Kofola CeskoSlovensko a.s. ($KOFOL)

Ladies and gentlemen, welcome to Kofola's 2025 Results Conference Call. Martin Pisklak, the Group CFO, will present a summary of the results. This will be followed by recording with business insight from Czechoslovakia, Adriatic, and Beers & Ciders segment presented by country CEOs, Daniel Burys; Marian Sefcovic; and CFO, Martin Rosypal.

Good morning, investors. Please welcome on our Conference Call. I'm pleased to present that our final results for 2025 slightly exceeded our initial preliminary results, which we published in February, the reason for slightly better results are basically a bit lower cost than we expected in the last quarter of 2025. Basically, all the comments, which we provided to you during 2025 are still valid. So regarding the development of the revenues, regarding the development on the cost and overall situation on the market, nothing changed significantly. I'm very pleased that the improving situation with the consumers on the market, and basically confirmed also in the first quarter of 2026, where we are reporting 8% increase of the volume compared to 2025. So we really believe that we basically been close in 2025. And now we are prepared for the growth in 2026. That's why we also like published more precise expectation for the dividend, if nothing significant happened, we will propose to the General Meeting dividend CZK 21 per share. Now I will hand my word to most significant segments from Kofola Group and my colleagues. Thank you.

Dear Kofola fans, here is Daniel speaking. 2025 was a difficult year for our business, expected slower sugar tax, surprising weather and lower consumer sentiment. Lower raw material prices and extraordinary savings, including 0 bonuses for all team, very painful. Positive development of market share in retail and HoReCa formats, declining market position in on-the-go formats due to weaker brand in energy category and a wrong strategy in booming functional water category. Believe me, 2025 was a year of many lessons learned for us. Our answer, 42 SKUs of new innovations launched in 2026, especially Kofola Nulka, our innovation of decade, 2 brands of functional water and 2 new brands in growing, no sugar, no sweeteners, water category. Strong marketing support and maximum focus of growing categories like coffee or Kombucha. Q1 very positive development, plus 10%, confirmed our ability to change negative trends. We carefully analyze the impact of Iran crisis. with negative impact, CZK 150 million, mainly due to virgin PET, plus 40%. We are ready to cover this impact by savings, better performance and price increase. Thank you for your attention and drink Kofola Nulka is delicious.

Hello, everyone. This is Marian Sefcovic, CEO of Adriatic speaking. The year 2025 was defined by dynamic market environment, regulatory shifts and volatility weather patterns across the Adriatic region. Despite the pressures the company maintained a resilient position with -- and our performance in Slovenia minus 2% compare '24, in Croatia minus 3% compared to '24%, reflecting our strategy adaptability. Initially, Q1, it means such as the VAT increase in Slovenia and new packaging fee in Croatia were mitigated by a robust first half recovery driven by a prolonged June head away. However, EBITDA growth remained under pressure due to raising personnel expenses and other operational costs. Third quarter results were fully impacted by an affordable rainy season prompting management to anticipate the operational expenses, optimization to protect the net results. That meant these challenges, which achieved a major strategic milestones, including the successful launch of Prager’s Kombucha and functional collagen our commitment to excellence was recognized with the prestige results of ours for the Oraketa design and the high ranking in the VALICON top 25 ranking, which plays Radenska among the 2 best FMCG brand in Slovenia. Finally, we continued our sustainability leadership to Green Logistics Solution and the complete of a high-efficiency can filling line in Radenci. Thank you, Marian.

