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

Good morning. This is the conference operator. Welcome, and thank you for joining the Orsero 9 Months 2025 Financial Results Web Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Paolo Prudenziati, Chairman of Orsero. Please go ahead, sir.

Hi. Good morning, everybody. Just a couple of things before I pass the word to Raffaella and Matteo. I would like to draw your attention to 2 items. The first is that the good results we have in front of us for the first time are driven not only by higher price, but also higher volumes, which is particularly satisfaction to us. And second, that the overall margin that we can show to the market are very much comparable with the global competition. But as you know, we are not at all involved in production. So it makes our things even more satisfactory to us. Now I pass the word to Raffaella. Thanks.

Thank you, Paolo. Good morning, everyone, and thank you for joining us. We are pleased to open by saying that this quarter once again met our expectation, showing how solid, stable and well-grounded our business continues to be. Net revenue grew by 10.5%, driven by the excellent performance of distribution. We saw higher prices, thanks once again to the product mix we keep working on, but also, as already Paolo said, an increase in volumes, which is a very positive sign. We are convinced that the distribution still has possibilities for organic growth, and we have not expressed our full potential. Adjusted EBITDA at EUR 74.6 million increased by 11.5% due to the contribution of both business units. Distribution EBITDA improved by 5.9% compared to the same period last year. All countries delivering solid results and met our expectation. And all products had a good performance with New Zealand kiwifruit and fresh-cut leading the way. Shipping also improved, thanks to an excellent loading factor and a very strong performance from dry cargo. Adjusted net profit increased by 19.4%, reaching EUR 32.9 million, and our net financial position stands at EUR 109.1 million. On the investment side, we have completed the dry docking of the second vessel, and we are moving ahead with the upgrades across all our warehouses. As for our guidance, we confirm it, and we are confident we will reach the upper end of the range in terms of economic margin targeting. Having this stronger foundation, and I conclude, we feel this is the right time to quickly move into a new phase of growth and further international expansion. With that, I hand over to Matteo to discuss our results.

Thank you, Raffaella, and good morning, everybody. Thanks for joining. So our results, as Raffaella and Paolo said, are showing a very strong performance. About the market context, we saw for the first time since, let's say, many quarters an increase in volume and not only in pricing. The inflection is counting for 3% on food in general. So our mix is driving the growth. The good news about the volume that we're not increasing the volume selling commodities, but the highest valued product in the fruit and vegetable gamma. So that's really important for us and really current with our strategy. Sales are up 10.5%, thanks to the distribution. And the distribution is not only growing on sales, but it's growing as well in the right way, thanks to very good margins. The adjusted EBITDA stands at 5% on distribution, and it's comparing with an extraordinary 2024 performance and it's more or less in line, slightly lower, but this is showing a very, very strong and resilient performance of our business. The shipping is continuing to perform very well, in line with our expectation. The market context is so far stable. The dry docking of the 2 last vessels is finished. So next year, we won't have any additional operating costs driven by the dry docking activity. Loading factor is continuing to be above 95%, and this is one of the most relevant KPI that we can observe. Going on the bridging of net sales and adjusted EBITDA, as we said, the distribution grew by EUR 115 million. This is the main driver of the growth, thanks to mainly kiwifruit, exotic categories, citrus berries and fresh-cut. Shipping is increasing by EUR 3 million or 3.4%, thanks to the contribution of the dry cargo, while the loading factor, as we said, registers record levels on both segments. On the EBITDA, as we said, the distribution improved by almost 6% versus last year, thanks to the improvement in terms of product mix, driven by strong performance of high value-added categories, in particular, pineapple, kiwifruit, exotic products, citrus and fresh-cut. We must underline that fresh-cut is performing very well and the category is starting to boom again. Shipping increased by EUR 4.8 million. The reefer segment, so the fruit, let's say, transportation segment remains stable with a cost base comparable to last year. And what is increasing is loading factor and the dry cargo. Going to the net profit. Actually, the net profit stands -- the adjusted net profit stands at EUR 33 million, mainly driven by the increase of the adjusted EBITDA that comes in for EUR 7.7 million. We don't have main adjustments. The only adjustment that we have on the EBITDA are comparable with last year. So nothing to underline here. On the net equity variance, the net profit is driving the growth with EUR 31.4 million. Then we have to take into account EUR 8.4 million dividend paid to our shareholders in May. Almost EUR 2 million dividend paid to third parties, so our partners, negative hedging reserve for EUR 4 million, mainly driven by the U.S. dollar-euro exchange rate and others effect accounting for not even EUR 1 million. So our net equity passed from EUR 256.4 million to EUR 272.6 million. In terms of net financial position, the net financial position is quite stable compared to end of 2024. This year was and still is a year where we are investing a lot. So -- but the cash flow is still very positive, coming in for EUR 35 million. We have EUR 7 million change in net working capital. This is driven by the growth of sales, EUR 17 million of operating CapEx. And then we have the dividends, EUR 8.4 million and the mark-to-market that the bridge is minus EUR 6 million. So our net financial position, excluding IFRS 16, passed from EUR 55 million to EUR 58 million. And then we have an IFRS 16 effect that comes in with EUR 51.2 million. Last word on the guidance before leaving the rest of the call for the Q&A session. As Raffaella said, we are keen in obtaining the top end of our KPIs on the margin, so adjusted EBITDA and net profit. So we are really happy to be able to have this trust in our performance for the rest of the year. Thank you. I will leave the rest of the conversation for the Q&A.

