Avolta AG ($AVOL)

Ladies and gentlemen, welcome to the Avolta Full Year 2025 Results Conference Call and Live Webcast. I am Moira, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Mr. Xavier Rossinyol, CEO of Avolta. You will now be joined into the conference room.

Good afternoon here in the Zurich Airport. Good evening, good morning on the call, and very welcome to the Full Year 2025 Avolta Results Presentation. I'm Xavier Rossinyol, the CEO, and I'm joined here with our CFO, Yves Gerster. Let me start straight on the highlights of 2025. We have reported an organic growth of 5.5%. Very strong organic growth in 3 of our 4 regions, 8.2% in EMEA, 7.4% in Latin America and 6.9% in Asia Pacific. The only region that has not been growing so strongly is the U.S. with a flattish growth. So if you take the group without North America, the organic growth would have been 7.9%. We have once more increased the EBITDA margin from 9.4% last year to 9.7% in 2025. And that's the fourth year in a row where we increased the EBITDA margin. In 2022, it was 8.8%. Equity free cash flow has reached CHF 487 million. This is a 15% increase between '25 and '24 with a massive improvement on the cash flow conversion from 33.5% to 36.8%, clearly ahead of our own expectations. Equity free cash flow per share has increased an 18%, also supported by the reduction of the number of shares through the share buyback. Earnings per share, a fantastic 33%. This is a combination of a strong EBITDA and good performance in all the other lines of the P&L plus the consequences of the reduction of number of shares. Leverage, very important for us, has again reduced from 2.1x net debt to EBITDA to 1.96x, crossing for first time in many, many years, the barrier of 2x. And that is including all the payments we have done on dividend and all the money we have invested in the share buybacks. Return on invested capital increased again from 9.5% in '24 to 11.4% in '25. We've been, for the last 4 years on a ROIC, ahead of the ROIC we had as a company before the pandemic. And Yves will elaborate on how important it is for us to focus on the return on everything we do. But not only a good performance for 2025, but the performance also with a very strict discipline on our capital allocation. We have invested in the business, as we said, with an increased return on investment. We continue deleveraging following the different layers of our capital allocation. First, invest in the business; then deleverage a strong balance sheet; and third, remuneration to the shareholders. We completed the share buyback of 2025 with a cancellation of 3.3% of our capital. The Board approved last -- approved in the last meeting to propose to the general assembly an increase on the dividend from CHF 1 to CHF 1.15 per share, which is a 15% increase. As you know, our policy is that we will distribute as a dividend, 1/3 of our capital -- of our cash flow generation as this one increases year-on-year also our dividend. And we are announcing a new share buyback of CHF 225 million for the year 2026. If you put together the share buybacks we did in '24, in '25 and the one we are announcing today for these 3 years, we'll be roughly canceling 10% of the shares of the company, clearly focusing on delivering more value per share for our shareholders. What's going on at the beginning of this year? The year started pretty well. January is a bit of a strange month because we had a very strong 2025 January with almost 10% growth. Also, the Chinese New Year is moving between January and February. February for me, a more -- a better proxy of the -- what we are seeing in the company. It has grown 5.5% organically. And like last quarter of '25, we see encouraging improvements in the U.S., still slowly but clearly a change on the trend of 2025. Remember, that the U.S., North America is our largest country. Middle East situation. Well, first of all, I'm not sure it's of interest of the investor's community, but it's very important for our employees. We have 1,200 team members working in the region. They are all safe. We check daily with all of them. Also, we have not been affected in our shops and restaurants. And to put a little bit of context, Middle East region directly and indirectly, it's accounting for around 3% of our total turnover. So even if this conflict will last for a few months, which I think most people don't anticipate, the effect we will have in 2025, it will be of limited nature. Also, we have seen year after year that this type of shocks have an effect on where it's happening, but lesser of an effect in the global movement of passengers. If you have to go to Asia because you have a business trip, you will not go through the Middle East now, but you will find an alternative route. People are not canceling their holidays. Maybe they are moving from one location to the other. And that's why once more, our extensive geographical diversification, it proves as a very strong hedging against these type of risks we are seeing right now. And this performance of 2025 is the direct consequence, a clear strategy with relentless focus on execution. And I know it's a bit repetitive because we've been saying the same thing for the last 4 years, but I want to once more remember, number one pillar is focus on traveler and consumer. And everything we've been saying over the last 4 years, the combination of food & beverage and retail, more entertainment, more flexible stores, more local products, more advanced pricing, more brand assortment, hybrids, et cetera, et cetera, et cetera, and the investment on data, loyalty, et cetera, all that is to keep expanding spend per passenger and gross profit margin. The second pillar is the diversification, both geographically and also on business segment. And that once more, it's proven a key element of our resilience, both in growth and profitability. The last one is productivity, operational excellence. We focus constantly in how we can improve the things we do. And that's why not only growing in a resilient manner, but we are also expanding margin and cash flow conversion. To give some numbers on the resilience and the diversification, we are in 70 countries with 5,000 points of sales in 1,000 locations, but we are also very well diversified on business line. We almost have 1/3 in duty-free, 1/3 in duty paid and convenience and 1/3 in food & beverage, which hedges us not only about potential geopolitical shocks, but also on consumer behavior. And the list on the right is just a reminder that 2025 was not an easy year. We had a bunch of things happening. Now we are all focused on what is happening right now, and we might be forgetting that '25 was a challenging year. We had the first Middle East conflict, we had exchange rates all over the place, we had the tariffs, we had the slowdown in the U.S. passengers. We have still the ongoing lower Chinese passenger consumption, the Ukraine-Russia war that makes a bunch of flights between Europe and Asia more cumbersome. Despite all that, we've been reporting very strong numbers. Again, speaks about the resilience of the company. And one of our key focus is the spend per passenger because that's where we can add on top of the passenger growth. And we do that with the growth engine we presented in the Capital Markets Day a few months back. The 3 businesses: duty-free, duty paid and food & beverage, both physical spaces, shops and restaurants, but also the digital and data side. And with all that, we focus on improving pricing, assortment, having more flexible stores, more distinctive look and feel with more focus on local because it sells more, enhancing retail and food & beverage, not only with the hybrids, but also sharing information. And now we have enough time with hybrids to confirm that a food & beverage outlet inside a big duty-free store, for example, drives more foothold into the store. So not only you sell what you're selling on the new F&B outlet, but you're enhancing the sales on the overall store, entertainment. And on the digital side, I'll come back later a little bit more but a smart use of data. With all that, we've been increasing for 4 years in a row, '22, '23, '24 and '25, the expenditure per passenger. If you discount the effect of the U.S., our like-for-like this year has been around -- like-for-like without business development between 5.5% and 6%. And about 60% of that comes from passengers and 40% comes from spend per passenger. And what is interesting on the graphic we are putting here is that you see very different behavior per region and per category. And some of the category analysis will resonate you if you follow some of the mega trends of what's happening with some of these categories. But for me, what is very interesting is that despite all plus and minuses, the overall is plus. Again, also our exposure to different categories, all the kind of brands from the most luxury ones to the most basic ones, it helps us to adapt to the consumers. And what we're trying to do year-on-year is to do that adaptation better and faster. And for that, we need data. And data is becoming year-on-year one of the key elements of our long-term strategy. And I want to put 3 ideas here. First idea, we are unique on the size of our data pool. There are about 10 billion passengers, air passengers per year. We have exposure in the locations where we are to about 2.5 billion. And last year, we had 682 million tickets for customers, and 16 million of those are Club Avolta. So the first clear idea is that we have access to more data than anybody in the industry. And year-on-year, we might be becoming even a powerhouse on travel data alone. The second idea, we are creating a data and digital ecosystem, putting together all these sources on the information we have. One is a transaction data, the tickets, what is in the ticket. Of course, if it's duty-free, we also have the boarding pass, so we have more data. We use data from the airports. We use our Net Promoter Score to see not only what they buy, but how they feel on the shops and the restaurant service. We have -- in those stores where we put smart cameras and smart analytics, we also see what happens on the stores, how people moves around. We have, of course, a very detailed data on those members of the Club Avolta, which are the frequent flyers. And we are also using a platform of start-ups calling it Avolta NEXT, which is providing additional ways of looking at data. And what we are doing progressively and without any doubt advancing, putting all those closer and closer together. So when you have more data than anybody else and a very clear data strategy putting them together, you are moving ahead in a different way. And the third idea is we don't do that for the sake of having more data and that's it. Our target is to monetize that additional and better data we are getting. And for that, advanced data management, AI, it's becoming increasingly faster and cheaper to generate value from that increased number of data points. There's a bunch of list with a couple of examples. If you understand better the consumer, if you have better data on the products, if you have better data on the way people moves, you can start applying, for example, dynamic pricing that we tested in 2025, and we're going to extend progressively in 2026. And we see that if you do it the right way, it's a clear system to increase sales, but also advanced data can improve the operations. One very complex topic for us, particularly in the duty-free side because we have global suppliers is the logistics and the supply chain. If you improve your forecasting system, which is basically data and better, for example, AI, you can improve your assortment, improving sales, gross profit margin and potentially decreasing working capital. So we see a tremendous potential. But it's not going to happen overnight, it has not happened overnight and we don't want to happen overnight. We want progressive, realistic improvements in the business for the coming years. And one element of this new data, digital and AI strategy is Club Avolta. We've been talking so much about Club Avolta that we maybe forgot that Club Avolta was born only in October 24. So it's a 15-month old program and has already achieved 16 million users or members, represents 7% of the total sales. An average member of Club Avolta spends 3x a nonmember. This is for show. There is a transaction every 2 seconds. It has won a bunch of awards in the industry. But for me, what is really important is the amount and quality of data we can extract from that and how we can keep fine-tuning our offering, our services to those Club Avolta members. And one way of doing that is with partnerships. And we have a bunch of them here from airport lounges, airlines. And you see we are starting getting to that point where we can see that if you are a member of Club Avolta and a member of certain loyalty programs of airlines, you consume more than if you are not having both programs. So better understanding the passengers, better understanding the frequent flyers allows us to more and more do better job as a retailer and as an F&B operator. One data point that is not here, we had last year, 1.5 million downloads of our app. And 25% of the new members were actually downloading the app. And that's even more important because if you have your loyalty program in your wallet, we get a certain amount of face time with you. But if you have the app, it's additional. There is people gaming for free in our app. We learned so much, and we are only at the beginning of what we can do to progressively monetize this Club Avolta because it's one of those win-win-win. The passenger, the loyal member wins because they have special treatments. We win because we sell more and the airport also wins because they get a percentage of that. And one point I wanted to make here is what we call Smart CapEx is to emphasize the idea that everything we do, everything we invest on is based on a very robust governance and a very strong focus on return on investment. And that includes the business development, that includes the refurbishment of existing shops and restaurants, that includes the investment on data, digital or the new spaces. And 2025 has been on new spaces, a very interesting year. We have entered new countries like Tunisia, Saudi Arabia, Japan, we opened the shops now. In existing countries, we have operated new segments. For example, we won the first duty-free store in Mainland China, a historical move and that was because we have a very clear strategy of focusing on geographical diversification and segment diversification. But we have the team in place to benefit from that. We also opened in '25 the first food & beverage in Latin America, both in Mexico and Brazil, another very interesting move. We have also won important contracts in North America, like several terminals, food, convenience and duty-free in JFK in New York. And we also have extended many of the existing contracts. I cannot name all of them because it will take a couple of hours, but I want to mention one because it's the contract here in Zurich, which we extended this week for 10 years with duty-free included, which we are very happy. But all what we do is with a smart focus on the return on investment. I was just checking that now it comes before I have my final slide, a small video in case people is getting bored of my speaking. Now we have some more energy into the system. So can we put the video, please? [Presentation]

