Barry Callebaut AG (BARN) Earnings Call Transcript & Summary

Hello, and welcome, everyone, to the Barry Callebaut Group 9 months Key Sales Figures of Fiscal Year 2025/'26. My name is Becky, and I will be your operator today. [Operator Instructions] I will now hand over to your host, Sophie Lang, Head of Investor Relations, to begin. Please go ahead.

Good morning, everyone, and welcome to Barry Callebaut's 9 months key sales figures conference call for 2025/2026, I'm Sophie Lang, Head of Investor Relations, and today's meeting will be hosted by our CEO, Hein Schumacher and our CFO, Peter Vanneste. As usual, at the end of our presentation, we'll have a short Q&A session for analysts and investors. . We start please take note of the disclaimer on Slide 2. I'd also like to remind you that the webcast and conference call are being recorded. And with that, I will hand you over to our CEO, Hein Schumacher.

Thanks, Sophie, and good morning, everyone, and thank you, of course, for joining us for our 9 months trading update. I will start with some key messages, followed by updates on our focus for growth action plan and strategic priorities. And then Peter will take you through our sales performance in more detail, and I would like to back at the end of the presentation. Let me start with a brief overview of the key messages. And while sales volumes decreased for the 9 months, the group has returned to positive volume growth in the third quarter for the first time in more than 2 years. This was supported by elevated demand in our global cocoa business following the sharp correction in cocoa product prices earlier in the year, alongside a low base of comparison. Our global chocolate business also returned to growth in Q3, supported by strong momentum in AMEA and early progress in restoring service levels in North America. And while we are encouraged by our total growth, the chocolate market remains challenging overall, as Peter will elaborate on later in the presentation. And our improvement at Barry Callebaut will be gradual. We still have a lot of work ahead of us. And that is why we've launched our Focus for Growth Action plan last month to strengthen our fundamentals, and I will come back to this in a moment. Taking all of this into account, we now expect full year volumes to decrease by around minus 1%, while maintaining our profitability and our leverage guidance. And before going into the details of the 9 months performance, let me start with a reminder of our Focus for Growth action plan and first reiterating our ambition. At Veritalwa, we are already the global leader of cocoa and chocolate with a uniquely integrated business model and leading capabilities in R&D and sustainability. And our ambition is to build on a strong foundation through 2 clear deliberate shifts. First, we are evolving towards a more solutions-oriented business, scaling targeted specialties in attractive, faster-growing segments where we can differentiate and create more value for our customers. Second, we are focused on protecting and strengthening our core volume base, while shifting more decisively towards premium segments and accelerating the growth of our important Gourmet business. Delivering on this ambition will be underpinned by a strong customer-centric culture, the right talent and increased environment of our regional teams. Now let's turn to the action plan itself. We are accelerating 5 key enablers that are critical to restore our fundamentals and stepping up execution across the business. The enablers span the entire value chain and are all anchored in a clear customer-centric approach and supported by digital capabilities. And in parallel, we are prioritizing 5 select growth priorities where we see the greatest potential for value creation, global accounts, regional food manufacturers, gourmet, specialties and cocoa powder. And this disciplined approach ensures that we allocate our resources where we have the highest impact, ultimately driving attractive financial performance and results for our shareholders. But we have significant work ahead of us to fully restore our fundamentals. I'm happy that we are starting to see