Orsero S.p.A. (ORS) Earnings Call Transcript & Summary

Morning, everyone. A few quick remarks from me before I hand things over to Raffaella. I'd simply like to say that our own strategy has become even more convincing to us, since in a year that was rather complicated, particularly for commodity products, and also shaped by a number of external factors, the company is reaffirming its guidance for 2026 and beyond that, it has simultaneously built the foundation for a promising near future in the U.S. market. That matters a great deal for the company's future. With that, I'll turn it over to Raffaella, who will walk you through the more detailed figures. Thank you.

Morning, everyone, and thanks for being here. I’ll keep this brief, then Matteo will walk you through the results in detail. This year has been tough—tougher than we expected—and Q3 was the hardest stretch. A number of outside forces converged at once. Energy prices rose, so did logistics and warehousing expenses, and the Middle East crisis disrupted parts of our supply chain. Because of that, more fruit landed in Europe, and that extra fruit put greater pressure on pricing. Against that backdrop, the group performed resiliently. Revenue was up 2.1%. EBITDA margin came in at 4.9%, and our financial structure stayed solid. Our strategy is delivering. Volumes for berries, kiwi, and exotic fruits rose by nearly double digits at excellent margin, offsetting a difficult year for bananas, Platano de Canarias, pineapple, and citrus—the categories hit hardest by market conditions. Shipping continues to perform well and is in line with what we expected. Revenues increased. Margins were a bit lower due to higher operating and port costs plus lower banana volumes, yet it remains a healthy business and a strategic one for us. As Paolo said, we’re convinced that over the years we’ve built a group able to absorb even a hard year, and these results prove it. Now, in the final quarter, we’re focused on two things. First, our high-margin year-end campaigns. The biggest is litchis from Madagascar; this year we were chosen as one of just two importers for Europe. That season runs from December through mid-January, right at the holiday peak. It’s a great opportunity, and we’re ready. Second, Trucco. Since this summer we’ve been collaborating on a U.S. expansion plan. The aim is to make Trucco’s distribution ever stronger nationwide; we’ll achieve that via third-party logistics partners, without opening any new warehouses of our own for now, and by expanding the sales team. On that front, we’re already well along. One final point. Cost control ranks among our top priorities. Much of this year’s cost increases were external, but we aren’t standing still; we’re doing everything possible to bring them down. One example is artificial intelligence. We’ve launched a group-wide project to make our processes more efficient and cut our costs. Let me close with this. Our high-value categories, our footprint in Europe and now the United States—these are the right choices, and we’ll keep moving in this direction. We confirm our guidance for the full year, and we’re heading into 2027 with clear priorities and a solid group. Now I’ll hand over to Matteo.

