on price increases where that is necessary as we have demonstrated also this year.

The next question comes from Lars Kjellberg from Stifel.

Two questions. First one on, you mentioned destocking and customer adjusting their inventory levels. Can you give us any sense what sort of impact that had on the quarter in Q3? And also looking into your guidance, of course, your, I guess, clean sort of revenue numbers were down 4.3% in Q3. Your guidance for the full year remains flat to moderately down, which would suggest actually reasonable performance in Q4. So the question there is being, are you now saying that there will be some year-end sort of purchase rally, which would then also bring the margins to bring it up to your guidance kind of north of 25% in Q4?

So let me start with Q3. I mean it's very difficult to single out what is now concretely a destocking impact versus a normal weaker market development. But I would also look at it not just so much on a Q3 perspective, but more really on a year-to-date perspective, where basically we are flat. Just the seasonality for the year was a bit interesting. That's how I would look at things. And what was built up earlier in the year then was probably contributing to a softer development in the third quarter.

Now our guidance for full year, indeed, we have confirmed that we will be slightly negative to stable for the full year growth rate. And with that, I believe we confirm it fully, and that leaves Q4 somewhere also negative, but we expect it might be slightly better than what we have seen in Q4. And talking about year-end really, I mean, as always, the fourth quarter is our strongest quarter that will not change. And yes, that's also what we see for this year. And of course, the last quarter will also drive the margins to a higher level. Yes.

And just to be clear then, as far as your customer contacts would suggest that destocking, we're sort of done with that in Q3, that's -- your guidance would imply that is the case.

Yes. I mean that's difficult again to estimate, but I believe Q3 has seen the major portion of that, yes.

The next question comes from Pallav Mittal from Barclays.

A couple of them. So firstly, in terms of the softness in various markets that you're highlighting, such as India, China, Germany, et cetera, are you seeing any structural changes in terms of the per capita dairy consumption? That's one. And then secondly, can you just confirm that the restructuring charge in adjusted EBITDA is still expected to be EUR 75 million to EUR 100 million for the full year? You have confirmed EUR 61 million for the third quarter. So just wanted to make sure that EUR 75 million to EUR 100 million is what you are still expecting for the full year.

So overall, I would say we don't see really structural changes in the market. What we see right now is a temporary softness, and we will also be discussing our perspective on markets and opportunities on Thursday. Now on the nonrecurring charges, so it's correct that within adjusted EBITDA, we have booked EUR 61 million in the first -- in the third quarter and that we expect further bookings in the fourth quarter, which, of course, will also fall into that bucket. So yes, we would confirm at this moment, the EUR 75 million to EUR 100 million also in that bucket. That said, I think you also mentioned or at least I understood that you mentioned severances. Severances doesn't fall into this bucket, but that would be below the line, as discussed earlier.

The next question comes from Cole Hathorn from Jefferies.

I'd just like to understand a little bit better how you're thinking about 2026. If volumes have been softer and utilization has been lower, do you plan to kind of pull back some of your CapEx or your filler placements into 2026 to improve utilization of your current filler base? So should we be thinking about kind of a lower CapEx number in 2026? And related to that, on the free cash flow side, should we be thinking about lower volume rebates being paid out in 2026? So lower CapEx and lower volume rebates supporting free cash flow in 2026.

Cole, thanks for the questions. And so on 2026, really, I would ask for a bit of patience still. I mean, it's only October. But -- so I think the consideration that probably 2026 is not going to be a year where we hit a record filler placement of above 90% again. I think that is a fair assumption. And thinking about free cash flow, where we have discussed for this year that we have had a significant negative impact for volume rebates payout. I would not expect that something like this repeats to that extent, of course, in 2026. But for full '26, so as discussed, the first guidance, we will provide on Thursday and then all the details we will give as always, when we release the full year earnings.

Understood. And then maybe then just focusing on the 2025 free cash flow, just to help us understand a little bit better the moving parts just because there's always a very big second half weighting of the free cash flow. You mentioned that consensus of around the $140 million to $150 million free cash flow is broadly in the right space. Could you just reiterate some of the benefits that you get into the fourth quarter? I just missed some of that earlier.

I think as always, the fourth quarter, really, that is driven by two factors. Number one, it's a very large quarter. So more sales, of course, also in the end, deliver more profit and with this more free cash flow. Then you should also consider that in the fourth quarter, there's typically no more payments for volume rebates of the year now because that happens largely in the first half, sometimes in the third quarter, but definitely not in the fourth quarter anymore. And always, of course also, don't forget, we have always a bit of an inventory buildup throughout summer autumn for the strong year-end season. And of course, that inventory will also come down and will drive also a higher free cash flow in the fourth quarter. Does that help?

