Operator : Ladies and gentlemen, welcome to the half year 2026 results conference call and live webcast. The call will be hosted by Urs Jordi, Chairman and Interim CEO, and Martin Huber, CFO. I'm Matilda, the conference call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Paul Meade, Head of Investor Relations. Please go ahead, sir.
Paul Meade : Thank you, Matilda. Good morning and welcome to our H1 results call. Our presentation includes forward-looking statement, which details the various risks and uncertainties that may impact our business and which also apply to today's discussions. I will now hand over to Urs to start the presentation.
Urs Jordi : Thank you, Paul. Good morning, all. Let me welcome you to this H1 2026 result overview. On page four, you can see the key highlights of the first half year 2026. We did achieve a revenue of EUR 1,063,900,000 almost, which accounts for an organic growth of -2.7%. EBITDA has been achieved of EUR 139.9 million and a free cash flow of EUR 23.6 million. Earnings per share stands at EUR 1.82. In April this year, we did repurchase the hybrid bonds, the last outstanding hybrid bonds. As you did read some weeks ago, we did a French bolt-on acquisition to expand our French business. On the next page five, you can see the H1 organic growth being impacted by mainly a heightened macro and geopolitical uncertainty. Consumer savings are going up and consumer uncertainty is visible, resulting in a subdued consumer sentiment. We did work against strong prior year comps. Germany was clearly the most challenging market. Germany underperformance offset the growth in other key markets. We are driving Project Excellence at pace to harvest attractive savings and strengthen margin resilience. For Germany, we are considering all options to maximize shareholders value. Both measure accelerating and delivering attractive savings benefits. The Excellence Programme, as I did mention, is rolling out faster and in more bakeries and in more markets. We are streamlining the organizational model. Further optimization investments are planned for H2 this year. We have very good visibility on key inputs. Innovation rate of 19% is supporting profitability via premiumization. On page seven, the guidance for 2026. We are targeting to achieve organic growth at the lower end of the guidance range, reiterate expectation to deliver further EBITDA and EBIT improvement, and we expect to deliver solid cash generation and an improvement in net debt to EBITDA. For 2027 and 2028, the board will propose a capital return allocation to shareholders at the AGM 2027. The options for this are dividends, share buyback, or a combination of both. We are targeting to evolve progressively towards Swiss-listed SMEs payout ratios. I would hand over now to Martin Huber for financial review.
Martin Huber : Thank you, Urs. Good morning. I'm pleased to share our results for the first half of 2026. We had a challenging start into the year, particularly in Germany. The group delivered a resilient performance in a difficult economic and consumer environment. Revenue of EUR 1,063,900,000 was below the prior year, resulting in an organic growth of -2.7%. This was mainly driven by volume mix of -2.1%, with Germany being the key drag on the group performance. Our reported EBITDA margin of 13.2% was 70 basis points below prior year and includes one-time cost of approximately EUR 5.4 million, mainly related to the Excellence Programme, which is driving cost optimization and organizational efficiency. These one-time costs represent approximately 50 basis points of revenue. Free cash flow of EUR 23.6 million is largely in line with previous year and our guidance for the first half of 2026. ROIC of 11.1%, although below last year, given lower profitability, is ahead of our weighted average cost of capital, creating value for our shareholders. At the same time, we made clear progress on the levers that matter for the full year. We accelerated cost efficiency, improved capital structure, reduced the financing cost. Let me now provide more details on the composition of our revenue performance. Total revenue decreased by 2.1% or EUR 22.5 million. This reflects an organic growth of -2.7%, which is partially offset by a positive foreign exchange impact of 0.6%. The subdued consumer sentiment impacted retail in particular, as well as QSR channels in Europe, with Germany being the main driver of the negative growth. Solid organic growth in Switzerland, France, the Netherlands partly offsets this impact, not enough to compensate for the decline in Germany. QSR in rest of world delivered mid-single digit organic growth supported by pricing and volume mix, while the other two channels in this region were flat. Overall, negative pricing remains limited. It is expected to be stable to slightly improving for the full year. I will now move from the group revenue bridge to performance of Europe and rest of world. Europe, Germany in particular, weigh on group revenue performance in the