Thanks, Paolo, and thanks to you as well, Raffaella. Good morning to all of you, and I appreciate your attendance. I'll take you through our presentation, starting with the main corporate, economic, and financial results. In 2026, CapEx landed in line with expectations, amounting to EUR 9.9 million in total, which covered the group distribution network. We carried out upgrades to buildings and equipment at the group's warehouses located in Italy. A significant portion of that investment pertains to the high-margin fresh-cut business, in France and Spain too, and we capitalized costs tied to in-house development software. Expansion CapEx came to EUR 6.8 million, which includes buying a new distribution platform in Vigo, in northern Spain, to grow and reinforce our distribution in one of our core markets, and we invested to support the launch of a new product campaign, namely Litchi, which is intended to be a high-performance one. As for interest rates, the hedging strategy we have in place gives us substantial stability in the cost of debt. Long-term debt has a duration of roughly two years and six months, and the average interest rate stands at 3.48%. Starting in December, an IRS contract means 75% of what we have outstanding will be covered at a fixed rate. On May 13, Orsero shareholders got a cash dividend of EUR 0.50 per share, plus a dividend in kind consisting of one Orsero share allocated for every 172 shares held. And, as Raffaella noted, Orsero signed a strategic agreement on June 30 to acquire 45% of Trucco Group in the U.S., with total consideration of $46.5 million. Turning to the market, the European area is being affected by an inflation rate that reached 4% in September 2026. The group results are marked by an increase in pricing. I want to stress something important: for most of the portfolio, the group can still pass inflation through in its pricing. Admittedly, with certain commodities that are contracted annually by volume — bananas being the case in point — that's harder, since banana deals are tendered one year at a time. We have faced, and continue to face, a gap between the negotiations we concluded late last year and today's actual conditions, which were driven mainly by the Hormuz crisis. Over in the distribution business unit, sales grew roughly 1.8% in the first nine months of 2026 versus the same period in 2025. Revenue rose on favorable pricing even as volumes dipped a bit, with bananas, pineapples, and Platano de Canarias doing most of the driving. Categories with higher added value — exotic fruit, berries, fresh-cut — saw gains in both volume and price. Kiwi volume came up, which matters a great deal to us since it's a crucial category, and the supply-demand picture in that market looks quite healthy. All told, revenue excluding bananas, Platano de Canarias, and pineapple was up 9.5%. Adjusted EBITDA comes in at 4.2% in distribution. That reflects a better commercial margin on the high value-added product, though it was unfortunately offset by quite weak results in banana, Platano de Canarias, and pineapples, and citrus as well, as Raffaella mentioned, was a very tough campaign, driven by the huge mass of volume that arrived in the market rather than going to other markets that are actually impacted by the Middle East crisis. The shipping business unit is still performing satisfactorily and in line with what we expected, supported by higher freight rates and the rose along with bunker fuel costs, partly offset by a decrease in transported banana volume. During the summer, as Raffaella mentioned, both the banana operation and the Platano de Canarias operation suffered severely because of the situation and because of the weather patterns that, as everybody is aware, proved extremely difficult in the course of this year; consequently we ended up losing part of our loading factor due to those factors. Turning to the consolidated net profit bridge, in this comparison we set an adjusted net profit of EUR 32.3 million for 2025 against EUR 26.1 million this year. The principal driver is a EUR 10 million reduction in adjusted EBITDA. Plus a further EUR 1.2 million in D&A and provisions. Our financial results are getting better, and a big reason is the Trucco share of profit, which by itself delivered EUR 1.6 million of net profit in the third quarter. That marks the first quarter where Trucco's result is being accounted for as a share of profit, followed by taxation. During this year we had a meaningful amount of non-recurring costs, which we adjusted for. The main adjustment items are a EUR 746,000 provision for employees' profit sharing, EUR 900,000 in top management and MBO accrual, close to EUR 800,000 for Trucco legals and due diligence, a EUR 900,000 tax assessment in Italy, and about EUR 1.8 million related to non-recurring shipping costs that had already shown up in the first quarter. Now on the net financial position: we entered the close of 2025 with a net financial position of nearly EUR 50 million. Within that net financial position we count the investment in Trucco, valued at EUR 38.2 million. Cash flow was strong at EUR 36 million, alongside a working capital change of EUR 8.2 million, operating CapEx of EUR 9.9 million and expansion CapEx of EUR 6.8 million, plus the cash dividend of EUR 8.5 million paid to the Orsero shareholder. Derivatives gave us a positive mark-to-market effect of EUR 6 million. If we strip out the IFRS 16 impact, the net financial position is EUR 79.3 million, and then there's EUR 67.1 million of IFRS 16 liability that has to be added in. That brings the reported net financial position to EUR 146.4 million. Regarding our guidance, as Raffaella mentioned, we have strong confidence in reaffirming the guidance we put out in February 2026, before the Hormuz crisis began pushing all of its effects into the market. We feel really good about that. The group was able to handle this situation without difficulty, counterbalancing that external factor with the way the group's strategy performed. We intend to remain consistent with the guidance we've provided, and we look forward to building up 2026 and 2027. Given how robust our approach is, we expect this to be a strong and rewarding year; with that said, I'll turn the rest of the time over to the Q&A. Thanks.

Hi there. Hello. Are you able to hear me?

Yes, we can.