Yes, that was very helpful. And then the last follow-up, I know you're going to give more on your Investor Day. But if we think about the impairment buckets and what has been impacted, if you look at the chilled carton, EUR 85 million, that's around 25% of the value that was paid for the Pactiv Evergreen acquisition in China. I'm just wondering, could you give a little bit more context of what you have done in chilled carton to integrate it with your aseptic? Is it still a separate business? Or how integrated is your chilled carton versus your aseptic business if that is considered noncore for disposal?

I think -- I mean, it's a separate business, and you can run it separately. But of course, I mean, we bought it also back then for the reason that it opens up a new customer base for us also for the aseptic carton, and we have been successful in diversifying the customer base in China over the last couple of years, but we believe that it's really a stand-alone business also still today.

So no footprint like manufacturing overlaps, et cetera? So you're not producing items in the same factories, it's still separate production for chilled?

Exactly. So there's limited overlap. And of course, it's in separate buildings.

The next question comes from Ben Thielmann from Berenberg.

I have two, if I may. The first one would be, if you onboard new clients in 2025, do you have any price erosion year-over-year, let's say, for your cartons or your bag-in-boxes compared to last year? That would be the first question.

I'm not fully sure I understand that. But if the question is, do we have price decreases, I would say the answer is no. To the contrary, we also see it in the EBITDA bridge that in the positive -- well, positive top line contribution, of course, comes from pricing. So no, the answer is no.

Yes, okay. Yes, that was the question. But I was wondering, is this the case for all of the substrates you're selling? Or is there a mix effect that you have it for the cartons, but not...

No, I think that's the same across the different substrates. I mean we always, of course, for the bag-in-box spouted pouch business need to consider the resin portion, and that's why we always call it out, and that's why we published the two growth rates. Because in that business, as you know, basically, you pass on the fluctuations of the resin cost. And that has been also coming -- the resin costs have been coming down, but I wouldn't consider this a price impact as such. That's just a normal fluctuation of the algorithm there.

Okay, perfect. And then maybe one question, which is a follow-up on the question from Jörn regarding the net filler placements or the gross filler placements. Is there any color you could give us how many of those 50 to 70 on a gross basis or the 40 on a net basis? I mean this is only related to the aseptic business, right? But maybe any color on the bag-in-box and the spouted pouch business?

Yes. Also in the bag-in-box and spouted pouch business, we have been continuously placing new fillers and new equipment. And I think we're very happy with the development over there also.

[Operator Instructions] The next question comes from Christian Arnold from ODDO BHF.

Question on the nonrecurring charges, the EUR 75 million market and capacities. Could you just repeat what's behind that and give us here maybe some additional color?

Yes, absolutely. So the majority of this concerns our Indian plant and also China. So in India, we were aligning our capacity investments with the demand outlook in the country. So India has not yet achieved really the expected run rate. And yes, we need to ensure that the group focuses on really profitable projects in line with our focus on higher-margin aseptic system solutions. And then in China, this relates mostly to impairments of production equipment. And then the last portion, that is also fillers. And as I described earlier, fillers that we have in stock, which haven't been sold or redeployed within a 12-month framework and really very limited on fillers that are in the market that customers want to keep, but which don't run at the capacity utilization as they should.

These three baskets, are they kind of similar size? Or what is the largest one, very important one?

No, I would say the Indian basket is the biggest one.

Okay. And the second question would be on the net leverage increase to 3.3x. I mean you also just mentioned the higher cash flow generation you're expecting in Q4 as always. So that should come down by year-end. Maybe still, do we have to fear some higher financial expenses on the back of the higher leverage, some risk premiums you have to pay on the financials?

Yes. So first, correct, of course, the leverage ratio should come down until the end of the year again, as always, the usual seasonality. And talking about interest cost or finance expenses. So in line with that the underlying rates being more favorable, of course, also our finance expenses are developing very decently for the year, and we are overall below last year. If there's any adjustment on -- because of anything a different leverage ratio, that should be really a marginal impact, especially considering the favorable development of the underlying rates.

The next question comes from Alessandro Foletti from Octavian.

Also related on the impairment charges. In a way, I don't really understand where they come from in the balance sheet when I look at your assets in the annual report. Can you give a little bit of an indication how much comes from the fixed assets and how much comes from the intangible assets?