[Operator Instructions] The first question comes from Gabriele Berti of Intesa Sanpaolo.

Congratulations on the strong results. At this point, also the upper end of the guidance range appears rather conservative. However, my first question, I wanted to understand whether the increase in volumes reflects the underlying market trend or a greater exposure to faster-growing product categories or an outperformance driven by other specific factors? And if you think this positive environment is sustainable also entering 2026? Second one, could you share some color on your early planning assumption for 2026, in particular, across shipping? Maybe you already have some visibility on time charter contract for next year and also expectation for banana trading environment? And lastly, on CapEx, could you please provide us an update on the key organic development plans for 2026, in particular, warehouse modernization planning, the Spain project. So in general, some indication on next year investment priorities would be helpful.

Thank you, Gabriele. So starting from your first question, volume-wise, this year, it's quite difficult to be very precise because in our business, we don't have a clear data set to be able to answer to your question. But surely, the category as a whole is growing. So the consumption trend -- the healthy consumption trend is growing, and this is basically very good for everybody in our category. But we surely are exposed to the fastest-growing categories. So we're not pushing, as I said, on the pure commodities where there's no value in increasing that much the market share because the consumption is flat. So you always buy market share. You're not building up anything. So we are growing with avocados, with the exotic gamma, with the berries, with the kiwi, with the table grapes, with the clementines, with the categories where we think and we feel that the growth is there. But surely, the market context this year was not bad. For next year, we -- it's difficult to have a clear picture, but the feeling is that the trend is continuing or at least we are positioned on the right categories. So we have a strong confidence that the growth will be there. Then very difficult to say which will be the percentage of growth because, obviously, it depends on as well the inflection and the pricing of the whole category. But we are positioned to grow organically. On 2026, shipping and bananas. On the shipping, we have the feeling that the market is stable. So we are not seeing in our niche neither a relevant increase or decrease on the freight rates on the fruit business. On the dry cargo, the situation is flat. But it's a spot market. So we have to see that month by month next year. But our feeling is that the situation of the market is not under pressure on our niches. Surely, all over the world, some routes are under pressure or are starting to be under pressure, but we work in a very protected niche in the good way and in the bad way. So we don't see a relevant swing up or down for next year. Banana tender are really starting now. Banana situation is probably one of the most difficult situation to understand because the market is short, the production cost is booming, but it's very difficult to pass this information to our clients mainly to the retailers. So still it's a product where the tenders are trying to push the price down. That is why already 4 to 5 years ago, we decided not to participate to the tenders where the pricing is not satisfactory for us. So hopefully, we will have an increase on average on the price, on the tenders, but we cannot be sure because we just started now. On the spot market, the difference between the price on the tenders and the price on the spot market is very relevant. So our strategy at the end of the day is to push more on the spot market, so the wholesale channel to have some satisfaction on this category that is unfortunately always under pressure without any industrial reason. CapEx. CapEx, next year will be a year hopefully dedicated to CapEx for growth. So the maintenance CapEx will be under control. As you remember, there's the Spanish project. We are still obtaining all the permission and preparing the land to be able to build. We think that the building will be starting not next year, but in 2027, but we have other plans for Spain. So we will see some CapEx to grow organically as well even next year. And all in all, we will expand our fresh shop facilities next year because, as we said, the category is booming and is giving us a very good satisfaction. But we will try to keep the maintenance CapEx and the operative CapEx really under control to save space for growth CapEx. Hope I answered to your question.

Yes, thank you.

