Kri-Kri Milk Industry S.A. ($KRI)

Hello, and welcome to this webcast. I'm Konsta Sarmadakis, Kri-Kri's CFO. In this session, we will discuss in detail our performance for the full year 2025, and I will give you an update on the business for the current year 2026. After a short presentation, Q&A will follow. You can post your questions using the chat tool. Now let's have a look at our P&L statement. Sales continue to show strong growth with an increase of 28.2%, exceeding EUR 328 million. Most of this growth is attributed to higher selling quantities while the price effect is estimated of about 2%. Gross profit margin was 27%, which is 2.7 percentage points lower than that of 2024. EBITDA was increased by 13.4% and reached EUR 48.3 million with a margin of 14.7%. EBIT show similar increase of 13% at EUR 42.1 million with a margin of 12.8%. It should be noted that profit after tax had a benefit of EUR 1.4 million that relates to a tax relief as a state subsidy for completed CapEx projects. For the previous period, the tax relief was much higher at EUR 5.3 million, and this explains why the profit after tax figure is marginally reduced. We have applied to be certified for completed state subsidized CapEx projects. Following the successful completion of audits, we will be given the right for tax exemption in future periods totaling EUR 6.7 million. Now compared to targets, actual sales figure well exceeded the revised estimate of above EUR 300 million. And also, we achieved the EBIT figure target of EUR 42 million even marginally, but we missed the EBIT margin target by about 1 percentage point. And this difference is translated to about EUR 3 million less at the bottom line. In the yogurt segment, our gross margin improved in the second half of 2025, broadly in line with our estimates and after our price adjusting initiatives. However, we had some cost overruns as shown on the table on the right-hand side of the page. Firstly, about 1.1 million relates to increased cost of raw materials for ice cream. Prices of key raw materials such as [indiscernible], chocolate and vegetable fats remained at high levels during the last quarter of 2025 when we proceed to mass purchases for the next season. In 2026, these prices have dropped significantly. The second element is the increased waste [indiscernible] production. This comes from the shortage of available capacity that made our factory to operate well above the optimal utilization rate to cover the demand. Also, we had increased transportation cost because of the change in sales mix regarding geography. So sales in distant markets like U.K. have grown at higher pace. Finally, in 2025, we upgraded our SAP ERP system and moved to the cloud version. We expect this upgrade to support our digital transformation initiatives and facilitate the introduction of AI to more areas of the business. Unfortunately, the project went a little over budget. Moving on to input costs. The graph shows the evolution of raw milk prices. The blue line shows the price of Greek milk, which consists of basic raw material. You can see that it is stubborn stands at high level, a little above 55. On the other hand, with the green color, you can see that the price of EU milk has dropped significantly in Q4 and continues in 2026 at even lower levels. This is explained by the abundance of raw milk supply. This development has a direct positive impact to our cost base as it relates to dairy commodities that we mostly import such as butter and proteins. Also, it might drive the Greek milk price lower as buyers of Greek milk may replace some quantities with imported milk. Now about the impact of the Middle East conflict. It is very difficult to estimate the impact both the financial and the operational to our business, especially if the conflict lasts for long. Given the effects are temporal and energy markets will soon return back, the estimate total surcharge to our cost base is about EUR 5.5 million. The most part of it currently offset by lower dairy commodity prices. And also, we are preparing for price adjustments if the effects to our cost base escalate. Moving on to segment review. Yogurt export sales saw a strong double-digit growth of 45.7%, exceeding EUR 188 million. It is worth mentioning that yogurt export sales make up about 70% of total yogurt sales. The boost in our sales mostly comes from the major markets of U.K. and Italy. You can see on the graphs that the size of Greek yogurt market in these 2 countries is growing very rapidly. And by the currently available information, we expect this growth at high pace to continue. Moving on in the domestic market, it seems that the market has entered a growth phase. In 2025, it showed an increase of plus 10% in value and plus 7% in volume. And this positive trend seems to continue during the first month of 2026. Our sales in 2025 have followed the growth of the market. In general, consumer preference for private label yogurt continues, primarily driven by the significant price gap compared to branded yogurts. And although we overall benefit from this development, it exercises pressure to our branded yogurt market share. In the ice cream segment, in the domestic market, our sales saw an increase of plus 8% in value. The prevailing inflationary environment has primarily affected the traditional sales channel, leading consumers to shift towards supermarkets and private label products. This also means higher discounts and pressure to margins. In response, our growth strategy focuses on expanding our sales network and promoting our Greek frozen range of products, particularly in touristic areas. In exports, the U.S. case is going according to the plan. However, it seems that it will take some time until sales there reach a material level. In addition, there are efforts to tap into new markets. A recent case is China, where we have a scheduled launch of Greek frozen yogurt with Sam's Club, a subsidiary of Walmart. Let me now move on to our estimates for 2026. We expect sales growth to continue at high pace. Our estimate for 2026 is a figure of above EUR 390 million. Our EBIT figure is expected to be around EUR 60 million, provided that current geopolitical developments will not have a material impact on our cost base. The financial performance in the first quarter of 2026 supports these estimates. Specifically, sales are showing an increase of over plus 30%, while profitability margins have improved. Finally, the shareholder structure. [indiscernible] family controls about 70% of the share capital. Institutionals abroad have 14%, domestic institution about 10% and retail about 6%. Thank you all for attending this meeting. Please post any questions you may have at the chat tool. I will return in a little and try to answer them. Thank you.