On my last slide. So '25, despite all the turbulence and all the headwinds, was a very good year in all the key metrics of our outlook. And we were very disciplined in getting a strict capital allocation policy. So we have proven over the last 4 years now, consistent delivery and consistently doing what we have said. Now of course, People is going to ask what happens going forward. And once more, we confirm our midterm outlook for the incoming years, which is organic growth of 5% to 7% per annum. EBITDA margin of 20 to 40 basis points additional. And yes, additional to the 9.7% we reported for the full year 2025 and an increased cash flow conversion of 100 to 150 basis points. We've been doing much better on this metric over the last 4 years, but we think we can keep improving another 100, 150 basis points on the current basis. And with that, I hand over to Yves. Thank you very much.

Thank you very much, Xavi, and good morning, and good afternoon for everybody who joined online and good afternoon for everybody who joined here in the room in Zurich to this year's financial result presentation. Let me start directly with the highlights of this year's results, starting with the turnover on the left-hand side of the slide. Turnover came in at CHF 13.72 billion, that represents an improvement versus last year organically of 5.5% or -- and that's actually the metric I prefer, at constant exchange rate, 5.9% versus the same year 2024. Looking at EBITDA, the margin has improved by 0.3%, now reaching 9.7%. This is bang in line with the medium or the midpoint of our guidance, which Xavi just have explained of 20 to 40 basis points improvement year-on-year in the midterm. Equity free cash flow, once more the start of the presentation, came in at CHF 487 million. So a significant improvement versus the number of the previous year. If we look into the growth first -- into the detail of the growth, you will notice on the left-hand side that like-for-like came in at 3.9%, as Xavi has explained at the beginning, that's on one hand side driven or predominantly driven by the slower performance of North America. Net of the North American impact, the group would have grown by around 5.5% to 6% on the like-for-like. If you look at the different regions, as I've just mentioned, growth was significant in EMEA coming in at more than 8%, at 8.2%, but also at Lat Am with 7.4% and APAC with 6.9% improvement versus the previous year. If we go further into the P&L and looking at the detailed evolution here, there are 2 messages from my side on the P&L above the EBITDA margin. Number one is you will notice that the improvement year-on-year on the gross profit margin is probably not as high as expected. It's a slight decline. You will also notice that the concession expenses year-on-year as a percentage of turnover has increased actually quite substantially. And you will also see that personnel expenses and general expenses have decreased. Now there are 2 reasons for that. Number one -- or actually 3. Number one is a mix effect. Because of the slower performance of North America, we see an impact on the gross profit margin, on the concession expenses and also on the personnel and general expenses. And the reason for that is potentially an obvious one, and we have presented it in both Capital Markets Day. North America has a very strong food & beverage business and also a very strong convenience business, driven by the big footprint we have in North America, specifically in the U.S. And as we have explained many, many times, the food & beverage business, while it has a very similar EBITDA margin than the duty-free business, comes in at a completely different cost structure when you look at the gross profit margin, the personnel expenses and the concession fee, but then also the general expense line. Food & beverage has, relatively speaking, a higher gross profit margin. And because it's the evolution and the turnover growth was lagging behind the other regions, the improvement in the gross profit margin is not as pronounced as it would have been if North America would have grown as well in line with the rest of the organization. So gross profit margin because of that lagging slightly behind or the improvement lagging also slightly behind. But if you look at it on a region-by-region basis or if you compare food & beverage with retail in both areas, the gross profit margin has increased. But then on a consolidated basis, it did not. Again, a mix effect. The same applies on the concession fees. Concession fees in food & beverage are significantly longer than in duty-free. So the same thing applies here because North America was not growing as much as the rest of the organization, the concession fee, relatively speaking, was increasing. And the same on personnel expenses and general expenses. Food & beverage has typically higher general expense, but because of the lower growth, you see a decline there. Now there's another element I want to quickly mention on personnel expenses and general expenses, which is irrelevant. One element there is the improvement of productivity, simplification of processes, automation and the further use of artificial intelligence throughout the organization, from front office to back office. That also supported the reduction of general expenses and also the reduction of personnel expenses. This is point number one. Point number two, it's probably a little bit more complex, but we have started to internalize some of the costs, which before were covered by external advisers, by support we got from outside the organization into the organization. So that led to a slight negative effect on personnel expense, but an over-proportional positive effect on general expenses. Some of the things we did there, for example, is in IT. We are focusing more on having the function there in our shared service centers rather than buying external advice. And something similar happens in HR, something similar happens also in the finance organization. So it depends less on external advice, for example, also in the area of tax support. That ultimately led to the improvement of the EBITDA margin by 30 basis points. If we go to the lower part of the P&L, you see a number of effects there. Depreciation and amortization came in, in line with expectations. If I look at the financial result, this was significantly better than the year before. On one hand side, it's structural improvements. It's well management of the interest expenses, some additional interest income on some cash deposits we had, but then on top of that, also by a good positive FX result. So look, we have a natural hedge in place, as you know. So the FX differences we report are not very material. But nevertheless, for the last 2, 3 years, it was slightly negative. This year, slightly positive and this slightly negative to slightly positive helped us to improve the financial result there as well. Income tax has been reduced further as a percentage of EBT. For me, this result here is a good proxy to what we should see going forward. So somewhere between what we have seen last year and this year, 21.8% to 22.8%, I believe, is a good area of approximation if you want to model our tax rate going forward. And then when it comes to the net profit, we have generated CHF 645 million. Also, minority interest has slightly decreased as a percentage now standing at 22.8%. There are 2 effects I want to quickly mention there. On one hand side, as you know, some of the minorities we have in North America. It's part of the business model there. It's unavoidable. And as a consequence of the slower performance in North America, we are lacking a little bit behind there. This is one element. The other element is a more structural one, because we are optimizing the organization, because we are more efficient on processes, specifically also on global functions and on global elements, which are owned 100% by us, we can expect to see a decrease of that percentage over the medium term. So that's more a structural improvement. The last point quickly here is on the right-hand side. If you look at that table with the performance over the last couple of years, quarter-by-quarter, there's something which is very interesting to observe. If you go vertically, Q1 '22, '23, '24, '25, you do the same for half year, you do the same for the 9 months and the full year, you see that quarter-by-quarter, year-by-year, we have improved in line with what we have mentioned from an outlook perspective. So year-on-year for every single quarter, we have improved the EBITDA margin by at least 20 basis points, in some case, closer to the 40 basis points. So in range with our outlook we have provided. Moving on to the bridge of the income statement. We have shown that several times in the past, we then didn't show it for a while. It's always reflected in the annual report. Sometimes, we have shown it in the annex of the results presentation. But it's one of those things we got asked during the roadshows by investors and external stakeholders to show because it helps to understand the bridge from IFRS to core. You see it here in a very transparent way. I will not go into the details, but we do actually 3 adjustments to IFRS. One is the acquisition-related amortization because we believe that, especially now in a situation where the big transactions and the big acquisitions