early signs of progress in a number of key areas. In footprint and quality, we are implementing selective network enhancements. And importantly, we have recorded 0 critical quality incidents or product recalls year-to-date. In planning, we are strengthening our sales and operations planning processes with new demand being tools and with new planning forms that focus on Gourmet and specialties. Our early steps are starting to translate into improved reliability with old in full or in North America, the key focus area, up 6 percentage points versus the same time last year. And in our core customer processes, simplification efforts are underway, reflected in a meaningful improvement in customer response times of close to 20% year-to-date. And while these are encouragingly early trends, I want to be very clear, this is really just the beginning. Restoring our fundamentals will require sustained execution and continued discipline for the months and year to come. Now turning to our 5 growth priorities where we are taking action to drive commercial progress. First, on global accounts. We have formed a dedicated team reporting directly to me, and the objective is to unlock the full potential of our largest global customers, with clear growth plans for each account as we move into our new fiscal year. Second, for our regional manufacturers, we now have a much clearer view of the growth opportunities by region. And this was helping us to prioritize our commercial focus and ensure that planned investments are directly linked to the markets where we see the highest potential. Third, in gourmet, we continue to invest. We are preparing for the launch of new innovation next fiscal year, supported by a strong commercial campaign while also securing safety stocks for key SKUs and key core SKU list actually, to support future growth. And then the fourth in specialties, we are addressing capacity and selected focus sites and working to integrate these offerings more deeply into our core business and commercial processes. And finally, in cocoa powder, we are taking action to annual premium for Class D and accelerate sales efforts in the higher-value segments. So across all these 5 priorities, while still early steps, we are moving from strategy into execution. And the common denominator across the 5 is focus. Focused market segments and regional food manufacturers, focused core set of SKUs reducing complexity in Gourmet, focused in specialties with a focus of around 4 to 5 core specialties by region, and a focus on cocoa powder on premiumization. Since the launch of focus for growth last month, we've also taken 2 concrete steps to move closer to our customer and strengthen execution in our regions. First, we are refining our global chocolate regional setup in the Middle East and North Africa and Southeast and West Africa clusters transitioning to the CEE or Central and Eastern European region. Historically, these fastest area and the move to CEE reflects closer geographic proximity, a stronger alignment in customer preferences and consumer habits as well as supply chain interconnectedness, and commercial go-to-market approach. And this will allow us to be more responsive to local market dynamics and better serve our customers in these clusters. And as a result, from the first of September 2026, our region will be renamed Asia Pacific or APAC and the currency region will be called. Second, we are evolving selected functional capabilities and teams to be closer to regional business execution. So selected teams within functions such as customer supply and development, finance and are closely linked to regional execution will start to report directly into the regions, while obviously continuing to be anchored in strong global personal expertise and alignment where that really matters. This is about empowering our regions to act faster and with greater accountability, while continuing to benefit for the global scale that we have. We're also shifting towards a more horizontal way of working and bringing teams together across regions and functions to drive impact. Now let me hand over to Peter to talk more about the months performance.

