Acomo N.V. (ACOMO) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to Acomo's Half Year 2026 Results Investor Call. Today, our CEO, Allard Goldschmeding; and CFO, Mirjam van Thiel, will take you through Acomo's financial performance and key developments during the first 6 months of the year. Following the presentation, there will be an opportunity to as questions. [Operator Instructions] Before we begin, I would like to remind everyone that today's discussion may include forward-looking statements. These statements are based on our current expectations and are subject to risks and uncertainties that could cause actual results to differ. Please refer to the disclaimer included in our press release for further details. I will now hand over to Allard, our CEO, to begin the presentation. Please go ahead.

Good afternoon, everyone, and thank you for joining us on today's call. In our previous call on March 5, we were -- we discussed the full year 2025 results, and we commented on the outlook for 2026. We said that the broader outlook for the global economy, sea freight rates and product availability in 2026 remains uncertain. We're now in July, and this is still very much the case. But as you know, uncertainty is part of Acomo's daily life. And against this backdrop, I'm very pleased with our performance to date. As last year's first half year posted record results, we compare against a very strong base. Our current robust year-to-date results show the resilience of our business model and the progress we made. In this call, I will start with the key highlights that characterized this first half year. I will also discuss how these results compare to the previous years and share a number of strategic initiatives that we took the last few months and that are focused on future growth. Mirjam will then cover the financial performance of the group and of the individual segments. At the end of the presentation, I will finish with a look ahead at the remainder of 2026. Let's start with the business update. The results in the first 6 months were strong and important strategic progress was made in the last few months. It is good to note that H1 2026 was the second best in the history of the company despite foreign currency headwinds, which caused negative translation effects. On a constant currency basis, sales and profit show a more positive picture than appears on a reported basis. The sales of EUR 711 million and the adjusted EBITDA of EUR 61 million were achieved in a challenging geopolitical environment, affecting market behavior and requiring constant adoption to new realities. In the Spices & Nuts segment, all our companies continued to show very solid performances. The record performance of the first 6 months of last year was difficult to repeat, given the market price developments, but also this segment reported the second best first half year ever. It underlines our belief in this segment and why it is one of our areas of focus. In our March call, we discussed in detail the performance of our Edible seeds business in North America during 2025. The business had to deal with a number of challenges, including operational issues, which resulted in disappointing results. To address this, we have made the necessary strategic and organizational changes in North America, and I'm happy that the business is trending back towards normal performance levels. The new leadership team made substantial progress and the fundamentals of the business are solid. What became a standard practice in these calls in recent years is that we covered the organic cocoa results. Therefore, I'm very pleased we can report strong results for this business. After the difficult years of 2023 and 2024, the team managed the still volatile market prices well. The current market price for cocoa is still twice the historic average price, but half the peak prices of 2024 and 2025. It is positive that demand for our products has remained strong, and our plant in Middenmeer is operating at high capacity utilization. The business that is most impacted by the current geopolitical circumstances is our tea business. It's our most global business with important markets and supply chains in affected countries. Despite these challenges, tea sales increased, although margins were impacted by increased costs and FX headwinds. The physical implementation of the new commercial hub model is experiencing some delay due to the situation in the Middle East. But in a virtual way, we started working in the new setting. Food Solutions was able to increase margins through product mix improvements and the new wet blend facility that became operational last year provides a great platform for further expansion. Important components of our strategic plan presented during our Capital Markets Day last year include investments in value-added activities as well as M&A. These initiatives are crucial building blocks for our midterm goals, and we were able to announce the opening of the new office in China of Catz International, that we made an investment in the citrus plant in the U.S. to in-source production and that we welcomed 2 new companies to the group, Citromil in Spain and Cublend in the Netherlands. As you know, one of the core elements of Acomo is that we value a healthy financial position of the group, and therefore, we need a strong balance sheet. It is important to us that despite relatively high prices for a number of our products and the investments we made, we have maintained a strong balance sheet. To reflect the strong performance and to align with our consistent dividend policy, we have set the interim dividend at EUR 0.45 per share. The results for this first half year compare positively against previous years. To put the results into perspective, the graph on this slide shows all half year adjusted EBITDAs, so both H1 and H2 since 2021, which was the first full year after the acquisition of Tradin Organic. The graph shows that the adjusted EBITDA of the first 6 months of this year is above most other half years, including H2 of last year. The graph also shows that the years 2021 and 2022 had a rather equal split of the EBITDA between the first half year and the second half. In 2023, 2024 and 2025, the picture is distorted mainly due to the cocoa price development that had a material impact on our results. As said in previous calls, we expect a more balanced split between H1 and H2 than we experienced in previous years due to more normalized price developments. It should be noted, however, that current geopolitical circumstances and other developments can impact the results for the second half of this year. China is economically increasingly important for a number of our products. To strengthen the business and service offerings to customers, Catz International opened an office in China. By having local presence with local people, Catz is perfectly positioned to further develop the business in China. Access to suppliers, managing supply chains and product portfolio expansion is better served locally and will provide in-depth market knowledge, which is one of the key strengths of Catz. The opening of this office fits perfectly with our strategic building block of expanding our value-adding capabilities. The acquisition of Citromil is an example of a vertical integration that not only expands our value-added capabilities, but also adds scale and a platform for further growth. Citromil is based in Murcia in Spain. This region is an important agricultural area and is referred to as the Orchard of Europe. The company produces citrus products, including juices, purees and oils and is well known to Tradin Organic as it has been a supplier for many years. This bolt-on acquisition will be integrated into the Tradin organization. There are a number of reasons why this vertical integration is important. The organic market for citrus product is a growth area. And by integrating this business, Tradin expands its product offering. The in-sourcing of the production capacity enables the supply of an increased volume of organic products to be offered to customers in both Europe and North America. Our latest M&A addition, Cublend, also ticks a number of boxes. With this acquisition, we expand our geographical reach, diversify our product offering and consequently add scale. Cublend is based in the Netherlands and will be part of our Food Solutions segment. The company is agile, strongly customized dry blends, customer-centric and is active in a number of attractive export markets. The DNA of the company fits very well with our culture and the management team will work closely with our company, Snick EuroIngredients in Belgium. Both companies will add each other's product portfolio to their respective offerings to customers and further synergies will be looked at in close cooperation. It's important to mention that this acquisition strengthens our Food Solutions segment, which has an above-average margin profile within our group. Our value creation tree is rooted in ESG, and I'm happy to report that early 2026, Acomo published its second CSRD-aligned Sustainability Statement and continued rolling out its strategy. I'd like to share some of the initiatives we took that show our efforts in the respective areas. In the area of climate change, Delinuts completed a Scope 3 hotspot analysis and started engaging selected suppliers to identify emission reduction opportunities and support science-based target setting. Regarding nature and biodiversity, Tradin Organic organized dynamic agroforestry workshops in Peru, supporting ginger, cocoa, orange and coffee farmers in strengthening agricultural and economic resilience. With respect to the [ 2 ] own workforce, Acomo implemented a group-wide learning platform and launched further mandatory governance training programs, supporting a more consistent approach to employee training across the group. And finally, in the area of workers in the value chain, Royal Van Rees Group received an EcoVadis Gold Medal, placing it amongst the top 5% of assessed companies and recognizing progress across management systems, focusing on environment, labor and human rights, ethics and sustainable procurement. We have covered the performance highlights of the first 6 months of 2026, provided a perspective on the performance and outlined the latest strategic initiatives in the areas of investments, M&A and ESG. I would now like to hand over to Mirjam, who will discuss the financials.