lie in the past of the organization, it's important to correct for that because the concession rights are only activated when it comes to acquisitions. When we grow organically, we don't activate those concessions. And as a consequence, over time, this amount is fading and being reduced. And it would be wrong not to adjust for that, also because core on one hand side, it should be transparent, but also management compensation depends on that. And it would be wrong to have an improvement over time purely mechanically because of the acquisition-related amortization. The second one, which is much more important in this lease adjustment, it's related to IFRS 16, and it's purely related to that. We, as you know, believe that IFRS 16 does not represent us properly, and therefore, we adjust to that something similar applies for the fuel. What is important here, you may like or don't like, core, we believe it's the right way to represent our business, but maybe you prefer IFRS. So what is important to note here is the bottom line. The IFRS result profit to equity holders of CHF 199 million is by far the best result the group has ever generated this regarding before or after IFRS 16. If you believe that the IFRS 16 adjustment of CHF 177 million is justified and you add that to the IFRS 16 result, the bottom line result is about 3x the best one the group had in the past before IFRS 16. So a significant step-up in the bottom line result in that regard. Moving on to the cash flow. It's a record equity free cash flow. But then if you look at the details, it's quite uneventful. Core EBITDA was one of the biggest contributor to ultimately lead to the strong equity free cash flow. On top of that, we had some improvement in the net working capital of CHF 60 million. The improvement in the net working capital is predominantly generated by improvements in inventory. So we are more efficient of managing our inventory. And as a consequence, we're able to take out some of the net working capital there. Otherwise, CapEx is in line with expectations, so is dividend to minorities, income tax and also the interest result. So nothing surprising there. And below the equity free cash flow, we have the 3 typical lines, you will see the CHF 175 million of share buyback. As you know, the share buyback of last year in total was CHF 200 million. So we have canceled shares in the value of CHF 200 million. The amount we purchased is slightly less because we still had some treasury shares on stock, and we used CHF 25 million of treasury shares to be canceled to complete the CHF 200 million program. On top of that, you see the reflected dividend increase there from CHF 100 million the year before, CHF 140 million last year, so an improvement of 42% year-on-year. And still disregarding the share buyback, disregarding the increase in dividend, we were able to reduce the net debt by around CHF 130 million, standing now at CHF 2.5 billion. And that leaves us or leads us to the leverage. Leverage is standing at 1.96x by the end of 2025, which is exactly in line with the medium-term guidance of 1.5x to 2x. So it's just scratching at the upper end of our medium-term target when it comes to leverage. On the maturity profile, it's still very well balanced in regarding to different currencies, different products, different maturities and also from a fixed and floating mix with having 80% or around 80% of our debt being under fixed rate arrangements. Now there are 2 maturities coming up. One is actually in about 2 weeks' time on the 23rd of March this year, which is a CHF 500 million convertible. We are not going to refinance that. We are repaying that convertible on one hand side with cash, which we had from a refinancing of last year. Last year, we financed or refinanced a CHF 300 million bond with a new CHF 500 million bond. So there's some cash left. And on top of that, with cash from the balance sheet. So no refinancing there. The next maturity is at the beginning in the first quarter of 2027, so around 12 months from now. There, we plan to refinance that in the next couple of months. It's not finally decided yet with which product or mix of product, but you can expect to hear from us quite soon there in that regard. And look, having said that, it's also important to note that there is no refinancing risk. So the group has sufficient cash on the balance sheet and also sufficient available facilities under the RCF, which matures in 2030 to refinance the maturity of next year even if we would not go into a new arrangement on the market. ROIC, Xavi has quickly announced it. ROIC is something which is extremely important for us when managing the business. It drives any decision when it comes to CapEx. It drives the decision when it comes to business development, be it organically or inorganically via M&A. So whenever we enter into a new project, we look at the ROIC. And we look at, obviously, when you look at single projects at IRRs and at present value and some other performance indicators. Now we haven't communicated that to the market in the past. We didn't want to distract from our KPIs, turnover growth, EBITDA margin improvement and equity free cash flow. We will continue to report those. But nevertheless, we came to the conclusion based on feedback also we got from the market that it's important to show you also the ROIC. The ROIC for us, this follows a very strict definition. We believe that it's a very clean definition. We take into account everything, taxes, minorities, so everything which is related to the business and for our business model is included there. It's a very clean number from that perspective. And what is also important, and Xavi has mentioned it at the beginning, is the progression over time. So we see a strong improvement year-on-year, reaching 11.4% in 2025. And you see clearly the trajectory here. It's reflected in the arrow. We do believe that it will improve over time going forward. And we'll do everything and all the decision we are continuing to do in 2026 and beyond with that in mind and with having in mind that it should be accretive for the ROIC going forward. We are not going to report that number on a quarterly basis. It will be reported on an annual basis. So the next time you hear about that is in 1 year time. We will continue to report all the other KPIs in the usual fashion. But for that, I believe once a year is sufficient and we will also report obviously last 12-month information in that regard. Moving on to the capital allocation policy. It's the same as we have shown for the last 2 years. There is no change in that regard, and I believe that's also important, and that's the key thing about it. We are using it very strictly. We have the clear priorities to reinvest into the group. We have just discussed CapEx before when talking about the cash flow. We will continue to do that because we believe there are opportunities out there, which are worth exploring and to enter into. On top of that, we are looking or continue to look into some small- to medium-sized bolt-on acquisition, fully cash financed and with the requirement to be accretive in general, but also from a ROIC perspective. And we are very much focused on maintaining the leverage and the leverage targets we have discussed before between 1.5x and 2x net debt to EBITDA. And last but not least, whatever is remaining as a free cash flow of the organization, we are using as a cash return to shareholders. We have discussed it before. But as a summary, once more, the dividend, where we have started about 2 years ago, to pay CHF 0.70 per share as the dividend improved significantly to CHF 1 last year and a further 15% improvement for this year proposed by the Board to the general assembly. We are following a very strict 1/3 of equity free cash flow there and that leads basically to that pattern. On top of that, we have continued with the share buyback. We did a cancellation of treasury shares 2 years ago. We did the share buyback last year of CHF 200 million, and we have announced this morning today a further program to be launched shortly for CHF 225 million. And if you take all of that together, that's a reduction of around 10% of the shares since we started with canceling shares and the share buybacks around 2 years ago. So a significant reduction in the number of shares over the years. And if you calculate all of that together, the dividend and the share buyback, that basically reflects a cash return to the shareholder over the last 2 years, including now 2026 of more than CHF 1 billion, so a significant amount. That basically brings me to the end. As a quick statement before I hand over to Xavi, what is outstanding about the results from my perspective is threefold. First, that we have achieved this growth, disregarding some headwinds, and Xavi has mentioned them, we have faced during 2025, while at the same time, improving profitability. That's point number one. Point number two, we have continued to invest into the organization by investing CHF 500 million CapEx, while still significantly improving the equity free cash flow. And number three, we have achieved the target leverage of 2x, while at the same time, generating cash returns to the shareholders of a significant higher dividend and a CHF 200 million equity share buyback. Having said that, I hand over back to Xavi for the conclusion.