Thank you, Hein, and good morning, everyone. Before turning into numbers, let me start with a brief update on the market environment. Cocoa bean prices have increased in recent weeks and especially this week, but overall remain in line with our expectations. Looking at supply, the current crop, which is now coming to an end, is expected to result in a significant surplus, marking the second consecutive year of tons. As a result, the industry is entering the '26/'27 drop cycle well stocked and more than 10 months of price cover. At the same time, the market is closely monitoring the development of El Nino for '26/'27, which has been confirmed as a strong event by the U. Typically, El Nino is associated with below-trend cocoa production, while La Nina tends to support. However, this is not a hard rule as the impact really depends on how El Nino influences regional weather patterns and ultimately, crop development. . Generally, the El Nino-associated weather risks are higher than normal rainfall in Ecuador and higher than normal temperatures in West Africa. These weather dynamics are, therefore key, and we're closely tracking developments with our teams on the ground. Importantly, based on what we see today, we do not expect a bit of the extreme market conditions experienced in '23, '24, even in the case of a strong El Nino influence. Because the context today is fundamentally different. At that time, in 2024, El Nino coincided with the main crop and marked the third consecutive year of deficit. In contrast, today, we're coming from a position of a strong surplus with ample cocoa stock entering the new crop year. In addition, we're significantly better positioned to manage this volatility potential volatility at than we were 2 years ago. We strengthened our resilience through greater origin diversification, increased sourcing flexibility and enhanced bean blending capabilities as well as several financial measures, including the of credit and borrowing base facility that we talked about in previous conversations. Now turning to the end consumer environment. Main message is that truckload market remains challenging. In the most recent quarter, Nielsen data showed a decline in market volumes of minus 4.4%, with a 9% year-on-year increase in pricing. So while the overall consumption remains under pressure, the rate of decline is easing with some early indications of stabilization. From a demand perspective, we continue to see that also through our forward. As you know, we contract several months in advance with our customers, and we've seen our customers more willing to book further in advance, which is a positive sign. So our average market pricing remains approximately 9% above last year. Absolute price levels per kilogram have started to come down in recent months, as you can see on the right-hand side of this chart. Category pricing typically shows some seasonality with higher promotion intensity around Easter, followed by a normalization after that. What we observed this year is a more pronounced decline in net pricing over recent months, partly driven by increased Easter campaigns with price adjustments occurring somewhat faster than any typical seasonal paper. Overall, we are seeing early signs of moving into the right direction, but it will take time for the market to recover progressively. Moving now to our 9-month performance. In the third quarter, BC Group volumes returned to positive growth for the first time in more than 2 years. This was primarily driven by a strong demand in global cocoa, following the cocoa market correction earlier in the year and reduced cocoa product prices. Cocoa powder saw particularly strong momentum in Latin America and Asia, supported by some customer restocking, while the business also benefited from one-off cocoa opportunities. At the same time, global chocolate returned to growth in the quarter, driven by a second consecutive quarter of double-digit growth in EMEA and early progress in restoring service levels in North America. It is, however, in point to put this Q3 performance into some context. As just discussed, both customer and end consumer demands are only gradually recovering and our recovery at BC as Hein has also mentioned, will take some time. And so the 5.7% in the third quarter should not just be extrapolated. The recovery of our volumes will be gradual, and as we recently outlined with the focus for growth plan, we expect volume growth in the range of 1% to 3% over the next 12 to 18 months. Let me go into the 9 month numbers in more detail now. Overall, the group saw a volume decrease for the first 9 months of the year of minus 2.8%, turning positive in Q3 as just discussed. Looking at the left of this chart by segments, food manufacturers were impacted over the year by declining market dynamics with our customers adapting behaviors in the context of higher prices, and we also saw supply disruption in North America earlier this year, returning to growth in Q3. Gourmet volumes were temporarily pressured by a high price list in a sharply declining bean price environment. And Global cocoa over the year declined as a result of a negative market demand with a very strong bounce back in Q3 as we just discussed. Moving to the right hand of the chart, global chocolate, these volumes on global rocket declined by 2.3% for the 9 months, ahead of the 5.6% decline on the market as per Nielsen. Western Europe saw a 2.5% volume decline as demand continued to be impacted by market dynamics related to pricing. Central and Eastern Europe declined slightly by 0.7% over the year, significantly better than the market as local and regional accounts saw continued momentum. North America went down over the 9 months by 7.6%, impacted by declining markets as well as, as you know, network supply disruption in the first half of the year. Importantly, North America turned positive in Q3 and is seeing monthly improvements as the business rebuilds inventories and meet growing customer orders. Latin America decreased by 1.2%, and we were really impacted there by phasing effects in the third quarter, yet still well ahead of the market. Finally, volumes in EMEA grew by a strong plus 10%, driven by market share gains. In China, momentum, continued momentum with key customers in India and additional business secured in Australia. And before handing over to Hein, let me also briefly cover the recent euro bond buyback, which has been an important step in our ongoing journey to deleverage and reduce the financing costs. During the quarter, we completed a total bond buyback of EUR 849 million across 3 majorities, EUR 400 million of the 228 bonds, 99 of the 229 bonds and EUR 350 million on the 231 bonds. We are using available liquidity to reduce growth debt, optimize our maturity profile and lower our finance costs in the future. This transaction comes with an upfront cost of around CHF 15 million, which will be recognized in the net financial items in this fiscal year. But importantly, of course, will reduce our cost of financing in the years to come. Taking the bond buyback into account, we now expect a net finance cost of around EUR 330 million for this fiscal year. And so let me now hand back to Hein for the guidance section.