first half. At the same time, it is important to highlight that there are clear signs of relative resilience in several of our retail markets. Year to date, three of our seven retail markets have outperformed their respective markets, two additional markets have significantly closed the gap versus market performance. Our continued strong innovation activity, representing 19.2% of revenue, delivered almost the same absolute top-line contribution as in prior year, importantly, is supporting margin. Distribution platform acquired in France will contribute to our revenue growth for the full six months of the second half. Lower revenue impacted profitability with an EBITDA margin of 12.4%, coming in 80 basis points below the prior year. The European businesses are the main focus of our cost efficiency and optimization initiatives, and most of the related one-time costs, therefore, are recorded in this region. Based on the progress of these initiatives, we are confident that Europe will recover margin in the second half and contribute to the overall targeted improvement of the group EBITDA margin. This was Europe. I will continue to share further details to rest of world segment. The QSR channel has been driving the top-line performance of rest of world. Positive organic growth of 2.7% is supported by both volume, mix, and pricing. The other two channels in rest of world were flat in growth. We're highlighting our Malaysian business with good contribution to growth, driven by volume, which was, however, offset by the performance of the other businesses. The ramp-up of the Perth factory is progressing well, and we expect a positive contribution to revenue in the second half of this year. The cost of pre-hiring of factory staff and preparatory work in the factory have temporarily impacted profitability of rest of world. For the full year, we expect EBITDA margin to increase to previous year's levels. As a next step, I will move now to the key drivers of the EBITDA margin. EBITDA margin reduced by 70 basis points in H1 to 13.2%, including a 50 basis points impact of one-time costs related to the cost efficiency and optimization initiatives of our Excellence Programme. These one-time costs correspond mainly to restructuring expenses and consulting costs supporting the accelerated rollout of the program. Gross margin before distribution improved sequentially by 70 basis points versus the second half of 2025 and remained flat versus the first half of 2025. Key drivers of the evolution of the gross margin versus previous year are a positive contribution from procurement and other savings initiatives of 90 basis points, plus margin-accretive innovation, which added 20 basis points to the gross margin. These positive effects help to compensate the impact of lower operational leverage and the negative net effect of commodity deflation, labor and energy inflation, as well as slightly negative pricing. The negative impact of distribution and SG&A on the EBITDA margin, on one side, is driven by lower operational leverage, and on the other side, by approximately 50 basis points of one-time cost, which are recorded within SG&A. These costs were partially offset overall by the ramp-up of the Excellence Programme, which has already contributed 30 basis points to the result. The impact of Excellence actions to strengthen in the second half and to be a key contributor to the targeted EBITDA margin improvement for the full year. I will now provide more details on the Excellence Programme and the savings initiatives behind this margin improvement. We have made good progress in our long-term efficiency and cost optimization program, Excellence. The program is now moving from assessment into delivery, with confirmed savings already being realized and further rollouts prepared for the second half. Up to now, we have addressed with this program circa 45% of total production volume. Far, we have identified and confirmed EUR 8 million-EUR 10 million of gross cost reductions in operation. We are gradually building up internal capacity to further accelerate the coverage on the remaining plants, and we expect to have our full manufacturing footprint covered by the end of 2027. The alignment of our organizational structure is progressing according to plan and is expected to deliver annual gross cost savings of approximately EUR 10 million. We are also progressing with the rollout of our IT roadmap as we continue to evolve towards a more digitally enabled company. Key initiatives this year includes the S/4HANA implementation in Fornetti and the upgrade of our warehouse management system in the French Coup de pates business. With this, we confirm that ARYZTA continues to target to achieve the EUR 20 million-EUR 30 million net savings by 2028 through Project Excellence, by optimizing, on one side, our operation, and on the other side, streamlining the organization. From Excellence, I will now turn to the cash flow performance. Free cash flow of EUR 23.6 million is largely in line with