Barry Callebaut Stock

Well, we're delighted to welcome Barry Callebaut back to Boston, and welcome Hein Schumacher, CEO of Barry, the world's largest B2B chocolate and cocoa ingredients company. Since joining earlier this year, Hein launched the Focus for Growth strategy and Q3 marked a return to volume growth, I think for the first time in 2 years, helped by obviously improving execution and a slightly more supportive demand environment. But clearly, at the same time, there are some challenges. Cocoa prices remain pretty volatile. There's some concern over El Nino, perhaps you can touch on.

So I guess investors are debating the pace of recovery and the pathway back to historic profitability. Hein, you bring obviously a unique perspective, having led many of the world's sort of largest food businesses. So we're delighted to have you here today.

And maybe we could start at the highest level. When you arrived in February, what did you kind of diagnose as the key issues facing Barry Callebaut? And what are the sort of 2 or 3 most important things that Focus for Growth is -- designed to fix?

Yes. It's great to be here, Alex, and good to see you again. So I think the first -- for me, the first one was, I would say, dilution of our resources, whether it was capital, whether it was operating expense and investment or whether it was people. So there were not really clear priorities in the group. The transformation had started, but it consisted of many, many different initiatives. And I felt there was an absolute opportunity to prioritize, which I'll come to and what we did. The second thing was I felt that our fundamentals were not in order. So customer service levels were too low. Our deliveries on time in full, which we measure, of course, were not in order. And our customers, as a result, were not super happy.

And then third was all about quality. We've had some quality scares in our major factories, the largest factory in Belgium that was already a few years ago, but also at the end of 2025 in Canada, our largest site for North America and a big site in Mexico. So there was sort of a priority question, service and fundamentals to customers and then something that you need to get right in food always, and that's quality. So in Focus for Growth, we addressed indeed all of them, and it's all about prioritization.

So first, we focus our resources on 10 important countries, not the whole world, 10 important countries. Within those countries, we focus on 2 important segments. One is what we call Gourmet, which is the highest margin business, and that's particularly for chocolatiers, for hotels, for restaurants and so forth. And we are focusing much more on what we call providing solutions. So that's not just chocolate, but also specialties like nut specialties, fillings, caramel fillings, for example, inclusions like soft baked inclusions that you would find in ice cream and so forth. So that will lead to margin accretion for us, and it focuses us much more on segments where we can really win.

So priority was #1 in Focus for Growth. Then restoring fundamentals. So instead of doing many different things, I had to make an intervention on quality investments and making sure that, that is a nonnegotiable in the company, absolutely not. Since then, the good news is you have seen quality incidents really coming down. That's good. And I think it's something -- it was self-inflicted and I wanted to have people really on 2 or 3 big fundamentals, restoring service, restoring on time in full, restoring quality credentials. And I think that's sort of -- that's working.

But if you would ask me, it's about priorities, fundamentals and then, of course, the execution that the company had lost a little bit, but those are the big ones.

Makes a lot of sense. And as we think about that execution piece, I mean, I think a couple of weeks ago, you recently announced the appointment of Thomas Gaengler, COO of the company, he obviously comes from Mondelez.

Our largest customer.

Yes. So maybe you could talk a little bit about what he's bringing and what his role...

Sure. So I think the way to think about it is we went from strategy, i.e., the action plan that I talked about, right? So priorities plus fundamentals. That was number one. Then second, we had to address structure. The structure of the company was quite hybrid. So some things were global, some things were very local and some things were regional, but it lacked a clear accountability focus. So we've put the accountability back to regional leadership because ultimately, food tends to be quite local. So reduced the number of global headcounts quite significantly and moved that to regional responsibility.

And then third lens, of course, after you've -- on strategy and structure is the people lens. And that's what we're really in the middle of. So I felt that we needed a change in our supply chain. That is the reason that customers come to us. I mean if we don't have service on time in full and quality, right, that's a problem. And I felt that a change was probably appropriate for the next phase. And Thomas is very experienced coming indeed from our largest customer. So that was a good conversation with them to have. But they were very happy eventually that he will lead our operations and service them really very well. And I mean, he's very experienced. He knows the industry really well. So I was really glad to have him.

Makes a lot of sense. And on the people side, you brought it up there. I mean, Barry Callebaut has been through quite a lot of disruption over the past 5 years, we had COVID, cocoa crisis, quite a few changes in top leadership. So how do you ensure sort of like, I guess, buy-in from the sort of broader organization for Focus for Growth in that context?

I think it's absolutely critical. And we've seen indeed in the last couple of years, there was quite a bit of attrition. But I think, first of all, we created the action plan or the Focus for Growth plan. It was a co-creation with people. So there have been many consultants in the company. We've said, hey, we stopped that. So we made the plan with 30 people in the company, not my direct reports, but actually a layer below to make sure there was buy-in. We focused our priorities, as I said, and we converted those priorities into personal objectives for people. It was something that was new for them, and we started with that on the 1st of September. So a couple of days ago into our new fiscal year, so that people are really clear about what needs to be done.

And then as you said, we make a few changes, but I'm really looking for solutions inside the company. There's a lot of knowledge there, but we need to get people into that sort of, hey, this is what you're accountable for. These are your priorities. And I think that requires quite a bit of what I would call cultural change. But it's -- essentially, it's about behaviors, and it's about making sure that not saying I can't tell you what you should not do, but I can tell you what's really important. And I think it's starting to work, but it will be a multiyear journey to get everyone in that mode.

Makes sense. And you touched on it. Part of the strategy is evolving from being not just a chocolate manufacturer becoming a solutions partner. What does that actually mean in practice? And I guess, how different could that make Barry Callebaut look in 5 years' time?

Yes. No, I think this is a very fundamental choice. So let me explain it with ice cream. It's a sector that I know well, obviously, from my own past. So if you sell -- if you take a segment like ice cream, we are doing business with 10 out of the largest 10 ice cream producers in the world, so with all of them. And it's not just about chocolate that performs under frozen temperatures. But actually, if you could say, hey, here's your chocolate, but I also give you caramelized nuts, I also give you fillings in your ice cream. I think of a Magnum or think of a Ben & Jerry's because that's the brands that most people know. If you take a Ben & Jerry's, you have chunks in there, and many of them are chocolatey flavored, some of them are not. But we give a total solution.

So we provide chocolate, whether it's nut solutions, filling solutions, inclusions in the ice cream. And then you say, hey, here's the total package. And actually, we start innovating with that and how these flavors can come together. And I'm super excited about that because it's not only stickiness of customers, but it also helps us to drive margin accretion over time. So it's a value-added strategy. And yes, it's growing well. We just need to choose wisely which segments we want to provide these total solutions because you can do them all.

So ice cream is an important one for us. The other one is bakery. It's exciting. If you look at bakery in retail, private label is gaining a lot of share. And for example, in the U.K., we're working with a chain like Marks & Spencer, you know we're selling a lot of the private label chocolate in the U.K. And we started from a normal biscuit, we added chocolate coating and now there's layers and fillings and pistachios and it enhances the value in the category, but it's also good for us in terms of what we can offer to the customer. So I'm very excited about this route.

Nice to hear. And it's not a 1-year strategy, obviously. But if we're sitting here in 1 year time, hopefully, we are, what are maybe 2 or 3 things that investors should be looking at to decide whether Focus for Growth is working?

Yes. No, absolutely. So number one, we do need to grow our Gourmet business faster than our average for sure, because that's an absolute focus point because it has the highest margin in the company, and we want to make sure that we grow that faster. So that's one. Secondly, we need to grow our specialties, the ones that we choose to win in the segments that I talked about they need to grow much faster than the average in the company. So that's two. Third, I want to make sure that our top 10 countries, about 2/3 of our global business, grow faster than the average of the company as well. So that's the growth part.

The second one is I want to make sure whether if you can see if it's working, our service levels have to go up, and we will report about that, what it was and where it is. And that should result in a higher market share. Now if you think about it, in last quarter, we reported growth. The sector was quite a bit down. So we are taking share. The fourth quarter, which I cannot comment on because it's finished a couple of days ago, but we implied growth in the fourth quarter given our full year guidance. And that also suggests we're taking share, and that's something that I would like to see in a year's time as well. And then finally, our profit should grow faster than volume growth as a result of all of that.

Makes a lot of sense. I mean maybe turning to the here and now and you touched on Q3 and implied outlook for Q4. I mean the business did return to nice volume growth in Q3, but I think you sort of cautioned a little bit that the underlying chocolate demand environment was still quite weak and maybe there was an element of kind of stock comps from last year and maybe a stocking up. But what gives you sort of the confidence in the sustainability of the growth in [indiscernible] into next year as well?

I think it's really important. So let me take a step back first. Over the last 3 years, if you look at the numbers, prices have gone up in 3 years -- a little bit over 3 years by 50% globally. Volumes globally are mid-single digit down by 5%. So in a way, that's already pretty resilient. At the cocoa price level that we are today, which is about GBP 4,500, we believe that from what I can see is that prices because of hedges that were taken, those levels are already priced in. And we see now for the first time, the latest Nielsen reports, we see prices coming down a little bit in Western Europe.

So first of all, I don't -- at the moment, I don't see that there will be more price increases coming. I think there will be moderation or even decrease. So that's number one. Second, as a company, we are only -- well, it's a lot, but we are only around 40%, 45% exposed to classic chocolate confectionery. The majority of our sales is actually where chocolate is an ingredient. So in bakery, in ice cream, in protein bars, in granola, and those segments are actually growing. And we clearly see that in our sales numbers, where we're growing in those segments faster than, let's say, in the classic confectionery only. So that's an internal point.

And finally, as I said, we are focusing our efforts on higher value-added segments, so the Gourmet segment as well as the specialties. But Gourmet, when people tend to eat less chocolate, for example, in the U.S. because of GLP-1, we see people snacking less, but they tend to go to higher quality solutions. And that's where we are usually disproportionately -- we have a higher share than our competitors. So I feel good about that.

Makes sense. And you touched upon kind of service levels as a KPI that you're going to report on. It's clearly a big opportunity. How much of the 2% to 4% medium-term volume growth algorithm that you're targeting could come through simply as a result of kind of taking back market share that you may be lost because of those services. I mean how much visibility does that give you?

So as I said, if you take the different category or the different chocolate -- confectionery categories plus the other ones that I talked about, that should take care of growth of around 2%, we believe, globally. And then taking market share is the next step, and that should come from restoring fundamentals. I mean we're doing that now. And I feel that, that will certainly be a source of growth also in the 2% to 4%. I mean, to be exact, is it 1%? Is it 1.5%? It's helping and customers want to work with us. So yes, that is definitely part of it. We are assuming market share growth.

Yes. And is that primarily a North America phenomenon in terms of where the service levels have dropped and need to be...

We had it pretty much in our main markets in Europe as well as North America. North America, it was more sticky. We are investing in our largest site in Brantford in Canada at the moment. It's a very new site. We're debottlenecking on compound production. So I don't know -- I mean, if you knew, but -- so our customers, they have -- they're making a choice, right? But do you buy chocolate, i.e., cocoa butter solutions or compound solutions. And because of the cocoa crisis, many have shifted to compound solutions. But our capacity did not hold up for these evolving customer needs.

So what we've done in the last couple of months is very quick debottlenecking in those areas where our customers were actually going. And therefore, I feel it has gotten a lot better. So it's percentage points better than where I started. But in North America, I feel we still have steps to take, and we can grow further. We're not perfect yet. In the other regions, it's a better picture.

Good to hear. I mean, historically, outsourcing was a big growth pillar and part of the strategy for Barry Callebaut. It didn't make as much a feature in your Focus for Growth strategy, perhaps because of where we are with the service level side. But thinking long term, maybe beyond Focus for Growth, is outsourcing still a material opportunity for Barry Callebaut? Or has the industry really changed how it thinks about outsourcing?

No, it's a very good point. And if you -- I mean, many of the companies that are here, so I want to be quite straight and direct. So if you take our global top 7 customers, okay, they are 25% of our chocolate volume, okay? And what we've said is they have -- because of the last couple -- not just because of service levels, but because category was under pressure, they lost volume and the utilization in the factories came down, and therefore, they have in-sourced. So that's happening. And I said, therefore, that is the group of companies who can actually in-source because of the scale.

And I said, look, that will bottom out in '27 because once the capacities are filled and/or when the category is coming back, will they then invest in complete new factories for in-sourcing? I don't think so. We are better placed, and we can -- we have those conversations. And therefore, I think we assume and I believe we will grow after 2027 with them. So that's comment number one.

Then two, obviously, we're working a lot with the regional players, regional companies. There's so many of them, and they are either taking share or retail private label share. They are not outsourcing. So that's -- they rely on us to do what we need to do. So I think outsourcing in a way is natural for them. And obviously, we will grow with them going forward. So -- and I believe the large ones, if we innovate and come up with solutions that are outside of the basic products that they have, they will also -- we're seeing that already now. They will also come to outsourcing with us.

So it's probably not the growth engine with the large accounts for the next 12 to 18 months, hence, the lower volume projection, but for the company as a whole, but it will reignite behind innovation as well as production capacity after '27, on the big ones. And we will continue to grow with the regional players as well as through the Gourmet and the specialty sections that I've already talked about.

Yes. And I want to stick on Gourmet because clearly, that's a big part of the strategy in terms of driving growth outperformance there. It's historically been very nicely margin accretive for Barry Callebaut as well. So I mean, part of the reset on profit outlook for '26, which came through sort of earlier this year was sort of a miss -- if I understood it correctly, a mismatch between selling prices from some of your competitors and decline in cocoa input costs. So maybe you could sort of elaborate on that a little bit and as to why you don't see that as a problem beyond this year?

Yes. So our Gourmet business is critical. And we've said it's a priority. I was very clear -- I wanted to be very clear about it. What we've done in Q3 and what we've done in Q4 is -- and I think we announced that with Focus for Growth. We said, hey, we're investing a bit in margin because we saw that we had longer hedges out there than others. And I wanted to keep the customers with us. And that's what we've done, and that's what drove quite a bit of the growth in Q3. It will be an engine as well to some extent in Q4. But of course, our profitability is getting better when these hedges expire, and that's what we see happening. So I think that was a good decision that we took.

I think when you look at the next year, first of all, Gourmet is all about availability. And I felt that the service level on that was too low. I talked about that. By now, the service level has increased substantially because we're treating it as a make-to-stock business and not a make-to-order business. In order to make it make-to-stock, we've really worked hard with the team to get to a core SKU list of around 200 SKUs of Callebaut brand and Cacao Barry brand, the brands that we have for the B2B market, and that's working very successfully.

We've also made very clear tiering. We brought that back into the Gourmet business. So our Cacao Barry is for chocolatiers and Michelin star restaurants, around 140 index -- 145 price index. The same for the Signature Collection on Callebaut. Then the Callebaut Selection made in Belgium claim is around 125 price tiering. And then we have our local regional brands like Van Houten. We have many of those. And I think we've been very clear on price tiering, very clear on the proposition and what they should bring.

So I'm super excited about the reignition of that business. It's also a bit closer to where I come from. So that's working. Yes, and I think that should be a great engine for us in '27 as well as in '28 and beyond. Besides all of that, we now need to get the innovation engine going behind it. And therefore, we've launched 4 big platforms, which I'm also excited about, and that is about taste. We're enhancing taste through fermentation and more to that to come in the course of the year. We're doing more on health and wellness with high flavanol solutions, which is working very well in Asia.

We're working on cocoa replacement. That's a ChoViva concept that we launched so that customers can actually -- they can choose between a cocoa solution as well as a non-cocoa solution. So yes, I think pricing, tiering, availability, innovation, and digital. So our Gourmet segment is really on all cylinders, and that is where we are going to make a big difference.

Very clear. We haven't talked about cocoa prices yet. And obviously, part of your Focus for Growth strategy, you have to make a planning assumption on cocoa prices. I think you talked about GBP 3,000 per tonne. Obviously, we are now sort of above that level. And obviously, there are some concerns around supply again with El Nino. So I mean, has your view changed at all on kind of what constitutes sort of a sustainable cocoa price in that environment? Or is GBP 3,000 still the right kind of level to plan for?

I mean, first of all, where are we now? And if you sort of look short term, right? So the cocoa price is around GBP 4,500 today. And that is indeed based on quite a bit of news from -- about El Nino and that the crop will not be as good and so forth. I think the important thing to call out is globally, there is more than 500,000 tonnes surplus in the market. So even if the crop will not be that great, there's much more buffer than there was a couple of years ago when the cocoa crisis started. And this is the second consecutive year of surplus because last year, there was also some -- and that's still carried on by many players in the industry. So I believe there's quite a bit of buffer. I think that's number one.

I think secondly, the reaction that we've seen to the cocoa price market is a bit more extreme than what you've seen in the past. So yes, there's obviously El Nino, if it's there and if that really impacts the crop that will come in October, November, yes, there could be something. But the reality is -- we're not seeing that yet. So we're seeing quite extreme reactions in the market. And I think it will tend to that price corridor that what we talked about, which is about GBP 3,000 to GBP 5,000 in the medium term. That's what we believe, and that's what we're still backing.

Maybe last word about cocoa price, and that's interesting. Many of our customers, they've taken positions at around GBP 4,500, GBP 5,000. And that has already been priced in, in the retail price, what I talked about earlier. So at the current levels, even while they are a little higher than what they were a couple of months ago, it's not -- it will not translate into even higher retail prices. In fact, I see a little bit of a downward of price decreases coming.

Yes. That is super interesting and perhaps sort of a slight mismatch between all of the noise around El Nino and what we're actually seeing in [indiscernible].

We need to see what El Nino, what it does. I think for us, what we've done is we wanted to build a lot of resilience, right, because it's not one size fits all. I mean a couple of years ago, it's super dependent, of course, on Ghana and Ivory Coast only. If you look now, whether it's West Africa, but we're expanding with larger scale farming in Brazil and Ecuador. So we have more resilience in that -- in global sourcing. That's super important that we do that. The crop that we saw in June was equal to what it was last year. So there might be movements, and I'm not trying to underestimate it, absolutely not, but I want to put a bit of nuance to the sometimes quite extreme reactions that we're seeing in cocoa price volatility.

That's fair. And I mean, somewhat related, obviously, profitability per tonne in terms of PBT per tonne, Barry has come under some pressure in recent years and the guidance for '26, you took it down a bit further in part because of the Gourmet challenges that we talked about. But you've been quite clear that long term, you think profitability per tonne, PBT per tonne can go back to pre-COVID levels. So maybe you could speak to like what are the key drivers from getting to -- from where you end '26 to that...

You to be a little careful.

Yes, I'm not asking for time frame.

Because I mean, of course, our year has ended a couple of days ago, so I don't know [indiscernible] But a few building blocks. It's very important for everyone that EBIT, you should always look at our EBIT in conjunction with profit before tax because in our EBIT, we have what we call finance charges that are related to the price of the cocoa that we pass on to customers. So if the prices of cocoa come down or if interest rates come down, we don't pass on so much. But of course, at the same time, we would have less interest cost. So that neutralizes on PBT. So we need to look at both, okay?

Next year, we will definitely have much lower finance cost pass on. So our EBIT will be down from that, but it's compensated in our profit before tax. So that's number one. The second lever, obviously, for next year, if I talk the big building blocks is I do expect a better margin from Gourmet and growth. I think that is a -- those are probably the 2 big levers down and up.

Makes sense. In terms of that sort of movement in cocoa price, I mean one of the other knock-on impacts was clearly a quite a big strain on Barry Callebaut's balance sheet if we rewind sort of 18 months ago, peaked at net debt to EBITDA at 6.5x, I think, in April last year. You've done a great job actually proactively deleveraging and then the lower cocoa prices also helped. But how are you thinking as leverage does normalize between the balance of investing in the business and maybe pursuing any sort of bolt-on M&A or returning cash to shareholders?

Yes. So our leverage has come down where we guided for the end of this year, and we haven't changed guidance. So again, without saying too much, I think we can say, hey, around 3 is where we expect to end the year. And I think it's important to point out, we said that at the time that the cocoa price was around GBP 3,000. Now it's trending around GBP 4,500. So we're sticking to that guidance. And it means we have become more resilient as a company in terms of leverage. So we've optimized working capital. We have shortened some of the hedging that we did, so they were closer to the market. And obviously, we've changed our financing structure to cope with potential volatility. So we're really focused in the last couple of months to make the company more resilient for that.

Now back to your question, we will generate obviously quite some cash this year. What does that mean going forward? Well, first, I want to make sure that we invest in our own network behind the priorities, 10 countries, Gourmet specialties. That's it. I'd be very hard-pressed to do anything else. That's it. But we need to do that really well. Second, in the capital expenditure, the choice is ensuring absolutely strong fundamentals, no more quality problems. So that's number two. So investments in our own network go first.

Second, deleveraging, yes, but I would expect to end up between 2.5 and 3. That should be an ideal level, depending on the cocoa price. If it goes up further, it will be slightly north of that. But I don't -- have no intention to deleverage further, but that should be a good level from where we are. So that's 2. Three, the dividend. It's now 30%. If we could do more, we can do more. But I would say for now, that's it. If there will be more cash generated, then that's where that will go.

And then finally, it's opportunistic M&A. As you know, in our sector, we cannot do something transformative because we are an N is one. There's no company that is exactly like us. So if we were to do it, it will be bolt-on, and we have a couple of opportunities that we're looking at, but I'm careful because I really want to create that replicable model first and then make an acquisition and do it really well.

Makes sense. And in terms of those investments in the network that you described, focused on the 10 key markets. Have those been -- I mean, does the scope of that change with Thomas coming on board? Or is kind of that [indiscernible]?

Yes. I mean also in my -- in previous companies where I work, I want to -- you've got to be very, very clear and repeat, repeat, repeat, it's 10 markets, it's those segments. That is going to lead us to the profitable growth equation. And then it doesn't mean I say it very often. I mean many people ask me in the company, so what should I stop? I always say, I can't tell you what you need to stop, but I can't tell you what was really important, and that's really what we're going to do. And I think that's a good and exciting journey. I think the company in 1 or 2 years' time will be a different one than what it was a while ago. And I think it will strengthen. I feel very positive about the direction that we're taking, but it's not overnight.

Yes. That makes sense. So I'm conscious of time, but I think one final question before we go to the breakout, if there are more questions behind. As you've met investors, customers, employees over the last 9 months that you've been in the sort of CEO role at Barry, what do you think is the sort of the biggest misconception about Barry Callebaut that you come across and that you maybe like to change?

I think -- well, I'm not sure if it's a misconception, but -- but I think it's important. We are in what I call an N is one. There is no company that is the same as we are because we have that integrated chain. We have -- essentially, we source about 1/4 of the world's cocoa, but it allows us to provide, a, availability; b, traceability; c, segregated streams for big concerns that are out there, whether it's child labor, whether it's deforestation and rightly so. And we are, I would say, spearheading things like diversifying sourcing. We are working with large farming solutions in Brazil, as I talked about, we have nurseries for seedlings, for cocoa seedlings in Ecuador. So we're really developing that.