Thanks, Peter. Moving on to the outlook for this fiscal year. Following a stronger-than-expected Q3, we have updated our volume outlook for the year. We expect around minus 1% decrease. And this is at the upper end of the minus 1% to minus 3% range that we have previously guided for. At the same time, we are maintaining our guidance for a mid-teens decrease in EBIT on a recurring basis in local currencies, and I will talk more about that on the next slide. Given the EUR 15 million expected that for the cost from the recent bond buyback that we can just share, we now expect to recover around half of the absolute decrease in EBIT at the profit before tax level. And we also reiterate our deleverage ambition for net debt over EBITDA recurring to be below 3x. And this assumes a 3,000 cocoa bean price. Now today, as you may have noted, the prices are more around the 4,000 level, assuming stable bean prices at this level where we are today, we expect leverage to be around 3x. So we are maintaining our profit guidance as the stronger volume development in Q3 is offset by a number of headwinds. Let me share 3. First, as we said at the half year, we are taking short-term actions to prioritize growth and market share. And this is particularly relevant for Gourmet where we are making commercial investments as we work through the temporary dynamics created by our global cocoa position, and we talked about that, in particular, at the end. Second, we indicated at the half year as well that cocoa profitability would normalize in the second half, following an exceptionally strong first half. And while our cocoa business delivered strong volume growth in the third quarter, supported by elevated demand following the cocoa market correction, the profit contribution from these additional volumes is well expected to increase at the same rate given that normalization. Third, as Peter outlined, the recent bond buyback will result in an incremental cost of around EUR 15 million in profit before tax this year while generating benefits obviously through lower financing costs in the future. We have incorporated these headwinds into our guidance. And at the same time, we see a few additional risks, which we are monitoring very closely. The geopolitical situation in the Middle East remains uncertain as we've seen this morning and could result in additional costs for our supply chain disruptions, and that takes time to price through. While market conditions overall are gradually improving, the operating environment does remain challenging and you see signs of financial pressure across parts of the European customer base. In addition, in Turkey, an important market for us and a priority market for us, we are closely monitoring developments in hyperinflationary environment and potential implications for us going forward. So overall, we reiterate our guidance while recognizing that the external environment remains dynamic with some uncertainties. And with that, thank you for listening, and I will now hand back to the operator for Q&A.