Thank you, Allard. Good afternoon, everyone. I will now go over the key group financials of the first half of 2026. Sales declined by 3% on a constant currency basis versus a record high H1 2025 comparison. Gross profit margin improved by 0.2 percent points, driven by recovery of the margin for Edible Seeds after the actions taken at the end of last year and a strong margin performance for Organic Ingredients and Food Solutions. Overall, the EBITDA margin is at 8.6%, which shows strong progress coming from historical margin of around 8% towards the 9% EBITDA margin we set as a direction during the Capital Markets Day last year. On the right, for added context, you will see the contribution share for each of the segments in which we are active. I will now discuss each segment in more detail. We start with our biggest segment, Spices & Nuts. After our record performance in 2025, sales continued to grow with 4% on a constant currency basis. Market conditions remained broadly similar during the first half of the year to those reported at year-end, with key categories trading at relatively elevated yet generally stable levels. The period was marked by ongoing supply chain disruptions and geopolitical uncertainty, creating challenges across several sourcing regions and trade routes. Despite these circumstances, the Spices & Nuts division continued to effectively support customers through its global sourcing capabilities, supply chain expertise and strong market knowledge. This, together with the acquisition of Manuzzi in the second half of last year, resulted in a sales growth of 4%. As market prices were more stable compared with the exceptional environment of H1 2025, margins were closer to the historical average at a healthy level of 10.3%. This reflects the strength of the division's market position, customer relationships and risk management capabilities. Then over to Edible Seeds. Coming from a challenging 2025, the actions we have taken are paying off. The segment saw a strong recovery with adjusted EBITDA up 22% versus last year on a constant currency basis. The U.S. business within Edible Seeds contributed significantly to the year-on-year improvement of the segment's margin performance. The production issues that affected SunButter in Q4 2025 were fully resolved by the end of January and sales of SunButter increased versus last year following successful full replenishment and a strong offtake. For Wildlife, volume and sales performance exceeded the levels achieved in the first half of the previous year, supported by improved execution at key accounts and a return to strong seasonal demand. For example, we see improved promotional activities across big home improvement chains where Wildlife is sold and at retailers. Looking at Organic Ingredients, the global trend for healthier and more sustainable foods continues to be positive. Within Acomo's Organic Ingredients segment, the Fruits business continues to demonstrate strong commercial momentum and consistent growth. To support future growth and improve operational efficiencies, investments have been made to further integrate and strengthen the end-to-end supply chain for Organic Ingredients and Beverages. As Allard already mentioned, the acquisition of Citromil in Spain was finalized, which will strengthen the position in Europe and beyond and further enhance control over quality, traceability and supply reliability. And in the U.S., an investment has been made to in-source processing of the juice business, bringing together ingredient sourcing, processing expertise and consumer-focused innovation to deliver premium organic beverages at scale. This transition puts some pressure on sales in the short term, but will improve the business structurally from the first half of 2027 onwards. The Cocoa business continues to demonstrate resilience and strong execution, successfully managing market volatility and increasing regulatory requirements. After the record high cocoa prices at the back end of 2024 and first half of 2025, cocoa prices have come down, but remain above historic levels. For coffee, we saw lower volumes, but these were more than offset by improved margins. Adjusted EBITDA was EUR 20.2 million, in line year-on-year on a constant currency basis, with lower sales being offset by improved margins. Within the Tea segment, the Van Rees Group has been able to grow sales, underscoring its ability to deal effectively with evolving market conditions within a fragmented and complex customer landscape. Sales increased with 9% on a constant currency basis. At the same time, the conflict in the Middle East has impacted this segment more than others. A lot of countries in the Middle East have strong tea cultures and deliveries have been very limited to that area for some months now. We continue to work on the transition to a centralized business model that consolidates the commercial trading and strategic functions within a central hub. And as you can imagine, certain costs will already go before the benefits, which you see reflected in these numbers as well. The Food Solutions segment delivered an improved margin performance in H1 2026 compared with the same period last year, primarily driven by the blends business. The entrepreneurial R&D mindset remains a key driver of customer focus. This, combined with the new plant in Oostende, supports future growth and drives operational efficiency. Very excited as well that we have added the Cublend business to this segment. With the new facility opened last year in Belgium and the addition of Cublend to the group, we see great potential for this segment. Then lastly, on the cash flow development. Overall, we generated net cash from operations of EUR 56 million, which is EUR 85 million more than last year. As a reminder, last year, we saw an increase in our working capital, mainly driven by higher prices for some of our key materials. As we see some of the prices coming down like cocoa, you will see, as expected, a decline in inventory. Then in line with what we laid out as our capital allocation model during the Capital Markets Day, we have invested in assets to secure future growth. We paid out dividends and the remainder we used to lower our borrowings. Our solvency ratio remains healthy at 45% and the same for our leverage ratio of 2.9x. Our sweet spot is around 2.5x, and we will move gradually to that as working capital will come down following the lower prices, especially for cocoa. With that, I would like to hand it back to Allard.