previous year and as per the expectation. Stable working capital and disciplined CapEx management supported the results. Lower absolute EBITDA was almost fully compensated by the improvement in financing costs and lower cash taxes. Higher net lease payments and some other elements had a slight negative impact on cash flow. For the full year, we are confident to generate solid levels of cash flow supported by the improved profitability. On the next slide, I share more details on the working capital performance supporting cash flow. Our trade networking capital was maintained at efficient levels and protected cash flow performance for the company. Our cash conversion cycle has slightly increased by two days compared to H1 last year. Somewhat higher inventories and days of sales outstanding have been almost fully offset by better payment terms management. I will now move to our capital structure and leverage development. We continue to move towards our targeted leverage levels and to improve our financing and capital structure, supported by consistent cash generation and disciplined balance sheet management. Key achievement in the first half of 2026, our total net debts decreased by almost EUR 100 million-EUR 789 million, corresponding to a leverage ratio of 2.7x. The repayment of the last remaining hybrid principal concluded our hybrid repayment and refinancing program, and our core equity continues to increase to 23.3% of total assets, up from 18% in previous year. On the next slide, I'll explain the evolution of our financing costs, where the stronger capital structure is translating into tangible benefits. Supported by the continued optimization of our financing structure, the reduction of total net debt, and a further improvement of our cash management, decreased total financing costs by EUR 5.5 million-EUR 16.8 million. Our interest rate hedging, which is covering 29% of our bank debt, will end in the second half of this year. Given the positive evolution of our year-to-date financing cost, we are improving our full year guidance to the lower end of the EUR 37 million-EUR 40 million range. This compares to the previously targeted range of EUR 40 million-EUR 43 million. Next is the evolution of ROIC and value creation. Our ROIC remains robust at 11.1%, which is ahead of our cost of capital. Even in the more challenging profitability environment, the group continues to generate returns above its weighted average cost of capital and creates economic value for the shareholders. The year-on-year reduction of ROIC is explained by lower operating profit in the first half. Importantly here, the capital base has been well controlled. Disciplined CapEx and efficient working capital management have delivered a stable to slightly declining invested capital base. ROIC is lower than last year, but remains comfortably above the cost of capital. Moving now to the earning per share. Earning per share at EUR 1.82 is largely stable versus previous year. The lower operating profit was almost fully compensated by further improved financing costs and a lower tax charge. I will now conclude with our outlook for the full year. While the first half was demanding, particularly in Europe, we have made significant progress in ramping up our cost optimization and efficiency initiatives. These actions are expected to support a stronger profit contribution in the second half and keep us on track to deliver profit improvements for the full year. We are set to accelerate the impact of the excellence initiatives, which contributes to the targeted profit improvement for the full year. The plan to further drive channel penetration, the contribution from our growth investments and new facilities, and the strength of our innovation pipeline provide the support required to target the lower end of our organic growth guidance. We are reviewing all options for Germany over the next few months to support shareholder value maximization, and we'll share the outcome in due course with the market. Our resilient business model and solid cash generation will set us up for the resumption of returning capital to our shareholders in 2027. In summary, while the first half was challenging, the direction of travel is clear. We are addressing the short-term pressure points, accelerating the initiatives which are under our control, and are strengthening the financial platform of the group. This gives us confidence to target profit improvement for the full year and the lower end of our organic growth guidance. Thank you very much, and I hand back to Urs.
Urs Jordi : Thank you, Martin, for this information. We would now continue with Q&A.
Operator : We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on a telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from a webcast while asking a question. Anyone who has a question may press star and one at this time. First question comes from the line of Daniel Bürki from Zürcher Kantonalbank. Please go ahead.
Daniel Bürki : Yes. Thank you. Can you hear me?