So I'm not fully sure. No, let's put it differently. So all the splits, of course, we will publish with the financials for the full year. And I think it makes sense to give us the time to really also finalize all bookings during Q4. And -- but you can expect, of course, that a very significant portion of the impairments will go to intangibles related to the PPE -- PPA of the acquisitions. And then, of course, there will be also impairments on PP&E. So I think that's basically the two blocks where you would find that in the end.

Okay. And the capitalized R&D, can you give an indication how big that is?

Yes, that is a small double-digit million euro amount that we have there. And probably you remember from the discussions that were held back then on that topic that this very much relates to know-how generated for a new filling platform that was developed over a couple of years, which in the current market environment proves to be probably too complex and too costly for customers to adopt. And that's -- hence, why the decision was taken to stop the project and to not market that equipment further.

Right. And is there more capitalized R&D on the balance sheet or we are talking small amounts at the end of the day?

So after this, basically nothing -- very small amounts are left, yes.

Right. And maybe one last thing. Those fillers that I have now understood, you have some fillers on stock where you have impaired part of it because you cannot deliver them in the next 12 months. Maybe two questions to this. It has nothing to do with this filling platform, you just impaired the R&D on the filling?

So of course, for the fillers that are impaired, of course, there is also equipment relating to this new platform that is not going to begin. The fillers on stock that I had commented before, I mean you know that when fillers are deployed with customers, but then don't reach the utilization that we agreed, we have the opportunity to take them back, which we also do. And then we redeploy them typically with other customers. And for ourselves, we have defined the rule if such a redeployment doesn't happen within 12 months, then this is an indication that the value of the filler has impaired. And of course, in the current market environment, it's more difficult to redeploy fillers. And that's why we have taken a conservative approach and have impaired those fillers that sit on stock and haven't been redeployed within 12 months.

But will be redeployed later on?

Yes. I mean this is not tariff for the group, of course. So if we find an opportunity to redeploy them later, of course, we will do that, absolutely.

The next question comes from Miro Zuzak from JMS.

Just one question. In the last 8 years, you had quite a high increase in installed capacity. So just the net filling machines, the increase, but also given the fact that you install high efficiency fillers and you take back low efficiency fillers, means that your capacity has grown -- the installed capacity has grown much faster than your sales or organic sales growth. A question here. Given the fact that at the moment, there are some changes happening, you ran into some problems, you mentioned the fillers that you had to take back. Is it fair to assume that in the coming couple of years, the expansion in terms of numbers of fillers is probably going to be a bit less compared to the time in the past?

Miro, thanks for the question. So I mean, I don't have now the numbers of the last 8 years perfectly in my head. But if I recall well, filler placements also over the last years and not only the last 2 or 3 years have always been varying between 40 and 90. I believe 91 being the top in '23 that we achieved, I believe. So that there is fluctuations in the number of fillers placed, I think it's very normal. But would I agree that 2026, as I said earlier, is probably not a high number of 90-plus given the current market environment, I would also agree to that.

Now the development of the overall fillers in field versus own growth, I mean, we should always also take into consideration that you have a filler with the customer, and then it depends on how much that customer is also growing and develops its business. So there is never a one-to-one correlation between the market growth and the growth on the installed filler base. I think that also needs to be taken into consideration.

We will take now some questions from the web. Back over to Ingrid, please.

Thank you. So we have some questions from Charlie at BNP. He's asking, in total, how much cash onetime outflows do you expect in 2026?

Yes. Thanks for the question. So let's come back to the overall announcement that we made, where we said 90% of the nonrecurring charges is noncash. That leaves you with about 10% on the range of EUR 310 million to EUR 360 million, and I think that's a reasonable assumption. And of course, that is pretax, that number.

His next question is, what share bag-in-box and spouted pouch today is aseptic?

So the share of bag-in-box -- aseptic in bag-in-box and spouted pouch is more than 30% already today and improving year-over-year, especially now with the placements of the spouted pouch fillers Generation 2. We believe that this number will grow significantly over the next couple of years. But also in bag-in-box in the dairy segment, of course, we see increases in aseptic content.

His final question has basically been asked, but I will ask it. What do you estimate to be the destocking effect in Q3? And what gives confidence in the implied sequential improvement in Q4 based on full year guidance?

Yes. And the answer would be the same. So it's difficult to single it out perfectly. But we feel that especially taking into consideration the seasonality throughout the year with a stronger buildup in the first quarter, we believe that the majority of the destocking probably has happened in the third quarter, but potentially a little more ongoing also in the fourth quarter.

Operator, are there any further questions?

Yes, madam. We have a follow-up question from Jörn Iffert from UBS.

It's just a follow-up question, please, on the accruals and the volume discounts you are paying. Can you just remind us what is the volume discount you have paid out in 2025 comparing to 2024, so that we get a feeling what could be the bridge for the equity free cash flow going to 2026?