[Operator Instructions] Our first question comes from J rn Iffert from UBS.

The first one would be please taking an early view into 2027, what do you currently observe or what do you expect from your customers? I mean, do you expect customers to lower price points to material step up promotions? Or do you expect customers to use the lower bean price to repair margins just because the readthrough would be so important for your volume prospects? That would be question number one. And question number two, if I may zoom in a little bit in gourmet, can you tell us what is happening currently on the market shares on competitive dynamics? And also if you're still pursuing your own direct online shop initiatives?

Thanks, Jorn. Let me talk a little bit about the customer behavior and particularly around pricing. So what we're seeing globally is that in the third quarter, we've seen -- generally, we've seen prices come down in the market. with the exception of North America, where prices have still increased. And that's, of course, a very important market for us. One you may have seen or spotted is that with increasing prices in North America, chocolate contractionary market volume-wise with North America, it is 1 more pressure than what we would see elsewhere in the world. So in general, there is a correlation, obviously, between pricing and volume developments, and that's what we're seeing in the third quarter even stronger than probably before. Now with these decrease in prices that we're seeing across the globe. And we have, as you can see in our revenue, our prices have gone down double digit, and this is something that we expect as well for Q4. We expect that reduction in pricing for the fourth quarter, and that could probably roll into the next fiscal year as well. With those developments, we would expect volumes to recover a bit. The current market is still single digit down, mid-single digit down overall. So there's still definitely room for improvement. We see customers investing at this point. We see customers investing in innovation. We see customers investing in media. We see customers investing in promotion overall. So that's a good development. And we've highlighted that as well during the focus for growth presentation. So we're seeing that from important big customers, whether it's Mars, whether it's Hershey, they are coming up with new things, exciting things that will help the category, I think, to grow, and that's a positive sign. We're also seeing that around our future bookings portfolio by the end of Q3 is 30% higher than what we saw -- what we saw last year at the same time of year. Just for your information, by February, that was only 17% higher. So there is increasing confidence from that number, you can see increasing confidence from customers that volumes might recover in the future. So yes, it's a bit of a longer explanation, but hopefully, that paints the landscape a bit for you. And look, yes, maybe one more remark by the way. It's important that I think we talked about this with our growth. The chocolate confectionery categories as we mentioned later by Nielsen is down. As a company, Barry Callebaut, we're also increasingly exposed to adjacent categories. So think of category like ice cream there, we see more positive developments, right? So it's very important, not just to look at the chocolate confectionery market. You need to get a feel for where we operate and also our volumes. It's important to look at the biscuit category, ice cream category, chocolate categories. I think that probably gives that's a reflection. So let me leave it there. Then on gourmet, yes, what we've -- as we've said before, we had a low position that has, of course, had an impact on our profitability but also to cut pricing at a relatively high level. We have invested in that in the third quarter, but only towards the end. We feel that with change price list, which tend for us to be coactive every half year. So we've just issued a new prices for the first of July, and we believe there's a lot of reason besides excellent taste of course, for customers now to start stocking a bit, and we're seeing some early indications on that. And therefore, overall, we're quite confident on our projected growth in fourth quarter that you can calculate given the guidance of minus 1% for the year, the growth we've made in the first -- in the third quarter that should be around 4.5% or so in terms of volume. So Gourmet should play a good role. So coming from a decline, we expect the fourth quarter to be slightly positive there.

Our next question comes from Alex Sloane from Barclays.

The first one would just be around the cocoa bean price and the leverage guidance. So obviously, you're not changing, if I understood correctly, you're not changing the leverage guidance for the year. You're still working off kind of the medium-term assumption of GBP 3,000 per tonne of bean price. Obviously, we are above that level today. So I mean, does that imply that you don't necessarily see the current cocoa bean price as sustainable? Or is there kind of more balance sheet flexibility to kind of absorb this higher price? And is that sustainable also into next year? Or if prices stay here, does the kind of normal rule of thumb still apply. That would be the first one, please. And then the second one, just actually just to go back to gourmet, if that's right. I mean, good to hear it's coming back to volume growth in Q4 on these new prices. Are the new prices kind of in line with what you are expecting and thinking about back in April, just thinking about kind of the potential recovery in profitability in gourmet next year, which I think you you had kind of talked about like your train less sort of issues in gourmet, profitability being temporary in nature. Is that -- is that still the case? Can we still assume gourmet profitability recovers next year as sort of pricing COGS better aligned?

Let me probably start with question 2, and then I'll hand over for the bean price and the impact on leverage to Peter. I mean the ongoing and the new prices, yes, I would say the new price list does reflect what we had in mind. And it will, given the ease the long position, it will result in a higher profitability for us. Now that's all factored in, by the way, in our guidance. And therefore, that will also have a positive impact as expected in the new fiscal year. Of course, without further external disturbances and so forth. So -- but in itself, yes, that should return to levels that we feel is more in line with historic averages. At the same time, as we -- as I said before, we're not doing this for volume for volume, but where we lost some share, and where we feel that we need to make a stepping our way to create customer intimacy, but also to start selling solutions, including specialties and so forth. We will, of course, be competitive. We're not alone in the market. And yes, we want to make sure that we are the spire of choice. Now with that said, overall answer is, yes. We do see improvements in the fourth quarter volume-wise profitability-wise, and we expect that to roll in the next year as well. On leverage and the bean price, I'll give to Peter.