The next question is from Matteo -- sorry, Andrea Bonfa -- sorry about that, Banca Akros.

Some of my questions have already been answered. But Matteo, if you can remind me and to the audience, I mean, what's preventing you in the fourth quarter this year to repeat the profitability of the shipping last year? Can you remind us what were, let's say, the dry docking issues? But last year, you almost delivered EUR 4 million, EUR 5 million EBITDA pre-IFRS 16 in the last quarter of the year. And I think the business should be back, I mean, with the same trend of last year at least.

Andrea, actually, I understand you're trying to understand why we did not increase our guidance at the end of the day. Actually, we don't see the last quarter as a very strong one like it was last year. This is mainly due not to market condition all in all or consumption, but only driven by the campaigns. So sometimes the campaigns are lasting longer or sometimes are shorter and very profitable at the beginning. So when we -- maybe we will exceed something in our guidance, but it's not that relevant, and we're not so confident that the difference will be that higher to suggest us to increase the top end. And if it's going to be better, it's going to be a good surprise for everybody. The shipping activity, we think that this year, the last voyages of the year won't be that high in terms of loading factor. This is mainly due to a speculation attitude of our suppliers because given the fact that starting from the first week of 2026, the prices of banana will be increasing by mostly $1 per box. They will try to sell the bananas -- most of the bananas -- they will try to keep the most of the banana they can on the new contract and not on the old one. So to give you a general concept, they will try to short the market with the actual prices and then to load the market when the prices will be higher. And we already know that the prices will be increasing next year on bananas in dollar base, I'm talking. So taking in consideration all the information that we have so far, we think that the last quarter will be okay, but not so brilliant like it was last year, mainly driven by bananas, what I told to you and then the loading factor. Then obviously, there are many different categories that we can drill down in detail. The lychees, for example, it's something that is probably will be -- the market will be overloaded with additional volumes compared to last year. So when we look at our product mix of the last quarter, we are not that confident to be able to massively beat our high end. That's a bit the consideration that I can give you.

Very useful. And if I may, can you share with us any information on your M&A campaign, if it's possible?

We would like to be able to tell you more, but it's not already the moment. We are working hard, and we are doing our job, let's say, but it's -- we're not ready to be able to disclose additional details.

The next question is from Mathias Paladino of TPICAP.

Congratulations for the results. Most of my questions have been already answered. But one of them, I want to get your view -- maybe to share your view on one point to the audience is about -- we saw last month, there was a delay on the votes on the cutting maritime emission by the IMO. In this trend, let's say, you're back in some way because U.S. are opposed to this cutting maritime emission. I wanted to get your view maybe. Can we say that this delay in the votes can give you more flexibility also to run your business with the current vessel? And yes, maybe what's your view on the situation on this cutting maritime emission of this association?

So thank you for asking this question and for the consideration. We are not the player that is able to give you a very, let's say, deep answer to your question, but we will try. Our perception in general is that this delay on the IMO decision is really coherent with the impossibility of the industrial footprint and distribution, both on the, let's say, new engine, new technologies and mostly the new fuels, let's say, that are not there. So the industrial footprint end-to-end is not ready and is not current with the political vision. This is, I think, a reality so far. And so the target that the IMO was dreaming to have is not there and cannot be there. So probably the reason why they delayed the rotation is because the agreement proposed is not possible to be, let's say, agreed upon. So there will be 1 year to rediscuss. I don't know actually if they will change massively the way and the trend. But what we can say is that in our segment, in our, let's say, tonnage as a player, basically, there is no order book or relevant ships now with different engine and fuel than oil and carbon-based engines. So at the end of the day, we think that the green wave is something that is positive, obviously, but must be paired with the reality, with the technology and with the industrial footprint. Otherwise, it's going to remain a dream and it's going to damage a lot the economy, both in Europe and worldwide. And given the fact that IMO is not representing the European Union, but is representing, let's say, the worldwide shipping activity now is blocked, and we will see what will be the evolution of the new agreement, if there will be a new agreement. For us, it's a good news, formally speaking, but it's since a couple of years that we have this vision that at least this situation will be slowed down compared to the communication that we had. So we will see if we will be able, thanks to this new situation, to operate our vessels longer. We have time to see and decide. But surely, let's say, it's not a bad news for us. Being practical is not a bad news.

[Operator Instructions] Mr. Colombini, at this time, sir, there are no questions registered.

Okay. Thank you very much. Thank you, everybody, for joining again, and we will talk soon early next year for the full year results. All the best.

Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your devices.