Dear investors. This is Martin Rosypal speaking, Finance Director of the Beer segment. The year 2025 was relatively cold and didn't have many sunny days compared to what we were used to, which was reflected in the entire beverage business, including the Beer segment. There was greater media pressure on healthy living and alcohol consumption was one of the topics. The population is aging. Although it is growing. It is mainly thanks to foreigners who are not so beer focused. The longevity trend, it's very relevant for Generation Z and partly for millennials. The composition of gastro business is changing. There is a trend of eating gastronomy where people go rather for food than for entertainment. The share of takeout and how delivery consumption is growing, thanks to all base the per capita beer consumption falls. We can see a long-term increase in alcohol consumption and beer drunk at home. The can segment has clearly strengthened. The main reason is the product simplicity for customers. Draft and Tank beer fell the most year-on-year. The market fell by 4% overall, but Keg fell by 6% and Tank beer by almost 7%. People drink less, go out less. For us, 2025 was a year of big changes, 2 of our key brands, Zubr and Holba underwent complete rebranding and repositioning. After a long time, they entered the market with media campaigns. The main tool was ATL and TV, which were supposed to fulfill both B2B and B2C effect. At the end of the year, we started working on positioning and rebranding of the Litovel brand. There were changes in the product portfolio, it's optimization, where we newly focused on core sub-brands. The Litovel brand underwent the biggest change because its results were a bit behind Zubr and Holba. In addition, we strengthened our prices. And after a long time, we increased prices, which had the effect that sales went down a little. There was also a major personal change, both in sales and marketing, the trade marketing and marketing departments were rebuilt. New key suppliers were selected both at the packaging and design level and the new digital agency was selected. Despite all this, there was no impact on the quality of beer. And for example, Zubr won the award for the best Biolager in the Czech Republic with Gradus. In terms of revenue, in the Czech market, we reached basically the same gross revenue in a very successful year 2024. Although, in volumes we declined. In export markets, we had some successes and open a new markets, but the overall revenue declined significantly by about 25%, mainly in Central and Eastern Europe as we continue to prioritize margin improvement and scale back lower value private label businesses. Although our targets for 2025 were not met mainly due to export and not too much favorable, but we remain committed to our transformation strategy. Our focus is on building a stronger, more profitable brand-driven business that will dial in sustainable growth in the long run. Thank you for your continued support and attention. wishing you a successful day ahead.

Ladies and gentlemen, now it's time for your questions. [Operator Instructions] We have a first question from Petr Bartek.

I had some technical difficulties. Yes, congratulations to the better results for the preliminaries. Three questions. First, there was some discrepancy in your earlier release regarding the guidance for 2026. In the presentation, we have a guidance for CZK 1.8 billion to CZK 1.9 billion for EBITDA...

And this one is correct, for sure.

Okay. Okay. So the other one in the annual report is not the right one. And second, if you can comment on the development of the VAT price increase by 40%, and this is CZK 150 million cost impact, which was commented by Daniel. Is that already fixed like that you have purchased all these volumes or how we should understand it?

Thank you for this question. The situation so far is quite unclear. Everyone is following the situation around Iran very closely. However, in the numbers for first quarter 2026, basically, this crisis will be not visible basically at all. In the second quarter, the visible impact in our P&L will be very small. Typically, we have some materials on the stock part of the annual purchases are already fixed with the prices and these prices then cannot be changed. So basically, the current expectations are that even the situation will calm down very quickly, let's say, now during the April, May, then the impact will be not kind of like too long term. And we expect that on the group level, it can be in between of CZK 100 million to CZK 200 million. It really depends where the crude oil prices will finish and how fast situation will be back on the normal. So we are rather looking what will happen in the third and fourth quarter. We already implemented some measures on the cost side, and we are preparing very openly for price increase because such an increase in raw material cannot be bear by the producers. We can expect that also our competitors, they increase the prices because they are facing the same situation, as we are. So at the moment, we are preparing a price increase overall, we still believe that it should not have any impact on the annual targets, which we have for 2026, and we will handle this situation. Of course, this is kind of like a complication for management as always, but we have to work on it. And I really believe that we are able to be prepared because still the second quarter is basically ahead of us. So we have enough time to prepare ourselves for the real heat.

Maybe in terms of the costs in Q4, you commented that part of the cost savings from the fourth quarter is probably not recurring. So if you could specify the amount. And also there was a comment regarding provision for bonuses that it has positively impacted the Q4. So any comment on that how much was the difference compared to the last year or something like that.