And I think the future of the industry, I think we are playing a very important role in that. But by doing that extraordinarily well, I feel that the deep expertise that I detected in the company, if you go deeper on processing those beans from different locations, understanding what exactly that means and turning that into a final chocolate solution is pretty unparalleled. And that makes us an N is one. That's always harder because then you could ask, what are your peers, what are your benchmarks? What is the comparable? I'll leave that very wisely to you. But what my job is to create the maximum value out of this uniqueness. And when you're unique, you're hard to replicate. And when you're hard to replicate, that gives you a huge strategic benefit. And that's what I like.

Excellent. We've hit the buzzer there, Hein. So thank you very much for your time and insights today and coming to Boston.

Pleasure. Thank you.

Hello, and welcome, everyone, to the Barry Callebaut Group 9 months Key Sales Figures of Fiscal Year 2025/'26. My name is Becky, and I will be your operator today. [Operator Instructions] I will now hand over to your host, Sophie , Head of Investor Relations, to begin. Please go ahead.

Good morning, everyone, and welcome to Barry Callebaut's 9 Months Key Sales Figures Conference Call for 2025/2026, I'm Sophie Lang, Head of Investor Relations, and today's meeting will be hosted by our CEO, Hein Schumacher and our CFO, Peter Vanneste.

As usual, at the end of our presentation, we'll have a short Q&A session for analysts and investors. We start -- please take note of the disclaimer on Slide 2. I'd also like to remind you that the webcast and conference call are being recorded.

And with that, I will hand you over to our CEO, Hein Schumacher.

Thanks, Sophia, and good morning, everyone. And thank you, of course, for joining us for our 9 months trading update. I will start with some key messages, followed by an update on our Focus for Growth action plan and strategic priorities. And then Peter will take you through our sales performance in more detail, and I will come back at the end of the presentation.

Let me start with a brief overview of the key messages. And while sales volumes decreased for the 9 months, the group has returned to positive volume growth in the third quarter for the first time in more than 2 years. This was supported by elevated demand in our Global Cocoa business following the sharp correction in cocoa product prices earlier in the year, alongside a low base of comparison.

Our Global Chocolate business also returned to growth in Q3, supported by strong momentum in EMEA and early progress in restoring service levels in North America. And while we are encouraged by our return to growth, the chocolate market remains challenging overall, as Peter will elaborate on later in the presentation.

And our improvement at Barry Callebaut will be gradual. We still have a lot of work ahead of us. And that is why we've launched our Focus for Growth action plan last month to strengthen our fundamentals, and I will come back to this in a moment.

Taking all of this into account, we now expect full year volumes to decrease by around minus 1%, while maintaining our profitability and our leverage guidance. And before going into the details of the 9 months performance, let me start with a reminder of our Focus for Growth action plan and first reiterating our ambition.

At Barry Callebaut, we are already the global leader in cocoa and chocolate with a uniquely integrated business model and leading capabilities in R&D and sustainability. And our ambition is to build on this strong foundation through two clear deliberate shifts.

First, we are evolving towards a more solutions-oriented business, scaling targeted specialties in attractive, faster-growing segments where we can differentiate and create more value for our customers. Second, we are focused on protecting and strengthening our core volume base while shifting more decisively towards premium segments and accelerating the growth of our important Gourmet business.

Delivering on this ambition will be underpinned by a strong customer-centric culture, the right talent and increased empowerment of our regional teams.

Now let's turn to the action plan itself. We are accelerating 5 key enablers that are critical to restore our fundamentals and stepping up execution across the business. The enablers span the entire value chain and are all anchored in a clear customer-centric approach and supported by digital capabilities.

And in parallel, we are prioritizing 5 selected growth priorities where we see the greatest potential for value creation, global accounts, regional food manufacturers, gourmet, specialties and cocoa powder. And this disciplined approach ensures that we allocate our resources where they have the highest impact, ultimately driving attractive financial performance and results for our shareholders. But we have significant work ahead of us to fully restore our fundamentals.

I'm happy that we are starting to see early signs of progress in a number of key areas. In footprint and quality, we are implementing selective network enhancements. And importantly, we have recorded zero critical quality incidents or product recalls year-to-date.

In planning, we are strengthening our sales and operations planning processes with new demand planning tools and with new planning forums that focus on Gourmet and Specialties. Our early steps are starting to translate into improved reliability with on-time in full, or OTIF, in North America, a key focus area, up 6 percentage points versus the same time last year.

And in our core customer processes, simplification efforts are underway, reflected in a meaningful improvement in customer response times of close to 20% year-to-date. And while these are encouragingly early trends, I want to be very clear, this is really just the beginning. Restoring our fundamentals will require sustained execution and continued discipline for the months and year to come.

Now turning to our 5 growth priorities where we are taking action to drive commercial progress. First, on global accounts. We have formed a dedicated team reporting directly to me, and the objective is to unlock the full potential of our largest global customers with clear growth plans for each account as we move into our new fiscal year.

Second, for our regional food manufacturers, we now have a much clearer view of the growth opportunities by region. And this was helping us to prioritize our commercial focus and ensure that planned investments are directly linked to the markets where we see the highest potential.

Third, in Gourmet, we continue to double down and invest. We are preparing for the launch of new innovation next fiscal year, supported by a strong commercial campaign while also securing safety stocks for key SKUs, a key core SKU list actually to support future growth.

And then fourth, in Specialties. We are addressing capacity in selected focus sites and working to integrate these offerings more deeply into our core business and commercial processes.

And finally, in cocoa powder, we are taking action to unlock premium powder capacity and accelerate sales efforts in higher-value segments.

So across all these 5 priorities, while still early steps, we are moving from strategy into execution. And the common denominator across the 5 is focus, focused market segments and regional food manufacturers, focused core set of SKUs, reducing complexity in Gourmet, focused in Specialties with a focus of around 4 to 5 core specialties by region and a focus on cocoa powder on premiumization.

Since the launch of Focus for Growth last month, we've also taken two concrete steps to move closer to our customer and strengthen execution in our regions. First, we are refining our Global Chocolate regional setup with the Middle East and North Africa and Southeast and West Africa clusters transitioning to the CEE or the Central and Eastern European region.

Historically, these clusters were part of [ ALEA ], and the move to CEE reflects closer geographic proximity, a stronger alignment in customer preferences and consumer habits as well as supply chain interconnectedness and commercial go-to-market approach. And this will allow us to be more responsive to local market dynamics and better serve our customers in these clusters.

And as a result, from the 1st of September 2026, our [ ALEA ] region will be renamed Asia Pacific or APAC, and the current CEE region will become CEMEA.

Second, we are evolving selected functional capabilities and teams to be closer to regional business execution. So selected teams within functions such as customer supply and development, finance and HR that are closely linked to regional execution; will start to report directly into the regions, while obviously continuing to be anchored in strong global functional expertise and alignment where that really matters.

This is about empowering our regions to act faster and with greater accountability while continuing to benefit from the global scale that we have. We're also shifting towards a more horizontal way of working and bringing teams together across regions and functions to drive impact.

Now let me hand over to Peter to talk more about the 9-month performance.

Thank you, Hein, and good morning, everyone. Before turning into numbers, let me start with a brief update on the market environment. Cocoa bean prices have increased in recent weeks and especially this week, but overall remain in line with our expectations.

Looking at supply, the current crop, which is now coming to an end, is expected to result in a significant surplus, marking the second consecutive year of surplus. As a result, the industry is entering the '26, '27 crop cycle well stocked and with more than 10 months of price cover.

At the same time, the market is closely monitoring the development of El Nino for '26, '27, which has been confirmed as a strong event by the UN. Typically, El Nino is associated with below-trend cocoa production, while La Nina tends to support above-trend crops. However, this is not a hard rule as the impact really depends on how El Nino influences regional weather patterns and ultimately, crop development.

Generally, El Nino associated weather risks are higher-than-normal rainfall in Ecuador and higher-than-normal temperatures in West Africa. These weather dynamics are, therefore, key, and we're closely tracking developments with our teams on the ground.

Importantly, based on what we see today, we do not expect a repeat of the extreme market conditions experienced in '23, '24, even in the case of a strong El Nino influence because the context today is fundamentally different. At that time in '23, '24, El Nino coincided with the main crop and marked the third consecutive year of deficit. In contrast, today, we're coming from a position of a strong surplus with ample cocoa stocks entering the new crop year.

In addition, we're significantly better positioned to manage this volatility -- potential volatility at Barry Callebaut than we were 2 years ago. We strengthened our resilience through greater origin diversification, increased sourcing flexibility and enhanced bean blending capabilities as well as several financial measures, including the letter of credit and borrowing base facility that we've talked about in previous conversations.

Now turning to the end-consumer environment, main message is that chocolate market remains challenging. In the most recent quarter, Nielsen data showed a decline in market volumes of minus 4.4% with a 9% year-on-year increase in pricing. So while the overall consumption remains under pressure, the rate of decline is easing with some early indications of stabilization.

From a demand perspective, we continue to see that also through our forward bookings. As you know, we contract several months in advance with our customers, and we've seen our customers more willing to book further in advance again, which is a positive signal. So while average market pricing remains approximately 9% above last year, absolute price levels per kilogram have started to come down in recent months, as you can see on the right-hand side of this chart.

Category pricing typically shows some seasonality with higher promotional intensity around Easter following -- followed by a normalization after that. What we've observed this year is a more pronounced decline in net pricing over recent months, partly driven by increased Easter campaigns with price adjustments occurring somewhat faster than in a typical seasonal pattern. Overall, we are seeing early signs of moving into the right direction, but it will take time for the market to recover progressively.

Moving now to our 9-month performance. In the third quarter, BC Group volumes returned to positive growth for the first time in more than 2 years. This was primarily driven by a strong demand in Global Cocoa following the cocoa market correction early in the year and reduced cocoa product prices. Cocoa powder saw particularly strong momentum in Latin America and Asia, supported by some customer restocking, while the business also benefited from one-off cocoa butter opportunities.

At the same time, Global Chocolate returned to growth in the quarter, driven by a second consecutive quarter of double-digit growth in EMEA and early progress in restoring service levels in North America.

It is, however, important to put this Q3 performance into some context. As just discussed, both customer and end-consumer demand are only gradually recovering and are recovering at BC, as Hein has also mentioned, will take some time. As such, the 5.7% growth in the third quarter should not just be extrapolated. The recovery of our absolute volumes will be gradual. And as we recently outlined with the Focus for Growth plan, we expect volume growth in the range of 1% to 3% over the next 12 to 18 months.

Let me go into the 9-month numbers in more detail now. Overall, the group saw a volume decrease for the first 9 months of the year of minus 2.8%, turning positive in Q3, as just discussed.

Looking at the left of this chart by segment, Food Manufacturers were impacted over the year by declining market dynamics with our customers adapting behaviors in the context of high prices, and we also saw supply disruption in North America earlier this year, returning to growth in Q3.

Gourmet volumes were temporarily pressured by a high price list in a sharply declining bean price environment. And Global Cocoa over the year declined as a result of a negative market demand with a very strong bounce back in Q3, as we just discussed.

Moving to the right hand of the chart, Global Chocolate. These volumes on Global Chocolate declined by 2.3% for the 9 months, ahead of the 5.6% decline on the market as per Nielsen. Western Europe saw a 2.5% volume decline as demand continued to be impacted by market dynamics related to pricing. Central and Eastern Europe declined slightly by 0.7% over the year, significantly better than the market as local and regional accounts saw continued momentum.

North America went down over the 9 months by 7.6%, impacted by the declining markets as well as, as you know, network supply disruption in the first half of the year. Importantly, North America turned positive in [ Q3 ] and is seeing monthly improvements as the business rebuilds inventories and meets growing customer orders.

Latin America decreased by 1.2%. We were really impacted there by phasing effects in the third quarter, yet still well ahead of the market. Finally, volumes in EMEA grew by a strong plus 10%, driven by market share gains in China, momentum -- continued momentum with key customers in India and additional business secured in Australia.

And before handing over to Hein, let me also briefly cover the recent euro bond buyback, which has been an important step in our ongoing journey to deleverage and reduce financing costs.

During the quarter, we completed a total bond buyback of EUR 849 million across 3 maturities, EUR 400 million of the 2028 bonds, EUR 99 million of the 2029 bonds and EUR 350 million on the 2031 bonds. We are using available liquidity to reduce gross debt, optimize our maturity profile and lower our finance cost in the future.

This transaction comes with an upfront cost of around CHF 15 million, which will be recognized in the net financial items in this fiscal year but importantly, of course, will reduce our cost of financing in the years to come. Taking the bond buyback into account, we now expect a net finance cost of around CHF 330 million for this fiscal year.

And let me now hand back to Hein for the guidance section.

Thanks, Peter. Moving on to the outlook for this fiscal year. Following a stronger-than-expected Q3, we have updated our volume outlook for the year to expect around a minus 1% decrease, and this is at the upper end of the minus 1% to minus 3% range that we have previously guided for.

At the same time, we are maintaining our guidance for a mid-teens decrease in EBIT on a recurring basis in local currencies. And I will talk more about that on the next slide. Given the CHF 15 million expected upfront cost from the recent bond buyback that Peter just shared, we now expect to recover around half of the absolute decrease in EBIT at the profit before tax level.

We also reiterate our deleverage ambition for net debt over EBITDA recurring to be below 3x. And this assumes a GBP 3,000 cocoa bean price. Now today, as you may have noted, prices are more around the GBP 4,000 level. And assuming stable bean prices from at this level where we are today, we expect leverage to be around 3x.

So we are maintaining our profit guidance as the stronger volume development in Q3 is offset by a number of headwinds. Let me share three.

First, as we shared at the half year, we are taking short-term actions to prioritize growth and market share, and this is particularly relevant for Gourmet, where we are making commercial investments as we work through the temporary dynamics created by our long cocoa position, and we talked about that in particular at the end of Q2.

Second, we indicated at the half year as well that cocoa profitability would normalize in the second half following an exceptionally strong first half. And while the Cocoa business delivered strong volume growth in the third quarter, supported by elevated demand following the cocoa market correction, the profit contribution from these additional volumes is not expected to increase at the same rate, given that normalization.

Third, as Peter outlined, the recent bond buyback will result in an incremental cost of around CHF 15 million in profit before tax this year, while generating benefits, obviously, through lower financing costs in the future.

We have incorporated these headwinds into our guidance. And at the same time, we see a few additional risks, which we are monitoring very closely. The geopolitical situation in the Middle East remains uncertain, as we've seen this morning and could result in additional costs or supply chain disruptions, and that takes time to price through.

While market conditions overall are gradually improving, the operating environment does remain challenging, and we see signs of financial pressure across parts of the European customer base. In addition, in Turkey, an important market for us and a priority market for us, we are closely monitoring developments in hyperinflationary environments and potential implications for us going forward.

So overall, we reiterate our guidance while recognizing that the external environment remains dynamic with some uncertainties.

And with that, thank you for listening, and I will now hand back to the moderator for Q&A.

[Operator Instructions] Our first question comes from Jorn Iffert from UBS.

The first one would be, please, taking an early view into 2027. What do you currently observe or what do you expect from your customers? I mean, do you expect customers to lower price points to materially step up promotions? Or do you expect customers to use a lower bean price to repair margins just because the [ readthrough ] would be so important for your volume prospects? That would be question number one.

And question number two, if I may zoom in a little bit in Gourmet, can you tell us what is happening currently on the market shares on competitive dynamics? And also if you're still pursuing your own direct online shop initiatives?

Thanks, Jorn. Let me talk a little bit about the customer behavior and particularly around pricing. So what we're seeing globally is that in the third quarter, we've seen -- generally, we've seen prices come down in the market with the exception of North America, where prices have still increased. And that's, of course, a very important market for us.

What you may have seen or spotted is that with increasing prices in North America, the chocolate confectionery market volume-wise in North America is under more pressure than what we would see elsewhere in the world.

So in general, there is a correlation, obviously, between pricing and volume developments. And that's what we're seeing in the third quarter, even stronger than probably before.

Now with these decreasing prices that we're seeing across the globe, and we have, as you can see in our revenue, our prices have come down double digit, and this is something that we expect as well for Q4. We expect that reduction in pricing for the fourth quarter, and that could probably roll into the next fiscal year as well.

With those developments, we would expect volumes to recover a bit. The current market is still single digit down -- mid-single digit down overall. So there is still definitely room for improvement.

We see customers investing -- at this point, we see customers investing in innovation. We see customers investing in media, we see customers investing in promotion overall. So that's a good development. And we've highlighted that as well during the focus for growth presentation.

So we're seeing that from important big customers, whether it's Mars, whether it's Hershey, they are coming up with new things, exciting things that will help the category, I think, to grow, and that's a positive sign.

We're also seeing that around our future bookings portfolio by the end of Q3, is 30% higher than what we saw last year at the same time of year. Just for your information, by February, that was only 17% higher. So there is increasing confidence from that number. You can see increasing confidence from customers that volumes might recover in the future.

So yes, it's a bit of a longer explanation, but hopefully, that will -- that paints the landscape a bit for you. And look -- yes, maybe one more remark, by the way. It's important and I think we talked about this with focus for growth.

The chocolate confectionery category, as we mentioned, measured by Nielsen, is down. As a company, Barry Callebaut, we're also increasingly exposed to adjacent categories. So think of category like ice cream. There, we see more positive developments, right? So it's very important not just to look at the chocolate confectionery market. You need to get a feel for where we operate and also our volumes.

It's important to look at the biscuit category, the ice cream category, to chocolate categories. I think that probably gives a better reflection. So let me leave it there.

Then on Gourmet, yes, what we've -- as we've signaled before, we had a long position that has, of course, had an impact on our profitability, but also it kept pricing at a relatively high level. We have invested in that in the third quarter, but only towards the end. We feel that with changed price list, which tends for us to be proactive every half year.

So we've just issued a new price list for the 1st of July, and we believe there's a lot of reason besides excellent taste, of course, for customers now to start stocking a bit, and we're seeing some early indications on that.

And therefore, overall, we're quite confident on our projected growth in fourth quarter that you can calculate, given the guidance of minus 1% for the year. And the growth we've made in the third quarter, that should be around 4.5% or so in terms of volume. So Gourmet should play a good role. So coming from a decline, we expect the fourth quarter to be slightly positive there.

Our next question comes from Alex Sloane from Barclays.

The first one would just be around the cocoa bean price and the leverage guidance. So obviously, you're not changing -- if I understood correctly, you're not changing the leverage guidance for the year. You're still working off kind of the medium-term assumption of GBP 3,000 per tonne bean price. Obviously, we are above that level today.

So I mean, does that imply that you don't necessarily see the current cocoa bean price as sustainable? Or is there kind of more balance sheet flexibility to kind of absorb this higher price? And is that sustainable also into next year? Or if prices stay here, does the kind of normal rule of thumb still apply? That would be the first one, please.

And then the second one, just actually just to go back to Gourmet, if that's right. I mean, good to hear it's coming back to volume growth in Q4 on these new prices. Are the new prices kind of in line with what you were expecting?

And thinking about back in April, just thinking about kind of the potential recovery in profitability in Gourmet next year, which I think you had kind of talked about like you framed the sort of issues In gourmet profitability being temporary in nature; is that still the case? Can we still assume Gourmet profitability recovers next year as sort of price and COGS better align?

Thanks a lot, Alex. Let me probably start with question 2, and then I'll hand over for the bean price and the impact on leverage to Peter.

I mean, on Gourmet and the new prices, yes, I would say the new price list does reflect what we have in mind. And it will -- given the elapse of the long position, it will result in a higher profitability for us.

Now that's all factored in, by the way, in our guidance. And therefore, that will also have a positive impact as expected in the new fiscal year, of course, without further external disturbances and so forth. So -- but in itself, yes, that should return to levels that we feel is more in line with historic averages.

At the same time, as we -- as I said before, we're not doing this for volume for volume, but -- where we lost some share and where we feel that we need to make a stepping our way to create customer intimacy, but also to start selling solutions, including specialties and so forth, we will, of course, be competitive. We're not alone in the market. And yes, we want to make sure that we are the supplier of choice.

Now with that said, overall answer is yes. We do see improvement in the fourth quarter, volume-wise, profitability-wise, and we expect that to roll in the next year as well.

On leverage and the bean price and Peter?

Yes. So leverage and be price, let me go one by one. On leverage, we're indeed confirming our guidance for August around 3. There's a few points to mention there. First of all, we are in the low harvest cycle. So there's not a lot of be buying going on. Secondly, there's -- the rule of thumb is largely still valid, as we said before, 60 million to 70 million.

But of course, there's a short-term and a midterm effect. We are protected somewhat more in the short term because of our letter of credit, for instance, as an example. So that's one reason why we are not going to see immediately that impact.

But also overall, as we discussed in previous calls, we have a better protection, not only because of the financing that we've done, but also because of our procurement agility, buying from different sources, buying at different moments. and being able to keep especially our open futures lower, which means that we're less impacted when there's a sudden increase in the bean price.

On the bean price itself, so net, yes, we stay around 3 at even today's bean prices for August. On the bean price itself, we've seen quite a spike linked and driven by some speculative activity around the El Nino impact -- potential impact on the sector and some articles that have appeared over the course of the last 2 weeks.

Again, we are in the low part of the crop season, and that's often where we see a lot of market volatility and market moving fast in function of one or the other direction. We are, in that context, also carefully watching the Q2 '26 grinding data coming now soon when the expectation is that will increase, but that demand is going to take time to recover. So that's something to keep an eye on.

And as I mentioned in my part of the presentation, we do not expect a repeat of the extreme market conditions we've seen in '23, '24. Industry is well covered, we have strong surplus, everybody is well stocked. So that's why we are -- we believe we're a very different situation than previous [ one ].

Our next question comes from Ed Hockin from JPMorgan.

My first question, in the press release, you noted on restocking in cocoa. Are you seeing restocking more broadly in chocolate as well, conscious that it's been a period of quite low cocoa prices during the quarter? So have you been seeing customers taking the opportunity to restock on chocolate at lower price points? And whether more broadly, you could help quantify what magnitude of support to your group volumes in the quarter restocking may have contributed?

And then my second question, please. It may be a bit premature, but you've given already guardrails on 2027. So I wanted to come back on those guardrails for 2027. Clearly, still pointing to 1% to 3% volumes over the next 12 to 18 months. But wanted to come back on EBIT and PBT, the magnitude of some of the blocks that we should be considering in the EBIT bridge for 2027 as Gourmet profitability recovers, you've had supply disruption costs over the last couple of years, disruption costs in your OpEx that should be fading out.