Urs Jordi : Yes.
Daniel Bürki : Yes. Thank you. I would have a question on the European market, especially in retail. Is the shrinkage there, it's only the market decline or you also walk away from some contracts or did not renew them because they were not attractive enough? That will be my question.
Urs Jordi : Thank you. Good morning. Daniel, again, it's basically the market and the consumer environment. We have good figures and good visibilities in the markets. We believe that in many markets we are gaining market share, even in Q2 in Germany. In Germany, the market for H1 for bakery products was short by -1% in value and -4%, -5% in volume. This is the main driver of this. There is no cancellation of contracts or corporations. It's clearly a market issue we see in this retail business.
Daniel Bürki : Thank you.
Operator : The next question comes from the line of Chiara Di Giammaria from Berenberg. Please go ahead.
Chiara Di Giammaria : Yes. Morning. Thanks for taking my question. I'd like to ask what gives you confidence in achieving the full year guidance? Are you already seeing a demand acceleration at the beginning of H2? I also wanted to double-check if you have any comment on the midterm guidance. Thank you.
Urs Jordi : Thank you for this, Chiara. We have all programs in place, as you did see, or Martin did mention, the markets outside Germany are doing reasonably well. We have good initiatives in place. We have a high share of innovation, which is driving our positioning in the market. On the other hand side, we have this aggressive cost program, this Excellence Programme, which is delivering good results. We have now addressed almost 50% of the entire manufacturing footprint or the entire volume output by 50%, which is a good progress, generating the good results. That's why we are confident to achieve the guidance we gave on the top line at the lower end. As we have told, the markets will remain challenging, mainly in Europe, mainly in retail, this has been addressed. This is the confidence we have.
Chiara Di Giammaria : Thank you. On the midterm guidance?
Urs Jordi : We stay with this for the moment. This is no change. We have, as I told, good programs in place, good initiatives. As we have told, we test options for Germany. Midterm plan 2028 remains unchanged.
Chiara Di Giammaria : Clear. Thank you.
Operator : We now have a question from the line of Joern Iffert from UBS. Please go ahead.
Joern Iffert : Yes. Hi, good morning, and thank you for taking my questions. The first one would be on Germany, please. I would like to understand what happened on pricing, especially. What is driving this negative pricing? Are there over capacities? Is there potential insourcing from retailers putting pressure to prices? Any color here would be appreciated. Also my second question would be on considering what you can control, what are the plans to drive growth, especially in Germany, but also elsewhere in 2027 and beyond?
Martin Huber : Thank you for your question. In terms of the first one, look, Germany, no surprise, has been always a cost-conscious and price-competitive market environment. For the first half performance, we are not satisfied with the performance there, and that is why we have decided that we will study all options for the German businesses, and we will analyze that. Once we have concluded the assessment, we will come back to the market and inform the market about the next steps we are taking. As Urs has mentioned, the German bread market is in decline. That is the driver of the performance. It is not about walking away from contracts, as we have mentioned before already by the first question of Daniel, and it is also not a topic of insourcing. That is the overall summary of what has happened in Germany and our actions towards that situation. We are making sure that we are ahead of the curve and address the points in order to fix the performance and maximize the overall value creation of our business. Does that answer your question?
Joern Iffert : Yes. Thank you. My second one on growth in 2027 and beyond, not necessarily only in Germany.
Martin Huber : I think I would reiterate what I mentioned in the presentation. It is about driving general penetration. It is about leveraging the investments that we have done in our new facilities and in our growth CapEx. For example, the Perth factory is expected to deliver growth in the second half, and that should help us to improve the performance that we had. I would also like to draw your attention to the fact that the second half in 2025 was softer than the first half. Therefore, we also have an effect of comps. Don't forget our continued strong contribution from our innovation program, which has been strong in the first half, and we expect it to continue to drive contribution to the top line in the second half.
Joern Iffert : That's helpful. Many thanks.