Thank you, Yves. Well, to avoid to be repetitive, good performance, all the KPIs in line or ahead of the outlook, very strict capital allocation, growth, deleverage return to shareholders, an obsession on profitable growth. And we confirm the outlook. The last thing I want to say is, first, thank everybody here, thank the shareholders for the continuous support, particularly in the last few years, also the strategic shareholders, the Board, the suppliers, the landlords. A lot of the things we are trying to do are only possible in the combination with the suppliers and the landlords, the 3 together. And the last and most important, thanks to all the team members, starting from my colleagues at the Group Executive Committee, going through all the global function, all the regional functions, all the shops, all the restaurants, all the warehouses, everybody of the 75,000 employees of Avolta that thanks to you, we are delivering these results. And a last word of solidarity with our employees in the Middle East, they are going to the shops. They are going to the restaurants despite being in the middle of war. So we appreciate your support, we appreciate your commitment to the company. And I also want to thank the magnificent collaboration we have with the airport authorities and the authorities in that part of the world that have been tremendously supportive and also focusing a lot on the safety of our employees. So thank you very much. Now we are going to open for questions and answers. Thank you.

Thank you, Xavi. So good afternoon, everybody. For the Q&A, we're going to start with the floor, and then we'll go on to questions on the phone, and then we'll finish with questions on the webcast. We've got a mic on either side of the room, so pick your hand up, and we can kick off.

It's Laura Bucher with Octavian. I have 3 questions, if I may. So the first one, in the CMD last year, you said that you expected a 30 bps pressure from concession fees. So if and when North America comes back, is that still the level that you expect? Or has anything changed since July? I'll take one by one.

Look, of course, we monitor the activities segment by segment and region by region, and we see a limited inflation in the concession fees when you eliminate mix effects. I think what is important for me is that the improvement in gross profit margin and productivity has to be larger to any potential pressure on the concession fees. As Yves explained, you cannot just look at the line of concession fees, you need to look -- because you could have an operation with huge margin in the gross profit margin, very low people and a little bit higher concession fees. So we expect that the combination of the different elements allows us to deliver on our outlook on the EBITDA margin. I think on the last 4 years, you have seen that the evolution of the concession fee has been quite kept at bay. It has increased, but in a very limited manner. So we expect something similar for the coming years.

Okay. And then the second question on lease payments in the cash flow statement. There's a 20% increase year-over-year. So almost CHF 400 million more than '24 and similar trends H1 versus H2. So what happened there?

On the lease payments? So you're looking at the IFRS results?

Yes.

So look what happens there is the lease payments on the cash flow statement, IFRS talking now, so it's not what you see in the presentation, but in the annual report reflects the fixed component. So whenever you renew a concession or whenever you have a concession, which has a relevant minimum annual guarantee, the minimum annual guarantee or the fixed component is reflected in lease payments while the variable part in the IFRS P&L is reflected under lease expenses. And together, they reflect the full charge of the year for the leases under IFRS 16.

Yes, I'm aware of that. So my question is why has it increased? Or why has your MAG increased CHF 400 million? I mean that's a massive increase if I compare with the other years. I was under the impression that post-COVID, we were going more -- or that MAG intensive concessions were not so much of a topic anymore.

Yes, absolutely. So look, overall, especially after COVID, the MAG intensity has decreased. Nevertheless, there are contracts which have a minimum annual guarantee. And whenever you renew them or when you enter into a new one, which have a minimum annual guarantee, you would be -- you would see it reflected there. So what I can tell you is that this is not a one specific concession. The last big one we have done, which has a significant MAG is Spain, but that was before 2025. So in 2025, the number of concessions we have renewed and which have a relevant MAG are minimal, but the sum together will have led to that specific amount.

Okay. And then the third and final one, I appreciate that it looks like you guys can do it all and at the same time. But again, why another share buyback? Why not deleverage faster? I mean you're at 2x, which is the high end of your guidance. Why not wait until you're at 1.5x and then you do truly recurring share buybacks at even higher amounts and then you can return even more cash to shareholders?

Look, I think the right way to answer that is consistency. So we have announced something. That is the capital allocation policy that Yves explained earlier on and we are strict following it. So you have no surprises. We said that after the investment in the business and with a leverage of 1.5x to 2x as a target, the excess cash will go to shareholders and that's what we're doing. If you ask 10 people, there are 10 opinions, but we announced something 3 years ago and we are delivering on that year-on-year. I think the good thing is that the business still brings a lot of opportunities organically and potentially a small M&As, always accretive, always financed with the balance sheet. But if you don't have an M&A, there is enough cash for a share buyback. And that's consistency. That's the main reason why we do the things.

Gian-Marco Werro, Zürcher Kantonalbank. Two questions from my side. The first one is on the historic win of your duty-free contract in China, one of the first since a decade, as you mentioned. And I was just wondering if you could elaborate a little bit more about what have -- might have changed there in relation to the protectionism of the local airports and authorities down there? And do you now also see more opportunities to expand your duty-free business in China? And the second one also on Asia. Just 2 years ago, you mentioned that you're entering more and more duty paid, especially in Wuhan, experimenting with this new category in Asia. What are your learnings so far and your experiences? And do you also plan to expand duty paid more in China?