So any more clarity on how we should be thinking about the quantum of EBIT and PBT improvement in fiscal year '27, please?

Thanks, Ed. And I'll do the first question and hand over to Peter for the second question.

On restocking, just a few words. First of all, I want to dissect it a little bit and you talk about chocolate, but let me just give a bit of the landscape. The overall growth in Q3 was, of course, primarily driven by an elevated demand in Global Cocoa. So that's 18% up as the cocoa market correction earlier in the year reduced the cocoa product prices.

And cocoa powder saw particularly strong momentum in the quarter in Latin America and Asia, and that was supported, we believe, by some customer restocking. So that's happening in cocoa to some extent and in some regions. But our business overall also benefited from one-off cocoa butter opportunities. And as I said before, the base of comparison on cocoa was a bit lower for this particular quarter.

So that's cocoa. So there might be some restocking taking place in certain regions, but I wouldn't want to make it a too big of a theme.

Then on chocolate, the growth in the quarter, 3.2%. And also here, I think we need to go a little bit in detail. So we saw a second consecutive quarter of double-digit growth in EMEA that was 14% in Q3, and that is as a result of higher demand in China for us, market share gains in India, where the business continues to drive double-digit growth for already quite a long time. So really strong business overall there. And we secured some additional business in Australia because of just a more commercial drive there. So that's an important part of the overall growth.

I also talked about improved service levels in North America. Just by stepping up service levels, and I talked about 6% earlier on, that will -- it just helped us to get back to levels where we, yes, need to be. In fact, it's still not where I want to be. I think there is more for us to do. But overall, that helps us in driving a positive volume.

We are increasingly exposed to some categories outside of chocolate that are, I would say, better placed. We're seeing -- we saw an enhanced demand in ice cream overall, at least better than what I would say in chocolate confectionery. I will not give particular numbers on ice cream, but it was certainly a better picture, and that benefits our specialties and some of our business there.

And then finally, as I mentioned, by the end of May, our future booking portfolio was at a level around 30% higher than at the same time last year. And it was also higher than what we saw by the end of February. And that suggests there could be some customer restocking.

Now I'm a bit elaborate, but the reason I am is because I don't want to sort of point it all to a restocking. It's not. It's a much more nuanced view. And there might be some of that happening, but it's certainly not the overall driver for chocolate growth.

All right. And your second question, Ed, on '27 profit, obviously, we will come back on that as per the right time when we announce the full year results. But it's obviously a good question. Main message I want to bring is we need to be a bit balanced on that because there are different components playing in different directions.

First of all, the volumes that we talked about it already that we expect to be between -- modestly up between 1% and 3% linked to, obviously, the market, which today still is at minus 4.4%. And secondly, also the service levels for us that are improving, but still have some way to go.

With that or next to that, we do -- we will see some of those things that you're mentioning in chocolate, especially some margin recovery on the Gourmet side after the investments we had to make and we made this year, not expecting a full repeat of that. And some of the disruption costs as we improve service levels and stabilize should also get better.

On the other hand, and we have talked about it before, we've seen exceptional results in cocoa linked to the pressing margins and supported by the absolutely crazy volatility that we've seen into the market. So there will be some normalization. We're seeing it happening already right now in this half year and in Q4. So you have to balance that out versus the chocolate margin side with the normalization on the cocoa side.

And the final also important element is on the deleveraging agenda and therefore, the reduction of the financing costs. We do expect a significant reduction of the financing costs also next year, which is great. Now that also means that there's less pass on supporting EBIT. So EBIT will mechanically go down because of the reduction of the financing cost next year.

That obviously does not make a negative on the profit before tax, but it's something to keep into account when you look at your EBIT line, there's a mechanical negative impact of the lowering financing cost. I hope that clarifies a bit. And obviously, we'll come back with a lot more detail in due course.

Our next question comes from Jon Cox from Kepler Cheuvreux.

Congratulations for the figures, which were probably better than most of us expected. Just on the sort of volume outlook for FY '27, if you're already growing above 3% in chocolate, which is everybody thought that, that business would remain under pressure with your big customers maybe still having to refill their own factories because of lower capacity utilization, it looks like maybe some other players are coming in and already ordering.

Why shouldn't we expect top line growth next year to actually be 3% and maybe more in terms of volume? What do you see that maybe we don't? Or anything -- any sort of color you can provide on that would be useful?

And then just to come back to profit before tax this year, you were mentioning that there's an extra CHF 15 million on the financing. It will be about 330 million this year, that net financials line. But you're also saying at the PBT line, it wouldn't be as bad as that mid-teen decline you're going to see in your EBIT recurring in constant currencies.

I've struggled to get there. When I'm mucking around my figures, I still see a pretty substantial decline in PBT because of that financing line. And maybe as an add, if I can, any early indication of what that net financial line will look like in FY '27?

Thank you, Jon. I'll go for the first question and hand over to Peter for the second one and probably add some comments there.

So I mean, first of all, you're right. So what we've indicated for 12 to 18 months was a volume of around 1% to 3% that is slightly below the medium-term guidance of 2% to 4% and the focus for growth plan. And yes, we're obviously happy that we have a return to growth right now. So that's good. And that's for all the reasons that I just mentioned on the previous question, right? So I will not go back on to that.

But what it leads to the growth in Q3 as well as the implied growth for Q4 is a higher base from where to grow. And if you take that higher base and if you then think about the overall chocolate confection category, which is still negative mid-single digit, I mean, North America, around minus 7%; we are -- that means we really -- again, we're offsetting that with growth in adjacent categories that are looking better, but they're not in growth yet.

So it means for us better service levels. It means for us taking market share gains, and it means for us some effect of, as I said, on restocking because of the future portfolio increase.

So look, I definitely -- I don't want to give the gloomy view here, but I'm very keen for Barry Callebaut overall to set realistic expectations. And yes, I feel that the guidance that we've given there for the next year based on the -- I think in combination with the higher base that we will be getting to towards the end of this year is the right guidance for us to play with.

Now in addition, as I said, we will continue to -- and that's a bit of a basic boring message, but I think it's super important for us that we continue to focus on making the company better, laser focused on restoring fundamentals, making sure that I'm happy with the progress we made in North America, but there's absolutely more to do, making sure that quality remains at the level where we are and in fact, that we truly embedded in our operations much more sustainably than what we did, continuing with the approach of more differentiated sourcing, not just from West Africa, but as you know, we're creating flexibility there, also that comes with investments and R&D and so forth.

So we really need to make this a better company. I'm super excited about that. And I think the opportunity out there is very significant for us, but I want to be quite realistic about the sequential progress that we're making and therefore, the volume outlook for next year.

Jon, on your second part on the EBIT and then PBT and how it relates, yes, we are -- well, start from, we are -- as you heard Hein say, we are maintaining our mid-teen down EBIT guidance for the full year because of the short-term impact of some of those actions to prioritize growth and stabilize because of the mix, because of the cocoa normalization and because of some additional risks that we're still facing regarding the Middle East and hyperinflation. So that's how we maintain the EBIT guidance.

Now PBT for this year will also still be declining. However, less. Now the recovery on PBT depends on -- and maybe that's why you're right, your question is coming from. If you look at absolute level, the decline on PBT will be significantly lower, about half versus what we see in absolute decline in EBIT simply because our finance costs will go down significantly year-on-year.

It does not necessarily mean that percentage-wise, it's a slower decline because, of course, you're looking at it, that's an absolute amount of a smaller base. But essentially, we will be recovering about half of the absolute loss on EBIT on the PBT line. For next year, yes, I'm not going to guide very specifically on PBT. Obviously, we'll come back to that.

The only thing I can say beyond what I gave in the answer to Ed about the moving parts on is that we will be reducing further our finance costs for next year. It will go below 300 for the full year, but we'll come back to that in -- at a later stage.

I want to maybe just have a little add. You talked about how actually other categories are doing better than chocolate. Can you just give us a rough split? Is it still something like 70% chocolate, 30% other confectionery, whether it's biscuits, ice cream, you'd use it in other applications as well?

No, I think we're obviously -- look, I can't give you an exact split here, to be very honest, between the different categories. But I think for us, adjacent categories, as I said, ice cream, biscuit categories, bakery overall is larger than what you would -- what you just suggested. That's not 20% or 30%, that would definitely be more.

So 60-40, say?

No, I think it's around half. Well, I can come back later on with a more precise number. So let's hold this, but -- because, again, sometimes the category lines are blurring a bit. But we're definitely more exposed to other categories than chocolate confectionery again, than the number that you stated.

Our next question comes from David Roux from Morgan Stanley.

Two questions from my side. Just coming back to the guidance and at the risk of laboring on the point, could you perhaps unpack in more detail why the upgrade to volume guide for FY '26 did not drop through to an EBIT upgrade?

I mean, given the fact that Barry runs a cost-plus model, this would suggest there's additional price investment somewhere in the business that you had not anticipated, I guess, in June when you last confirmed the guidance or there's some under-recovery of costs; so any additional color on those contributing factors would be appreciated.

And then just a more sort of broader question. I mean, if we look at the business on a PBT per tonne basis, I think we're probably sort of 30% to 40% below 2019. I mean, do you think we are now in an environment where profitability per tonne for the business will be structurally lower than it was prior to the pandemic? Or are you fairly confident that you can return to those levels, if not exceed those in coming years?

Thanks, David. A few comments on the guidance overall. So let me start and Peter will add where he sees fit.

We are maintaining our profit guidance indeed for a mid-teens decrease in EBIT. And the volume development that we've seen in Q3 is actually offset by a number of headwinds. So it might be a bit repetitive because we talked about it before.

But first of all, as we shared at the half year, we are taking some short-term actions to prioritize our growth and our market share. And that's mainly relevant for Gourmet, where we are making some commercial investments as we work through the temporary dynamics that are created by the long cocoa position.

As you may have noted, I mean, Gourmet overall is not yet into growth. We expect that to happen in Q4. But what it means is that the mix -- the overall mix in sales is not yet contributing to the extent that we would like. And that's something that will evolve and that will improve for sure over time. But it's not coming -- it's not yet at the historic average.

Secondly, we indicated that at half year, that cocoa profitability would normalize in the second half, and that's actually what's happening. And as I mentioned, yes, we had significant cocoa volumes. but they do not provide sort of that same level of profitability.

So very important on processing margins, et cetera, where we have seen a very significant profitability in the first half as well as in the second half of '25. We're not seeing that anniversary in the second half of this year.

Third, and we talked about this, the recent bond buyback. So I'm not going to repeat that one. And then fourth, we did incur significant extra fuel cost in the last couple of last months, and then we saw an easing again. Obviously, very curious to see what's going to happen in the next couple of weeks.

In some European countries, and I saw this morning the latest Northern Europe, for example, prices are up again per liter to EUR 2.5 levels. So that, of course, leads for us to quite some additional costs. And even if we would pass on some of that, as you called out, some of that will come with a time lag because you have existing contracts and the situation is so volatile that we would have to swallow part of that for the short term. And obviously, that, again, on the longer term, I feel that we're well protected there.

I also talked about Turkey. We're seeing an important market for us. Although volume-wise, it's probably around 2 percentage of our total. but an important market for us overall. And with strong hyperinflationary environment there, it means that we need to apply hyperinflation accounting and that leads to charges in the P&L, if that would continue at a very high level that we've seen in some parts in Q3.

So look, we want to be realistic here. We want to make sure that we do the right thing for the company and strengthen the company overall. And that leads me to the second question that you asked, which is the profitability per ton in the longer term. And there, I'm much more optimistic. I feel that with the measures that we are taking, first of all, to drive the mix much more positively and do that really intentional. So that for me is super important.

We talked about focus for growth and about premiumization and a determined shift in that direction. If I now look at the capital expenditure program, if I look at the resource program, digital investments to connect to chefs and buyers, if I look at -- I mean, all of that, I'm very convinced that we have a very clear prioritization on the gourmet and on the most profitable areas.

Secondly, we talked about top 10 countries. We didn't only choose the top 10 countries and the priority countries are based on volume alone. We also -- we had profitability considerations in there as well.

And then finally, it's the investments behind specialties and so forth. So I feel that whilst it has to go quarter-by-quarter, I'm optimistic on the return to much higher profitability levels that could be there at the same level of pre-COVID.

Peter?

Yes. Maybe just to complement on that, also when we look back at some of the drivers of why we saw this depressing or lowering net PBT before per tonne. Obviously, there's a volume element and a market element impact on cost absorption. We've talked about that. We expect the market to gradually go back to growth. Our own volumes to go back to growth next year. That, of course, is going to help that.

We've also been making some both commercial investments, but also some cost investments to stabilize the network, which, again, it's not a [ miracle ] thing that suddenly by August, that will turn around, but it will gradually improve. So that's another reason why this is not going to be sticky over the midterm.

And there's a few other elements that we'll be talking about the Middle East impact, some of the financing costs that were mostly passed on, but not 100%, now that will be reversing. So all of that together with what Hein said about the focus we have at focus for growth will bring those PBT per tonne levels back up.

Our next question comes from Matteo Lindauer from Vontobel.

I've got two. Could you remind us quickly of your net working capital sensitivity to a GBP 100 change in bean price? And second, on outsourcing and your customer relationships, do you have any update on your key account relationships? And is there any large contract at the risk in the short term?

I'll start with the second one, and then Peter will turn to working capital in relation to the bean price.

So on outsourcing, I just want to reiterate what we said before. We feel that overall, that will bottom out for our largest accounts in next year. We've seen in-sourcing over the last years. And again, we are quite confident that after '27, that we will go back to a growth pattern here. But some of them have made those in-sourcing decisions, obviously created by category declines and therefore, utilization of factories and so forth. So it's a fairly logical response.

But at the same time, what we're doing is we're innovating fast at the moment. And as I come back to that previous question from David. our plan with innovation, with all the things that we're doing, we feel that we could reverse that trend, and my conversations with customers confirm that. But again, I want to be realistic for this year as well as next year.

We don't comment on particular individual deals, Matteo. So I want to be careful there. But I am -- I would say I'm very satisfied with the recent progress that we are making with our -- not only with our global accounts, but actually also with the large regional accounts, so yes -- which you've by the way, seen in the volume growth, right?

So there is a -- I can definitely see an increased confidence with our larger customers in our performance, in our quality performance, the uptick in our service. And those are -- really are -- those are the best indicators for future success. So that's where the focus is.

And on the net working capital, so the impact, the rule of thumb that we talk about is 60 million to 70 million impact on working capital up and down for every GBP 100 change in the bean price. It's somewhat lower than some of the numbers that we called for the midterm earlier in previous calls simply because we have gotten better in flexible blending, flexible sourcing, lower inventories, which allow us to have less open futures structurally.

But especially also, as I mentioned earlier, in the short term, it doesn't necessarily mean the 60 million -- or it doesn't mean the 60 million to 70 million because we are protected, for instance, by our letter of credit or sometimes our payment terms.

Our next question comes from Antoine Prevot from Bank of America.

Two questions from me, please. First, I mean, in Global Cocoa, I mean, last year, you discontinued some contracts in liquor and butter to focus more on powder because it was kind of like better return, better use of your balance sheet. Now I mean, it sounded you did mean some better again.

I mean, first, could you split out maybe the growth for powder versus better, please? And I mean, why are you going back into better? Was this a bit of a one-off? Or is it a bit kind of like a change in trends? Is it because you have less pressure on your balance sheet? I mean, yes, just trying to understand a bit more here.

And the second question, so on the Gourmet price investment, I mean, considering cocoa prices going up again, was this really needed to do some, let's say, bigger investment into kind of like July and so on to be more competitive? Or by nature of cocoa price going up again, you would -- or this somewhat be more competitive?

Thanks, Antoine. On the powder growth versus butter growth, so I'll hand over to Peter first, and then I'll add some words to that as well as on the prices.

Yes. So the growth in cocoa, first of all, has been exceptional for the quarter. We talked about at length. But both for the quarter as structurally, the growth in cocoa is driven mainly by powder. It's also the strategic priority that we have, and that will continue like that.

[ Liquid ] butter is more opportunistic, and we did last year cut back in the -- but essentially, it's a margin question, right? If we can do profitable good deals, we will not step away from it. And as you've seen the market environment changing, the pricing going up, we have seen some one-off opportunities this quarter, which has helped also the quarter sales for cocoa.

But we'll continue -- we continue to look at it in the same way. It's not as strategic as powder. We look at the margin and obviously, we take into account the working capital impact.

Agreed. And I think I wanted to add, Antoine, that in the plan and the Focus for Growth plan, we talked about cocoa powders and about premiumization opportunities, investments that we're doing in that space. That's not in the butter area as such. And we've seen that come down over the last couple of years, and we will continue on that strategic shift. So just to amplify what Peter says.

On Gourmet, Peter?

Competitive, right?

Sorry, [indiscernible] because I wasn't sure I fully got the question on the prices. But maybe you can just -- can you ask me a question once again?

Yes. No, no. I mean it's just like you were doing price reinvestment for Gourmet, as you flagged, for July and so on. But considering like recent months, cocoa price has been going up a lot again, like how needed were this kind of like price reinvestment compared to just by nature of the markets probably -- I mean, price is going up there?

I see what you mean. Yes. So look, we've seen a sharp obviously, decline in cocoa prices. But as I said, we tend to -- on the price listed business in our Gourmet, we have price list approximately every half year, at least for our main markets, North America and Europe. There's a new price list as per the 1st of July that reflects the market reality when we set the price list for a number of countries 1 or 2 months ago.

But please remember, we contract that business already quite a bit before that. So the very latest moves in the cocoa market are not always immediately reflected in these price list. But that shouldn't also impact us financially to that extent because, again, these are very long contracting periods.

So -- and we are actually flexing our hedging there to avoid the situations that we've had this year in -- with very long positions where we need to compete with companies that are much shorter. So I think we've become more flexible, but I want to caution a bit that on Gourmet in itself, that our pricing to customers will reflect the daily reality of the cocoa market that wouldn't happen.

Our next question comes from Samantha Darbyshire from Goldman Sachs.

Just want to say thank you for all the detail around the cocoa market and underlying retail market trends as well. That's super helpful for us. I have two questions like everyone else.

The first is kind of -- we've kind of touched on the non-chocolate confectionery categories that you sell into. But I think what we started to see as cocoa prices were going up was that some customers were maybe choosing other flavors beyond chocolate that were perhaps cheaper for them to use. I'm just curious to see whether you've seen any shifting demands there with people coming back to chocolate flavors and kind of pushing that chocolate innovation again now that it's potentially a better return for them.

And then the second question is you've mentioned the improving service levels in North America, and you've quantified that. Can you give a bit more color about the other regions as well? I think Western Europe was an issue as well. So it would be good to get an update there.

Thanks, Sam. I mean, first of all, delve on chocolate as a flavor. Actually, we're very bullish about that. We're not seeing that effect, as you mentioned. We're not seeing consumers moving away from that flavor.

And the interesting thing is if you take a little bit of distance from it, there's already quite a bit of flex, right, that our customers can offer. We have, of course, the traditional cocoa butter solutions. At the same time, there are compound solutions that have grown substantially also for us within the compound solutions or the cocoa coating solutions.

We have offered a real premium solution there. Cocoa Max innovation is underway there. Super coating solutions are underway. So the customers can play with that, and we have become a lot more flexible. And importantly, that is not a negative in our profitability mix. And as you may recall from the Focus for Growth program, and as I said, what we want to offer is everything chocolaty.

So we're saying cocoa butter, yes, that may be traditional, but we also want to be the absolute leader in cocoa coating solutions in both the premium side as well as the -- well, what the customer needs, as well as in cocoa replacement opportunities.

We see, in particular, positive response to our ChoViva solution. That is a replacement based on sunflower. And that's small in itself, but the increase, I would say, is meaningful, and that's particularly happening in Western Europe. So we will keep you, of course, updated on that as soon as when there's -- when it becomes much more meaningful for the total portfolio, but this is something that we're absolutely pursuing.

So if you look at all of that, it comes at different price points. And therefore, we feel that chocolate is as relevant overall as ever. And it is the preferred flavor for consumers, whether that's in ice cream, whether that's in fillings and so forth and inclusions in bakery. No, I'm very positive about that.

I got actually very excited. So I forgot your second question. Yes. on Western Europe. Look, I mean, as I said, North America was under pressure. We saw increasing prices still in North America, and that was -- was the question on the market? Or was the question on our performance on service?

It was the service levels.

Yes. So the reason for calling out North America on service levels was mainly because that's where we have seen the biggest decline and also because North America is as a single market, U.S. is as a single market, it's our most important market. And therefore, it was absolutely critical to restore service levels there first.

We were also reading from some quality incidents in the [ Sythisen ] factory that happened by the end of last year. And again, I was very keen to prioritize and put focus. And therefore, we talked about North America.

If you look in Europe, service levels there are also at a higher level than what they were before. We wouldn't talk about the same level of improvement. But again, it wasn't as bad as North America was.

Our service levels in Asia Pacific, what we call the new region, are at a significantly higher level. So I feel much more positive there. But again, Europe is improving, but at a high -- overall at a higher level than North America.

We -- I'm very encouraged by the way that on the progress that we're making in the focus on our Gourmet business. We talked about the core range of SKUs, reducing some of that complexity. Our Gourmet business being produced primarily in Belgium under the Callebaut brand and in France on the Cacao Barry proposition.

If we focus there on the high runners, bring that clarity on what is really important for us, I see the organization responding to that very fast. And therefore, inventory levels that were at a very low point by the end of last fiscal year will be at a much more healthy level towards the end of this fiscal year. So I'm really encouraged by that progress.

Our next question comes from Tom Sykes from Deutsche Bank.

Thanks again for the detail probably the longest Q3 call you'll ever want to give. But just firstly, it's a little bit difficult to disaggregate perhaps what you're saying to the organization versus saying to the market. I appreciate that volumes have improved, but you're trying to push through some fundamental changes to the business. And so you're sounding cautious.

But if we take it from the point that you last spoke, would you say that your caution over market growth has at all changed either for better or worse? Maybe it's possible to disaggregate a little bit the growth outlook in Gourmet by sort of type of customer or region? Is it the smallest customers that you're having the most problems with? Because you obviously say there's some contract backing there. And is that in any particular region at all?

And then just finally, quickly, you did mention something about EBIT down. It wasn't clear whether that was meant to be an intentional forecast or not. But if you did grow volumes at 1% to 3%, knowing what you know about your finance costs, I appreciate it's the focus on PBT. But do you think at 1% to 3%, your EBIT would be down? Or is that just not something to read into, please?

Thanks a lot, Tom. And I mean, interestingly, as you say, this is a Q3 call, but with three of your questions, you're adding quite a bit of that time to it. So -- but it's my pleasure, of course. And Tom, as you said, since the last time I spoke, I guess that was during our fireside chat that we had at the Deutsche Bank conference. So thank you, by the way, still for that one.