Thank you, Mirjam. As we get to the end of our presentation, I'd like to share our views on the environment we operate in and the effect on our business. The long-term market trends towards plant-based diets is positive and is expected to continue providing a strong fundament for our business. In the short term, the trend may be impacted by, amongst other things, market prices and product availability, but the long-term direction remains. What is difficult to predict is how the geopolitical environment will develop in the next few months and how it will affect our business environment. The impact on the global economy, cost levels and supply chains cannot be predicted. However, our people and our business model have proven to be resilient. The same is applicable for the so-called Super El Nino, which is expected to start having impact towards the end of 2026. In recent history, we have faced more El Ninos and the Acomo business model is diversified with geographical spread and is focused on finding alternatives in case of disruptions or limited product availability. The cocoa market prices, as said, are expected to remain at elevated levels with some volatility similar to the level of H1. Our Edible seeds business in the U.S. recovered well in the first half of this year and actions are in place to continue this trend in the second half. Our tea business will continue to be impacted by geopolitical tensions in the coming months, and the team will do their utmost to mitigate the impact where possible. When looking at our working capital levels, we expect a decline, as Mirjam mentioned, in the second half of the year, which will have a positive effect on our cash generation. Finally, disruptions and volatility do not only create challenges, but also opportunities. The strength of the Acomo Group companies is that they find ways to respond to these changes in an effective way, and we have expertise and skill. We will continue to pursue our goals as laid out during the Capital Markets Day, and we will look at opportunities to expand our value-add offerings, our expertise and to create further scale. With that, I would like to hand it back to Jean-Mari.