Thank you all for posting your questions. There are many questions, but I will try to answer as more as possible. Let me start from the beginning. Question about the energy consumption. Energy is about -- was about EUR 7 million in 2025. It is -- we are not a very heavy energy consumer. I think this accounts about 3% of the cost. A comment of the U.S. market. We expect to see some good figures in the U.S. market coming from 2026. We have launched our branded products in a large supermarket chain in mostly Texas state. And also, we have a contract for private label with a large American retailer. A question about how we see profit margin in 2026. Overall, we see an improvement to the profit margins. This comes both from lower level of raw material prices, along with the initiatives of price adjustments that took place on the second half of 2025. The question about our plan to buy new trucks for distribution. We don't own trucks. All the transportation is done by third parties. The question about how sustainable is the growth of sales. Of course, it is very challenging to keep up growing at such pace. We -- in many cases, we are running out of capacity, especially in periods where demand is peaking. This is why we are having heavy CapEx projects in order to build up our capacity and be able to fulfill the rising demand. A question about if there are plans to further expand our production capacity after Greek Dynamo project. This project is expected to finish to be completed by the end of 2027. If we see that we need further expansion, I think we will have a plan we set a plan for further CapEx as well. Question about the tax relief. The recent application for certification completion of our CapEx projects, we will have about 6.5 million tax relief for the next year. I think 4 of this will be for use in 2026 and the rest A question about how much of [indiscernible] is Greek raw milk and raw milk. Our imports of raw milk is very limited. We mostly use Greek milk, but we import some dairy commodities such as butter and proteins. A question about the U.K. market size. What we are seeing is that the U.K. market is growing at a very high pace. and very aggressively. If this trend continues, we might see surpassing the market of Italy in a couple of years. Question about a contract with Walmart in the U.S. No, we don't have a contract with Walmart. We have with Kroger for private label. A question about China market. I'm not sure I understand the point here. But the general idea is that we try to sell where we find opportunities. And if China can offer such, we will tap into the market -- this market as well. A question about how the U.S. market is going. I said that overall, it is going according to the plan. we will see some good figures coming out from there in the current year. We might have cultivated some greater prospects, but what it is that it seems that it will take some time for material sales to come from there. Question about the CapEx. Most of the CapEx is going to be in the yogurt factory in order to increase capacity. Question about the EBIT margin. I think I answered this. Question about the German market. I think we stopped delivering yogurts there. And also, we were delisted from -- at least from some supermarket after a slight price increase that we tried but sales there were not significant. Question about Q1 performance. It is a little early to have more details on this. You need to wait a couple of weeks until our first quarter financial statements are released. question if our guidance includes the EUR 5.5 million effect of the war. Yes, this is incorporated. And as I said, much part of this is offset by lower -- by lower prices of dairy quantities. A question about price adjustments. Last year, we had some price adjustments that were effective mostly from August on 2025. We try to increase -- to expand our sales network for ice cream. We now have more than 20,000 points of sale. And each year, we try to add about 1,000 new points of sale to our question of why U.K. market is growing that fast. I think it have incorporated most trends of healthy diet that comes along with Greek yogurt. And also the consumption behavior is different there. So yogurt, British mostly consume plain yogurt as food ingredient, whereas Italians consume it as they prefer flavored yogurt and consume it as. expected CapEx for 2026. I think we have this year, it is about EUR 26 million to EUR 30 million. question about cocoa prices. Yes, we have seen that cocoa prices and chocolate price have dropped significantly in the first months of 2026, and this will have a positive effect on our ice cream question if developments in Middle East can affect milk price potentially increasing cost. Yes, this is a risk. This happened also in 2022. But the energy crisis back then started in June 2021, and it took about 9 months after affecting milk prices. Currently, the case seems different because also raw milk supply is very high all