But a few things. First of all, have we changed our view on the category overall? And with the volume growth that we're now seeing, are we more bullish on the overall growth of the category? And the answer is I haven't changed. As I said, we were a mid-single-digit decline, I think, when we spoke last, and that's really still where we are.

What is relatively new or latest information, and that's why I talked about it today was that prices were still increasing in the U.S. overall, and we saw a higher than global average volume decline in North America, which we were able to withstand. So that is something that I was keen to get across today.

And that's a result of, again, higher service levels, us playing in other categories in chocolate confection ingredient alone. And in the U.S., we're particularly exposed to ice cream, for example, and we're having a very healthy specialties business there. So I feel that's a positive message that I want to give, but there's no change in our perception on the global market, it is what it is. So I think -- so that's number one.

Then secondly, on Gourmet, I talked about in-sourcing and outsourcing. But in general, we see that regional customers are -- in the developed regional customers as well as private label are growing faster in the developed regions, so in Europe as in North America. I don't think that's a surprise for you, but I just wanted to call it out. And our focus, as you know, with the market segments that we've chosen in focus for growth, I feel that we are well positioned to benefit from that.

At the same time, we believe that in the long -- in the medium term, working with our global accounts more intensively on innovation, on working together on consumer insights and driving the right platform, something that I particularly enjoy, by the way, that will give us a longer-term base that I'm very excited about, but I am subdued on the volume developments on those accounts for the near future for us in particular.

Then on the region, we saw very healthy growth in APAC. And whilst the category in APAC is actually down, so it's not up, but I think we are positioned in a couple of markets where we're also putting priority that are some exceptions. So I feel good about India. I feel good about our China business at the moment.

We -- I think that will continue to grow for a bit. That's partially because of the comparable, but also how we're positioned. So that's good. And we are playing increasingly in that premium sector. And within the country, the premiumization is still happening. So while the overall category is having some headwind, premiumization is helping us.

Finally, on your question on EBIT. And Tom, you asked it a few times in different ways during the fireside chat on guidance for 2027 on EBIT. I have to be honest, I'm not yet in a position to provide guidance on EBIT for '27. We talked about a volume growth of 1% to 3%. We will come back with guidance, of course, at the beginning of September. That's what we will do.

But I just want to leave it at the moment where we are. I feel that we will continue to deleverage, and that will, as Peter talked about, that will lead to reduction in financing costs. So that will, of course, help our PBT overall versus the EBIT equation.

But maybe, Peter, you want to add a few words to that?

Yes. Just to complete, I mean, we are confirming indeed are talking still about 1% to 3% volume growth. It does not mean that EBIT will go down next year because that was part of the question. I just mentioned in my answer a little bit more that there is a balanced mix of elements with a normalization and a finance cost impacting EBIT negatively. But of course, volume and chocolate margin and some cost softening will help on the other way.

Yes. So I mean, clearly, I don't want to point towards an EBIT increase, Tom, absolutely not. But I just wanted to say I'll stick to what Peter said in his bridge earlier and a precise guidance, I don't want to get into that with a number today.

I think that concludes the overall -- looking here, yes. Thanks, everyone, for joining. As I said, it was a lengthy call, but thanks a lot for your interest in the company. It's always much appreciated. And I look forward to engage with you in a number of sessions in the weeks and months to come. And for those who are going to speak to, I wish you a very good summer holiday. Thank you. Bye-bye.

Thank you all. This concludes today's call. Thank you for joining us. You may now disconnect your lines.

Great. Well, good morning, everybody, and thank you for joining this session. And we're very pleased to have on stage Hein Schumacher, Chief Executive of Barry Callebaut, especially on this important day when you've released your strategy announcement this morning. Perhaps before we get into the details of the strategy, perhaps you could tell us about your first 6 months in the role.

Your appointment was made in January. What was your perception of the business as you started? Why take this role? And how did you go about appraising the challenges that the company faced?

There's quite a few questions in one go, but...

I do keep doing that.

Yes, let's get started. So maybe to start with, why did I take the role? I mean, I have a foods background. I love global foods. And there's only a very few companies in the world that have sort of that end-to-end value chain. But also -- and I think this is super important that have a very deep expertise in what they do and that are truly global in nature. And obviously, I have a CPG background, a branded background. So for me, the new leadership opportunity was the business-to-business side of things. And so those were probably the 3 biggest reasons.

And I felt that this was a company where you can really make an impact. The company, and that's sort of a segue, I think, to this other part of your question, the company has been under pressure over the last couple of years from a number of things, a perfect storm.

One very fast-growing cocoa prices. I mean, literally, it shoot up almost 5x to the historical average which obviously, you're all very well aware of. Secondly, a few big quality incidents in the large sites of the network, and that hampered customer service. And thirdly, the company went on a massive transformation.

And if you do everything in one go, that had an impact on the people, had an impact on the organization, had an impact on service delivery, had an impact on stability. So I felt this was an opportunity to potentially make a difference. And I think the first impressions over the last 6 months were sort of in line with what I expected.

There is a deep expertise. There are good foundations. There's a huge opportunity. I feel, for the medium and the long term, for sure. But at the same time, we had to get a few things right to strengthen our basics, strengthen the fundamentals and making sure that we do the things that our customers expect us to do.

Thank you, Hein. And so looking at the business now after that period of discovery, perhaps we can walk through your assessment of the business as it stands, and then you can talk us through the focus for growth strategy announced this morning.

If we divide that assessment maybe into people and culture, the infrastructure and the go-to-market, starting with people and cultures, you say, been significant external volatility, but also a very high number of internal initiatives aimed at improving performance and also cost savings.

Presumably, that can take a toll on an organization. So how would you position the morale currently? And was it a place you think where people who were outperforming actually got recognized?

I would say when I arrived with everything that I sort of talked -- that I just talked about, I think it was a bit of a fatigue factor in the company, and I felt it. Many initiatives that had to be done and we have a high attrition level overall, which is something that we talked about.

But at the same time, this is a company, we are selling joy, right? I mean this is joy and indulgence and it's a very global company. And I felt that in the conversation with people, the opportunity that we have, and which is what we talked about earlier today, the Focus for Growth program to charter our own course.

And I involved immediately 30 leaders from around the globe, not actually my direct reports, but below. And we did that exercise to handpick them and with that group, we designed that Focus for Growth action plan that we talked about this -- earlier this morning in a video message. So involving people, making them part of the journey, doing this collaboratively and co-create the way forward, I think, was felt as a very positive step forward.

So in every organization where you come in, there is a certain culture and so forth, but I think there's an opportunity to quickly put everyone and get it in the right direction. So I feel there was a lot of enthusiasm and passion in the business but it needed to be unleashed. It needed to be unlocked a bit. And I think that's sort of where -- that's probably where we are on the people side.

I think second, on the infrastructure side, as I said, I think there was an immediate opportunity to strengthen fundamentals. I felt that the customer service process, our planning process, our quality assurance process, we're not as robust as I would have liked to see it. So I want to be very upfront about that. But at the same time, with a high operating focus and requiring discipline around those, I think we are making progress. It's not a silver bullet. It will not happen overnight. We need a bit of time which I talked about at the end of our second quarter.

Hence, we also changed our guidance for this year. But at the same time, I feel that we're making rapid progress now. And I think it's a matter of, I would say, towards the end of the year, and we should get that stability, right? So that's on the processes. I think the second one is on stability in the network. The network was very aimed at closing sites in the last couple of years to reduce cost, and that's a wonderful thing. But at the same time, you need to service your customers.

So what I'm very focused on is, first of all, to get the right capacity in because the customer and the consumer has evolved over the years. For example, customers. I mean, it's bifurcation that you're looking -- that's pretty global, and we're seeing it in chocolate too. Affordable solutions, then that means cocoa coatings and compound solutions and premium solutions. So dark chocolate, specialties, et cetera, et cetera. And our network was not -- was very focused on the mainstream. So we had to make some changes. And that's what we're doing now tactically to make lines more flexible, so they can either produce those compound solutions or the full solutions.

But we also had to invest in capacity, and we had to cut through a couple of knots quickly. So -- which was also announced this morning, it means a significant investment in Northeast U.S. It's a place called Pennsauken. It's a significant investment in Canada, and we announced the planning or the building of a new site in the Midwest. So North America, which is about 23% of our volume, I wanted to absolutely prioritize that, make sure that that's where the money goes and revamp the network there, but it was needed. So that was the infrastructure part. You had another one.

Yes. Well, it's on the go to market. Yes. I mean, I guess when we think about the digitization of the business or sometimes a perception at the level of investment required to fully modernize, Barry hasn't perhaps been made. Is that fair at all?

Yes. I think that's fair. I think we had an opportunity on digitization and the use of AI on 3 areas, one in R&D, but I'll talk about that later. But the most important one for us is, I would say, in the planning and in the customer interaction. So do you know what the customer really wants, where is the signal? And how can you have your supply chain cater for that? So I think that was opportunity one.

Secondly, it's in our Gourmet segment. So that's our premium -- most premium segment. And we inspire chocolate making and recipe making around the world. We're by far the global leader on that but we do that through chocolate academies. We have 20 of them around the world, but we had an opportunity to digitize that and not just inspire on recipes, but also convert into e-commerce. And that still -- it strikes me, given the experience in B2C, but it's still at a relatively early stage. And that's -- I believe it's an area where we can lead, and that's where the investment in digital now goes.

And what would be your assessment of the way, I guess, you've sought to maximize those growth opportunities before? I mean you've sort of alluded to perhaps a lack of rigor perhaps in the planning and assessment of those opportunities. I guess, how quickly will that change? And in terms of the sort of oversight and accountability, how you'll actually be getting the reports and the MIS systems? Is that something that's going to change internally?

So what I saw was an organization that was pretty hybrid in its execution. So we had people managing the commercial operations in the regions. So we are a food company, and I believe, therefore, a regional focus or having a regional way to conduct your business is the right choice to make. It's because the way people consume chocolate and use chocolate in North America is different than in Asia, it's different than in Western Europe, it's different than in Latin America.

So I want to steer the business really on a regional basis. We have defined 5 regions, and that's where the P&L should sit. That's where the resources should sit. And as a function, global functions, they have a very important role to play on the how, on planning processes on what tools to use, et cetera. So there is clearly a value for the company, but we needed to get that clear. That wasn't clear. So it was quite matrixed and I feel that bringing that clarity now is super important. That was one.

Second, the world was our oyster, and that's a good thing, but we've now defined 10 markets that are more than 2/3 of our volume and definitely more than 2/3 of our profit. They get the first call on resources. So when it comes to solidifying planning, for example, and service, first U.S. I was very clear -- that is number one.

Secondly, 4 countries in Western Europe and then thirdly, 4 emerging markets. And I think, look, choosing is not losing. I learned that the hard way across my -- over my career, but you need to -- yes, to make it explicit and then -- and then organizing coherently your resources behind those choices that usually takes a little bit of time.

But I feel it's happening. By the end of our fiscal year, which is by the end of August, I believe, we will organizationally be in the right place.

Thank you. Well, let's move on to today's announcement, in particular, then. So in your own words, how would you like to give an overview of the Focus for Growth Action Plan that you announced and its key elements?

Yes, sure. So I would say 3 things. First, relentless focus on these fundamentals that I talked about. We had customer service on-time in full rate on our important segments below 80% last year. That needs to be -- now to customers that need to deliver 95% or 98% to the retail. So we just simply have to step it up there. So that for me is priority #1. It's a bit brilliant boring basics, but you simply have to do it. So I think that's number one.

Number two, we are -- we've made a clear choice to do what I would call everything chocolaty. So that is full chocolate solutions, compounds and coatings, but also chocolate replacement opportunities, and that includes sunflower experiments that we're doing on a global basis as well as cell culture. So we really want to lead that. So that's two.

Third, we are making a clear shift towards premiumization. If I would add up the Gourmet segment, which I just talked about, plus Specialties plus some of our premium powder solutions, at the moment, it's just shy of 1/3 of the volume of the company already, but that's where we can make a difference, both in profitable growth as well as in absolute growth. So a clear shift to premium and be intentional about our resources.

And then finally, point number four, in those market segments, in those 10 markets that I talked about that we believe are attractive and that's not only chocolate confectionery, but think of the use of chocolate as an ingredient, in ice cream, in protein bars, in pastry snacking, provide a more holistic solution to the customer so that we become a one-stop shop for them. And that includes everything chocolaty, but that can also include a specialty like a decoration, a filling, which we already have, but we didn't -- we weren't intentional about it, and I want to scale that up significantly.

So for ice cream, for example, for ice cream, we're working with 10 out of 10 of the largest ice-cream companies in the world. And I think with everything that I've seen in the company, we can sort of provide that holistic solution filling, a decoration and caramelized nut solution plus the chocolate side and that is very attractive if we get that right. So those are the 4 elements.

Okay. And obviously, given an assessment of the categories, and you've sort of outlined the geographies where you intend to allocate the majority of your resources to. Are there any areas of the business that you'd consider exiting where you can't make the required return?

So when you list those specialties that I talked about, for example, I think we need ultimately around 6 or 7 type specialties, so chunks, baked inclusions. So these are, for example, those and so forth. The caramelized nut solutions that I mentioned, one shot fillings for ice cream. That's a list of around 6, 7, roughly. And I would say, at the moment, in the periphery of the company, we have around 25, 26, and that clutters the company, and that requires an adjustment in the portfolio. Those are not huge in terms of volume but they require attention.

They require CapEx. They require people. They require processing. So there we need to make a choice and we will.

The company has been through a number of costs...

By the way, just Tom, before I go, because I think also that differentiates us a bit versus the competition. There are -- without going into all kinds of competitions, but there are -- and then one of the companies is actually currently for sale, but they would be a specialty solutions provider for around 30 or 40 different specialties, all very small and so forth. We do need to provide a certain scale to things. So that's -- we need to make choices.

At the same time, we're not a trader. We are a company that is truly end to end. We're putting our emphasis on the value-added side right now, but then you need to choose on what you can do in a bigger way.

Okay. And so if we look at the cost side of the business, as we said, there've been a lot of initiatives before, a lot of cost initiatives over the last few years. There isn't a cost saving target as part of your profitability targets.

Where is the productivity going to come from going forward? And can you still make these productivity savings without affecting your ability to supply your customers?

Yes. Look, I mean, first of all, we didn't specify a productivity target as such. I mean, on cost, however, we did say -- I mean, on the medium term, but also on the shorter term that our -- we expect profit to grow ahead of volume, right? So you do need leverage in your P&L. And I feel that we can do that. If you look over the last couple of years, the company has invested also CHF 250 million in extraordinary items or one-offs. I expect that level to be way lower going forward. So that's, I think, a remark number two.

I think three, I feel that the current cost base that we have is mostly served by growing in the areas that I talked about, the 4 things and we need to shift resources behind those things first. And I felt that announcing now a major global restructuring after the last couple of years that I talked about was not the right message to -- in the company. And we first need to make sure that we resource the priorities in the right way. After that, of course, you can never exclude it, but it wasn't part of the plan as such today.

Okay.

We don't expect -- I also don't expect major cost increases. We talked about capital expenditure. We were at a level of CHF 300-ish million. We're ramping that up probably to CHF 350 million and on an OpEx level, I'm very keen to get inflation compensated by productivity. So that's all in the plan, but not a major restructuring.

Okay. So in terms of the priorities for investment through the P&L, obviously in your presentation, you give a red box that says investments, but that's the -- that's not quantified at this stage in terms of the incremental OpEx that you can spend?

Well, as I said, on the capital expenditure, I think we're pretty clear and that's the step-up that we're going to have to make. On OpEx, I feel that with everything there, whether it's digital, but also whether with the plans that we have, we can -- we should be capable to drive net productivity ultimately in fixed costs which would be a trend change already. But -- and as I said, this is also not a plan for a major restructuring or a major step up in OpEx.

I feel it's a shift plan. People are doing too many things, have been doing too many things. Investments as a result, get diluted. And I want to bring clear focus in everything that we do and bring consistency in our performance.

And in terms of -- you mentioned obviously the higher CapEx investment that you're putting in to support the growth in the 4 key areas. How do we -- should we think about whether you're actually building out capabilities that you already have or that you're actually having to build muscle in areas that you don't necessarily have now?

Yes, I think to give you a statistic, our network at this point is capable without going too technical, but 35% of our lines, they can sell cocoa coatings or switch back to real chocolate solutions. And cocoa coatings tend to be more affordable, right, because cocoa coatings in combination with oils and fats are an important ingredient list for many of our customers. But interestingly, when the cocoa price, which is around now GBP 3,000 per tonne, when it drops, so when it's higher than that, around GBP 3,500 or something, then these cocoa coatings become a lot more financially interesting.

When we're at the current level, that's sort of an inflection point and people do prefer taste and do prefer the more premium solution and they tend to go for chocolate. And we can talk about that and say, well, we like this or we like that. I'm taking a fairly pragmatic approach. And I'm saying, hey, we need to bring that chocolaty experience. And that means I need to have lines that are flexible. And we need to increase that flexibility and agility. So a 1/3 of our lines can do that in our important geographies, but I feel we still need to have a -- we can still make a step there.

Secondly, on the specialties, as I said, we have -- for example, we have baked inclusions, which are super popular on ice cream. And they have been out of stock because the demand has been there. We have a supply point in Europe. We've got a supply point in India, wonderful, but we need to step that up in other markets. And I feel that, that's something that we need to be faster on.

When we see those trends happening, okay, that -- caramelized nuts, we produce in Spain, wonderful solutions in combination with chocolate and particularly chocolate that performs great when it's frozen in ice cream again.

That combination is golden. All right, great. How do we move faster? And I feel that's something -- that's a muscle that we need to build up. And that will take a bit of time, but I feel those are probably the 2 changes that we need to bring.

So there's a lot of aspects that we've spoken about. So perhaps if we bring that together to the targets that you're setting, the phases of the plan and the time frame in which you're looking to deliver those outcomes. You're targeting 2% to 4% volume growth margin -- on the margin side, mid- to high single-digit EBIT growth and low teens PBT growth with the impact of lower financing costs as well as cash flow, CHF 300 million to CHF 400 million. What are the key phases of the plan and the milestones that we should all look for delivery?

So -- so first of all, that's a medium-term algorithm that we feel can -- is feasible in combination, by the way, with 11% to 13% ROIC as well as a leverage in a company that we -- that should get us to a safer level than where we were a few years ago, and I think that's ongoing and going in the right direction, but it's a medium-term outlook. In the short term, we've guided towards a volume growth for the next 12 to 18 months, that is not 2% to 4%, but around 1% to 3%.

Now what's -- first of all, what's driving that? First of all, we've seen 50% price increases over the last 3 years. And we need to see prices come down, and we need to see the consumer responding to that. I am positive that, that's happening because we've guided for this fiscal year, for the second half of our fiscal year towards volume growth already.

And that's with all the knowledge that I have today, that is indeed coming through. And we expect that to continue to some extent next year.

But of course, it will depend on the pricing and how consumers are responding. So I would say, I just want to be a bit cautious on that one in combination with higher fuel costs and disposable income and so forth. So that's one on volume.

On profit, we expect -- also for the shorter term, we expect profit to be ahead of that volume, but I want to be careful as well. We are making investments in our capabilities that I talked about. We need to step -- step up fundamentals. We have things to repair. So I just want to be a bit cautious.

We have a cost headwind on the fuel side, particularly in logistics, which is an important part for us. And I feel that we're going to make steps. But -- and the steps will be also the profit before tax actually will be ahead, I expect, in the shorter term will be ahead of the midterm algorithm because of reduced financing costs that are coming through to a faster extent than what we anticipated, which is all good. But I want to caution to great expectations on margin development per se.

Okay. And in terms of a definition of medium-term or milestones, I mean, is there anything you can sort of say about what medium term means, I suppose?

You can say around 18, 24 months, you should get to a medium-term type of view.

Okay. If we link this to your mission to be a reliable and innovative global leader, how do you think about the balance between wanting to get that volume growth and the positive benefits of operational gearing and wanting to provide a more consistent solid foundation to that growth?

Yes. I think the world is -- I mean the world in what we do is changing a bit. So -- and we talked -- I talked about it this morning in the Q&A as well. The chocolate confectionery market, from what I can see versus the past is not growing to the same extent.

As I said for the short term, but I feel overall will be sort of between 1% and 2%. That's lower than probably what it historically -- has historically been. But I feel that chocolate as a very versatile ingredient is used in adjacent categories that are super interesting, ice cream, which I know from some experience has been growing and will grow, I would say, between 2% and 4% roughly.

Snack occasions, such as protein bars and where chocolate is the preferred -- by far, the preferred taste and ingredient, will grow faster but also pastries will grow faster. So the second thing that we need to do is to move in those adjacencies and therefore expand our addressable market more intentionally. And then third, as I talked about, our service. Look, I feel that stepping up the fundamentals is arguably our best lever for growth right now.

So your question, look, I think this is the 3 things that we need to do, and that will give consistency over time, but we do need to build that machine. And as I said, I'm not asking here for everything long term. I say, 1% to 3% volume growth in the shorter term, profit ahead of volume and PBT somewhat ahead of the midterm guidance because of the particular dynamics around financing costs. But at the same time, we do need to build the machine and that is not an overnight exercise.

And you've very clearly introduced more oversight and accountability at organizations in your -- you've been in charge of in your career. What can you say about the degree of rigor to that, which will be brought to Barry? And will that affect the rewards and incentives framework that the business operates in?

Answer is yes. So as I said, I felt the organization is a fairly matrixed organization in terms of global functions, regional responsibilities that are not fully defined and so forth. So what we're going to do, 5 global regions, a simple set of targets for the regions in which they have accountability to deliver and of course, a global target set that's there. Key functions supporting the regions in a few important areas, supply chain and engineering, obviously, finance and operations to global shared services.

We have now 4 locations. And I want to stabilize that, get the cost levels out there, which I believe will help us to reduce that inflationary impact that you have every year, which I talked about. So that's for me finishing a journey. And I would say those are probably the key things. But we do need to get the accountabilities in the organization absolutely right, and I want to be very straightforward. If you're the President of North America in our organization then you run that show.

And our regions are around 85% self-sufficient. So a large region like North America, for example, is around 85% to 90% almost self-sufficient. And then there's some, of course, chocolate from Belgium, which is super famous, and that's what we own. Cacao Barry here in France, which is a very super premium chocolate. It's wonderful. You should taste it. And that's something that we can export.

But for the rest, they should run the show based on and with the help of global colleagues, but clear light regional offices, light head office, designed fit-for-purpose and put the resources as close as you can to the market.

Yes, I have to admit, yes, that's something I've done a few times -- I've experienced before, as you probably are aware of. And I think it works to have the accountabilities right.

