AGRANA Beteiligungs-Aktiengesellschaft ($AGR)

Ladies and gentlemen, welcome to the AGRANA Results for Full Year 2025-2026 Conference Call. My name is Joseph, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Hannes Haider. Please go ahead.

Good morning, ladies and gentlemen, and welcome to AGRANA's conference call, presenting our results for the full year '25- 26. [ When we publish an to release mid of April. -- today, we will provide you with further details on all segments and also on the audited financial statements ]. As announced in our invitation, a presentation is available in reference to this call. You can find this presentation in the IR section of our website. As you can see on Slide #2, the presentation will be divided into three parts. Our CEO, Stephan Buttner, will start with a general introduction, focusing on the highlights of the '25-'26 financial year. He will then hand over to our COO, Franz Ennser. He will report on the topics of raw materials, investments and ESG. And afterwards, our CEO will take over again and provide you with [ peers ] on the financial performance, and he will conclude with an outlook for the ongoing financial year '26-'27. The presentation will take about 25 minutes, and afterwards, the lines will be opened and we will be glad to answer your questions. And now I may us over to CEO, Stephan, who will start with the presentation.

Good morning, ladies and gentlemen. Yes, let's have a look at the financial year, '25-'26. So it was still a very challenging year in a also challenging environment, uncertainty. Intense competition, still volatile commodity markets, also inflation are the most important topics here. Now again, we are facing a heavy, let's say, crisis triggered by the world in the Middle East. Despite all these factors, our operating results, our operating performance was quite solid with an operating profit of EUR 81.2 million. This is a moderate increase versus prior year where we had EUR 76.5 million. Of course, a very negative impact, the one-timers, especially the write-off of assets in our Sugar business. amounting to EUR 46 million. Also, we had to book personnel expenses in combination with the closure of our 2 Sugar production sites, Leopoldsdorf and Hrušovany with about EUR [ 30 ] million. And also, we had to book a provision for potential lawsuit also with nearly EUR 10 million. When we look at the key numbers, revenue of EUR 3.2 billion, this is a decrease versus the EUR 3.5 billion in '24, '25, mainly the reduction comes from the sugar business, where we had a decrease of EUR 250 million in revenues. Our operating profit, EUR 81.2 million, as already mentioned; exceptional items [ 74.1 ] million minus. This is more than twice as we had in '24, '25, mostly coming out of our [ Sugar ] business. and this leading to an EBIT of only EUR 3.2 million for the business year '25, '26. When we look at the free cash flow, EUR 127 million, let's say, considering the negative operating result in Sugar, a solid performance with around 4% in terms of our revenue. a further reduction in our net debt position despite the fact that we had a payout of more than EUR 50 million for the acquisition of the remaining shares of AUSTRIA JUICE. Our [ gearing ] with 39.2%, also solid and also a strong equity ratio with 44.1%. We also see ourselves on track in the execution of our corporate strategy [ next level ]. So we terminated our sugar production in Leopoldsdorf, Austria and Hrušovany, Czech Republic, a very important step towards the restructuring of our Sugar business. As already mentioned, also we were able to acquire the remaining shares in AUSTRIA JUICE from [ Ranger], also important for our potential growth strategy in our Food & Beverage Solutions segment. Also, we were able to close the transaction concerning the acquisition of the Slovenian food company, Mercator-Emba, a very important supplier for the [ food service ] business, quick service restaurants in Europe; bringing us access to additional sales channels. Also, we were able to reach an agreement with the Austrian sugar beet growth, also a very important step to to secure our production site in Austria. [ Pooling ]. This is a 3-year contract where we think that we found a very good agreement on one hand, securing the raw material base for our factory. On the other hand, let's say -- yes, bringing us also in a position where we shall be competitive with our production cost in sugar midterm, also in connection with the savings program that we are executing currently. Yes. And also our savings program, where we had a target of over EUR 80 million, this is a number that we overachieved already. So we set a new target until the end of the business year '28, '29 where we want to reach a total year-end yearly savings amount of EUR 130 million. Let me say something about the Management Board. So Franz Ennser, new colleague in the AGRANA Board. He joined us in November '25. He is already in a AGRANA for quite a long time. He was the CEO of the AUSTRIA JUICE business for the last 10 years, and we are very happy that he joined us in November and took over the COO position in the group. And now please let me hand over to Franz. He will guide you through raw materials and so on.