Morning, everyone, and thanks for the presentation. If my memory serves me, the final quarter of 2025 came in somewhat weak. So my question: is it fair to think that in Q4 you ought to gain from an easier comparison base? And more broadly, how confident do you feel about hitting the EBITDA guidance? Turning to the Litchis campaign that's coming up, I was wondering whether you now have better visibility on what portion of its expected contribution lands in the last quarter of 2026 as opposed to the first quarter of 2027. Given the EUR 1.5 million of share of profit coming from Trucco only in the third quarter, could you tell us whether Trucco experiences any seasonality? And finally, you brought up launching an AI adoption project aimed at optimizing internal processes and improving cost efficiency. Could you say more about where it will mainly be applied? Thanks.

Thanks, Gabriele. Yes, we'll walk through your questions. You're correct that the last quarter, 2025, was a soft one. As you know, in our business there isn't really, let's say, a contract, so each quarter hinges on a lot of different factors. Campaigns aren't identical year to year when it comes to seasonality; certain campaigns can shift by two, three weeks or up to one month. Our target is a stronger Q4 2026, that's right, and that's why we're confirming the guidance with confidence. One key point, we'll have two key points. First, the last quarter was a tough one in 2025 for the shipping business since we endured some non-recurring stop and go with our vessel for maintenance, and we don't expect that to recur this year. That's one point. Then certainly the Litchi campaign is a newcomer in our portfolio and a welcome one, because it's a strong campaign, and a very tough one since it's concentrated basically into four to six weeks, though the real sales will be concentrated in 20 to 25 days. The campaign, to give you some figures, depends basically on volume. The harvesting, on volume, will be pinned down, let's say, within a couple of weeks. I'll be traveling to Madagascar next week to follow the loading of the vessels, the packing, and the campaign's start. I'll stay there one week. Basically, we're aiming to reach revenue, let's say, of between EUR 20 million and EUR 23 million, and normally profits there are quite strong. Obviously, it really depends as well on the campaign's timing and many different factors, but basically the information we have is that the campaign will be slightly in line with the one we can consider about last year. We have some insights about how last year's campaign flowed, so we consider this campaign a potentially profitable one. That is also the reason we feel quite confident in reaffirming our guidance. Turning to Trucco's performance: it was really strong. We've known from the start that Trucco is very well positioned, in terms of portfolio mix, to be a profitable company. This is a key point. As you know, whenever we pursue an M&A deal, we always look for companies whose portfolios include a strong position in the right category, one we consider correct for future growth. Trucco's performance was very strong in the third quarter. That's fairly normal, since Trucco has a seasonality in which essentially the last part of the second quarter, the third quarter, and the fourth quarter are stronger; then there are a couple of months, let's say February and March in the first quarter, when performance is weaker because some of the high-value categories aren't there, since there's a breach, a break in the campaign, but that's entirely physiological; so yes, Trucco has a certain seasonality with a low peak in the first quarter, but basically, it isn't a low peak that worries us. We believe Trucco already has internal and organic growth written into its future. Obviously, we have to work a lot and very hard together with the Trucco team to achieve it; that's about Trucco. On AI, we've been working on it since the beginning of the year. Basically, what we're seeing now is that the main areas where AI has a plug-and-play effect are the back office and the administrative area, where in our business things are very complicated and there's a lot of, let's say, repetitive work and low-value work to be, let's say, strengthened thanks to the AI instrument. This will be the first phase. We're starting hard from Italy, and next year we are expanding in Spain and in France as well. Those are the other two core markets. At the same time, we see an opportunity to use AI within our warehouse operation to get better insights on how we have to ease the processes and to lower the cost of labor, which obviously is growing, as Raffaella said, over the past two years. Our approach with AI is a transformative approach, not really on cost, but even on the culture of the company. We all must be focused — from myself, Raffaella, the whole management team, and the operative team — we must be focused on working on the priorities and on the value-added activity, leaving space for AI in completing the low-value activity, and we have plenty of that.

Thanks a lot, Matteo.