Absolutely. So sustainability has been a top priority for -- well, for the industry, clearly and particularly for yourselves as a global leader. What role does this play in the focus for growth plan?

It's bigger than you think. I think it's worth saying that the undercurrent of sustainability, in particular for us in the ESG framework, the S, so child labor issues, but also, of course, deforestation issues in the chain, I take them extraordinarily serious, but not just that, but actually, we see the demands from our customers and the brand owners are going up and not down.

So while the topic of sustainability is sometimes not hitting the front pages these days, the undercurrent on the demands, the action that the industry is taking, I think, are very serious.

And we have a program that's called Forever Chocolate that was started 10 years ago, big credit to my predecessors on that. And we are not relaxing our targets on that. And I'm not going to make major changes.

I want to make sure that the couple of key targets that are in there that we hit them. And so I'm prioritizing 3 or 4, and that's what we will go after. But I think by doing that, we will be capable to provide something to our customers that no one else can because that's a clear level of differentiation.

So we've spoken about a number of different aspects across the plan that you've announced and obviously a number of different stakeholders as well. So in your view, what does success look like in the Focus for Growth Action Plan?

We cannot have in our most important segments, customer service levels below 80%. They need to be 93%, 94%, 95% plus, and that needs to be reached pretty quickly. Second, that 30% of premiumization in the portfolio needs to go up as a percentage of the total because it's a clear trend, and we need to address it.

And third, the segments that we want to win in, I called out ice cream, I called out bakery, I called out snacking and protein. With the specialties that I talked about, we need to win those segments and be the absolute market leader. For me, those are the 3 big ones.

And of course, very motivated and happy organization, but that's something you probably won't see from the outside so much.

Okay. Well, look, we've been through an awful lot this morning in a short period of time and sort of significant actions that you're taking to improve the performance -- but Barry, so thank you very much for joining us today and giving us this chance to speak on this important day as you launch the strategy. Thank you.

I appreciate your time. Thank you.

Okay.

Hello, and welcome to the Barry Callebaut Focus for Growth Action Plan Q&A session, which will be hosted by CEO, Hein Schumacher, and CFO, Peter Vanneste. My name is Nadia, and I'll be coordinating the call today. [Operator Instructions] I will now hand over to your host, Hein Schumacher, CEO, to begin. Please go ahead.

Thank you very much, and thank you, and good morning, everyone. I hope that you had the opportunity this morning, albeit very early, to watch our on-demand presentation about the Focus for Growth Action Plan. And as you've seen, with Focus for Growth, we are making some clear choices. We are strengthening our fundamentals. We are focusing our resources and stepping up on our position as a solutions provider by, for example, scaling key specialties in market segments that we believe we should win. With that, we are very much looking forward to your questions and the discussion, of course, and I'll hand now back to the operator to get us started with that.

[Operator Instructions] The first question goes to Jörn Iffert of UBS.

And just 2 quick follow-up questions on the [ BU, ] please. The first one is, there was -- I mean, 1 or 2 years ago, the full-time employees of Barry Callebaut were supposed to be reduced by 15%. Can you give us an update where we stand here? And if there are reinvestments happening, in particular, in which areas you want to reinvest in SG&A to implement your new strategy? That would be the first question. And the second question is, please, on the equity free cash flow guidance or free cash flow guidance is CHF 300 million to CHF 400 million medium term. What is your assumption here on the interest cost line and also net working capital swings? Because when usually volumes are growing net working capital was cash outflow, just to double check these assumptions again.

I mean I wasn't sure I fully got your first question, but let me give it a try, but please let me know if I'm going the wrong way here. I thought you were talking about reinvestments and reinvestments in our margin or reinvestments in the P&L. When it comes to SG&A, look, this plan is not about making significant investments in our operating expenses, both not in SG&A as well as in, for example, fixed other costs such as fixed supply chain costs. This plan is very much about prioritizing our current expenses and investments behind the priorities that we have talked about. So top priorities around country focus, priorities around premiumization and priorities about scaling up specialties to become that service -- solutions provider that I mentioned in my opening.

So this plan is built on the foundation that we have, but it is very much around the shift. It's about adding focus, and it's not necessarily about stepping up a massive investment level in our operating expenses. Now I do want to say something about our capital expenditure goal. That is an area where we have historically been around a level of around CHF 300 million. There, we will give ourselves a bit of room because we feel that investments are necessary in North America, in particular, and we've outlined a few details on that one. We are expanding our site in Pennsauken to service the Northeast. We are looking for expansion of our Brantford site in Canada, and we are looking for a new site in the Midwest. So that will increase our overall capital expenditure level to a level that is around CHF 350 million or round about, obviously, depending year-on-year. So that is what I wanted to say about reinvestments. Peter, when it comes to the cash flow number.

Yes. On your question on cash flow and the moving parts behind it. So first, maybe on the financing cost, as you asked. As we said already this year, we will be landing below CHF 320 million for the year, which is CHF 60 million -- CHF 56 million down versus last year. We will continue on that trend as we are deleveraging further. We're paying back maturing debt, which is reducing our financing cost. So we have not given any official guidance on the financing cost itself, but you've seen that the PBT algorithm is faster than the EBIT algorithm, which means that, that gives an additional impact, positive impact.

Overall, historically, this company has been around -- has been in '23, '24 has been around CHF 200 million net finance costs. I mean this is the direction that we're moving into as well in our plan, obviously, with some improvements coming from our cash conversion cycle that in terms of inventories that is better than what it used to be -- to some extent, offset as well by evolutions in the EURIBOR.

But overall, that's the direction where we're going with that, and that's why it's an incremental addition to our net profit before tax. Net working capital, you have seen, I believe, and you're not surprised by that, that we qualified our assumption with a GBP 3,000 bean price assumption. We obviously have to take an assumption when we do that because that does have an impact if there's brutal movements on it, especially on the working capital side. So we have assumed GBP 3,000.

Now you know that we already have become more resilient to some of those moves by having lower inventories by having the financial instruments like the letter of credit in place. So that's not really a big discriminator, assuming that GBP 3,000 flat over the different years in the plan. Next to that, we have some further improvement on the cash conversion cycle as such as we are completing our efforts to become more effective and efficient in especially inventories where we have invested and are investing in better systems and tracking to get a better grip and monitoring of where our inventories sit and therefore, be more efficient.

The next question goes to Alex Sloane of Barclays.

Two for me also, please. Maybe just the first one, thanks for laying out the medium-term algorithm. In terms of next year, fiscal '27, I mean, should this -- should we be assuming sort of a more meaningful PBT inflection year given the kind of reversal of some of the gourmet price pressures you outlined in April? Or does that PBT guidance to the medium term incorporate '27? Just interested in your view on that.

And then the second one, actually, just following up on the -- maybe for Peter, just on the cocoa bean price assumption GBP 3,000 per tonne. I mean, I guess I'd be interested why are you assuming that level? I think in the past, you've said structurally, you see the cocoa bean price sort of higher, maybe GBP 4,000 to GBP 5,000 per tonne as a kind of sustainable structural view. Has your view there changed? And maybe could you give us the updated sensitivity on that assumption? Like I think you've historically talked about GBP 100 per tonne move being GBP 70 million to GBP 80 million swing on working capital. Has that sensitivity come down as you've made these efforts to tighten up working capital structurally?

Thanks, Alex. Very helpful. What I -- I would like to go into your first question on the shorter-term guidance, and then Peter will take your second question. On the short term and on 2020 -- on FY '27, a few overall remarks. I mean the first one is that we have guided on volume, and we expect volume to increase roughly around 1% to 3%. That is slightly slower than what we would expect in medium term. And there's a few reasons for that. First of all, pricing is still in there, and we need to see how consumers are responding to likely price decreases that will happen. But timing, of course, to be seen. And therefore, we do expect some volatility around that. And we want to await a couple of months before we give you more precise guidance on that.

The second reason for slightly lower on -- guiding slightly lower on volume is, of course, geopolitics. I mean we're seeing movements in the Middle East. That is an important area for us. And that will impact things over time. We need to see how that progresses. Also El Niño, we're seeing this year a fairly strong El Niño, and that could have impact on bean prices, something that will become much clearer in the course of June and July. So we're a bit cautious on volume. But at the same time, we have guided to volume growth already in the second half of this year. I can confirm that, that is indeed happening. So we're happy with that. And overall, we are guiding towards a return to volume growth overall for next year after a few years of decline.

Then on profit, PBT, we will -- we would say, in the short term, will go faster up than the midterm algorithm would state. And a key reason for that is also related to the finance costs. So finance, we -- as you know, we transfer that or we pass that on to customers in EBIT. So EBIT will have a downside effect because of that, but that's reversed in PBT. And overall, therefore, we expect PBT to grow faster than the midterm algorithm in FY '27, but we're cautious at this point to give you there a precise number. On cash, we would say that FY '27 will be roughly equal to what we would expect in the midterm. And of course, on ROIC and leverage, we will be taking steps. But you know where we're coming from. So that is a slow buildup towards the midterm objectives that we state to ourselves. So I wanted to give you a bit broader view on that FY '27 versus the midterm guidance that we've given today. And for the second question, I'll refer to Peter.

Yes. And your second question, Alex, was around the cocoa bean prices. I mean the main answer is that we've assumed for our plan that the bean price remains at the levels that it is right now today. We've seen a bit of fluctuation movement in the last months. So the GBP 3,000 is not a strange assumption from where we are today. So that's the main. What we're looking at is a fairly -- it's still a supply surplus year as we've also seen last year. So there's not a lot of reasons in the short term to assume that, that's going to change. Now as -- and already hinted that as well. There's, of course, we're watching the potential effect of El Niño that could have an impact on the bean price. But overall, as we believe that this is the short-term view that makes sense, we took that as a starting assumption.

Obviously, it could be higher over time, as I mentioned. And we do believe that it could be around GBP 4,000 or even a bit higher. And on that, as I hinted, Hein also when I was answering Jörn, we have all our measures in terms of reduced -- working with reduced inventories, having a higher procurement agility in buying beans earlier, later, especially later, having different sources and channels to buy the beans from different origins, having the operations flexibility to manage it from different origins, which has reduced our dependency to some extent on those bean price. Of course, it doesn't eliminate it completely, but I think we're a much better place on that front than what we were before.

The next question goes to Jon Cox of Kepler.

Q&A session, very useful. A couple of questions for you. Just sorry to come back to FY '27, not so much on the PBT. I think everybody can see that financial line is coming down pretty rapidly. Just on the EBIT line, you're guiding for 1% to 3% growth on the volumes. Would it be correct then to assume that the EBIT growth with -- you mentioned no significant investments, but you seem to be hinting at maybe some, maybe EBIT growth will be closer to volume growth in FY 2027, that's the first question. Second question, maybe just on that net financial line, Peter. You said you're going down towards CHF 200 million. We're below CHF 320 million this year. Could you give us a bit more granularity like I don't know, I'm just looking at my model now, CHF 280 million next year, FY '27, CHF 250 million the year after, CHF 210 million the year after. Does that sound sort of reasonable or not so?

And then, sorry, just more of a question on that guidance of 2% to 4% you've come up with. It's lower than the company has had historically. And I understand you're obviously going to focus a lot more on the premium segment. You talk about 1% to 2% growth in the chocolate market. You mentioned GLP-1s, I see in the presentation earlier. I wonder you just give us a breakdown of where you think you can get the 2% to 4% -- because historically you've talked about more outsourcing deals, gourmet growing faster plus emerging markets. You seem to be not talking so much about outsourcing deals and talking a lot more about gourmet and elsewhere. If you could talk a little bit about that 2% to 4% and the building blocks associated with that?

Thanks a lot, Jon. So I'll take question one, then I'll refer to Peter to question 2, and I'll do question 3, but I may do question 1 and 3 in one go if that works for you. So first of all, on PBT and EBIT, and Peter, please add, of course. So look, you talked about the dynamics on finance costs, so we will not belabor that. What I can confirm is that for FY '27, we do see EBIT increase ahead of volume growth. However, we're very cautious at this point to give you there a precise guidance for some of the reasons that I already mentioned, which is around -- obviously around volume. I do want to state a few things though, because you mentioned it on costs.

Over the last 5 years, we've seen cost increases in the company, both in SG&A as well as in other fixed cost areas. And we've also seen a significant investment in transformation in one-off cost that was around CHF 250 million. And whilst I would never exclude, of course, taking a one-off, if that is necessary, I would overall say that would come down to a much lower level. So that's something that I wanted to make sure that, that's noted. The second thing is -- on the cost levels, I've suggested no major restructuring at this time. However, as I said in my first answer today, I expect we are very keen to keep costs stable. That means offsetting inflationary pressures. I believe that's something that we should do given the focus that we are bringing to the plan and given the fact that we are shifting our resources behind our most important priorities.

And that -- so that's a trend shift, but it's not a major disruptive event on the cost side. So cautious on volume, EBIT ahead of that, but cautious for now. PBT ahead of the midterm algorithm. And on the cost side, we will be prudent, but we're not envisaging a big one-off or a major restructuring. So I hope that adds some color to it. Then on -- on the volume development, I think very -- yes, very good observations. Look, I think there's a few elements here, Jon. So first of all, as I said, on the short term, the 1% to 3%, we do expect the market overall to return to growth, but confectionery at a level of 1% to 2%, that is a bit lower than what we've indeed seen in the past. So yes, that is there.

In addition, we've said that for us, specifically outsourcing, and I've commented on that at the half year results as well. Outsourcing has come to a hold. I mean it's not increasing as fast. And the reason for that is volume pressure in the sector, our performance in the past on service, which has not been great and some of the large companies have therefore in-sourced. Those decisions have been taken, and that will impact FY '27 growth for us because we expect that to bottom out. But we don't see after all the conversations that I've had with large customers that, that is a structural trend going forward. The second thing to say about that is that midterm midsized companies as well as the fast-growing local companies, they don't in-source. So that is, for us, algorithm-wise, that will help us given their strong performance in driving volume there.

Why do we see the 2.4%, therefore, ahead of confectionery? Well, that's for 2 reasons. One, the -- what we call adjacencies and where chocolate is used as an ingredient. And by the way, chocolate is a very versatile ingredient. And then you have to think of snacking bars and protein type solutions, then you have to think of ice cream solutions where we still see a faster growth than in the confectionery side, that's the areas where we are already strong. But with the strategy that we're pursuing, which is to provide those solutions, including specialties and so forth, we believe that we can tap into those adjacencies in a good way. So that will add 0.5 to 1 percentage point or something ahead of the chocolate confectionery growth that I pointed out.

And then the third one, over the last couple of years, we have suffered some market share losses given our service track record. We believe we can step that up and all the signals that I'm getting is that will give us an uplift on share, just given what we offer in terms of taste, in terms of solutions and so forth, and that will take us to the 2.2% to 4% range. So it has 3 components: a slightly slower confectionery chocolate, our ability to capture the adjacencies that are attractive and that we believe will grow ahead and then step up in our base and our fundamentals and in our performance to drive execution.

And maybe to pick up on Hein's comment on the first one on the EBIT evolution and so on, linking it to the finance costs. We are, as Hein said, for next year, we're also looking at a profit and EBIT evolution that is faster on the EBIT line that is on volume line and even faster on the net profit before tax. What's important to note as well is this impact that the finance cost reduction has on EBIT versus PBT. As you know, it's neutral on PBT on EBIT as we reduce finance costs, we price through less finance cost that has actually a negative effect in the short term. So that's one of the drivers that will make EBIT grow lower -- slower than PBT next year because mechanically, it has this impact as the bean price goes down, we price through less on EBIT. So that's one thing to keep in mind for next year. Having said that, we believe EBIT is going to grow faster than volume.

On the point you made, Jon, on the financing costs, I mean, that was quite a specific question. But -- so I'm not going to quote annual numbers, but the direction is, as you said and as I said, it will take a few years to get to that level. But we will see meaningful drops. We've seen -- we will see -- we are seeing meaningful drops this year. We will see a meaningful drop next year as we're paying back maturities. You heard me say in the past, there's about CHF 700 million maturing debt average per year over the next years, and we've been deliberately spreading that when we were raising debt over the past few years. And then maybe the last thing, next thing to add is that we are evolving very strongly towards more flexible debt with like the [ BBF, ] where we -- of course, we -- that secures the sourcing of the funding when we need it, but also that allows to not use it when we don't need it, which then obviously also helps to keep the finance cost down when the bean prices are lower.

[Operator Instructions] We have a question from Antoine Prevot of Bank of America.

So 2 for me, please. I mean, one, we saw some a bit of volatility in some trading sessions around cocoa over the past couple of weeks. Just to confirm, but the move towards the letter of credit system, did it work as you expected or intended to smooth the cash flow -- the cash outflow in this kind of like volatile trading sessions. I just wanted to confirm a bit on that. And then second question is around private label. So you don't really talk about this in your plan. But it has been a part of the market in kind of your subcategories, which has been doing pretty well ultimately in terms of like gaining market share and volume. Is it not a part of the market you are really interested to address a bit more? And any indication on like how big private label exposure is for you?

Thanks, Antoine, your questions. I'll refer for the first question to Peter, and I'll come back to you on the second one.

So on the letter of credit, Antoine, yes, it is fully in place, and it is being used. Now of course, the first benefit of this letter of credit, again, maybe for people who don't remember, I mean, what it does is that instead of -- when the bean price increases, instead of having to deposit cash with our brokers, as if the bean price goes up and impacts our futures, we work through a way of a bank guarantee. So it avoids big cash outs in the short term. And therefore, it smoothens the cash flow and that also allows us to keep less buffer because we don't have those -- we basically smoothen those spikes.

So the main benefit, obviously, is when the cash flow -- when the bean price goes up and there's cash to be deposited. So -- but yes, that's working. So what we've seen very recently, I mean, of course, that smoothens out the increase that we have. Obviously, it's not very critical at this moment because, first of all, the bean prices are still at very reasonable levels. And secondly, we're also working, as I mentioned before, with much a lower amount of open futures as we are buying later, we're buying more flexibly from different origins. So versus the past, our exposure is simply also lower. But it works as we anticipated.

On your second question Antoine, it's indeed well spotted on private label. We obviously see the growth there. And historically, the company has been focused more on branded consumer products. So you're absolutely right, but we do see that opportunity. And in fact, that is happening today. So in the algorithm going forward, we do see that as a meaningful segment, particularly in Europe. It does mean, however, Antoine, that it is for us a bit of a different way of working. And let me add some words to that. So where you normally work with CPGs, that will be a direct connect between the customer and ourselves. When you work with retailers, obviously, they have manufacturing -- manufacturers to produce their end products. So it means a 3-party cooperation.

And historically, we've -- again, we've gone through those manufacturers directly. But at the moment, and I cannot be specific, but I hope to be capable to announce a few things in the next half year or so, is that we are actually developing strong contacts with retailers define solutions on what they need and then make sure that we can be part of that manufacturing solution. And that's an interesting area of growth. I like it and a couple of the teams are realizing some of those opportunities. So thanks for asking the question. And indeed, that is an area that we believe is interesting predominantly in Europe and later on in North America as well. So it's a developed market phenomenon, as you well know, but that's where we're focusing on our efforts on...

The next question goes to Samantha Darbyshire of Goldman Sachs.

You already touched on this, but you mentioned 1% to 2% chocolate confectionery market growth, but your addressable market is higher. Can you quantify the actual addressable market growth for your business specifically? And maybe kind of go into some of the driving factors of which categories or regions are driving that? And then also just you mentioned uncertainty around how consumers could respond to price reductions. Are you able to see anything in the market so far? Or have there been instances of price reductions in the past that we can kind of take learnings from to extrapolate to this scenario? And then my second question is, sorry if you've already covered this, I might have missed it, but do you have a leverage requirement before beginning to increase your dividend payment? Does it need to come below that 2x target? Or could you start increasing your dividend, say, when leverage becomes below 2.5x?

Thanks, Samantha, for the questions. Let me start on all 3, and Peter, please add on the last one. So on -- you're right. So the 1% to 2% chocolate confectionery, I think it really differs per adjacency. So on the data that we are seeing, so let me just give you 2 examples. I mean, on ice cream, for example, we're seeing roughly 2% to 4%. And that's what I've seen historically as well when I was working in a different capacity, but I believe that's an attractive segment overall. So roughly that. If you look at energy bars, for example, we're talking 4% and in some markets, 4% plus. When you think of pastries and particularly the more premium side of that, we're also looking at roughly 3% to 4%. So just to give you some indication. And therefore, the question is, of course, how much of our chocolate ends up where. And therefore, I cannot -- given that mix, I find it a bit -- not difficult, but I find it a bit cavalier to sort of give you sort of the precise outcome of that.

But if we do the mix, we believe, as I said, that overall, by increasing our exposure to those segments that we believe are attractive, where we can offer holistic solutions in combination with specialties that could add somewhere between 0.5 and 1 percentage point of growth versus the confectionery part. And as I said, we should not forget that for us, just simply being capable to drive perfect service in itself is a growth lever as well since in the last -- particularly in the last 1.5 years, we have been below what customers should expect from us. So I think the combination of the 3 would lead us to the 2.4% on the midterm. But in the shorter term, we are a bit cautious. I'm happy, though, to say that the second half of this year, as I said already, but the sector is returning to growth, and we are seeing that coming through in line with the guidance that we have given you earlier on for this year.

On price reductions, maybe let me just verify if I understand your question correctly. I think you said how consumers -- how fast consumers are responding to the price reductions. We are seeing price reductions coming through, certainly in the Gourmet segment as well as in sort of the price listed business, as we call it, as well as in the consumer market overall. And many manufacturers have also gravitated to solutions such as chocolate coatings, for example. And yes, consumers are responding. As I said, we are seeing a return to growth already in the second half. So there is a response, but I want to be a bit careful given the overall development. I talked about the Middle East about the direct effects, but of course, the indirect effects with high fuel costs and so forth, what is the disposable income that consumers will have, what -- and what is the bean price in the short term going to do given the El Niño effect. So I just want to be a bit cautious on that. But that said, we are seeing an effect of market growth now that prices are stabilizing at a lower level than where they were before.

And maybe to pick up on Samantha question on leverage and then linking you made to the dividend. Obviously, leverage, it's a very key metric for financial health, for ability to invest and all of that. We don't have any covenants related to leverage. We have them on a few other elements, but not related to leverage, and that's clear. And also the dividend as such is not linked to any leverage threshold. I mean we mentioned that our intention is a consistent stable or increasing dividend over the next few years, but there is no formal link to reaching one or the other level of leverage.

The next question goes to Matteo Lindauer of Vontobel.

I've got a question around your customers and the outsourcing agreements. You were talking about some larger players in-sourcing. Can you share with us the maturity of the long-term agreements maybe? And also furthermore, do you expect some of the customers to cut back the volumes or renegotiate the contracts with you? And my question is, is that already included in the new volume and EBIT guidance going forward?