So yes, so leverage on bean price, let me go 1 by 1 on leverage. We're indeed confirming our guidance for August around. There's a few points to mention there. First of all, we are in the low harvest cycle. So there's not a lot of mine going on. Secondly, there's -- the rule of thumb is likely still valid as we said before, EUR 60 million to EUR 70 million. But of course, there's short-term and a midterm effect. We are protected somewhat more in the short term because of our network of credit, for instance, as an example. So that's one reason why we are not going to see immediately that impact. But also overall, as we discussed in previous calls, we have a better protection, not only because of the financing that we've done, but also because of our procurement agility, buying from different sources, buying at different modes and being able to keep especially our open futures lower, which means that we're less impacted to the necessary increase in the bean price. On the BFS itself, so net, yes, we stay around 3% at today's bean prices for August. On the bean price itself, we've seen quite a spike linked and driven by some spec activity around the El Nino impact -- potential impact on the sector and some articles that have appeared over the course of the last weeks. Again, we are in the low part of the crop season, and that's often where we see a lot of market volatility and market moving fast in function of 1 of the other direction. We are, in that context, also carefully watching the Q2 26 grinding data coming now soon when our expectation is that will increase, but that demand is going to take time to recover. So that's something to keep an eye on. And as I mentioned in my part of the presentation, we do not expect release of the extreme market conditions we've seen in '23, '24. Industry is well covered. We have strong term plus, everybody is well stocked. So that's why we believe we are a very different situation than.

Our next question comes from Ed Hockin from JPMorgan.

My first question, in the press release, you noted on restocking in cocoa. Are you seeing restocking more broadly in chocolate as well? Conscious that it's been a period of quite low cocoa prices during the quarter. So have you been seeing customers taking the opportunity to restocking on chocolate at lower price points? And whether more broadly, you could help quantify what magnitude of support to your group volumes in the quarter restocking may have contributed? And then my second question, please. It may be a bit premature, but you've given already guardrails on 2027, so I wanted to come back on those guardrails for 2027, clearly still pointing to 1% to 3% volumes over the next 12 to 18 months, but wanted to come back on EBIT and PBT, the magnitude of some of the blocks that we should be considering in the EBIT bridge for 2027 as gourmet profitability recovers. You've had supply disruption costs over the last couple of years, disruption costs in your OpEx that should be fading out. So is there any more clarity on how we should be thinking about the quantum of EBIT and PBT improvement in fiscal year '27, please?

Thanks, Ed. And I'll do the first question and hand over to Peter for the second question. On restocking. Just a few words. First of all, I want to dissect it a little bit. And you talked about chocolate, but we just in the landscape. The overall growth in Q3 was, of course, primarily driven by an elevated demand in global cocoa, so that's 18% up, as the cocoa market correction earlier in the year, reduced the cocoa product prices. And cocoa powder saw particularly strong momentum in the quarter in Latin America and Asia, and that was supported, we believe, by some customer restocking. So that's happening in cocoa to some extent and in some regions. But the power business overall also benefited from one-off cocoa but opportunities. And as I said before, the basic comparison on cocoa was a bit lower for this particular quarter. So that's cocoa. So there might be some restocking taking place in certain regions, but I wouldn't want to make it too big of a theme. Then on chocolate, the growth in the quarter, 3.2%. And also here, I think we need to go a little bit in detail. So we saw a second consecutive quarter of double-digit growth in AMEA. That was 14% in Q3, and that is as a result of higher demand in China for us, market share gains in India, where the business continues to drive double-digit growth for already quite a long time. So really strong business overall there. And we secured some additional business in Australia because of just a more commercial drive there. So that's an important part of the overall growth. I also talked about improved service levels in North America. Just by stepping up service levels, and I talked about 6% earlier on, that will -- it just helped us to get back to levels where we need to be. In fact, it's still not where I want to be. I think there is more for us to do. But overall, that helps us in driving a positive volume. We are increasingly exposed to some categories outside of chocolate that are, I would say, better placed. We're seeing -- we saw an enhanced demand in ice cream overall, at least better than what I would say in chocolate confectionery. I will not give particular numbers on ice cream, but it was certainly a better picture and that benefits our specialties and some of our business there. And then finally, as I mentioned, by the end of May, our future booking portfolio was at a level around 30% higher than at the same time last year. And it was also higher than what we saw by the end of February. And that suggests there could be some customer restocking. Now I'm a bit elaborate, but the reason I am is because I don't want to sort of point all to restocking. It's not. It's a much more nuanced view. And there might be some of that happening, but certainly not the overall driver for chocolate growth.