Yes. So I believe our customer incentive accrual at the year-end 2024 was EUR 400 million approximately. And with the current volume, of course, we believe that this will be lower at the end of this year. And to quantify the impact on the free cash flow this year, I believe you could easily assume a very good double-digit number, so mid-double-digit number in million euros for the year. So I would believe something between EUR 50 million and EUR 80 million is a reasonable assumption for the year.

As a cash outflow linked for the incentives for 2025, is this likely falling away in 2026, given that your volumes are flat to mildly down?

I would -- no, I'm not perfectly sure that you can make that bridge, to be honest. So because also -- I mean, it's always the combination of how much you pay in a year for last year and how much you collect in the year for that year. So it's a bit more complicated, that math. But if you ask me why it was significantly negative hit for this year, it should not be a negative hit definitely next year to even slightly positive. But not fully fair, it will be black and white.

We have another follow-up question from Cole Hathorn from Jefferies.

Just an administrative point. For your Investor Day on Thursday, are we expecting a release in the morning or after market just so that we can get some context of how you're going to put it out on today?

Cole, yes, it's usual to have a release on the day summarizing the contents of the investor update. So we will put that out in the morning together with the presentation.

We have another follow-up question from Miro Zuzak from JMS.

One question regarding also, again, the number of filling machines and the impact on your free cash flow and CapEx number. So if you look into the past years with this record high installments of new fillers, '22 and '23, and also the elevated levels around these 2 years, we could see that the upfront cash number, liability in the balance sheet has also gone up quite significantly. Now if you install less fillers, there are two opposing effects, I believe. One is, obviously, you have lower CapEx, but you also have lower upfront cash and then you also probably have to run down or to deliver the goods, which are now basically stated in your balance sheet number. Now the bottom line from these three opposing numbers, is it positive or negative? So if you take all the three numbers into consideration and you assume that you have less gross filler CapEx going forward, is it positive or negative for your free cash flow?

Yes. So I wouldn't look at the gross filler CapEx in that respect, but always at net filler CapEx. And that is, I think, important to bear in mind because -- so over the last couple of years, I believe the team has done a very good job in improving the procedures and our contract framework also on how we place fillers to the market, and we have managed to drive the ratio of upfront cash up quite a bit. And if I recall well, in last year, the filler CapEx or net CapEx of fillers in percent of revenue was only a little more than 1%. So that's significantly less than what you have seen in earlier years.

So that said, I think it also makes sense to, of course, also consider a ramp-up time of fillers that it always takes up to, I don't know, 12 to 24 months to ramp up the fillers if you want to model what it means if you have a lower placement rate. But again, and I think we have said that for quite a while, any number between 60 and 80 is a good number. And while we have been at 80 or higher a couple of years now, probably the next year, it is rather in the lower end of that range. But overall, the impact of net CapEx related to filler placements is not a big one anymore as it used to be because of the improved go-to-market model here.

And sorry to follow up or to ask again, so the bottom line would then be positive or negative if you grow less quickly?

Yes. So if you -- of course, I mean, if you grow less quickly and consider that you don't have a super big investment anymore these days, right, of course, it will have a negative implication for the free cash flow. That's, I think, clear because lower growth probably means also then lower profits.

We have another follow-up question from Pallav Mittal from Barclays.

So you did comment on aluminum and the cost being high over the last few months, and you will clearly give more clarity in a couple of days. But any indications in terms of your liquid paperboard because those are slightly longer contracts and you do negotiate in Q4. So any indication on how we should think about the paperboard costs for next year?

Yes, I think no change compared to the usual answer on liquid paperboard. We have a number of multiyear contract arrangements with our suppliers, and there is fixed mechanisms in there, which typically results in a low single-digit price adjustment. So I wouldn't see any reason why that should be different next year because those contracts are in place and will be executed accordingly.

This was the last question from the phone. Back over to you for some other written questions.

Thank you. So we have a question from Torsten at Kepler. Can you provide an update with respect to the litigation? Any changes in context of what has happened in summer? Any updates on the time line?

Yes. Torsten, thank you for the question. And we don't have an update on the arbitration processes compared to what we have discussed in summer.

There's a further question from Mr. Massimiliano at Stifel about the dividend, and we'd ask for your patience to wait for the investor update, please, in 2 days' time. Yes. I think those are all the questions that have been asked. If there are no further questions, then we will end the call.

Thank you very much, everybody, for dialing in, and thank you for your questions, and then we look forward to welcoming you on Thursday in Zurich.

Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.