Thanks, Matteo, for your questions. We will not disclose particular negotiations or particular in-sourcing agreements. But as I said, we have enough reasons to believe that in-sourcing has happened, and I talked about that at the second quarter results as well. And that is something that we've seen coming through. But I also believe that the decisions on that have been taken. We see that given the available capacity at some of our customers that, that will also bottom out by the end of 2027. And if there is a rather substantial announcement on that to be made or if something needs to -- if it's material effect, of course, we will disclose. But at this point, I just want to be careful that we're giving individual customer data and individual customer dynamics.

Overall, we feel that with the 7 -- the choice of 7 global accounts, where we have seen some volume decrease in the last 2 fiscal years. Our goal is to obviously stabilize that overall and return to growth in the midterm, and that is baked in our plan. Also the normal in-sourcing decisions, apart from any decisions that may come up because you never know, I cannot do precisely in their kitchen, but that sort of bottoming out the effect is included in the 1% to 3%. And overall, the direction is included in the 2% to 4%.

And I've got one maybe quick follow-up question on North America, the investments regarding the factories. Is the investment more about capacity expanding? Or is it just making the process more resilient of the factories in North America and to be more agile? Can you give us some more color on that maybe?

Yes. So on North America, and that's a very important market for us, and it's -- we needed to make some adjustments there, but I'm looking at it through 3 lenses. I'm looking at through the short term, the midterm and the long term lens. So let me just give you a few facts. So first of all, on the short term, it is indeed about adding flexibility. We are currently converting liquid lines and so forth to also be able to provide chocolate coatings. And that flexibility is really going up. Around 35%, I believe, of our lines at the moment is capable to switch very quickly between the 2. And of course, depending on the level of the bean price, at this moment, chocolates, we're seeing demand increasing. But with a high chocolate price, we're seeing the demand for cocoa coatings increasing. And that sort of that inflection point is probably around where the bean price is today.

So we should be capable and the name of the game in the future will be flexibility, and this is something that I think strategically we need to be ready for. And that's part of the upgrades that we're currently doing. We believe that, that will add the necessary coatings capacity throughout this year, but we would still be a bit short of where I would like to be. Then in the midterm, a few investments. First of all, although we say it, but our Pennsauken factory servicing the Northwest, that is truly additional capacity. So that's not flexibility, it's additional capacity in areas where we feel it's the right one.

The second one on -- particularly on specialties, we see a great opportunity on specialties on fillings as well as chunks as well as some of what we call nutrition and you have to think of sugar solutions, for example, and that needs additional capacity. So that's where we anticipate an uptick in the overall capital expenditure level. And as mentioned, we are expanding our site in Brantford. So you have to imagine that currently, we have one major hole with a number of lines in there. We're adding a second hall to that, including more lines. And then for the longer term, we're seeing a site in the Midwest. That could -- the question is net-net, is that whether that's an increase or whether we would be looking to consolidate. But I don't want to go there right now. I would say, in the short and the midterm, it's about capacity expansion as well as having flexibility between coatings and chocolate production.

We have a follow-up from Antoine Prevot of Bank of America.

Just 2 other questions. First one is a bit more like, let's say, healthier indulgence product or a bit better for you, talking like the high flavanol product launches that you did. I wanted to know like how have been the launch, for instance, of this product or the uptake from the clients? And I guess, in general, I think like dark chocolate volume trends have been clearly a bit better, probably also because of a bit healthier in general, less sugar and so on. What is your exposure to dark chocolate globally? And what's kind of like a bit maybe your plans to grow that side of the business more?

And second question is on coatings or compounds, whatever you want to call it, is -- I mean, it was a big focus, I guess, previously, was clearly much less mentioned today. Any reason why you talk less about this? Because clearly, you have strong capabilities there. And is it just because you're a bit more maybe cautious going forward because maybe the economics are a bit less interesting with cocoa butter price coming down? Or do you hear maybe some customers go back to like a bit higher with chocolate content? I mean what's kind of like the rationale behind that?

Thanks, Antoine. Yes, a few remarks. I mean, first of all, when you talk about health and wellness, I'm taking it a bit broader, but I'm coming very quickly to your question on flavanol. So we're seeing a really significant interest in what I would call everything health related. So those are chocolate in combinations with protein, those are low sugar solutions or different sugar solutions. And indeed, those also include the high flavanol content chocolate. On the latter, we're seeing mostly impact in Asia. So this is -- flavanol as a concept is not that well known in Europe and in North America with consumers. It's very well known in Japan. It's very well known in China. And particularly in China this year, we're seeing a significant increase. I do not have -- at this point, I don't have a precise number on how much that's influenced by flavanol. But overall, the growth in China is very significant, and this is playing a role in our -- definitely playing a role in our offering.

If you look at the dark chocolate, it's about 1/3 of our volumes. And yes, that's growing. As I said, we also in our powder strategy, we're looking at dark, we're looking at low fat. So we see that overall that trend on dark, and we see that increasing also as a result of GLP-1. I think I said something about it in the video. And it is important, but I wouldn't point to dark as significantly ahead of some of the other forms of chocolate. I mean, even milk chocolate, you can do a lot with sugar solutions, you can do a lot with protein solutions. So I wouldn't call that one out as something that is growing much faster than other parts of the portfolio.

On coatings, actually, it's a good question. And as I said, coatings obviously get a lot more interest when the price of the cocoa bean is very high. As I said, there's sort of an inflection points that is around the price where we are when the one is financially and economically more favorable than the other. And then there's the question of manufacturers, whether they prefer a coating solution or whether they prefer a full chocolate solution. And that's a question that depends on brand preference, depends on premiumization and so forth. So we're having those conversations with them.

But we are indeed the largest coatings provider in the world. As I said, we're adding capacity in the U.S. because that's where we are short. And I believe that in coatings, while economically interesting, there is a significant interest in seeing better taste, a better experience overall. And that is why we are investing in a concept called Cacao Max, which is a part of our premiumization strategy in each of the segments. So Coatings is a segment, but within the segment, you can actually premiumize because the whole concept idea around sensory, about taste, super, super important. And that's where we're focusing on right now more than just adding -- talking about coatings as such. We want to improve the experience.

And just maybe as a follow-up on flavanol. So interesting to understand this difference between Asia and the rest. But is there anything you can do to increase the awareness of that in Europe or the U.S.? Because ultimately, these markets, clearly, as you said, I mean, they are shifting towards a bit more focus on health. So like anything you can do there to drive that?

Yes. Antoine, I mean, obviously, my consumer brand heart is sticking on this because I think it's fantastic. But at the same time, we are playing our role in the supply chain. So the way to think about it is I'm very keen, and this is something that we're actually pursuing at the moment on the back of focus for growth is we talk about innovation platforms. So health, for example, is one of the platforms. Taste experience is one of the platforms, think of Cacao Max. When I talk about health, within health, we have a couple of areas. So think of Sugar solutions, but also think of flavanol solutions.

So when we talk with the big customers, our role is to provide sort of those platforms and then say, hey, this is what you can say. This is what we see as the benefit. We have great R&D. We can prove those benefits. But ultimately, it's depending on the brands to talk about this with their consumers. And it has just more fertile ground in Asia since there is a base awareness with consumers and less so in Europe and in North America. But I'm hopeful that, that could change, but I don't see it as our role necessarily to advertise, of course, for that because that's just not who we are. But we can prove, we can show, we can experience and we're doing all of that good stuff. And that's what we will do more of given it's an important platform in the focus for growth direction.

We have a follow-up from Jon Cox of Kepler.

Yes. Just to maybe follow up on that last conversation. You talked about coatings. What about the non-cocoa alternatives? And are you still looking at that market now prices are back? Or do you think there will be long-term growth in that market after the shock that came to the market from super high cocoa prices. And I wonder if you can just sort of split out your capabilities there in terms of chocolate is, I don't know, half of the volumes, cocoa coating is maybe, I don't know, 40% non-cocoa, probably just a couple of points. And is that a fair guess?

Second question, just a follow-up. I think it's from Alex's question earlier. On this, if there is GBP 100 move in cocoa prices, the impact on Swiss franc free cash flow or working capital historically, I think it's like CHF 70 million, CHF 80 million. But you seem to be alluding to using other things like promissory notes and stuff like that. Has that figure actually gone down there, Peter? Is that what you're trying to tell us?

Thanks, Jon. I'll take your first question. Peter will take your second one. So as I said in the -- if you look at the chart, I think it's -- if I remember well, it's Chart 2 or 3 in the presentation that we showed to you this morning, which is about our ambition. And I was really trying to be super clear about that. I'm just now getting the chart number, oh, it's Chart #4. And if you look at that chart and the ambition, it says on the right upper corner, that we want to offer a full portfolio across cocoa, chocolate, cocoa coatings and non-cocoa solutions. So I wanted to be very explicit about that. And that means that we will continue our efforts on cocoa replacements. And for us, we are making 2 "bets" here. The first one is a partnership that we have with Planet A Foods, and that is a cocoa replacer through sunflower seeds. And we believe that is the best opportunity in the markets available at this point that comes closest to what we believe is right taste, what we can offer our customers and so forth and also what we can deal with from a manufacturing perspective. So it's an interesting partnership.

And we are seeing first volumes coming through actually in the several markets in Europe as well as North America. We're also looking at Asia. So super, super exciting. And therefore, we will continue to work that. But at this point, the volumes, I wouldn't want to quote a certain percentage, but of course, it's small versus the total. The second one that I want to call out is the -- on non-cocoa solutions is the development of cell culture. And also here, we are looking at partnerships where -- with whom we work and that we could do in different ways, either through equity stakes through manufacturing agreements, we're bringing that clarity at the moment. And I believe that, that is for the long term, that could be interesting. We should be prepared for that so that we cannot be surprised. So we're absolutely on that.

So I see ourselves, and I hope you got that from the ambition. If you take that full portfolio, in combination with specialty -- scaling key specialties, it is truly about providing solutions to customers in the area, call it everything chocolatey. I like that term, but I saw my IR people didn't really include it in the script, but I like chocolatey. That's sort of -- I think that's who we want to be. We want to be passionate about that. We can add to that. And I believe we can sort of take that space if we are very clever about it and if we are making very strong choices. So I hope that gives you a bit of a background on that. Peter, on the second point.

Yes. Second point, Jon, on this CHF 70 million to CHF 80 million, obviously, the bean price has an impact, as you know, on -- especially the inventories, right? So it's especially the inventory side. We have an impact on payables and receivables as well when the bean price moves up or down, but that's a bit offsetting each other to simplify a bit. So the biggest impact really is on inventories. Indeed, I was commenting on the fact that we've been making good progress on our buying agility, our inventory management, sourcing different origin and so on. That does mean that we see the impact of this rule of thumb of CHF 70 million, CHF 80 million lowering more into the area of CHF 60 million to CHF 70 million change in working capital for every GBP 100 move in the bean price.

To note still that this is a midterm effect, right, because short term, it can be impacted by many things. It's impacted smoothen by our letter of credit, as I mentioned before, but also depends a bit on when exactly the bean price is moving, right? If it's the middle of the peak harvesting season versus summer, that has a bit of an impact. But midterm, you can assume that we bring it -- that the impact will be a bit lower than what we said before, around the CHF 60 million to CHF 70 million.

We have a follow-up from Matteo Lindauer of Vontobel.

A quick question on the LTI scheme. Could you remind us about the KPIs you're measured on? And for example, are volume and EBIT development included, for example?

Thanks, Matteo. I'm not sure I fully got the question. So I'm looking at looking at...

You're asking for the long-term incentives, right?

Yes, exactly. The KPIs that are linked to the LTI.

Well, we've got a number of elements within our long-term incentives plan depending on the level in the organization. I mean, first of all, short term, of course, we have the volume, EBIT and free cash flow where we're having this across the organization. And it's one of the things that we will further simplify and of course, focus towards the -- Focus for Growth priorities that we're putting in. This is on the short-term incentives.

If we go to the long-term incentives, we have the element of ROIC, return on invested capital within our targets. We have the customer Net Promoter Score, NPS within our targets. We have sustainability within our targets. So that's what is basically driving us. And then so that's adding up to about 60% what I just mentioned. And then next to that is the share price, which is basically being linked to the peer group and the performance of Callebaut share versus the peer group. So again, to summarize the share price performance and then the different elements, I just mentioned before.

It looks like we have no further questions. I'll hand back to Hein, CEO, for any closing comments.

Thank you, and thanks, everyone, for your interest, of course, in the company as well as for, again, listening to the message that we have shared earlier this morning. We really appreciate it. And we know that we'll be exchanging thoughts and questions in the next couple of days with many of you. We are looking forward to that and to that ongoing dialogue. I wish you a great day for those who are here in Paris and wherever you may be. Thanks a lot.

Thank you.

Good morning, everyone, and welcome to Barry Callebaut's Half Year Results Presentation for 2025/ 2026. I'm Sophie Lang, Head of Investor Relations. And today's session will be hosted by our CEO, Hein Schumacher; and our CFO, Peter Vanneste.

Our presentation today will start with Hein's initial reflections and observations then Peter will go into the half year results and the outlook. And finally, Hein will conclude with a preview of the Focus for Growth plan. Following the presentation, we'll have a Q&A session for analysts and investors. [Operator Instructions]. Before we start, take note of the disclaimer on Slide 2, and I'd also like to inform you that today's session is being recorded.

And with that, I hand you over to our CEO, Hein Schumacher.

Thank you, Sophie, and good morning, everyone. It's my pleasure to be speaking with you as part of my first results presentation here at Barry Callebaut and I'm now approaching my first 100 days, and I wanted to start by sharing my initial observations and reflections before I hand it over to Peter to cover the results. So far, I've been in a listen and learn mode and spending a lot of time across the business to gather a broad range of perspectives from our people. And I've had the opportunity to visit a number of our factories and offices around the world and gain insights into our operations and the culture of the company.

What has stood out most to me is the passion, the expertise and the resilience that defines this organization. I've also met with several of our key customers, which has sharpened my understanding of what truly matters for them and how we can support them on their growth journey. Back in February, we formed the Growth Accelerator coalition, which is a diverse group of around 30 deeply experienced colleagues, talents from around regions, functions and nationalities. And this working group from within is designed to advise, challenge and co-shape our path back to volume growth.

And through a series of focus sessions, this group has developed a unified view of where we stand today, identified key bottlenecks that hold us back and is helping define a set of high-impact priority initiatives. And collecting these insights from across our organization is enabling me to shape a clear and decisive action plan that will sharpen our strategic direction and set our key priorities.

Now I will come back to that later in more detail. But first, let me share some initial observations. Over the past years, the company has been navigating a very turbulent period marked by transformation, significant industry volatility as well as supply disruptions. The Barry Callebaut Next Level program was launched with all the right intentions. However, the sheer number of initiatives proved too ambitious for the organization to absorb at once and particularly against the backdrop of unprecedented industry disruption. And frankly, without sufficient course correction in priorities, this created a perfect storm.

Now that said, several important steps were taken on the Next Level because the program did deliver savings of around CHF 150 million, and these enabled much-needed capability investments in core fundamentals such as digital, quality and supply processes. But at the same time, these savings were more than offset by the impact of volume declines, higher operating costs, particularly from the cocoa market and supply disruption as well as from a more competitive environment. And the combined effect was an organization that it become overstretched and quite internally focused. And with too many quality incidents, the business also began to lose market share.

And as a result, we find ourselves in a position today with clear improvement areas that need to be addressed. I'm calling out 3 areas: First, our manufacturing network. We do have capacity constraints in key growth areas with site upgrades that are still work in progress. A lot has happened, but it's still work in progress. It has contributed to quality incidents with longer recovery times due to limited business continuity plans and we have made progress on the Next Level without a doubt, especially in strengthening quality foundations, but more work is to be done. And our service levels are currently below industry benchmarks. We need to improve.

Second, our digital transformation. A good direction, but initiatives were decoupled from core business priorities and the scope was very broad. We moved very quickly before co-processes were sufficiently stabilized and before our data and operating systems had reached the required level of maturity.

And third, our operating model and the organization. Historically, Barry Callebaut was highly decentralized and the intention of Next Level was to introduce a greater degree of centralization and standardization and that was the right direction. But in some areas, for example, in customer service, we went too far and probably too quick. In others, we ended up with a hybrid central regional model, and that has created an ambiguity in accountabilities. It added complexity to the organization and it limited regional empowerment, where essentially, the customer is where the market is, and where we need to drive local decisions. Because I believe that food is fundamentally a local business. And our region should define the what, whilst global functions should support the how with scale, expertise and obviously, consistency. And that makes the value of the corporation essentially bigger.

Now importantly, while there is work to be done, as I said, we are building from a position of strength because Barry Callebaut has strong and solid foundations, and I'm confident that we can return to growth and reinvigorate ourselves as a reliable industry leader. Because we have a truly unique market position with leading relationships, strong customer relationships and a strong portfolio with benefits from our integrated end-to-end cocoa and chocolate model, very important for our group.

And in turn, this gives us deep expertise across R&D, innovation, cocoa and sustainability and these are capabilities that are highly valued and appreciated by our customers around the world. And my conversations with CEOs of our largest customers have reinforced this view. And they see Barry Callebaut as an important partner and they want to grow with us. They expect us to step up and play a key role in unlocking and supporting their growth agendas. And let's not forget that we operate in a fantastic category with strong underlying fundamentals. And as a market leader, we are well positioned to capture significant long-term growth opportunities. And underpinning all of this is our people, as I said in the very beginning, people with deep commitment and passion for what we do. And that's critical to ensure that we can fully deliver on the fundamental opportunities ahead.

Now bringing all of this together, clearly, we have strong foundations from our unique market position to the depth of our expertise, and that positions us to win in this industry. And at the same time, to fully deliver on the opportunity ahead, we must refocus behind a reduced set of priorities to stabilize key fundamentals as well as to step up execution. And in turn, if we do that well, it will unlock sustained profitable growth and it will reinvigorate Barry Callebaut as a reliable, innovative global leader. And that is the objective of our Focus for Growth action plan.

And I will share a preview of the plan later. But before I go there, let me hand it over to Peter to walk you through the first half year results. Peter, here you go.

Thank you, Hein. Good morning, everyone. Let me walk you through the half year performance first, and I'll start with a short summary. Cocoa bean prices have decreased strongly in H1 and especially in the last few months, and this is surely positive for the recovery of the chocolate demand. On volumes, we saw a sequential quarterly improvement to minus 3.6% in the second quarter, supported by double-digit growth in Asia and continued momentum in Latin America. Recurring EBIT decreased by 4.2% and strong cocoa profitability was more than offset by the impact of lower volume, supply disruption and a highly competitive overcapacity environment.

In Gourmet, margins were pressured with the context of the very rapid drop of bean prices, and I will come back to that a bit later in the presentation. Despite the decrease in EBIT, however, we grew recurring profit before tax and net profit, thanks to lower finance costs and income tax. And very importantly, despite the peak harvest and heavy cocoa buying season, we generated strong free cash flow and further deleveraged to 3.9x [ net ] debt over EBITDA.

Let me get into some details now. Starting with the cocoa market. The cocoa bean prices have decreased very, very rapidly, falling by 53% in just 8 weeks in Jan and February and closing at GBP 2,057 at the end of February. And that's driven by good main crop arrivals in West Africa over the past few months, and favorable recent weather conditions that are supporting output for the mid crop. At the same level, the market is still seeing some demand softness. So global stocks have replenished to healthier levels.

Overall, this means we expect a surplus this year for the second year in a row. Importantly, the structure of the cocoa futures markets has also improved significantly. We now have a carry structure meaning that the cost of buying spot cocoa today is cheaper than buying cocoa in the future. This means it is less costly for the industry to carry physical stocks and it's indicative for a more stable outlook.

In the short term, given that this is demand-driven surplus, we expect bean prices to remain in the GBP 2,000 to GBP 3,000 range. That said, we continue to monitor the markets very closely as the demand recovers and thus we assess potential supplier risk linked to El Nino and potentially speculative volatility as we have seen in the past. Over the medium term, depending on supply and demand dynamics, we believe prices could move back into the GBP 3,000 to GBP 5,000 range.

Lower cocoa bean prices are certainly positive for the future recovery of both the cocoa and the chocolate markets. We're seeing indications of this through our forward bookings. As you know, we contract several months in advance for our customers and in recent months, we've seen a greater willingness to book further ahead again. At the end of February, our futures booking portfolio was much, much higher than at the same time last year when cocoa bean prices were spiking. At the same time, our customers have priced through to their end consumer. As a result, consumer pricing and the rate of end consumer volume declines have started to stabilize. In the most recent quarter, Nielsen global chocolate/confectionery volumes decreased by 6.3% with plus 13.7% pricing.

And importantly, we're now seeing our customers gradually shift their focus back to its category investments to stimulate growth. And I'll just quote a few examples. In North America, Ferrero launched their Go All In promotion from April 1 backed by a $100 million investment. It marks their first portfolio-wide campaign and largest marketing commitment in the company's history. Another example is Hershey is boosting media investments by double digit this year with the new quarter 1 media campaigns on Reese's and Hershey, the first launches of this nature. We're also seeing increased interest in innovation from our customers. In half year 1, we saw a significant increase in number of projects in Western Europe for ChoViva, our non-cocoa chocolate offering as well as a growing traction on Vitalcoa, our high flavanol solution, especially in AMEA.

Beyond these benefits, the magnitude and the pace of the decline in the cocoa bean prices, as mentioned, just now more than 50% down in the last 8 weeks, helps, of course, the demand and the cash front but has also created some challenges on the short term as well and mainly on profitability. And there's 5 key impacts I just would like to highlight.

First, in the past few months, we've seen very favorable margin environment for cocoa. In half year 1, this helped to offset some headwinds we saw in chocolate. Looking ahead, we expect this cocoa margin tailwind to normalize in the second half as market conditions have become less favorable. Second, as we just saw from the Nielsen data, demand has been down for some time. And given the high prices that have been put into the market in the past, this has resulted in some industry overcapacity, which is intensifying competition with more aggressive pricing and commercial actions.

In this competitive environment, we've seen a temporary margin effect in Gourmet. The Gourmet business typically works with a 3 to 6 month price list where forecasted sales are covered and then a price list is determined. Given the unique speed now we've seen of the cocoa bean price decreases in half year 1, the result was a long position in a declining market, creating a high price list with not all players following the same approach. And this impacted our volume and profitability through the need for some short-term commercial investments. Also, next to that, there's a more technical effect related to the shift between EBIT and profit before tax due to lowering financing costs.