Thank you for your questions. The duty free in Pudong Airport in Shanghai, it's something we feel particularly happy about. It's something the industry has been waiting for 20 years, and everybody was thinking when it would happen, it will be announced years in advance and step-by-step and actually was announced days in advance. So the tender came up on a Tuesday. We knew it on Sunday, and you had to present the offer in 3 weeks and open the first stores 2 weeks later. So really crazy. We had a very strong local team that we've been building over the last few years with very strong local leadership in the different parts of Asia, and they were ready for this tender. It's a clear change in policy. And that means the government in China wants to explore international players operating duty-free. And one reason behind is because they are betting for inbound tourism in China. You have seen that in a massive relaxation of the Visa requirements to visit China. And this is part of a broader policy. They're going to be looking at what we do and how well we do it, and there might be more opportunities. But I think the consistency of what we said when -- I remember in '22, when I said we are going to go more to Asia, but it will take years, not months, and it's what is happening. We've been increasing. China is a very big -- duty-free in China is a very big example, but we also enter Japan, and we continue exploring that. We need more critical mass in Asia, but it's year-on-year. There might be a new tender in 6 months, but it could be a new tender in 3 years. We're going to be ready, and we are going to be learning. The duty paid and the F&B that we operate not only in China, but across Asia. So in most of the locations in Asia, we are trying to do the 3 businesses, at least 2 of them. So the strategy in China and in Asia is to grow on the 3 businesses as long as we can get the right contracts and the right return on investment. You learn from all of it. You learn different things. If you do duty paid and F&B, you learn the behavior of the domestic passenger. And let's remember, China is a huge market on domestic also. 80 -- almost 90% of our business in North America is domestic. I'm not saying we can do that in China in 3 or 4 or 5 years, but the opportunity is very big. But also India domestic, it's a huge opportunity. Other countries like Indonesia, Vietnam that are huge, massive distance, there is also a big potential. But some of them could be developing in the next 3, 5 years, some of them in the next 5 or 10 years. We are selecting where to go. We are ready to go. But Asia Pacific, has been growing significantly in the portfolio. And also, we are convinced that the bigger it becomes, the more critical mass, also the profitability, which is the lowest today, it will keep improving because in order to do all the things I'm saying, we need an infrastructure that requires certain critical mass. So Asia will keep growing in the next 3 to 5 years, both in sales and profitability.

Manuel Lang from Vontobel. I have 2 questions, more on the top line. Maybe to start with Q4 first. We saw there an acceleration in the U.S. and also in APAC. I'm wondering if you could quantify maybe just in those 2 regions what -- or was it driven by more spend per packs or more by number of passengers? And then also into 2026, you also said there you saw some encouraging trends in the U.S. or in North America, to be specific. What you didn't mention is what regions you've seen a deceleration given the year-to-date growth you reported was lower than a year ago, which I think was at 6%.

So it was both -- to answer your first question on quarter 4, it was both a bit of passengers and a bit of spend per passenger. So we want to be very mindful on any short-term guidance because it's always dangerous. It's much better in our business to have an outlook or a guidance for a year, 2 years, more than a month or a week because if I look at yesterday's sales doesn't necessarily mean this week sales or next month sales and also because of seasonality. But in general, starting the last quarter of '25, we have seen encouraging signs on the consumption trends in the U.S. Now it's a spring break, which is the first indication. And I always say that our first quarter actually is 4 months because they are the Easter, Ramadan and New Year's, all these things moving across the different months of January, February, March, April. But leaving aside Middle East, we have seen a nice traction. We have not seen this acceleration that will be used, I think, of a wrong number. But yes, we see better performance in quarter 1 in North America versus last year. And EMEA, which is also growing very nicely, but it's not growing at 10% or 12% that grew in the first quarter that, that was an exceptional beginning. So all the regions are growing nicely, all on a more normalized manner with the exception, of course, of Middle East that I explained. Look, the strength of Avolta is in the overall performance. And I'm happy to explain the individual ones. But what makes us strong is that a low performance in one place is compensated by a strong performance and also across the year. I think I already said, quarter 3, for example, is becoming in certain parts of the world, particularly in holiday places more difficult to grow. But part of that movement on quarter 3 is moving for the last couple of years in quarter 4. So that is also helpful that the passengers are also somehow decreasing a little bit the seasonality.

Maybe if I can add a third one, probably to Yves more. You guide for a much higher FX impact this year and also probably a lower contribution from savings in other OpEx. Is it reasonable to assume that the EBITDA margin increase will likely be a bit on the lower end of your guidance, so a bit below 30 bps compared to last year?

No, look, we -- first of all, the guidance we provide is a medium-term guidance. It's not for a specific year and also not for a specific quarter. But look, having said that, 2026 from our perspective should not be in any regard different than any other year. So from that perspective, we do expect to see a nice improvement in that regard. Having said that, look, the FX effect this year from a translation perspective should be similar to last year. I mean we have provided the guidance in -- an estimate, it's probably the better word in our press release and it's around 5% for this year. And look, that is similar than what we have seen last year. And if you take that and you extrapolate it, probably the effect we see in the first quarter this year is even more pronounced than the rest of the year. I believe that should answer the question.

If there aren't any more questions -- we've got another question.

Marti Queral from UBS. I would ask 2 questions, please. The first one would be on interest costs. I mean given the leveraging of the balance sheet now already below 2x, how shall we think about interest costs for 2026? Is this something that should help -- that should the triple EPS growth for 2026? And my second question would be, if I look on Slide #8, spend per passenger has increased over the last 3 years, but I see that APAC has been weakening in the last 2 years. So is there any specific reason for this?

If you take the interest?

Yes. So let me start with the first one with the interest. So look, there are 2 effects I want to quickly mention. The first one is with the deleveraging, obviously, that should lead to a reduction of the interest expenses. But as we have discussed before, we are focusing very much also on cash returns to shareholders. We have the dividends, and we have also the share buyback. And as a consequence, what is remaining for deleveraging is still relevant, but slightly less than the full amount of the equity free cash flow as a consequence of those cash returns to shareholders. So yes, as a consequence, interest expense should decrease moderately over time. The second element I want to quickly mention is the refinancing. So there will be maturities coming up for refinancing in the next coming years, one, which is in March next year. And we will need to look into the market conditions at that moment in time. And if they are in line with the products we are refinancing or lower or higher, and that also drives to a certain extent, the interest expenses going forward. Again, I think what helps us is this maturity profile, which is spread significantly over the years and also the fixed component of interest we have in place, which helps us to mitigate short-term volatility in the interest rates to the extent possible.

And on the spend per passenger is a combination of 2 things, a bit of mix because we don't have the same spend per passenger across the different subregions in Asia Pacific. Some works in the Australian activities and still a volatile consumption of the Chinese, which have been increasing as a percentage of our total exposure in Asia Pacific. But I'm convinced that with some of the things we expect for '26, the trend should go better in the coming couple of years.

Okay. So no questions from the floor. We'll go on to questions from the phone. I believe it's 6 at the moment.

[Operator Instructions] The first question comes from the line of Dhar, Manjari from RBC.

It's Manjari Dhar from RBC. I just have 2 questions, if I may. The first question I had was on dynamic pricing. I think you mentioned you've been trialing this in 2025. I just wondered if you could give some more color on the kind of uplift and benefit you see or you have seen where you have implemented this? And maybe some more color on how far it will be rolled out in 2026? And then my second question is just on working capital and to efficiency that I think you mentioned, Yves. I just wondered if you could let us know what's driven that inventory to improve? And should we expect further efficiencies to come in the coming years?

