Kofola CeskoSlovensko a.s. ($KOFOL)

Ladies and gentlemen, welcome to Kofola's First Quarter of 2026 Results Conference Call. Martin Pisklak, the Group CFO, will present a summary of the results. This will be followed by reporting with business insights from Czechoslovakia, Adriatic and Beers & Ciders segments presented by country CEOs, Daniel Burys, Marian Sefcovic and CFO, Martin Rosypal.

Good morning, dear investors. I'm very happy that we can present our promising results for the first quarter of 2026. Generally, I can say that first quarter of this year confirm the last quarter of 2025 when we saw improving consumer sentiment in all the markets where we are present. At the moment, the only weaker segment we have is export in our breweries, still decreasing, export volumes are causing lower revenues in the beer segment. Otherwise, all the other segments are performing very well, and you will hear the details from my colleagues from individual segments.

Dear investors, here is Daniel speaking. Let me comment key moments of top season in Czech and Slovak soft drink market. We missed our goals, and we have to recalculate our year targets. Key factors are known: double-digit drop of Slovak market due to sugar tax implementation, worst weather in last decade and additional surprise, unexpectable negative consumer sentiment, [ stop of ] complaining. Successful launch of Targa Florio retail formats, 154% compared to last year.

Dear investors, we are sorry, this was wrong recording. You will now hear recording from Adriatic segment.

Dear investors, here is Daniel speaking. Let me comment key moments of top season in Czech and Slovak soft drink market. We missed our goal.

Dear investors, we have some technical difficulties, so we are sorry for that and no recordings will be available today but if you want to ask a question, it is now time for your questions.

[Operator Instructions] We have the first question from Mr. Bartek, please go ahead.

Sorry, I also had some technical difficulties. So in terms of the Q1 results, maybe if you could comment a little bit on the beer exports, how it's developing, whether we should see some improvements in coming quarters. And I have also seen that the revenues were more or less flat in Czechia. So if you can comment on this market as well and then strategically, if you could comment on your potential expansion again in beer exports. You last time indicated that you want to expand in Slovakia. So if you have started already, if you have any targets there, how many points of sale or some numbers to catch? And also in -- the same with UGO chain, if you have already started the expansion in Slovakia and what would be your targets in terms of number of Freshbars or something like that?

Thank you very much for your questions. So let's start with the exports. Basically, the drop in exports started in January 2025. Most probably this was caused by imposed customs on Russian market, and that's why the distributors, mainly from Poland stopped ordering from the breweries. The full impact was heavily visible in the export segment [ for beer ] for full year. However, during the first quarter of 2025, still some exports to the Eastern Europe were realized. So the drop which we are experiencing now in the Beer segment is basically driven by the fact that at the moment, we have no exports to Eastern Europe or export to Russia at the moment. So that's why the drop still so significant. In the OnTrade segment of the Breweries, which are typically restaurants, I mean, like the overall beer market in Czech Republic experienced a very weak January. Like the market was heavily under the 2025. So -- and basically, the current performance and the fact that in the OnTrade segment, we are missing some 7% compared to prior year was caused by much better March compared to prior year. So, yes, Beer segment overall reporting lost in volumes approximately some 6.5%, predominantly driven by export. Such a drop shouldn't be visible in the second quarter because second quarter should be in terms of volumes in export already, let's say, like-to-like with the same conditions on the export market. So we believe that from the second quarter, we should be improving results of the Beer segment. I would not agree with you that the revenues in Czech Republic are almost flat. We're still showing some almost 3% growth in revenues, which I think is very solid compared to prior year. Basically, we can say that like all the segments in Czech Republic are improving. Volume-wise, we are better by almost 4%. Also, what is like worth mentioning here compared to 2025, first quarter, we have a slightly lower prices because during the season 2025, we started with like -- or we decreased some prices due to the conditions on the market and the competition on the market. But as you can see, right, from the details from CzechoSlovak business unit, Czech Republic performed very well. We have basically very solid on-premise results, which are restaurants and pubs, more than 6% increase volume-wise compared to 2025 and 4% increase in the retail channel, which is basically very good. What you can also see in CzechoSlovak segment is that we are much better in Slovakia. This is purely the function of the fact that in the beginning of January 2025, the sugar tax was imposed in Slovakia and there was a huge drop in revenues and in sales during the first quarter of 2025. So now we are back on some -- track. But what we can say is that basically the Slovakia is developing quite well and the consumer sentiment is much increasing compared to prior year. And the last question, which you have was regarding the UGO chain. UGO performing very well. We have -- we opened 1 Salaterie in Slovakia this year or in the end of last year already. And we are preparing ourselves for the international expansion of this chain. But at the moment, I cannot comment on precise timing or countries which we are considering, but I hope that we can present you such a plan in the near future.