The opposite, if you want, of what we've seen last year. This is a reversal of the finance cost pass-through, again, as we saw last year, and we now have lower finance costs as the bean prices come down. And it also means then a lower pass-through at the EBIT level. But it is -- importantly, it is neutral at the profit before tax level. Finally, there's also a BC-specific headwind in supply disruption. We had operational incidents in North America in the St. Hya factory, resulting in some volume losses and higher operating costs.

Before we move to the half year 1 figures specifically, I'd like to spend also a moment to highlight potential implications from the Middle East situation. As many, many industries, the primary impact for us is on the supply chain side. It includes shipping disruptions, increased transit times resulting from port closures or limited container availability and of course, as we all know, there's a sharp increase in energy prices. In some markets, fuel rationing has been introduced combined with higher freight and insurance costs and all of that is adding complexity and costs across our supply chain.

Next to the supply side, we've also seen some regional demand effects. Within AMEA, the Middle East and North Africa cluster represents about 10% of the volume there. This cluster has a specific high gourmet exposure and is experiencing therefore, disruption to imported premium products. Clearly, HoReCa food service segments are negatively impacted by the tourism levels in those areas as well as the closure of the schools, offices, rules on working from home and so on.

Beyond directly in the Middle East and North Africa, we also see an indirect impact in India, where we have an important business where LNG imports are disrupted and constraining the energy availability for food manufacturers, commercial kitchens has been impacting their operations and, therefore, also ours. Overall, this obviously remains a highly dynamic and uncertain situation that we are monitoring, obviously, as per the latest developments every day.

Now let me get into the numbers in a bit more detail, starting with volume. Overall, the group saw a sequential volume improvement in the second quarter to minus 3.6%, meaning we landed the first half with a decrease of 6.9%. Looking to the left of the chart by segment, Food Manufacturers continue to be impacted by negative market dynamics with our customers adapting behaviors in the context of high prices and lower demand. And there was the supply disruption in North America that impacted this segment for us. Gourmet, while more resilient, our competitiveness was temporarily pressured by the high price list in a sharply declining bean price environment, as I just explained. Also -- and also here, there was some impact of the St. Hya closure we saw in the first quarter.

Global Cocoa declined as a result, mainly of a negative market demand, especially in AMEA and secondly, also due to our choice to prioritize higher profitability segments, which did have its impact on volumes in certain areas. This business, the cocoa business saw early signs of market improvement in the second quarter with a sequential volume improvement of minus 5.2%, so significantly better than in the first quarter.

Now moving to the right-hand side of the chart, to global chocolate. Globally, we've seen chocolate volumes decline by 5.1%, which is ahead of the 6.5% decline of the market as reported by Nielsen. In Western Europe, we saw a 4.2% volume decline as demand continues to be impacted by market softness. Central and Eastern Europe declined for us by 3.6%. And way better than the market as our local accounts saw solid growth, especially in Turkey. North America decreased by 12.6% impacted by a strongly declining market as well, but as well as the network supply disruption we've seen from the temporary closure in St. Hya in the first quarter.

Importantly, though, North America saw recent months improvements as the business is rebuilding inventories and meeting increasing customer orders. Latin America grew by 1.5%, well ahead of the market, driven by a strong momentum in Gourmet that we've seen multiple quarters in a row now. Finally, volumes in AMEA grew by a strong 8.5% and reached double-digit growth in the second quarter, driven by strong market share gains in China, momentum with key customers in India and additional business that we secured in Australia.

Moving to EBIT now. Recurring EBIT decreased in local currencies by 4.2% to CHF 316 million (sic) [ CHF 310.9 million ]. The EBIT bridge on the page shows the respective moving parts. Cocoa, first of all, the green block on the chart saw strong profitability in half year 1, given a more favorable market environment -- margin environment, sorry, and market volatility where we're able to capture the volatility and increases of the prices and the decrease of the prices that we have seen.

In half year 1, this has helped to offset some of the other headwinds that we're facing in chocolate. The impact of the half year 1 volume decrease was meaningful. This is clear when we look at our EBIT per tonne as well, which increased by 3%, whereas our EBIT in absolute declined by 4%. So the impact of volume was meaningful in the first half, and this is something that we'll see turning around in the second half.

Next, there was an impact of the intense competitive environment and particularly within Gourmet. As I explained earlier, our high Gourmet price list and long position in the context of this very rapid decline of bean prices required temporary commercial investments. In addition, supply disruption resulted in higher operating costs to maintain service and deliver products to our customers. Finally, we also saw the shift between EBIT and profit before tax that I explained as a result of a lower financing cost year-on-year and therefore, a lower pass-through on the EBIT level. And this effect will get bigger in the second half of the year.

While our recurring EBIT decreased, it's important to note, we were able to grow the absolute profit before tax and our net profit. And to be more precise. As you can see on the left-hand side of this chart, our recurring EBIT in local currencies was CHF 14 million lower than last year. This is the minus 4%. In the middle, our profit before tax increased by CHF 2 million or plus 1.3% as a result of a CHF 16 million decrease in financing costs in local currencies driven by our actions to reduce debt and, of course, in the lower bean price environment. To the right, our net profit increased even further by CHF 42 million or by 66%, given significantly lower income tax expense compared to what we saw last year.

Recurring income tax expense decreased to CHF 29.6 million versus the CHF 69.4 million we saw in half year 1 last year. This corresponds to an effective tax rate of 21.4%, which mainly resulted from a more favorable mix of profit before taxes and much lower nontax effective losses in some of the countries.

Free cash. Free cash flow delivered strongly in the half year at CHF 802 million across the 6 months despite the peak buying season that we're having always this time of year. Now when we look, as always, at the moving parts behind this cash generation, we saw -- and that's the dark black bar, we saw CHF 1.5 billion positive impact from the cocoa bean price this half year. Bean prices decreased significantly in half year 1, especially in the second quarter, as I mentioned. And this has benefited us during the peak buying period, particularly in non-West African origins, which do not have the same forward contracting model as Ivory Coast and Ghana have.

There was a, next to that, a CHF 472 million negative impact on operational free cash flow, as you can see in the green bar. This has all got to do with the peak buying season. Half year 1 is always operationally like that with a negative cash out for the bean buying given the timing of the cocoa harvest. This was offset, however, partly by continued operational benefits from actions on the cash cycle reduction that we explained largely already in the previous communications. We continue to do so with our efforts to diversify our origin mix, reduce forward contracting and so on.

As a result, actually, our inventory was now this time of year in February, 10% lower than February last year. So that also helped to generate the cash. up to this level. And finally, there was a CHF 183 million CapEx investments, as you can see in the yellow bar in the chart.

Leverage. Leverage came down to -- strongly to 3.9x, and that's significantly below the 6.5x we saw in February last year and also well below the 4.5x we saw last August despite, again, the seasonality we always have in half year 1, with an important net debt reduction of CHF 2.5 billion, enabled by the strong cash flow that I've been talking about before. So leverage landed at 3.9x. But in fact, if you would exclude cocoa bean inventories from the net debt, and I'm talking only cocoa bean inventories, so not even correcting for cocoa products or chocolate stocks, our adjusted leverage RMI would be 2.7x. This progress mostly came from a lower inventory value given significantly lower bean prices, which is about 1.3x leverage in this decrease. But also through the actions to reduce our inventory volume, as I talked about, which made up about 0.6x in this reduction of leverage.

In terms of gross debt reduction, we repaid EUR 263 million term loan in September '25, so a few months ago and EUR 191 million in February on the Schuldschein. We've also reduced significantly our commercial paper and bilateral facilities over this time. Obviously, all of this has been an important contributor to the lower net year-on-year finance costs that we've seen in the first half already. And we will certainly continue to focus strongly on the deleverage in half year 2. It remains a key priority. We want to end much lower than where we are even today. So with the further actions that we're defining on the cash cycle will bear further fruit going forward. This could be and this will be partly offset to some degree because of the safety stocks that we will be watching and potentially reinforcing a bit in a few key segments. Again, back to the support we need to have on the service levels following some disruptions that we have seen over the last months.

So before I conclude the half year 1 section and staying on the financing. Earlier this week, we signed a EUR 2 billion sustainability-linked borrowing base facility. The borrowing base is linked to our underlying inventory asset base and represents an important step in the diversification of our funding sources. The facility strengthens our funding flexibility, particularly in periods of prolonged higher or lower bean price environments. It increases our agility and the agility of our capital structure and our ability to actively manage financing costs more in sync with cocoa price moves. Just to share a few additional details. The facility comprises of a EUR 1.6 billion of committed financing, complemented by an uncommitted tranche of EUR 400 million which is providing additional liquidity flexibility.

So moving now to the outlook of the fiscal year. We've updated our guidance, reflecting our focus on volume and deleverage while taking short-term action to protect our market share and drive growth. We have, first, raised our expectations on volume. We now expect a decrease for the group between minus 1% to minus 3%. And this implies a return to positive growth overall in the second half. We've also raised our guidance on leverage. We now expect net debt over EBITDA below 3x using a working mean price assumption of GBP 3,000, so with the continued tight focus on this and further progress despite our updated profit assumptions.

At the same time, we have lowered our outlook on EBIT. We now expect a mid-teens decrease on a recurring basis in local currencies. And this reflects short-term actions to protect market share and prioritize growth in the context of the rapidly declined cocoa bean prices. Important to note that a significant reduction in financing costs in half year 2 is an important factor in the reduced EBIT guidance. We expect to recover more than half of the absolute decrease in EBIT at the profit before tax level. Clearly, this outlook is subject to potential impact from the ongoing disruption in the Middle East that I commented on a little bit earlier.

Now before I hand back to Hein, I want to take a moment to explain the half year 2 moving parts on EBIT. Our return to positive volume growth will be a clear tailwind for half year 2, of course. However, this will be offset by a number of factors. One is short-term actions in global chocolate. We are prioritizing restoring Gourmet share following this unique and temporary long position impact that I talked about. We're also taking some temporary customer-centric interventions to restore service levels, and Hein will talk about it a bit more later, but action is needed to stabilize supply after a number of incidents that we've seen. Customer centricity is our #1 focus going forward, and we're taking action to reclassify lines, increase spend on staffing, maintenance and quality.

Second, as already discussed, cocoa profitability is expected to now normalize in half year 2 following an exceptional half year 1. Third, we are taking further actions to reduce finance costs. This means significantly lower year-on-year pass-through in finance cost at the EBIT level, while neutral on profit before tax. And finally, we have the uncertain and volatile situation in Middle East, which is bringing additional cost and supply chain disruption depending on how it will evolve further. Finally, the uncertain and volatile situation in the Middle East brings additional costs and supply chain disruption.

And I will now hand over to Hein to share more on our Focus for Growth.

Thank you, Peter. Now let's talk about Focus for Growth. And this has been shaped, as I said before, by the insights and learnings from our growth accelerator coalition that I mentioned earlier. And at this stage, me being in the company now for 2 months plus, the plan is directional as we continue to refine and deepen our assessment of the actions as well as the opportunities ahead of us. And I'm looking forward to sharing the full detailed update with all of you in early June. And in the meantime, I wanted to be transparent and therefore, share the direction that we are heading in.

Now before we go into details, let me start with why focus is so critical for Barry Callebaut. Because what really struck me when I started engaging with the team on our business portfolio is actually how concentrated we are. As you can see here on the chart, a few examples. So if we look at our top 7, top 7 markets represent 56% of our total volume. And of course, if you would extend that to 10 markets, the concentration increases even further.

Similarly, with customers, our top 7 global customers are approximately 1/3 of our volume. In our Gourmet branded business, our top 7 brands or top 7 propositions generate 85% of our volume. And on the sourcing side, 90% of our cocoa is sourced from our 7 origin countries. And finally, although we operate around 30 specialty categories around the world, the top 7 represent approximately 90% of the growth opportunities that we see today. So as we focus on stabilizing the fundamentals, which we talked about and focusing our resources behind reduced priorities, getting these top 7 really right already moves the needle meaningfully. And this is why focus sits at the heart of our growth agenda for the future.

Now turning to our Focus for Growth action plan. We do see that compelling need to increase focus across 3 areas. First one is commercially. So concentrating on a defined set of distinct growth opportunities and prioritizing key markets and segments where we see the greatest potential. Second, operationally by restoring fundamentals. I talked about that, and particularly in the areas that matter most for our customers in terms of reliability, quality and service. Customer centricity is absolutely vital. Third is organizationally by prioritizing a reduced number of the most impactful initiatives and restoring that customer-centric winning culture and by driving focus, restoring fundamentals and putting the customer firmly at the center of what we do, our objective is to reinvigorate the company and return to sustained profitable growth, and market share gains and, therefore, unlock strong financial performance going forward.

Now let me share some details on each. I'm starting with commercial focus. And we are defining a clear and distinct set of growth opportunities where we will intentionally concentrate our resources and our attention. And this starts with markets. And as we discussed earlier, our top markets truly move the needle, not only in terms of volume but also in profitability. Let me start with the U.S., our largest market, representing approximately 17% of our revenue and ensuring the right level of focus and execution in such markets is critical to deliver growth.

But also other markets stand out with clear growth potential, for example, Brazil, where we have a meaningful presence, Indonesia, India, Peter talked about that, and China, where we're experiencing strong growth right now. And it is therefore clear that our resources need to over proportionately support these priority markets, a distinct set. And importantly, this focus must be actionable, value-added defining a set of focus markets within AMEA rather than spreading our attention across that vast region thinly.

The same logic applies with Gourmet & Specialties, where we need to concentrate on the right segments and opportunities, and I will come back to that in some detail in the next chart. In cocoa, in itself, we see clear opportunities to unlock growth by increasing our focus on high value-added powders, whilst ensuring that we have the right growth capacity, of course, in place. So across all of these areas, a key enabler will be strong innovation platforms. Not many, but a few strong platforms that will allow us to lead in the market and that we can leverage across the portfolio to drive growth, greater level of differentiation versus our competitors and of course, to support our customers around the world.

Now let me talk about Gourmet, such an important segment for our profitable growth, and we are reintroducing here a clear brand hierarchy and customer propositions. Callebaut, Masters of Taste, that will continue to be our group commercial identity. And then we have a clear brand tiering after that to serve the different customer needs with a greater impact. And as you can see here on the top of the pyramid, we anchor the portfolio around our super premium global brands, led by the Callebaut Signature Collection and Cacao Barry. Now Callebaut brings over a century of Belgian craftsmanship and unrivaled bean to bar expertise and Cacao Barry brings 2 centuries of Cocoa Origins mastery and French pastry heritage, important brands on top of the pyramid at a higher price level, strong quality focus.

Now beneath that, our core Gourmet portfolio is firmly positioned in that premium segment with the Callebaut core section. And here, the focus is on delivering consistent quality, reliability and strong performance for professional customers in their day-to-day operations. Complementing these, we continue to develop strong regional propositions. Typically, one per region, such as Sicao, Chocovic or Van Houten in Asia, for example, ensuring that local relevance. And across all these tiers, our brands are supported by end-to-end services from the chocolate academies that we have around the world to innovation and technical expertise. These help our customers to succeed. And the objective is simple and clear, a more focused Gourmet portfolio with clearly differentiated propositions and price tiers that enable to serve our customers better, and it will allow us to allocate resources more effectively and drive the profitable growth in this important segment.

Now let's turn to specialties. Our plan here is to be a bit more selective, focused on a defined number of margin-accretive specialty categories that we believe we can integrate in the company, and the core of the company and by doing that, scale them first regionally and then globally. And while the final list is currently being defined, we already see clear and compelling opportunities in a number of areas, such as filled and baked inclusions, which you find in products like ice cream, where we have a very strong presence in that segment. But also both chocolate decorations, including toppings for bakery applications and fillings and coatings, for example, solutions with reduced sugar functionality.

And once this prioritization is finalized, the intent is to bring these selected specialties much closer to the core on the regional responsibility including, therefore, a tighter system integration. At this moment, they're not that fully integrated in our operating system. And that means we will invest behind them to ensure there is sufficient growth capacity, clear ownership, P&L ownership within the region and stronger category management. And we believe that this more focused approach will allow us to scale what really works. It will simplify the specialty portfolio, and it will concentrate resources where we see the strongest combination of growth, margin expansion and, of course, customer relevance.

Now moving to operational focus, where the clear goal is to restore some of the fundamentals. And Peter talked about the disruptions. Our #1 priority is to restore service levels and on-time in full performance that we are now measuring consistently every day, every week, every month. I'm absolutely determined to get us there and to improve on that particular KPI. And as I mentioned earlier, a combination of transformation complexity, industry disruption that we've had and many operational incidents, this has taken our focus a bit away from the basics. And as a result, service levels have been below industry standards. Now that's something that I'm keen to turn around for the company. We have to get this right.

Now beyond service, we also need to ensure that our network, our factory network is fit for purpose, both for the portfolio that we operate today, but also where our customers will go tomorrow. And at the factory level, we see currently mismatches between line utilization, so specific line utilization and the overall capacity available in our network.

So in the short term, that means we will make targeted and tactical adjustments to unlock available capacity. On the midterm and the long term, we will invest selectively behind those growth capacities that I talked about -- we talked about the focus areas, for example, ensuring that we deploy there for our capital towards the right opportunities.

And finally, restoring the fundamentals also means strengthening the core processes and enablers of the organization, very much the intention of Next Level, and we will build on that. We do need better data visibility, more effective end-to-end decision-making on a number of processes. And therefore, the priority for us is to focus on the core process as the company first, get them really right, such as the overall demand and supply planning processes, customer service processes and, of course, the quality and the usability of our data. We made strong progress, but now we need to finish it behind those few big priorities.

Going into more detail, there are a few areas where we need to focus operationally. So North America, as I said already, this region contains our largest market in the U.S., and we need to get it right. And as Peter has described, we've seen broad supply disruption across the network, and that resulted in longer lead times for our customers and capacity constraints in several high-demand product categories. Network investments under Next Level were there, but some of them were postponed given the macro backdrop.

Now there's an immediate need to stabilize the network and rapidly improve service levels, focusing over the coming months on increasing staffing and adapting shift patterns at relevant sites as well as targeted initiatives to stabilize critical facilities, particularly across maintenance, quality, infrastructure and planning processes. In parallel, we are reclassifying and redeploying existing product lines across the network to better utilize the available overall capacity.

We are developing a midterm plan to future-proof the network in order to sustainably support future growth. On emerging markets, here, our focus will be on a select number of key growth markets, large markets, though, but where we have a meaningful presence already and where we intend to invest to support evolving customer needs. Think of countries like Indonesia and Brazil. On this, we will update you in much more detail in June.

Service and OTIF, on time in full, we are taking targeted actions not only in North America but also in Europe to immediately improve reliability and to step up our safety stocks in selected categories. Peter talked about that. This will stabilize our key business processes and in turn, it will improve customer service in the months to come. And then finally, core processes. I talked about digital efforts before. We need to focus our digital efforts and investments behind those core processes, such as planning as well as customer service, driving better data visibility and transparency, and this will, therefore, strengthen these processes and, therefore, increase service levels for our customers.

Now turning finally to organizational focus. Our objective is to reestablish that winning culture with customers at the heart of everything that we do, while refocusing the organization, as I said, on a set of impactful initiatives that truly matter. And a key priority here is to increase the empowerment and accountability of our commercial regions because these regions are the closest to our customers and our markets, and they should clearly drive what needs to be done to win locally. And of course, supported by global functions. They provide the how. They provide the scale, the expertise and the consistency behind those core processes that I talked about.

By doing that, we need to be, therefore, more disciplined on prioritization because the organization, as I said, has been overloaded by a significant number of initiatives during a time of also intense industry disruption. And that, in itself, dilutes the focus and the execution capacity. So by intentionally reducing the number of priorities on the table, we will free up time, energy and resources. And this will allow us to focus on what truly matters. That's what we're going to do in the next couple of months.

Before closing, let me briefly highlight some of the initial steps that we have already taken as we start to put the Focus for Growth strategy into action. We've reduced the executive leadership team. I had a team of 20, we've reduced it to 12 members. This creates a smaller, more agile and more importantly, a more commercially focused leadership team in the company, which will enhance the speed of decision-making that we need. We also removed the global transformation office related to Next Level, and we significantly reduced our consultancy spend for the months to come. And this reflects a shift away from a separate transformation office towards a more integrated business ownership and execution.

And as such, we have fully integrated the remaining Next Level initiatives into our global functions as well as into our regions. And that has stopped a stand-alone program tracking savings, for example, and therefore, we're now much more focused on the bottom line delivery and therefore, the net impact of these changes. We've also strengthened our global customer account alignment, and the global 7 accounts that I've talked about before are now reporting directly to me. And this is designed to reinforce regional execution actually, but also to accelerate the deployment of global innovation where it matters most for our customers. Now these are early but important steps. Obviously, there's more to come, but the momentum in the company has started.

So that concludes my preview of Focus for Growth and we're not reinventing our strategy, as you've seen. What is different is the level of focus, the level of energy and depth supported by clear choices and strong resource prioritization. So to summarize, our priorities are clear: drive focus and discipline and put the customer back at the center of everything that we do. And I'm confident that our unparalleled industry leadership that we have and our truly unique business model will provide that strong foundation to sharpen that customer focus and return to profitable growth.

I'm looking forward to coming back to you in early June with a more detailed plan and to share our financial ambitions in parallel. And in the meantime, this concludes today's results presentation, and we are delighted to now take your questions. And with that, I will hand over to the operator to open the Q&A.

[Operator Instructions] Our first question comes from Alex Sloane from Barclays.

I'll have 2, please. I guess, overall, you previously guided to double-digit PBT growth in fiscal '26 based on today's guidance. Is it fair to assume you're now expecting PBT in constant FX to decline at sort of mid-single-digit rate for this year? And I guess if that's the case, within that potential 15%-plus downgrade, how much do you see as '26 specific or transitional versus perhaps more structural and put another way, how much of that do you think investors should reasonably expect to sort of bounce back in fiscal '27 would be the first one.

And I guess the second one, somewhat related, but in terms of the commercial investments that you've talked about to restore competitiveness in Gourmet, can I just say, does this purely relate to price gaps or -- in Gourmet? Are you also potentially suffering from some of the service level issues highlighted at the beginning of the presentation?

Thank you, Alex. For the first question on the -- on PBT and this year's guidance, I'll let Peter answer. I'll come back to some of the points on structural as well as take your second question on Gourmet. So Peter, first on PBT.

Yes. So Alex, thanks for the question. We will have a significant reduction of finance costs over the year, up to CHF 60 million, so CHF 50 million to CHF 60 million versus last year, which means that a very significant part of the gap that we see on EBIT will be offset towards the PBT level. So profit before tax will be down for the fiscal year, but to a lesser extent than EBIT because of that recovery on the finance cost.

And Alex, I think a few remarks on the structural nature of the guidance for this year. Look, there are a few things that I would call pretty temporary. These are, for example, the gourmet positions that you talked about. The other one is supply disruptions that we have seen as well as the volume declines that we've seen in the first half. I expect those to -- over time, of course, to come back. Some of that will go faster than others.