Basically, we, in Kofola, have like very like motivating bonus scheme for the employees. Basically, all employees in Kofola Group have motivation on reaching the annual budgets because then, like it really depends, but from the very like starting position in the production or the sales team there are some like 13 or 14 salaries, like middle and top management. They have like a significant part of the remuneration linked to the budget fulfillment. So in 2024, we were in the second half of the year much stronger than we originally expected. And as 2024 was a very, very strong year for us. Basically, almost everyone in the Group was on the maximum bonuses which were quite high and definitely, I would say highest in the history of the company. However, in 2025, we did not reach the budget, and that's why there are basically 0 bonuses for all the employees in the group. And the biggest difference, of course, like came in the last quarter because still we believe -- in 2025, we believe at least that for some like minimum level of the bonus sales still in the end of the third quarter. However, we didn't reach this like minimum level. So we released also the the part for the minimum bonuses in the last quarter of 2025, which like improved the results. And compared to 2024 where the situation was still better and better. And in 2024, we basically increased the provision for the bonuses in the last quarter. So now if you look quarter-on-quarter, it's visible that the performance, it's better by some CZK 200 million of approximately. And the vast majority of this difference is due to the annual employee bonuses. That's for sure, rest of the year is -- or of the last quarter is basically in the same mood as was the rest of 2025. So we were like try to save as much as possible to deliver at least kind of flat result compared to 2024. And you see that we basically manage. We are slightly behind 2024, but still the result is strong enough to pay out a very solid dividend.

A big last question. If you can comment on the development in Slovakia. How do you see the consumer sentiment? Is this improving already after the impact from the sugar tax last year. The economy is still in problematic...

What we, at the moment, see in Slovakia is that the sentiment is improving, still it's first quarter. So we are like very conservative regarding the outlook for the rest of the year. Now at the beginning of the year is significantly better compared to 2025. We are also waiting for the beginning of the second quarter in terms of results because there were some kind of restocking in the end of 2024. 2024 in Slovakia. So now we basically like really following the trends. What is positive and we like it is that the innovation which we placed or launched to the market in the beginning of this year in Slovakia, the strongest one is 3:1, which is functional water. So the first reaction for the consumers are very positive. So we believe that the sentiment is really improving.

Next question is from Mr. Raška. Mr. Raška, you can click on the unmute me icon.

I'm sorry. Yes, you indicated a solid 8% increase of volumes in the first quarter. Can you expect this growth between Nonalcoholic segment and Beer segment. Both of them are participated on this dynamic? Or can we see difference between 2 segments?

In terms of Czech market, both of them are participating in this increase. In terms of export, breweries are still a bit decreasing the export sales compared to 2025. But I think that really from the second quarter these decreases compared to prior year in terms of brewery should stop. And they will contribute the growth of volumes in 2026 for sure.

[Operator Instructions] We have another question now from Mr. Kubik.

I want me to congratulate you on a slightly better-than-expected results. I have just one question. Could you briefly clarify if you plan to decrease the overall indebtedness to at least some midpoint of where it is right now and where is the long-term target based on the net debt to EBITDA because as I see it's a little bit on the higher point that is the long-term guidance.

Long term guidance should be in between of 2 to 2.5x EBITDA in terms of kind of like operational part of the business. We will still keep this leverage around 3x EBITDA also until the end of 2026, the main results are acquisition, which we are doing. And definitely the leverage will stay at this level also during 2026, as is now.

We have another question from Mr. Bartek.

I would have one additional question. Sorry, can you hear me now?

Yes, we can.

There was a very interesting comment in Chairman's about expansion in Latin America actually. If you could comment on that, you currently have minority stakes in the local operators. Is there any targets to maybe increase the stakes or what's the current status of the cooperation and the plans for this market?

At the moment, we are still at this like interim period between signing and closing. As we indicated last time, we expect the closing will happen in May. And it seems that really it will happen like around mid-May. So from the mid-May, should be the co-owner of these operators in Latin America. We are stepping in with the minority share, and we have like some rights in shareholder agreement to increase these shares to majority in the future. We will see how the business will develop in Latin America in general. We see the market very prospective acquisition of Alta Fermentatio kind of like test for the market to learn like how the market is working, what we can achieve on this market and how we can develop our business in Latin America further. So at the moment, it's better like Italy to say, some more information. But in general, we see Latin America is a promising market. We are starting in the smaller countries. And let's see what we can manage in these countries.

There are no more questions. This concludes today's conference call. Thank you for your participation. A recording of today's call will be available on our web page. You may now disconnect. Thank you very much, and goodbye.