And in terms of the expansion of beer exports to Slovakia and maybe to other countries in the region?

In Slovakia, we are starting basically during this season. It should be like in cooperation with Kofola distribution. So we believe that this year or -- definitely this year, some volumes are coming from Slovakia as well. And what we also see is improving sales to Poland, which is currently our biggest export country for the beer.

Do you have any physical presence in Poland or only via distributors?

We are -- basically, we are selling beer to Poland like using 2 distribution channels, [ 1 ] distribution channel are the standard distributors like wholesalers in Poland. Second distribution channel is our company Premium Rosa, which is focusing on retail and some regions in Poland. So we are combining these 2 basically ways. One is like, let's call it, intracompany and the second one is directed with external partners.

Mr. Raska, you can ask your questions.

Do you hear me?

Yes, we can.

My question is on acquisitions. How will you consolidate the last acquisition, Alta Fermentacion, you own 40%, 49% share of this company. Will you consolidate it into EBITDA or we will see the results of this company in the financial part of the income statement?

You will see these results in the financial part of the income statement. We are in minority and we do not have full management control. So that's why we are not consolidating this entity fully to our results. However, we plan to be a bit more detailed on this segment compared to other companies where we have a minority share because we believe that Latin America is like very interesting part of the group now. So we will show you later a bit more details.

Last months, Kofola was active in acquisitions activity. Can you more elaborate contributions of new acquisitions into Kofola's first quarter results? I mean especially contributions of ASO Vending and Nobilis Tilia.

Well, in terms of ASO Vending, you can see that basically ASO Vending is the biggest contributor of the increase of sales in Slovakia. As you can see, our sales in Slovakia increased by 64% in first quarter 2026 compared to first quarter of 2025. Majority of this increase was, of course, caused by the ASO Vending revenues. And in Czech Republic, we added the Nobilis Tilia from the beginning of January. In general, I can comment that basically in terms of revenues, the companies are developing relatively well. ASO Vending is basically on the track, what we expected. Nobilis Tilia is slightly below the target which we had. In terms of EBITDA, typically, the contribution is lower at the moment, but this is basically driven by some reorganization of the companies after the acquisition. So basically, in the short term, you are typically incurring a bit more cost once you are implementing some like group standards to the companies. I believe like basically, this typically takes maximum 1 year and then the EBITDA of the company is developing according to expectation and increasing. So at the moment, contribution of this new acquisition is, I would say, rather small to the overall results. However, everything is basically running according to our acquisition expectations.

We have another question from Mr. Kubik. Please, go ahead?

Can you hear me?

Yes.

I have a question related to the leverage. Leverage increased to 3.5x in Q1 '26, which is quite significant expansion compared to Q1 '25. Given that this level potentially constraints your financial flexibility for future acquisitions which are probably a plan, could you please provide some view on your leverage target, where it lies, and perhaps some guidance for the upcoming quarters? And second question, you mentioned some negative impacts related to the Middle East conflict. Do you have a particular standpoint what might be the negative cost impacts in Q2 and Q3?