Thank you, Stephan. So some insights about our raw materials and our investments. In the last business year, AGRANA has processed around 7.7 million tonnes of raw material. The biggest share, 4.3 million is sugar beet, for sure, a smaller volume within on raw sugar. The grain amounted for 2.4 million tonnes; potato, around 200,000 tonnes. And overall, the fruit has been processing around 700,000 tonnes of various fruits. Of course, we were decreasing our volumes on sugar beet, especially coming from the previous year of 6.5 million. While in the other areas, we have been pretty stable. So the grains, the potatoes and also the fruits are on a pretty same level as in the previous year. In terms of our investments, AGRANA Group has invested in the last business year, around EUR 103 million. The biggest share we invested into the [ Food & Beverage ] Solutions segment, especially enlarging our processing and packing capacities in the various countries. On [ starch and sugar ], we invested around [ 18.5, ] EUR 12.4 million, respectively, of course, also driven by the lower performance in these segments. We also have been, let's say, very cautious in terms of our investments. The plan now for the current business year is that we will invest around EUR [ 130 ] million, which is slightly below the threshold for our depreciation, which amounts for EUR 117 million. 2/3 of our investments will be directed into the Food & Beverage Solutions segment, while around 18% will go into the Starch and roughly 11% will be dedicated for investments into the Sugar business. In terms of ESG sustainability, of course, ESG sustainability is an integral part of all our business activities. We are committed to our targets on Scope 1, Scope 2, which means that we are aiming at reducing it down to [ 50% ] in 2030 and achieving the net zero emissions by 2040. While for the Scope 3, the target is that we achieved a 30% reduction by 2030 and the net zero emission 2050. We have put some special, let's say, efforts and highlights in the [ sustainability ] business for '26, '27 related to the sustainable sourcing of raw materials, which means basically certifications according to the [ FS ] numbers. We are dealing with the responsible water use in all our activities, be it the processing, but also be the agricultural raw materials advice to our growers and suppliers. And of course, also, we have to deal with the waste recycling. We want to optimize this across all our sites. Furthermore, we will put a focus on, let's say, the nonfinancial targets, especially on gender [ equality ], which means that we are targeting achieving 30% of management position being held by women by 2030. We have a further focus on health and safety for all our employees by targeting in reducing the injury rates. And finally, also, we will enroll our code of conduct information campaign also for the [ blue color ] not just for [ the wide ] and this will be the key priorities. One final comment on our energy costs. So we have been able to benefit from the lower energy pricing in the last business year, reducing down our [ all ] energy costs in the various segments down to around EUR 204 million, but it's still substantially higher than compared to the the time period before the COVID crisis or especially the Ukrainian war impacted our expenditures on energy. The split, you can see here on the chart, the biggest share for sure with EUR 110 million has been spent in the Starch ] business, followed by Sugar and also finally by the [ FBS ] segment was around EUR 37 million. That's it in a nutshell. And now I hand back to Stephan.