All right. And your second question on '27 profit. Obviously, we will come back on that as per the right time when we announce the full year results. But it's obviously a good question. Main message I want to bring is we need to be a bit balanced on that because there are different components playing in different directions. First of all, the volume that we talked about it already that we expect to be between modestly between 1% and 3% linked to obviously the market, which today still is at minus 4.4%, and secondly, also the service levels for us that are improving, but still have some way to go. With that or next to that, we do -- we will see some of those things that you're mentioning in chocolate, especially so margin recovery on the Gourmet side after the investments we had to make and we made this year. Not expecting a full repeat of that and some of the disruption costs as we improve service levels and stabilize should also get better. On the other hand, and we have talked about it before, we've seen exceptional results in cocoa linked to the pressing margins and supported by the absolutely crazy volatility that we've seen into the market. So there will be some normalization. We're seeing it happening already right now, in this half year and in Q4. So you have to balance that out versus the chocolate side with the normalization on the cocoa side. And the final, also important element is on the deleveraging agenda, and therefore, the reduction of the financing costs. We do expect a significant reduction of the financing costs also next year, which is great. Now that also means that there's less pass on supporting EBIT. So EBIT will mechanically go down because of the reduction of the financing cost next year, that always does not make a negative on the profit before tax, but it's something to keep into account when you look at your EBIT line, there's a mechanical negative impact of the lowering financing costs. I hope that it lies a bit and also, we will come back with a lot more detail in due course.

Our next question comes from Jon Cox from Kepler Cheuvreux.

Congratulations for the figures which were probably better than most of us expected. Just on the sort of volume outlook for FY '27 if you're already growing above 3% in chocolate, which is everybody thought that, that business would remain under pressure with your big customers, maybe still having to refill their own factories because of lower capacity utilization. It looks like maybe some other players are coming in and already ordering. Why shouldn't we expect top line growth next year to actually be 3% and maybe more in terms of volume? What do you see that may be we don't or any sort of color you can provide on that would be useful? And then just to come back to profit before tax this year, you were mentioning that there's an extra EUR 15 million on the financing. It will be about EUR 330 million this year, that net financials line, but you're also saying at the PBT line, it wouldn't be as bad as that mid-teen decline you're going to see in your EBIT recurring in constant currencies. I've struggled to get there when I'm mucking around my figures, I still see a pretty substantial decline in PBT because of that financing line. And maybe as an add, if I can, any early indication of what that net financial line will look like in FY '27?