Thank you for your questions. On dynamic pricing, it's a fascinating area of development. The principle is super easy. You have different profile of customers, different nationalities. They look at pricing as a reference to their local market or maybe their origin or their destination. And therefore, they have different perception of pricing. If you can adapt that to the different seasonal populations to the different flights, even on different weekdays, of course, you are maximizing the possibilities to have a more attractive sale and your gross profit margin. The question has always been that you need a very advanced data management tools to do that in an efficient way. You cannot have somebody with an Excel file looking at all reference prices and changing the prices on a constant basis. We have then done a test in Europe. It worked very well. It shows that when you adapt the pricing to the potential customers you have around, you can do that in a very efficient manner. You, of course, need to have the -- it's not only the capacity to analyze and change the prices, you also have to have, for example, screens instead of fixed pricing. So it's a bunch of things. So that's why the deployment will be step by step. We have chosen after the test a few locations in Europe where we will implement that. And if we prove that is successful, not the concept because the concept we know it will be successful. If it's successful, our capacity to implement that in a smart and fast way, we will keep deploying that in the next couple of years to all the group. And I think your second question on working capital is for you?

Yes. Thank you very much for the question. I mean look, the net working capital, there was a kind of a step-up this year in 2025 because of system evolution, standardization, simplification of processes. So from that sense, it's a step-up. Now from here, the way I look at it is more kind of like an evolution over time. So look, we are obviously trying and that applies to all the lines of the P&L and the cash flow to optimize them, to continuously improve them and we see some further improvement also on the net working capital, but maybe not necessarily as pronounced as a step-up in one go. But look, having said that, maybe an additional piece of information for 2025, what for me is impressive about the result of an improvement of CHF 60 million. It's not only the amount, but that we have achieved that during a time where food & beverage was muted, which typically has a relatively low net working capital and where travel retail, specifically also duty-free was growing materially. And typically, when you grow in duty-free, you have to invest into net working capital. So you would actually have expected a slightly negative amount for 2025. And that did not happen. So we have improved the net working capital in such an environment. So it's even more relevant this step, which did happen in 2025.

The next question comes from the line of Harry Gowers from JPMorgan.

First question from me. Maybe just some color on what we should be modeling for kind of the direct Middle East impact. So maybe what percentage of sales is based in the Middle East directly? And then for Q2, should we be assuming that, that component is down significantly, and we need to shave a little bit off of our organic growth estimates? And then the second question, I just wanted to ask on the rationality of the global travel retail market at the moment. We're a few years after the pandemic. So how do you see general competition for tenders in the bidding environment at the moment? And do you think operators are more rational when bidding and winning space compared to before COVID?

The line was not perfect. So I'm going to answer what I understood. If it's not, please let us know. So as we said, the Middle East represents around 3%. So if the conflict, to give an example, will last for 4 months, you will have 1% effect. If that would be all the airports shut down, which is not even the case today, we have some operations fully shut down, others partially operating and others even at 70%, 80% of the normal is nothing in the Emirates, but it's nearby. So we believe, as I said, even if it lasts for a few months, not weeks, months, it will be of a limited effect. On the second question, if I understood well, if operators are more rational on bidding, I see 3 things. Number one, the answer is absolutely yes. You can see that people don't go everywhere. So even on the number of bidders has decreased a little bit. Second, the rationality of the bidders is higher. We are also massively strict. We can make a mistake, but we are massively strict on returns on investment and we are not -- sometimes not bidding ourselves, not renewing contracts or even exiting existing contracts. The return on investment is everything for us. And then the combination of more rational operators and a lot of industry talk, not everywhere, but we see more and more airports also having a more rational structure of fees. I think the win-win that has been the mantra of this industry for many, many years, but it was a little bit distorted in the years before COVID because of the bonanza of the Chinese passengers. I think that time is a little bit gone and people is more rational, both in the airports and the operators. What I can guarantee you because that we control, we are extremely systematic and we have renewed contracts in the last couple of years where we have decreased the payments to the airports. Not everywhere, of course. Otherwise, it will be great news. But it's just an example. There are a few limited examples. But when you put the right business plan on the table, the right improvement on the sales, you can have even better conditions. I don't want to be misleading here. Still, there are certain areas where the concession fees are maybe too low structurally, and there will be some pressure. But overall, there will be a limited pressure and a pressure we expect to be lower than the gross profit margin and the cost improvements that Yves was mentioning before. So overall, we feel comfortable with the outlook on the midterm on the EBITDA margin.

The next question comes from the line of Jaafar Mestari from BNP Paribas.

I have 3 questions, if that's okay. Maybe the first one, separately, just following up on Middle East situation. Can you give us a bit more -- I'm sure trading is way too early. But on the reality of the business operations in the region, you said some shops are operating 70% of normal. Are you fully open, fully staffed? Are airports starting to talk about plans, opening times, staffing? Or is the situation for the foreseeable future just operate as close to normal as possible? And the other side of the equation, your landlord and your suppliers in global airports. It's very early days, but what's been the chatter so far? What are they telling you in terms of passenger flows? What are they telling you in terms of assortments in your operations outside of strictly the region, please?

So the situation depends very much on each territory. There are some locations where the aerospace is completely shut down, and therefore, there is no body of our employees at the airport. Some others are operating, if not normally close to normality. And then we have the staff. And in other places, it's partially. Now is the moment to be supportive to the airports, to the employees. Even if it's limited passengers, those passengers might spend actually more time than usual in the airport. They need to be serviced. And we have a very strong commitment to our airport partners. And there will be time to talk about the potential financial consequences of that. Now is operate when we need to operate on a safe manner, both for our employees and the passengers. And as I said, the situation changes completely airport by airport, and we follow the guidance. So we agree with the airports what are the needs of that specific location. If you have food & beverage in some areas, we have more work than in other places because you might have an airport with 3 terminals, 2 closed, only 1 open and we have more people on that terminal than usual. It's a very different situation. It has been 9 days. It's really, really very short and we believe it will be normalized once the conflict itself is stopped, the normalization based on our experience happens very, very fast. Globally, of course, the effects are in destination, Middle East, I mean, from other places on the world. But with the 3%, we are kind of including also that rational destination Middle East, not transfer Middle East because transfer Middle East is moving to other places. So far, we had no major impacts on assortment, suppliers, et cetera. We have alternative logistic routes to supply our shops without going through the Middle East -- shops and restaurants, sorry. I mean the food is basically locally supplied and also the convenience. So it's only the duty-free. But the -- compared to other industries, the channels in Middle East are not as important for our industry like in other places. So until now, the effect beyond the Middle East is extremely limited.

Great. And my other questions are on capture rates, 27% looks broadly flat. I know the numbers in terms of passengers and transactions can be a bit rounded. Maybe it's increased a decimal, but it's 27%. So it looks like you're doing very well to drive spend with the people who already stop and shop. I'm not sure you're satisfied with flat capture rate on the other hand for people who do not stop. What are the plans specifically for that, if any? And a question, net new contracts continue to tick up. It was net 2% in Q3. It's net 2.5% in Q4. Your medium-term guidance for net new space is 0% to 1%. So at which point do you start to articulate maybe that you can sustainably win new space and grow more in new contracts, please?