Thank you, Franz. So yes, please let me put the attention to the new segment reporting. Again, we already reported about that since March '25, we have the new reporting structure. So we have [ two ], let's say, strategic business areas and therefore, then three segments, Food & Beverage Solutions is one segment that we report. We have [ agricultural commodities and specialties starch ] segment, and we have [ agricultural commodities and specialties sugar segment ], and we have the holding and [ other ]. This is a new reporting scheme. So let's jump to the next slide, revenue by segment. I already mentioned, we had a decrease of nearly 8% mainly coming out of the Sugar segment, you see a decrease by 32% in revenue from EUR [ 840 ] million down to EUR 570 million. Starch, a slight decrease of 3% and a slight increase in our [ Solutions ] segment by 1.1%. Main driver for the reduction in sugar, of course, the prices, we had quite stable volumes on the sales side but the sharp drop in sugar sales prices, especially in the industrial markets. The EBIT by segment here, a very good development in our [ Solutions ] segment. An EBIT of EUR 103.3 million with an EBIT margin of 6.3%, this is totally acceptable. I would say, starch quite weak, still also here a further decrease of 26.3%, still a very challenging and difficult environment, a weak economy, low ethanol prices and margins is all negatively impacting our EBIT in starch. And then you can see really the very, very poor performance. In [ sugar ], again, we had [ 1 timers ] here. I already mentioned the [ right ] off of assets, EUR 46 million. I already mentioned social plans. So extraordinary personnel cost of nearly EUR [ 13 ] million and the provision of nearly EUR 10 million. So all this negatively impacting our results in [ sugar ] and therefore, a negative EBIT of EUR 106.6 million. And when you take this into consideration also with a number of '24, '25, you see the tremendous losses in this business segment. So this is why we have constantly to work on the turnaround. This is a heavy burden for our group. Of course, everything very negatively impacted by the low sugar prices. You see the sharp decline in prices where we were in '23, '24. So now we see kind of a stabilization also caused by the conflict in Iran. Let's see what the final impact will be on the energy prices. This will potentially also [ then ] in the coming campaign leads to higher production costs. On the other hand, we have high stocks in Europe. We will enter the new production campaign in September '26 with a record level of 2.6 million tonnes of sugar on stocks in the European Union. This is a very, very big number. So on the other hand, we see a decrease in planted acreage further decrease versus '24, '25, where we also saw a reduction. Now it will also depend on the weather conditions on the yields of sugar beets in the European Union. And this will guide us the way through the sugar [ marketing ] year '26, '27. Let's come to the financials, Consolidated income statement. I already referred to the revenue, EUR [ 3.237 ] billion. yes. EBITDA, EUR 195 million, this is not a very good number. But when we take into consideration the poor situation in our [ commodities ] businesses, especially in Sugar, I would say it's a solid performance also with EUR 81.2 million operating profit. And then we have the extraordinary exceptional items with minus EUR 74.1 million, leading to the EBIT of EUR 3.2 million and the loss for the period amounting to minus EUR [ 35.1 ] million. Yes, exceptional items I already explained it. So let me come to the dividend proposal. So the proposal is EUR [ 0.35 ] dividend payout per share for the '25-'26 financial year. This is let's say, half of the dividend that we paid out in '24, '25 of EUR 0.70 per share. This would be -- the EUR 0.35 would be a dividend yield of 3% based on the share price of [ 11.75 ] at the end of the fiscal year '25, '26. Dividend payment will be made on 13th of July 26. [Audio Gap] Already to the outlook for '26, '27. Of course, we expect a very significant improvement on EBIT level, but this is not very difficult as we have these -- all these exceptional items in '25, '26. So the expected range of EBIT is between EUR 70 million and EUR 90 million. spend on group level, we expect a slight growth in revenue. Also, we will further work on our savings program and expect to have implemented measures with the future impact of nearly EUR 110 million at the end of '26, '27. For the segments, in Food & Beverage Solutions, we expect a moderate increase in revenue and a moderate reduction in EBIT. This is mainly due to the massive, let's say, [ frost ] that we saw in Hungary last autumn, impacting our harvest of apples, yes, leading to a very low utilization of our capacities in our AUSTRIA JUICE concentrate production in Hungary. Therefore, this has also, of course, an impact on our results expected in '26, '27 in our FPS segment. The rest should be on track and comparable, at least with the business year '25, '26 performance-wise. In [ starch ], we expect a stable revenue and a significant increase in EBIT and in sugar, a slight reduction -- a further slight reduction in revenues and, of course, a very significant improvement on EBIT level. So finally, please let me draw your attention to the war in Middle East. This is something that, of course, brings more uncertainty for all our business segments. We can already say that in the first quarter, we did not really see an impact of this war. Of course, the closure of the Strait of Hormuz is impacting the energy prices already. The question is how long will this go on? And then, of course, we will see the impact in the value chain coming in the next months. But really, it depends on on how long the whole situation will last that we see. Actually, this will also potentially have an impact on inflation. So prices will rise again. This is clear, I think we are doing a proper risk assessment on AGRANA Group level. And currently, we have the expectation that this is absolutely manageable and will not have an immediate impact on our guidance. But as I already said, there is a lot of uncertainty and nobody knows how this whole things in Iran will evolve. Finally, outlook for the first quarter, '26-'27. Of course, the EBIT in the first quarter '25 '26 mln was extremely low, There, we had to book the restructuring costs for the closure of Leopoldsdorf and Hrušovany, especially the personnel expenses. This is what we'll not see in the actual first quarter. Therefore, the EBIT is expected to be very significantly better. So this was my part. So thank you very much for your attention. Let me hand over to Hannes Haider, who will inform you about the financial calendar.

Thanks so far. Before we go on with the Q&A session, I just wanted to remind you that today in the morning, we also published our annual report for '25-'26. And we would like to invite you to also visit our digital report on reports.agrana.com. And having a look at the financial calendar, I just wanted to remind you that our Annual General Meeting will take place on the 3rd of July, and it would be a presence event. We will now go on with the Q&A session.

[Operator Instructions] Our first question comes from Alan from OHF.