Thank you, Allard and Mirjam. To summarize, today, we have discussed our performance for the period, the key drivers across our segments and the broader developments impacting our business. We will now start with the Q&A.

The first question we received is, the leverage ratio of 2.9x has risen substantially. Do you intend to bring that ratio down? And if so, how can you realize that?

Yes. Thanks for the question. Let me take that question. Well, the first point I would like to make is that we have a strong balance sheet with a solvency of 45%. We talked about that 2.5x leverage ratio as a sweet spot for us to be able to cover higher working capital if required, and if it will deliver attractive returns and to support acquisitions. And that is exactly what we are now doing, again, on the back of a strong balance sheet. Now looking forward, we're still having relatively expensive inventory. And as I mentioned, given current market prices, we expect this to go down in the second half. I hope that answered the question.

Thank you, Mirjam. Another question that came through. It states, could you explain something more about the lower sales of the organic segment and how the investment in organic orange juice in the U.S. relates to this?

Yes, sure. Thank you, Jeanie. Yes, first, I would like to mention that the reported sales of Tradin Organic is impacted by a weaker U.S. dollar and that on a currency basis, it looks much, much better. Having said that, the sales did decline versus last year, as you can see. But part of the reason is that we experienced disruptions in the third-party production of our juice business in the U.S. In order to address these disruptions, we made investments to in-source the production capabilities, and this investment will become operational early 2027. In the meantime, we will have to deal with the negative sales impact of the fact that we had these disruptions. But when the facility will become operational, we will start regaining sales. So the investment is primarily to protect our market position. But at the later stage, it will also provide opportunities to generate new business. And I see that we get questions in from Patrick Roquas from Kepler, who normally dials in, but has some connection issues. You want to take the first one?

Yes. So let me add. The first question from Patrick is how do you see the recovery in Edible Seeds in the second half? Well, I think, first, important to mention that we really see the actions that we've made at the end of last year that are paying off. And we see a strong performance for SunButter and Wildlife. Margins went back to 8.8%, so towards the historical levels. There's still some further improvement to be expected going forward. But overall, we're very pleased with the speed of recovery. We strongly believe in the fundamentals of this business, the potential, and we will continue to focus on further growing this.

The second question of Patrick is regarding cocoa. So his question is, can you comment on the demand in cocoa? And how do you see the market developing into H2? Well, what I've said is that the demand for cocoa remains strong. So we foresee that it actually will continue to be strong. The demand for organic cocoa, as you know, that's where we're active in, is still high. The capacity utilization of our plant in Middenmeer is very good. And in the near future, we don't foresee major changes in demand.

And then maybe for me, the last question is what are your expectations for working capital aside from the lower prices in cocoa? Yes, on working capital, look, important that working capital for us is a commercial instrument. So lowering working capital in itself is not our goal. We will continue to invest where we believe it makes sense and where it will give us attractive returns. And it very much depends on the development of the market prices. So yes, we are expecting a decline because of cocoa. That will be the main movement. And for the rest, yes, that really depends on market price movements.

Great. Thank you, Mirjam. We also have a call on the line, Reg Watson from ING.

Yes, I have a question about the working capital moves. I think at the start of the year, you said that you expect working capital to decline through the year. And unless I'm much mistaken, that hasn't really happened yet. So what gives you the confidence that we're going to see that happen in the second half? And why didn't we see that in the first?

Yes. Thanks, Reg. Look, we do see inventory going down. So that is really what we said that we would expect that really based on the lower cocoa prices. That's still being offset now, [indiscernible] some higher receivables, mainly coming from the recovery of Edible Seeds and the Tea business. But that continuing decline in inventory, that is really what we are expecting based on current market prices to happen in the second half as well.