Operator : As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from the line of Jon Cox from Kepler Cheuvreux. Please go ahead.
Jon Cox : Good morning, guys. Just coming back to Germany. I think you said the market overall is down 1% in value and then down 4% or 5% in volume. Was that what I heard? Because when I look at your interim report and look at the segment reporting, Germany is down actually almost 10%. Just trying to square the circle in terms of you're saying you haven't walked away from any contracts, you've not lost any insourcing deals or whatever. I'm just wondering why are your German sales down 10% when I look at your interim report in that segment reporting?
Urs Jordi : There are several aspects on this. These numbers I did give you, the minus one and minus four or minus five, these are retail sales. We are in Germany in food service as well and in quick serve restaurants. There is, in markets like Germany, an accelerating effect. There are protagonist customers with own manufacturing capacities, and if markets are short, they are insourcing. If the market is short, the addressable market for the suppliers, it's becoming less because some big customers are then re-insourcing products in their own manufacturing. These are the two points you need to consider in this number.
Jon Cox : To come back to this down 10%, I've seen this before with other big food suppliers, Barry Callebaut, same sort of thing happened, volumes down across the board. Everybody started to insource, and that put pressure on their business. Why should this turn around in Germany in the second half of the year for you guys to get to low single-digit decline overall in organic sales growth? Because if the market is down 4% or 5%, it takes a bit of time to get their own work off their own capacity again before coming back to you to actually do that. Maybe as a bit of an add, I understand that Lidl and some others are actually expanding their own capacity over the next year or so. I guess this would impact your own business with them as they would look to fill up that capacity.
Martin Huber : Morning, Jon. We have indicated in the presentation that, let's say, there is three drivers that will drive the acceleration in the second half. This is channel penetration, this is the contribution from our new facilities that come online, and the overall growth investment that we have concluded over the last couple of years, and our continued strong contribution from our innovation activities. There is a technical effect. There is lower comps in the second half. As I mentioned, we have some of the seven retail markets we are measuring on a consistent basis where we see strong performance. We have three markets that are outperforming the market. We have two markets that are catching up to the market momentum. That gives us confidence that we have the positions and the pieces in place to drive a strong growth performance in the second half. As we have mentioned, we will review all options for Germany. We will do that analysis. We will come back to the markets once that's concluded and let the market know what the next steps are for Germany.
Jon Cox : Just on Germany, you've talked about the fact that next year you'll start to return cash to shareholders, either dividend or a buyback. In terms of Germany, if you have to start closing factories, it's not a cheap thing to do. Yeah? I'm just wondering what would the impact of that be on cash generation for you and your ability to pay a dividend or do buybacks next year if, say, you're closing a couple of your factories in Germany? And/or you do a full exit, then maybe you have to write down all of these assets or effectively, maybe you can't remonetize much of what's actually in Germany at the moment.
Martin Huber : Jon, as I said, we are assessing all options. We are running these analyses. Once we have concluded these analyses and these assessments, we'll come back to the market and let the market know about the next steps.
Jon Cox : Do you have any rough timescale for when this review will be concluded?
Martin Huber : You can expect that this is sometime in the second half of this year.
Jon Cox : Okay. Maybe just the last one. On the rest of the world business, you have capacity coming on there. Maybe organic sales growth was a little bit more subdued than some of us expected with that new capacity coming on. Is it just maybe the capacity is not coming on as fast as you anticipated in the rest of the world?
Martin Huber : I think you heard me say in the presentation before that we expect Perth factory to contribute to the revenue performance in the second half, and I would call it that this is running in line with expectations.
Jon Cox : Okay. Thank you very much.
Martin Huber : Yep.
Operator : Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Urs Jordi for any closing remarks.
Urs Jordi : Thank you for this. Thank you for joining. We are here to answer questions. We will have our meeting today, maybe one or the other will have the opportunity to meet us in person today. I wish you a good day and a good week. Goodbye.
Operator : 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.