On your first question, of course, you need to correct one aspect, which is the U.S. or the North America. I mean if you correct that effect, you can see that conversion of penetration has been growing in the other 3 regions, but also the spend per ticket. Of course, there are thousands of mix effects. We look at this on a location by location and taking into consideration the profile of the customers. But we are doing to drive both -- I think I gave an example. I mean when you put entertainment, sports-related entertainment, when you put the combination of food, when you use the loyalty, when you use more digital promotions on the store, when you put new brands and new categories, all of those things we do is not to have fancier shops or fancier restaurants. We do it to drive more people into the stores and to increase the spend per ticket. For me, when I have the follow-up meetings with all the regions and all the operations, spend per passenger, spend per ticket and penetration are the 3 things we discuss. And if there is a mix effect, for example, a different mix of nationalities, different mix of long haul, short haul flights, whatever is the relevant point, we explain it, but that's the target. So I think the last 4 years have been good. Maybe I didn't say it, but the performance of the last 4 years, including '25, I think, has been good, but not by chance. It's not a miracle. It's not that it just happens. It is happening. And if you see some industry gurus, they didn't expect what is happening in Avolta to happen. And it's happening because of all the things we are doing to implement Destination 2027 and our consumer focus, more data, more digital, more entertainment, more hybrid. All those are the things that are driving more people on the stores and they are driving them to spend more. But what we have achieved today is not worth -- it's not enough. We need to do more in '26, more in '27, more in '28. That's why we keep investing in trying to improve the understanding of passengers. Data and the use of data with machine learning, AI, call it the way you want it, it is going to be in the next 3 to 5 years, a game changer for Avolta. But we need to keep investing in data. We need to keep investing in a better understanding of the passengers. I cannot disclose everything first because I don't want competition to know. And second, because in some cases, we don't know if it's going to work or not. But we are addressing every aspect of our business to see how we can optimize it from product to assortment, to pricing, to customer understanding to loyalty. Of course, we don't do everything at the same time. We test the different things and then we focus. And that's why when people say, why you keep reiterating the outlook with all what is happening in the world? Well, of course, we don't know everything is going to happen in the world, but we believe that we are touching the right things to keep performance. So answering your question, sorry, what we need to do is more and better what we are already doing. Sorry, I get passionate about that. And the...

Just on net new...

Yes. Look, you need to look at net wins and losses, which are 2 type of losses, voluntary losses or exiting of unprofitable or below profitability contracts and wish. The net, we want to be positive. And that's a 0% to 1%. There could be some years more, some years less. Because it's impossible to have that as an outlook per year because that's not the way the market works. Sometimes you have 1,000 contracts in a year, another year, you might have 200. Sometimes you might be massively the incumbent on that year and some other times, you might be the big winner. So it depends. So that's why the outlook we provide is for organic growth that is a combination of like plus new wins and losses. And we don't feel comfortable at this stage to change the way we've been guiding. Some years will be better, some years will be a little bit less. But overall, the organic growth should be this 5% to 7%.

The next question comes from the line of Isacco Brambilla from Mediobanca.

I have 2. The first one is on equity free cash flow conversion, 2025. So again, more than 300 basis point improvement. Second year in a row of a sharp overperformance compared to the medium-term guidance. Beyond such extremely strong results, can you give us more color on the levers you see to deliver further announcement from this level? Second question is a follow-up on net new openings. If we look at the second half of 2025, it contributed almost as much as like-for-like to your organic growth. Looking forward to 2026, should we think about this pattern to continue? Or maybe are you expecting to rely more on like-for-like growth?

So let me start maybe with the equity free cash flow first. Thank you very much for the question. So look, the levers are coming across the grade. We have discussed before net working capital. While I do not expect some similar step-ups as we have seen this year to happen, but still some improvements going forward. It's one potential source of improvements going forward. The second one is also what we have discussed is the deleveraging. So look, with the deleveraging and the tight management of interest expense and also interest income on the cash deposits, we do expect to see some improvements over time there. And then, look, to a maybe lesser extent, but the remaining lines, be it on the tax line or also dividend to minorities, there should be some potential improvement possibility. CapEx, I don't want to touch. I think we feel comfortable where it stands at the moment. But then what also happens on top of the different elements of the cash flow statement, it's a pure technical one. Because of the improvement of the profitability, because of the improvement of the EBITDA margin, if you then calculate the equity free cash flow as a percentage of turnover, you should improve over time also the conversion rate there. So those are basically the levers we have to optimize the equity free cash flow.

Look, on the new concessions like-for-like, again, it depends a little bit how you consider North America. The like-for-like is this 3%, 4% or 5% to 6%. So like-for-like is clearly higher than new concessions. And again, new concessions and like-for-like have to be combined and look at it not in a quarter, not in 2 quarters, but in a longer period of time. We are very happy to have a strong like-for-like, and we are happy to have new concessions. But you see another idea of new concessions, which is fundamental for me. I don't want to give guidance or a specific outlook there for 2 reasons. One, because it's more volatile than the like-for-like. But second, because it's a trap. If you push yourself to have new concession because you guided the market to have new concessions, you might lose discipline. And I want to be absolutely free. Of course, I want to win new concessions, but only if they come with the right return on investment and the right profitability. And if 1 year is zero, it's because that year, the opportunities were not fitting our strategy. So I think keeping this freedom of being absolutely disciplined on the new bids, it's very important. So when you have new concessions net positive, be assured that is not only good news on the sales, but it should be also good news on the profitability. And I think that is the key message we want to give.

The next question comes from the line of Luka Trnovsek from Berenberg.

So just congratulations on the results. And then just on the first one, I wanted to ask about the equity free cash flow conversion. So you've mentioned that you've reiterated the guidance, so 100 to 150 basis point improvement per year between '24 and '27. And given the improvement you delivered this year, do you still think you can do 100 basis points this year? And I'll ask one more after that.

So look, the question -- the answer to the first question is yes. I mean we have basically shown that we are in a position to do that over the last couple of years, significantly beyond that. But also for this year, we -- and we don't give guidance for one specific year. We know that it's a medium-term guidance, et cetera. But still also for this year, there is no sign or no indication why we should not achieve that. So we also believe that an improvement of 100 to 150 basis points on the equity free cash flow is achievable due to the reasons I've mentioned before.

Perfect. And then just on the size of the buyback. So it looks like it's about 46% to 47% of free cash flow in both '24 and '25. So just thinking forward, like in the absence of any big M&A or anything like that, would you be comfortable staying at that level if we think out to maybe '26? Or is it just too early to say?

I think, look -- thank you for the question. But we stick strictly to the capital allocation policy that is very clear, growth, deleverage and excess cash to dividends guaranteed 1/3 of the cash flow and potential share buybacks when there is excess cash. No more, no less than that. This is a discussion management and Board of Directors have on a yearly basis, looking at the opportunities, the growth and I think that's the best way I can answer your question.

Perfect. And then just one last one. So I know you've spoken about this kind of net new space and the contribution. But specifically just for 2026, given that you have this in China, do you think it'd be fair to say that you'd be over that 1%, just if you assume that the China was kind of like maybe not expected when you were setting the guidance? So now that you've kind of won that on a normalized basis, there should still be some more concession wins?

Look, we have to consider the wins that we already have. We have to consider some exits that we have executed in '25 with FX in '26. And I think as Yves keeps saying, we don't give -- because you see you start giving guidance for 5 years, then 3 years, then a year, then a quarter than a week. So I think our guidance is clear. Our guidance is on a multiyear midterm. Things are going on the right direction on all the key indicators, of course, with the exception of the conflict in the Middle East. And we feel comfortable on keeping the same outlook we have been saying over the last few years. And we will not go in more details on a specific year because that's too much information.

The next question comes from the line of Elias, Karine from Barclays.

I just had a quick one on your maturity profile. Obviously, you've been very proactive at addressing your upcoming maturities and with the recent bonds issued in May, you used to take out the rest of the '26, the convertible coming up. How should we think about your 2027 maturity? Are you planning to come back to the market? Or any particular thoughts with regards to currency or convert or share?