Well, regarding the leverage. At the moment, we are 3.5 which is increased compared to the year end. At the year end, we were approximately 3. Our expectation is that based on the model which we have, we should return to approximately 3x, 3.1x EBITDA at the year-end of 2026. Our long-term target is around 2, 2.5x EBITDA from the operational part. The increase is basically driven by 2 major facts and these are acquisitions and extraordinary high CapExes which we incurred in 2025. We built 2 big warehouses, 1 in Mnichovo Hradiste, second one in Rajecka Lesna and also the other investments to our mainly production part of the business. And simply, if you can -- what you can see so -- in the past, we typically invested, let's say, around 40% of our -- or we have invested 40% of our EBITDA back to the capital expenditures. In 2025, we invested basically 60% of our EBITDA. So that was the major reason for such an increase in leverage. And this was, of course, combined by the lower profitability than we expected. We were more optimistic for 2025. And in the end, the result was much -- the result was lower than we expected. So this also negatively affected particularly this KPI, net debt to EBITDA. So I believe that, again, we can return back to 3x at the year-end. Long term, we would like to be like 2, 2.5x EBITDA. And the second question, you have -- if you can remind me, it was...

It was negative impacts related to the Middle East.

You can see that in the numbers for the first quarter, nothing is basically visible. In the numbers for the second quarter, there will be some small impact already visible now in June, namely in material prices. Basically, overall impact for the group can be -- if I calculate it only as a pure like material cost increase and transport cost increase or energy cost increase, the overall impact on the group can be like around CZK 200 million approximately. We already recalculated all the necessary P&L lines and basically approved the plan how to mitigate these losses. So for example, we already increased the prices in Adriatic region. We implemented some kind of like cost savings and we canceled some of the commercial projects which we have for 2026. And overall, we believe that still we can deliver the target which we presented in the beginning of the year, so CZK 1.8 billion to CZK 1.9 billion EBITDA for the full year 2026. What is important for us is that really that the war can end during the second quarter. And at the moment, it seems that it will be not the case. If this will be not the case, then for sure, we have to increase prices also, for example, in Czech Republic and Slovakia and generally, such effect that the war will not end in the second quarter will bring in our opinion, a very strong inflation pressure in all the European markets. So basically, then we will be forcing again some like inflation in Europe as we experienced it some 2 years ago, as you can remember.

Next question is from Mr. Bartek. Please, go ahead.

One more question regarding the leverage. You have closed the acquisition in LatAm in the first quarter. So whether we should expect some impact on your leverage for the second quarter from this acquisition?

Well, second quarter, this will be again -- there will be an increase of net debt because of this acquisition. On the other hand, we already like in the preseason time, and so far, the second quarter is developing according to our expectations. So the profitability is increasing. So I do not expect any significant impact on the leverage for the second quarter, like in the end of the second quarter, I believe that the leverage will be slightly below 3.5.

Mr. Bartek and Mr. Kubik, do you have any other questions?

Yes. If I may, one follow-up question. On the Q1 results, there was relatively strong increase in the selling and administrative costs. If you could split it into what was the impact from the acquisitions and what is the increase in personnel expenses? Maybe how much was kind of the impact from postponed expenses from 2025 on Q1?

Well, basically, there are almost no postponed expenses from 2025. The increase is basically driven by the new acquisitions. Definitely, the administrative costs increased by some like CZK 110 million, out of which CZK 65 million approximately was driven by the new acquisition and relatively the same or basically even higher share of the increase is in terms of selling and marketing costs. So basically majority of this was driven by the new acquisitions. What we did is that basically in the first quarter, we are accruing or we are posting accruals for annual bonuses. This is the same situation as was during the first quarter of 2025. So there is no impact from this fact because this accrual for the bonuses were then released basically in the year-end or during the last quarter of 2025. Yes, we increased the salaries for the employees, but this is basically visible in all the lines of P&L where you can expect some employees. And I would say that the increase of the salaries is basically on the market level. So there is some percentage points, but nothing extraordinary compared to the market. So the biggest impact is basically driven by adding new companies to full consolidation.

Maybe if you can remind us of covenants, which you have for now on your debt?

On our net -- annual net debt to EBITDA should be like 3x that's the major covenant. We are -- at the moment, we are in line with debt service coverage ratio, which is also one of the covenants and we are also meeting the CapEx covenant. The major one which we are discussing with our banks like always, it's like a debt to EBITDA, which is really the most important for our banks at the moment. And at the moment, we basically do not have any negative indications from the banks that they are nervous or not able to provide us with the financing. Also Alta Fermentacion investment was financed from the bank credit, which were specifically provided for this acquisition. So banks are supporting us in our acquisition activities. And at the moment, we do not have any financing problems with them.

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, and goodbye.