I'll start with a quick clarification question on the [ Nextel ] savings program. So if I understand correct, that you've achieved EUR 52 million of savings for the current financial year, but you are targeting EUR 80 million for the following year and then EUR 100 million for the year after. And then the EUR 110 million, that is just measures that you will implement in the next fiscal year, but they will flow through to the P&L in the years after that. Is that sort of the way to think about that? So we're going to get EUR 80 million of savings that will hit the P&L next year and EUR 110 million in terms of the measures you're taking and that they will sort of flow through later?

Yes. It's clear, but it's not correct. Our target for '25, '26 were EUR 52 million. What we already achieved is an amount of EUR 89 million. Now maybe you will raise the question, where is the result? The problem is that all the savings are eaten up by the lower gross profit, gross margins especially coming out of Sugar and Starch. And this is due to the actual pricing situation in Sugar, but on the other hand, also due to the [ cool ] economic situation in starch. Our target for the next year, '26-'27 is that we will implement -- already have implemented measures that bring up savings -- annual savings of around EUR 100 million. This is our ambition for the year '26-'27. This also will have a very positive effect once the market will recover, then we will profit on one hand from the recovery of these markets and volume-wise and on the other hand, from the much better cost structure that we will have then.

Yes, that's helpful. And so just to clarify, so that EUR 100 million for next year, that will be fully kind of reflected in the P&L., it's not sort of measures you're taking and they will flow through later?

It's not fully reflected in the P&L, but I would say it's up to 80% to 90% reflected in the P&L because this was already achieved in last year.

Right. Okay. Understood. So we can imagine essentially some incremental savings hitting the P&L in the next fiscal year. And so if I were to come to a follow-up question on that. If you were to look at your guidance for for the next fiscal year. I mean it is essentially -- if you strip out the one-offs, it would assume kind of taking the midpoint flat year-on-year development. So I'm just wondering the incremental savings that you will essentially see coming through in the P&L this year will be offset by by adverse developments?

Yes, you're completely right. The problem is mainly in the [ sugar ] business, so still, we are facing a massive pressure from the market side. So prices are further -- will further decrease in the actual business here on one hand. On the other hand, yes, let's see what happens also with the volumes. I mean, we are in the restructuring mode. But yes, I mean we need a recovery also in the market side.

That's very clear. And I guess final question from my side is just coming to the [ sugar ] business. I mean you're guiding for a slight revenue decline, but improving profitability. Now that's kind of obvious, given the EBIT level on the one-off. But what are the assumptions embedded in the guidance here also on the revenue side? So what level of [ sugar ] prices are you assuming? And what are you seeing in the market currently? And perhaps on that, also, what is your current breakeven price? I mean it's sort of somewhere below EUR 600 million, right?

Yes, it is difficult to talk about breakeven prices in sugar, it really depends on the energy prices. that we will face during the sugar marketing campaign starting in September. This is one very important factor. On the other hand, it also depends on the raw material prices at the end of the day. Yes, . It's somewhere for sure, I would say -- in the industry, it must be somewhere around 600 plus/minus. This is what we think also with the current energy price levels.

Yes, as I said, I mean, difficult to say also, revenue-wise, it really depends what's going to happen with the sugar prices. [ Onwards ] from September '26, as I already mentioned, we have still very high volumes on stock. So the estimation is around 2.6 million tonnes in Europe entering into the new sugar marketing year September '26, and normal level is around 1.6 million tonnes. So this means over stocks of around 1 million tonnes, By statistics. Of course, this can be, let's say, compensated by the lower planted acreage in the European Union. But nobody knows what the weather will do, yes. So will this be a very good crop, then it will be more difficult, let's say, for prices to recover. If it will be a bad crop, it could also theoretically see an increase in prices. Currently, very difficult to say, yes,

Yes, that's helpful, but I'm just guessing sort of for your guidance, are you assuming that sugar prices deteriorate further or sort of hold this level? I'm just trying to think, what are the assumptions you've you can get it in a given...

No, for the fiscal year, so we expect, of course, a stable development now till the new sugar marketing campaign. And then we will see new prices. Our expectation in the budget -- reflected in the budget is a moderate decrease in prices, a further decrease. Yes. So -- and in total, a further decrease also in revenue. But this is what I already mentioned, yes.

[Operator Instructions] Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Hannes Haider for closing remarks.

As there are no further questions, thanks a lot for your participation. We wish you a nice remaining day, and goodbye. Thank you.

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