Thank you very much for the question. So look, yes, absolutely. We do expect to come back to the market in the next couple of months and quarters. We typically refinance ahead of maturity, significant ahead of maturity. But given the high liquidity of the company regarding to cash and available credit lines, specifically the RCF, which matures in 2030, we do believe that we have no rush. So we'll wait for the right market window. In regard to the product, we have not taken a final decision there. We are debating that in management with the Board and also with treasury. There are a couple of different options, maybe also to slice and dice it, and we will take actions in due course once we are ready and once the market window is the right one.

The next question is from the line of Jörn Iffert from UBS.

Yes, it's just 2, please. And the first one is, I mean, what have you incrementally observed on consumer trends over the last 12 to 18 months? And what does it mean for you going forward? And the second question, please, inflation in your food & beverage business, I assume was quite material over the last 2 to 3 years. And can you give more data, what you have observed on volumes on average over the last 2 to 3 years here?

Thank you for your question. It's not an easy question to answer because there are so many data points that depends on categories, regions, et cetera. Maybe the best way I can answer that is to refer to Page 8, I think it was, where you can see that there has been an overall slowdown on alcohol consumption over the last few years. We're still less affected than higher street because we have special formats, a special -- it's many of the purchases in this category is because of gifting and that is less sensitive than maybe the general trend. We have, in some cases, been affected, for example, also on the luxury performance, that is, we are not immune to the general performance. On the flip side, perfumes, cosmetics, in general, treatment, skin care, it's a very healthy category. And also a lot of the consumption in travel retail is based on as gifting on self-care. So this category is very strong across the board. So those would be a few examples. Of course, if you go forward on a regional basis, I think we had a very strong performance across the board with the exception of North America, which is linked mostly to the domestic traffic. And we know the number of domestic passengers in U.S., in particular, North America, in general, have been flat accelerating a little bit at the end of the year. On the food & beverage and also in retail, in general, we try -- and I think you have seen that both in high inflation, mid inflation and low inflation that we've been able to pass through most of the inflation effects on the pricing, both in retail and food & beverage. And that's why the gross profit margin has been stable and growing over the last few years. Of course, that depends on the different countries. That depends on the -- if you go on the food & beverage to the supply of products, but something we do very actively. Sometimes people want a sandwich, let's put. And they don't necessarily want the sandwich to be salmon sandwich. So if you have a salmon -- and now I don't want to get into trouble with any of our salmon suppliers, it's just an example. It increases, then you prepare a sandwich where you replace the salmon for another fish or turkey. So you can play a lot with the recipes to adapt the assortment to reflect in a smaller amount, the potential inflationary effects. But in general, we are pretty hedged, and I think we've been proving that over the last few years on inflation.

It was also about elasticities since the prices increased materially for food & beverage in general. In your channels, what have you observed on volumes? Did your volumes grow in the last 2 years on average in food & beverage? Or was mainly price driven, what you have seen there?

With few exceptions, volumes have been growing.

The next question comes from the line of Tim Barrett from Deutsche Bank.

First question just follows up from one of the last ones actually around category spend per pax. You didn't mention tobacco, but that's obviously been in compounding growth now. Do you expect that to continue? And does that have any implication for gross margin? And second question. Yves was very clear about ROCE and the trends there. Is that mainly going to improve through margin in your view? Or are you reducing capital base intensity?

What we see in the tobacco category, which is more and more nicotine-related market because what is really growing very fast are non-cigarettes, soup categories, and that's also a general trend in the market. And some of those categories are very convenient for smokers and fly. I mean if you don't -- if you have nicotine chewing gum kind of you're something very comfortable and you don't disturb other passengers. On the gross profit margin, with the, of course, difference between food and retail. On retail, when you take gross profit margin, minus concession fee, which is typically per category, all categories are very similar. That's why these changes in the categories have no major effects on the gross profit margin. They might have some in certain markets, but we are on net-net, on EBITDA effect very limited. And the second question, I didn't understand.

The second one is on ROIC. The improvement of ROIC is it coming from the improvement of the NOPATs or of invested capital? And look, it's basically from the margin. A big part is coming from the margin around 70% to 75%. Year-on-year improvement, 24% to 25% is coming from the NOPAT improvement and to a lesser extent, from the reduction in invested capital.

The last question from the phone is from Natasha Bonnet from Morgan Stanley.

I've got 2 quick ones. Just coming back to the Middle East, you said it was 3% of your sales. But what is your exposure to Middle Eastern national globally? Because I tend to believe they have a higher average spend. And then maybe if you could give us an update on the Chinese nationals now in your mix? And then the second just on U.S. You said you were seeing some encouraging signs year-to-date in North America. Are you seeing any differences by income cohorts? And can you share any color on trends of U.S. customers coming to Europe?

So the 3% is what we believe it's our exposure to the Middle East, not just on the presence on the Middle East. In the Middle East, you have 2 type, high-end expenditure but also the lowest-end expenditure. The people that works in the Middle East that go back to China -- sorry, to India, Bangladesh, Pakistan, et cetera, they have, on average, a much lower average. I don't -- it's a very limited exposure. I'm more and more reluctant because we have more data than anybody else to start explaining nationality exposures, but it's still low single digit, our exposure to Chinese nationals. And the last question was on North America?

North America and the increase and the trends when people are coming to Europe, for example, Americans.

International flight, it's always -- the consumption for international flights is always more resilient than potentially domestic because when people takes a long-haul flight, both on the cost of that flight and the duration of that trip because somebody could be going, I don't know, New York, Boston 3 times in a week. But if you're planning a long haul, it's a different type of mindset. And typically, the consumption at the airport is more resilient for international travelers. If you buy because you are going back home and you bring a gift, you still bring a gift. If you are on holidays with your family, friends, your mindset is a different one. If you are traveling long haul for business, typically, you take something back home because you've been a week abroad. So what we typically see is that the spend per passenger in international travelers is less affected to macroeconomics than domestic. And that's what we saw in '25 in North America that was basically negatively affected the domestic much less the international travel.

Okay. So we finished with the questions from the phone. We've got 3 core questions from the webcast. I'll ask them individually. The first question is, under what circumstances would you increase the share buyback at the expense of the dividend?

That's an infinite question. I mean we have the share buyback we have with the circumstances. So...

It's probably related to the future years or potential future programs. I mean, look, going back to what Xavi mentioned before, the dividend payment, the way it is described in the capital allocation policy is strict. It's 1/3 of equity free cash flow. Equity free cash flow ideally in line with our outlook is increasing over time. And as a consequence, dividend is progressively increasing over time as an absolute amount. It's point number one. And point number two, in regarding to the share buyback, also Xavi was explicit before, the share buyback is opportunistic in the sense that we first start with investment into growth. We have our leverage targets and achievements in mind. And then once what is left subsequent to the dividend and the progressive dividend payment is going into share buybacks. So depending on where the result lands, that is then the residual amount, which defines the share buyback in a specific year.

Second question, what is your medium-term ROIC target?

So look, in regarding to the ROIC, we are not providing a target. We are not providing a progression over a year or a medium-term outlook. We believe what we want to show there is something else. We want to show our mindset, our strict approach to investments, how we think about that and how that needs to be accretive for shareholders rather than a specific target.

And the final question is, what do you see as a ceiling for your medium-term EBITDA margin and equity free cash conversion?

For now, we stick to the current outlook. And then in a longer term, in due time, we will provide an updated outlook, if needed.

Thank you. So that's the end of the Q&A.

Okay. So thank you very much for everybody attending this call. And remember, if you travel by in Avolta shops or restaurants and become a Club Avolta member, you're going to get a bunch of benefits. Don't miss the opportunity. Thank you very much.

Thank you.