Thanks, Jon. I'll go for the first question and hand over to Peter for the second one. I'll probably add some comments there. So I mean, first of all, you're right. So what we've indicated for 12 to 18 months was a volume of around 1% to 3%, that is slightly below the medium-term guidance of 2% to 4% and the focus for growth plan. And yes, we're obviously happy that we have a return to growth right now. So that's good. And that's for all the reasons that I just mentioned on the previous question, right, so I will not go back on to that. But what it leads to the growth in Q3 as well as the implied growth for Q4 is a higher base for where to grow. And if you take that higher base and if you then think about the overall chocolate confection category, which is still negative mid-single digit, I mean, North America around by the 7%. We are -- what that means we really -- again, we're offsetting that with growth in adjacent categories that are looking better, but they are not in growth yet. So it means for us, better service levels. It means for us taking share gains, and it needs for us some effect of, as I said, on restocking because of the future portfolio increase. So look, I definitely -- I don't want to give the gloomy view here, but I'm very keen about overall to set realistic expectations. And I feel that the guidance that we have given there for the next year based on the -- I think in combination with the higher base that we will be getting to towards the end of this year is the right guidance for us to play with. Now in addition, as I said, we will continue to -- and that's a bit of a basic boring message, but I think it's super important for us that we continue to focus on making the company better, laser focus on restoring fundamentals, making sure that I'm happy with the progress we made in North America that there's absolutely more to do, making sure that quality remains at the level where we are. And in fact, that we truly embed in our operations much more sustainably than what we did, continuing with the approach of more differentiated sourcing not just from West Africa, but as you know, we're creating flexibility there. Also that comes with investments and R&D and so forth. So we really need to wait as a better company. I'm super excited about that. I think the opportunity out there is very significant for us, but I want to be quite realistic about the -- yes, the sequential progress that we're making and therefore, the volume margin look for next year.

John, on your second part on the EBIT and the PBT and how it relates, we are -- well, not to be it, we are, as you heard Hein say, we are maintaining our maintain down EBIT guidance for the full year because of the short-term impact of some of those actions to prioritize growth and stabilize because of the mix, because of the cocoa normalization and because of some additional risks that we're still facing regarding Middle East in fashion. So that's how we maintain the EBIT guidance. Now PBT for this year will also still be declining. However, less. Now the recovery of PBT depends on -- maybe that's why you're right, your question is coming from -- if you look at absolute level, the decline on PBT will be significantly lower about half versus what we see in absolute decline in EBIT simply because our finance costs will go down significantly year-on-year. It does not necessarily mean that percentage-wise is a slower decline because, of course, you're looking at it there's an absolute amount of a smaller base. But essentially, we will be recovering about half of the absolute loss on EBIT on the PBT line. For next year, yes, I'm not going to guide very specifically on the OSV will come back to that. The only thing I can say beyond what I gave in the answer to Ed about the moving parts is that we will be reducing further our finance costs for next year. We will go below EUR 300 million for the full year, but we'll come back to that in -- at a later stage.

I want to maybe just have a little add. You talk about how actually other categories are doing better than chocolate. Can you just give us a rough split? Is it still something like 70% chocolate, 30% other confectionary, whether it's biscuits, ice cream, you'd use it in other applications as well.

No. I think we're -- obviously we're obviously -- look, like I'll give you an exact split here to be very honest, it went tax price. But I think -- for us, adjacent cap wise, as I said, ice cream, biscuit categories, bakery overall is larger than what you would what you just suggested. That's not 20% or 30% that that would definitely be more.

So 60, 40, so. .

No, I think it's around half. Well, I can come back later on with a more precise former.So let's vote this. But because again, sometimes the category lines are blurring a bit, but we're definitely more exposed to other categories and chocolate confectionery, again the number that you stated.

Our next question comes from David Roux from Morgan Stanley.

Just 2 questions from my side. Just coming back to the guidance and at the risk of laboring on the point, could you perhaps unpack in more detail why the upgrade to volume guide for FY '26 did not drop through to an EBIT upgrade? I mean given the fact that Barry runs a cost-plus model, this would suggest there's additional price investment somewhere in the business that you had not anticipated, I guess, in June when you last confirmed the guidance or there's some under recovery of costs. So any additional color on those contributing factors would be appreciated. And then just a more sort of broader question. I mean if we look at the business on a PBT, per tonne basis, I think we're probably sort of 30% to 40% below 2019. I mean do you think we are now in an environment where profitability per tonne for the business will be structurally lower than it was prior to the pandemic? Or are you fairly confident that you can return to those levels, if not exceed those in coming years?