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Operator: 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.
Ann-Kristin Erkens: 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?
Mikko Keto: 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.
Ann-Kristin Erkens: 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: [Operator Instructions] The first question is from Ioannis Masvoulas, Morgan Stanley.
Ioannis Masvoulas: 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.
Mikko Keto: 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.
Ioannis Masvoulas: 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?
Ann-Kristin Erkens: 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.
Operator: The next question from Jorn Iffert, UBS.
Joern Iffert: 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?
Mikko Keto: 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.
Ann-Kristin Erkens: 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.
Joern Iffert: And one clarification question, please. You mentioned one-off restructuring cash cost in '26 of around EUR 25 million, right?
Ann-Kristin Erkens: Yes. Overall, cash impact of the nonrecurring charge is EUR 25 million for '26.
Operator: And the next question from Alessandro Foletti, Octavian.
Alessandro Foletti: 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.
Ann-Kristin Erkens: 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.
Alessandro Foletti: 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?
Ann-Kristin Erkens: No. So I would say, overall, the Foodservice business is clearly more than half of the bag-in-box, spouted pouch business, absolutely. Yes.
Alessandro Foletti: 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?
Ann-Kristin Erkens: 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.
Alessandro Foletti: 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?
Ann-Kristin Erkens: 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.
Alessandro Foletti: 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?
Ann-Kristin Erkens: Sorry, all included operating working capital -- yes.
Operator: The next question is from Benjamin Thielmann, Berenberg.
Benjamin Thielmann: 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.
Ann-Kristin Erkens: 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.
Benjamin Thielmann: 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?
Ann-Kristin Erkens: 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.
Benjamin Thielmann: 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?
Ann-Kristin Erkens: 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.
Operator: The next question from Pallav Mittal, Barclays.
Pallav Mittal: 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?
Ann-Kristin Erkens: 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.
Pallav Mittal: 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?
Ann-Kristin Erkens: 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.
Mikko Keto: 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.
Pallav Mittal: 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?
Ann-Kristin Erkens: 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.
Operator: The next question from Manuel Lang, Vontobel.
Manuel Lang: 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?
Ann-Kristin Erkens: 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.
Manuel Lang: 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?
Ann-Kristin Erkens: 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.
Operator: We have a follow-up question from Ioannis Masvoulas, Morgan Stanley.
Ioannis Masvoulas: 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?
Ann-Kristin Erkens: 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.
Ingrid McMahon: 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?
Ann-Kristin Erkens: 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.
Ingrid McMahon: And an additional one for Charlie, what depreciation and amortization charge do you expect in 2026, including or excluding amortization of acquired intangibles?
Ann-Kristin Erkens: Charlie, I would point you to the backup slide that we have provided. I hope that, that would be helpful for you also.
Ingrid McMahon: 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?
Ann-Kristin Erkens: 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.
Ingrid McMahon: And also from Christian, could you tell us to what extent you are changing -- increasing your prices in 2026?
Ann-Kristin Erkens: 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.
Ingrid McMahon: And then from Ashish, Citi, how do you think about restructuring charges in 2026?
Ann-Kristin Erkens: 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?
Operator: At the moment, there are no more questions.
Ann-Kristin Erkens: 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.
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.