across Europe. new factory. The project is -- relates to expanding our current facilities and not building new factory. And as I said, all production -- new production lines are expected to be operational by the end of 2027. But the new lines will add to production gradually. Question about percentage of supermarket contracts that have cost pass-through clauses. This mostly consists of contracts with U.K. retailers. And I think they now consist more than 60% of sales there. Question about the hypothesis, the assumption of global market. We are seeing that the market is entering a growth phase. But competition is still very hard domestically. And I think this pressure over prices will continue. So we need to have very elegant commercial moves with our branded about 3 million variable comp. Part of this consist of increases in salaries and this will be all along the current year 2026. So this will be split evenly. And part of this will be variable compensation, bonus that will affect the last quarter [indiscernible] about the trends. I think I answered this. The assumptions taken for the margin guidance. As I said, we -- the assumption was that the conflict will end soon. It will not take more than the next 3 or 4 months and energy market will return in the coming months as well. So the effect will be of about 6 to 7 months budgeted sales for U.S. in 2026 question about percentage of sales many retailers that we work with. On 2 of them are -- only 2 customers exceed the 10% threshold. One is U.K. retailer and the second is our customer, the importer that serves the market, the Italian market. Question about the launch in China. As I said, we have scheduled a launch with Greek frozen yogurt. The shipment is on the way, and it is expected on the shelves in the coming months. About the trend of private label. Currently, domestically, the price gap between branded price -- branded and private label is very high. It's about 50% normal price gap is about 30%. So if prices -- relative prices remain the same, we expect that private label will continue gaining market share. about our strategy in international market. I think the opportunity lies with international market. And our strategy is to capture as much of this growth [indiscernible] assumptions for our guidance. There are some underlying assumptions that we expect to happen, but these are relatively according to current market prices. We don't have any hedging contracts because our raw materials are not reflected to financial instruments at least directly. Question about our capacity with the Greek Yogurt Dynamo project, we expect to double our capacity compared to 2024. A question about the growth for the U.K. market looking in the first quarter. The U.K. market continues to grow at a very high pace. I think it is more than 45% or 50%. Question about presence in France. In France, we have a small presence, but our focus is on a much higher growing market in order to be able to supply our current customers and not -- and in this way, we delay any business development in other markets. question about the legal protection of Greek yogurt against Greek style according to the EU legislation, yogurt that is produced in Greece can be called Greek yogurt. Otherwise, it should be called Greek style. However, in our view, it is this is not an element of protection but we believe that the actual protection comes from high quality and consumers' perception of buying an original product. the proposed dividend is EUR 0.45 is increase of about 12% against last year. We have much needs for CapEx, and we expect dividend to increase according to profitability in the coming years. The question if it makes sense to build production abroad. At this point, it is not on the table because as I explained, in order to call yogurt, Greek yogurt, you need to produce it in Greece. So by building factory production unit abroad, we will lose this about marketing for ice cream. It is not easy to answer, but we try with our commercial strategy to increase our sales in cream. And I think we are effective in that way. Contract with Kroger is not exclusive. But I think it will be important to see the actual appeal that has to U.S. consumers. And I believe that if this is successful, other retailers might follow. Yes, we do have synergies with E.ON, for example, chocolate maker in Greece. We have products, and these are very successful. about productivity gains. This is a very good question. I believe that there are opportunities to increase our productivity because as I said, all these years, our focus is to try to meet the rising demand. So some areas like cost control, waste control are left a little behind. And there are opportunities that can improve our margins [indiscernible] Question about acquisitions. No, currently, we don't consider any acquisitions as we see organic growth that it is very high. I think this was the last question. Thank you all for joining this session. Have a nice day.