But more structurally, and Peter talked about that, our finance cost with a lower bean price, overall, the finance cost are not as high as in the EBIT definition, but they will come back and they will be neutralized on a PBT and on a net profit level. So some aspects are structural and some are temporary, but I wouldn't call it overall a rebasing of the company.

I think your second question on Gourmet. Yes. So we had long positions out there and -- in Gourmet, which is partially a price listed business. We are seeking to retain market share. Obviously, we're going to drive volume. I think that's super important for us. We have, of course, fixed cost, but also we want to retain our customers after having had some years of disruption. So we're very keen to put the customer right -- front and center for everything that we do. So that's something that we're investing in.

But if you look at Gourmet, yes, there have been disruptions also for Gourmet. Some of that in the North American part, but some of that in Europe, obviously, from somewhat longer time ago, but we're still sort of rebuilding capacity, and we're still rebuilding customer service. So this is something that we're now going to do on an accelerated pace. All the key factories are under hypercare. We've added some resources to make sure that we can deliver. We're also pushing some tactical investments through the sites because the customers have evolved their portfolio needs. We were a bit behind. We're stepping that -- we're really stepping that up and going fast after that. And therefore, I'm quite confident that in the second half of the year, overall, as a company, we are going to return to growth, and that will then sequentially improve the volume picture by quarter including Gourmet, which of course, is an important profit segment for us. Next question, please.

Our next question comes from Jörn Iffert from UBS.

The first one would be, please, on the reinvestment needs to restore customer service levels. For how long do you think it will last that this is more pronounced? And do you think despite these reinvestments, there could be operating leverage benefits for EBIT in fiscal year '27? So just to get a feeling for the time line here?

And the second question, please, a technical one. Into the core segment, I assume it is, in particular, the spread, not the combined ratio, which was beneficial in the first half, I mean, what do you expect as a more normalized profitability on the current cocoa bean versus butter and powder spread going forward from here?

Thanks, Jörn. I'll take the first question. Peter, you can take -- if you would take the second one, that will be good. On the -- yes, on the investments, look, as I said, there's a few different types of investment here. And so the first one as I said, it's around evolved customer needs of what they need in their portfolio. And I think whilst we have an overall capacity that is sort of sufficient given, of course, the volume reductions that we have and the existing capacity that we had, on a line basis, the capacity wasn't always keeping pace with the changes of what customers really wanted.

And therefore, we're doing a number of tactical investments predominantly in North America to keep pace and to satisfy the evolving customer needs. Some of that is in compound production. Some of that is in inclusion, for example, we need to step it up there. And so that's part number one. And that's partially CapEx. But of course, with all -- with quite a number of changes that we're doing and these are happening literally to date, that was in North America in the last couple of days and witnessing firsthand of what we're doing to step up that customer service and change portfolio. So that's number one. And that, of course, comes with some extra cost.

The second one, given the disruptions that we had, we absolutely want to make sure that food quality and food safety is paramount. So yes, we are investing a bit extra also in manual operations to secure that. We've had incidents over the last couple of years. We simply cannot repeat that. The reputation of the company is essentially what safeguards the value of the company. So I'm very, very keen to focus on that as well.

And then thirdly, as I talked about, investments when it comes to the long positions that we -- and we already mentioned that a few times, the long positions that we've had on cocoa and the impact on price listed business. So we're making here the right trade-offs, but we want to stick with our customers and we prioritize volume and we prioritize market share now and that's the third area of investment that we're making. Yes, I mean those are the main ones. But clearly, again, customer centricity and stepping up our efforts to evolve our capacity to that -- to the exact needs of the customer, that for me is really a priority now. And that's pretty short term. But I think in the midterm, that means that we will -- we need to continue to evolve our network, our supply chain through changing needs. And I think we can do that. And obviously, more to come on that in June. Peter?

Thanks for your question on cocoa. We've seen a strong EBIT growth on cocoa in the half year 1 year-on-year in local currencies. And very much linked to the fact that we're able to profit in cocoa and benefit from a more favorable margin environment and also the market volatility considering the speed of the market movements we've seen some time ago already with higher butter, higher powder prices, and we were able to capture that. We expect this to normalize in half year 2 going forward because the butter ratios have continued to drop in line with the terminal market evolution. Butter is now below powder and trading at a discount actually to CBE, which means that some of those benefits that we've seen linked to that volatility and the whole market that we captured in half year 1 and to some extent, a bit as well in half year 2 last year is at least, for the short term, not coming back. And then, of course, we'll see how the market evolves further to be more specific about that.

Our next question comes from Ed Hockin from JPMorgan.

Thank you, Hein, for your preview on your Focus for Growth strategy that I look forward to learning more in June. But on the Focus for Growth strategy, what I wanted to clarify a little bit following on from the last question, is on some of these initiatives you've outlined on capacity investments on focus and scaling of innovations, whether these are a refocus of existing resource or whether these are incremental investments? And within that, how we're thinking about the cash flow? Should we be, therefore, presuming that CapEx is higher for longer? And of your higher safety stocks in H2 that you mentioned, should we also expect that this is something longer lasting. So will you be holding inventory levels as a norm going forward? Or is this specifically an H2 comment?

And then my second question, please, is on your volumes outlook for H2 and the return to volume growth. The industry, as you noted, is currently tracking minus 6.5% volumes. So to return to volume growth in the second half of the year, can you try and help me to bridge that? Is it that the industry volumes, you should expect some improvement in the second half of the year? And how significant contribution should the actions you're taking in gourmet have? Is it some reversal of shrink inflations or some reversal of the temporary in-sourcing that you've seen in previous years. Just if you could help me bridge that gap between the current industry volumes and improved picture for your volumes in the second half?

Thank you, Ed. And let me take first go at it, and Peter, please add where you see fit. So I mean, first of all, this is not about incremental resources. I talked very much in focus for growth around galvanizing and rallying our people, and that is people's component, but also indeed capital expenditure as well as cost behind less initiatives. We're choosing essentially 6 to 8 initiatives in the company right now to focus our resources on.

We've been looking at many, many process improvements as a company over the last couple of years, ranging from HR processes to supply chain processes to essentially covering absolutely everything. What I'm really keen now is to focus our resources behind those processes that touch the customer first, and that is planning, so demand planning, supply planning, and making sure that we link up with our customer seamlessly and that we optimize our planning processes. So that means also digital efforts behind that. So that's the number one.

Number two, customer service. Over the last year, customer service has been pretty much standardized and, in some cases, has been moved from a decentralized model to a more centralized global shared services model for customer service. That was a decision taken. It didn't always go well. So we absolutely have to nail it now and be there for the customer and make sure that, that customer service process runs extraordinarily well. So this is not about incrementalism. No, it's about everything that we were doing under the Next Level program, it's to choose those things that are meaningful and impactful and putting our people behind those. So that's very much the mantra. Not an extra. We're not going to expand on that.

When it comes to capital expenditure, also for this year, we're not increasing the guidance. We have redirected some of the capital expenditure spend through the tactical investments that I talked about. And on the medium term, whether that's going to lead to a higher level, I'm going to come back to in June. However, we are very, very committed to deleveraging the company, as Peter has talked about. So that will remain an important priority. We will live within our means, but at the same time, I want to make sure that we spend the CapEx behind tangible, thought through, thorough growth initiatives, in a select number of markets, in our most meaningful segments. Gourmet, I talked to a few specialty categories, for example, and then, of course, in customer processes related to our Food Manufacturing segment. So more focused, clear and not incremental. So that, I think, hopefully answers your first question.

When it comes to the volume picture in the second half, a few comments. Obviously, with lower bean prices, what we're seeing is that customers ordering for longer, that's clear, and that's helping the volume picture for us. We also see that customers, and we said that in the presentation, customers themselves are going for growth. And we've seen a number of initiatives from Hershey's, for example. We've seen initiatives from Nestle. And I think that's really important. We are seeing an enhanced growth picture in some of our key markets. In ice cream, for example, in North America, we're seeing overall an increased demand picture. And again, I think the lower bean prices helped.

At the same time, and I think this is very important for us, when I talk about our efforts to restore growth, we believe that, in the very recent months, we are growing a bit ahead of the market with a reinvigorated focus on growth. And if we keep the pace, we make those necessary investments, we restore our processes and our credibility and stability, I'm actually very convinced that we will continue to do that in the very near future. So that's going to help us. So with less disruptions, we should see some growth. There's one important caveat, and that's, of course, the situation in the Middle East. At this moment, I mean, that's the latest one this morning. We believe that in the next week or so, business activity in the Middle East will resume somewhat, but obviously, it's very, very volatile. So that's something that we need to manage.

So that's more on a high-level basis. I don't know, Peter, if you want to make some further comment on what we have been doing?

I'm risking to repeat a lot of what you said. So no.

Okay.

Our next question comes from Jon Cox from Kepler Cheuvreux.

I have 2 questions really. One, just on what's happened in the last couple of years and what you're doing now to sort of maybe unwind some of that, maybe it went too far. I think under the first program, you laid off about 20% of your workforce and did a couple of factory closures and that sort of stuff. Just wondering, should we assume that maybe you're going to unwind the staff by about 10%, so maybe going back a little bit, or halfway from what you've done?

As an add on that, do you think there's anything more needs to be done in terms of the factory network? Or is it more, as you mentioned, it's all about quality issues and maybe some lines are not working as well as you want to? So that's the first question.

The second question, more on the top line outlook. I'm quite surprised that we're not really seeing volumes recover given the fact that cocoa prices have declined. I know there's a lag and so on and so on. But in terms of -- I'd imagine the whole industry is short chocolate in various places. Are you worried that maybe structurally, the chocolate market has changed in the last few years, maybe with GLP-1s and we see various data points suggesting that maybe chocolate demand volume growth won't come back to that on average 1% or 2% we've seen historically, maybe it's going to be closer to flat going forward. Any thoughts on that sort of long-term chocolate market outlook?

Thanks, Jon. I mean, first of all, on the Next Level program, as I said, in the plan on the Focus for Growth plan, look, I think that the Next Level program, again, the intentions to standardize more in the company, to reduce our cost by progressing our network into fewer, bigger sites into doing more with digital, intentionally definitely the right program. But what I'm saying is, therefore, we will build on that. And I have no intention to unwind necessarily what was going on. But I feel that efforts in the company were quite diluted. We have lost a lot of people. We have had quite some incidents and disruptions, and we have let customers down and customer service. So hey, I'm just very keen now to restore that confidence, go back behind a number of core priorities. So that means that we're not going to unwind, but we're going to phase and pace it. We'll go deeper, we're going to finish a number of initiatives, and we're going to do it well, but always with the customer in mind.

So yes, we will continue to evolve our network, and that may end up in less factories. But before you close a factory, you need to make absolutely sure that the volumes that you provide to a customer from that factory are then, of course, transferred to another place, and you can help the customer to succeed. So I'm very keen to progress, but again, in a thoughtful manner. There's no point in adding necessarily resources. As I said, we are making some selective investments now in the supply chain, particularly in North America as well as in quality assurance. But overall, I do not foresee that we're sort of adding cost on a structural basis. That is definitely not the intention. And I don't want to talk about unwinding. I want to talk about focus, and I want to talk about fewer, bigger and better. with a strong focus on operations discipline and customer centricity.

I think when you talk about volumes, actually, we are pointing towards a volume recovery in the second half. So of course, progressively, quarter 2 was a little bit better than quarter 1, in terms of volume, still negative. But going forward, as you sort of follow the algorithm, we're guiding to minus 1% to minus 3%. And that means mathematically that we're going to have to see a positive territory in half 2. Now where does that come from? And I talked about that lower bean prices? Yes, from our end, a better competitive position, strong focus and of course, with the caveat that I already talked about in the Middle East. But overall, we are actually seeing good signs of restored volumes. So in that sense, certainly on the midterm, we're looking more positively.

On GLP-1, I think yes, I mean, several of our customers have also talked about that. And I just wanted to highlight that quality chocolate, the more premium style chocolate, we believe that's actually benefiting in some cases. We're seeing that also in interest for our Gourmet products. So I think, yes, look, there will be some impact, but at this point, it will not be significant for the company.

And maybe just to add, there's some reassurance, of course, from the past on the market rebounding. I mean the market pricing has been significant, of course, this time, but also a few years ago on the back of COVID, there was a 20% pricing up in the market, and you could see the chocolate category bounce up well after that. And maybe last, as you said yourself, I mean, there is this lag, right? We had ourselves for the first time now a quarter in Q2 where our pricing was negative year-on-year. So we had our peak pricing, plus 70% a year ago. We had still plus 25% pricing from us to our customers in quarter 1. Quarter 2 was the first quarter where it started to come down. So there is this lag that the market needs to cycle through before it starts hitting the consumer.

I think, Peter, there's also -- and I think that on your question or the question before, I want to come back on one point, which are inventory levels. We've obviously seen inventories coming down, and that's partially bean price, but also operationally, our inventories are showing a healthy development. What I do believe towards year-end, again, tactically and particularly on what I call the runners in our portfolio, Gourmet products that are pretty standard, we are increasing the inventory levels somewhat to make sure that we have a very positive start into the new year.

I believe by the end of last year, the inventory levels were very, very low, and it hampered us a bit in satisfying customer needs. And again, with the positive signs that we are seeing in the market, we believe there is room, again, tactically and in a few areas to increase the safety stocks a bit to safeguard service. Again, a major priority for us going forward.

Our next question comes from David Roux from Morgan Stanley.

I just want to come back to Alex's question on the guidance. Can you perhaps quantify how much of the cut in the PBT guidance was attributed to the investments in Gourmet, Middle East conflict and then other factors? And then my second question is on Global Chocolate. On the Food Manufacturer client cohort specifically, do you see any need or any risk here that you need to invest in pricing here? I appreciate there's a mechanical cost-plus model with this cohort of customer. But I mean, how robust are these agreements? And then just my follow-up question on Global Chocolate is, where do you see manufacturer inventory levels at the moment?

Peter, you take the first. I'll come back on the Food Manufacturing.

Yes. So David, the first question on the moving parts on EBIT and then PBT overall versus the guidance that we now put into the market. Overall, as we said, still for the full year, there's a positive on cocoa considering the high and the strong benefit that we took on volatility and the increases of the market in the past, normalizing half year 2, as I mentioned.

Now if we look at then where the delta comes from in terms of the negative impact, you could basically argue that about 70% or 2/3 is triggered by this very rapidly declining bean price, which had an impact on, first of all, our financing costs, that pass-through had reversed basically on the EBIT line. Secondly, the impact that we've seen on Gourmet, where our long position and high price list forced us to do some commercial investments to secure the volumes that we have. So 2/3 is really coming from that rapid decline of the bean price.

The remaining part, basically, there's 2 components. One is volume that over the year will still be slightly negative. And secondly, some of the increased costs that we are taking to manage through the supply disruption, making sure that we can deliver our customers despite some of those disruptions that we've seen. So this is basically the different blocks that you should be considering within our guidance.

When it comes to the Food Manufacturing segment, you're right. I mean, most of our contracts, they follow the price of cocoa. So I'm not overly -- from everything that I'm seeing margin-wise and so forth, I don't see major volatility in that. I feel pretty confident about the segment going into the second half. And we will move with customers and of course, based on the contracts that we have. So when I talked about the major impact from the long position, that is more related to price-listed businesses.

When it comes to global stock levels, as I said, I think there are some -- we see customers buying a bit longer. I can't comment on exact stock levels. I'm not long enough here to give a really educated answer on that. But it's a fact that at this point, with the current bean prices, there is room for some increases globally. That's all I can say at the moment, unless, Peter, you would have further comments?

Our next question comes from Tom Sykes from Deutsche Bank.

Firstly, just on the capacity expansion that you're putting into North America and your comments to the earlier question around longer-term demand. I mean, if you're investing into compounds, which is the majority, I believe, of your Food Manufacturing business, are you not just signaling that there is a permanent reduction in cocoa demand even if it's not chocolate demand and that's coming from compound growth rather than cocoa content, if you like?

And then just on Gourmet, where would your gross profit per unit be standing versus 12 months ago? And are you saying that you're going to be cutting that even more? Because if you do have this shift towards more compounds and we're in a sort of excess capacity, I suppose, are we not just going to see a rebasing of Gourmet pricing? And indeed, is it still going down?

Thanks, Tom. I mean, first of all, in investing in North America, as I said, I think the network overall probably didn't keep sort of the pace with evolving customer needs. So I think it's more that we were a bit behind. And we are very, very keen to fill in some of the blanks. We have very good relationships with many customers. Obviously, in North America, we are the market leader. But I want to make sure that for particular needs, and indeed, there could be compound production, that they don't go to alternative suppliers. So what we're doing is we fill in tactical needs, and I believe that, that will strengthen our position with customers significantly.

At this point, with the bean price where it is now, we don't see compound necessarily growing faster than chocolate. We're seeing some movements that chocolate is actually back, and we're seeing some customers going back to chocolate. And again, with the current bean price, I believe that is overall probably even beneficial for them. We're sort of at that inflection point. So no, I don't think that compound will continue to always gain. I think what is more important for companies like us is that we're agile and that we can fill in the blanks of the portfolio that customers need.

And they will have a need for compound for particular parts of what -- in their portfolio, and they have a need for chocolate. And of course, there is the volatility of the bean price. So I think what is important for us, given our role in the industry, is that we are agile, that we have the ability to supply what is needed. And that is exactly what we're going to do in North America with a number of shorter-term investments. So that's, I would say, for the next 4 to 5 months or so.

I want to come back in June, as I said, with a more midterm picture for North America as well as coping with growth in a select number of large emerging markets, and I'm talking mainly Brazil, Indonesia, for example. India, we have ample capacity that can continue to grow. I mean we've done that double digit, and I feel that going to happen, that's going to go -- that will happen going forward. But I want to choose a few of the bigger markets where we have an emerging presence where I think we can succeed, but where we have some bottlenecks that we need to resolve. So I hope that answers the first question on investments.

On Gourmet profit, I wasn't exactly sure on the precise question. But I would say there's no rebasing on profitability as such. As I said, there were long positions out there, and then you need to determine what you do, what is your priority. And we feel that retaining customers is driving growth, whilst at some point these positions will unwind and we will be returning to normalized profitability on Gourmet. That's at least what I'm seeing going forward. But in the meantime, we want to make sure that we keep the customer connection that we can compete in our geographies. And that's what we're doing.

And maybe just one addition because I think I might have understood in your message that for compound production, we need an entirely new setup of factories, which is not the case, right? We can produce from our existing factories. There's a few interventions you need to do in terms of tanks. But overall, I mean, we can convert our lines. So it's not that if any move happens to compound, that is an entirely new network that we need.

Our next question comes from Antoine Prevot from Bank of America.

I have 2 questions, please. First, on coatings. So within Global Chocolate, I mean, could you quantify the volume growth of coating versus true chocolates and especially considering that now CBE is more expensive than cocoa butter, are you seeing maybe some pressure there overall, especially as a pretty big buffer on volume for the past couple of years?

And second, on Gourmet, so could you quantify a bit how much of your chocolate profit comes from the Gourmet side? I mean, it's about 20% of your volume, but I would suspect it's much higher on the profit. And considering the reinvestments and like the price change you're doing into like H2, how quickly do you expect a situation to improve there on volume?

Thank you, Antoine. So I think Peter takes the second question on the composition of the profit, if I got it right. I think on your first question, overall on compounds, by the way, we call it cacao coatings, we saw flat growth in the first half, but with a double-digit growth for particular super compound products. Don't forget that I'm talking about investments in compounds. And yes, we need to follow the customer, but we are the leader actually globally in cacao coatings. And we have quite a few R&D projects with many of our customers on the way to continue to compete in that well.

So if I sort of take a step back, as a company, what we are offering, we're offering the chocolate solution, we're offering the cacao coatings, but also non-cocoa solutions. And in that sense, we are partnering with Planet A Foods. We're working on what we call ChoViva, which is a non-cocoa product, which also has its own cost structure, and we will continue to invest in those type of alternatives. So we're very keen to provide the whole portfolio. Now again, flat growth in the first half with particular double-digit growth in a subsegment what we call super compound products.

Yes. And on Gourmet, Antoine, yes, it's about 20% of our volumes and it's over-proportional in terms of our profit split. We're not really disclosing a lot of details on it. But as you mentioned, it's a lot more accretive than the FM business. Volume-wise, 20%, despite the challenges, it's still performing relatively better than the FM business as we speak. And also in H2, I mean, we will invest, as we said, some of that long position, but it doesn't mean that we'll be cutting even more. We expect actually positive evolution in our business in chocolate, both on the FM and the Gourmet side going forward in the second half. Yes, I think that's where we are on the Gourmet side and everything else I think we said before, as it is linked to the very steep decline of the bean price, we do expect this to be a temporary phenomenon.

Our next question comes from Samantha Darbyshire from Goldman Sachs.

My first question is just around the end markets. It would be really helpful to get some context from you around how you're expecting them to progress from here. You've got pretty good visibility on the order book, it seems. How much of this is kind of because your customers are innovating, having to bring out new products to kind of support that volume growth? And how much of it is that you think that consumers are adjusting to the price levels of chocolate products right now?

And kind of along those lines, are you starting to see any appetite from your customers to reduce prices or increase promotions, increase pack sizes to get the volume coming back in the market? And if there's any regional context as well, that would be super helpful.

And then just switching to, just thinking about your service levels, can you perhaps contextualize where they are versus history? I know that it's been quite volatile. There's been a lot of disruption. But if we think about where Barry Callebaut used to be, say, 5 years ago, how significantly below that are we? I know that the company is below industry levels. But any kind of indication of the delta would be really helpful.

Thanks, Sam, for the questions. So first, I would like to talk a bit about the market and our customers and what consumers are doing. Let me just make a few points here. And some of it will be repetitive, I hope you don't mind. But obviously, there are lower bean prices and we're seeing a flattening as well of the futures curve. So there are some early signs, as I said, of market stabilization for our customers. So customers are therefore also willing to book further in advance. As I call it, these are longer positions, and there is some room for higher inventories overall.

I think we're seeing that customers are pricing through to some extent. Obviously, that's a customer decision. I don't want to go too deep on that. But I'm very encouraged by what I'm seeing with some of our large customers in particularly North America. Ferrero, and we said it in the presentation, they launched their go all-in promotion lasting from April to July, and that's backed up by significant investments. They've made a very public statement about that $100 million investment. Hershey also making significant media investments in this year with a very big launch around Reese's and Hershey. It's the first launch for them since a number of years that is sort of at this magnitude. So we're seeing restored confidence. Obviously, the margin profile will help given the lower bean prices. So these are, I think, very positive signs for recovery going forward.

We're also seeing, therefore, some increased innovation interest from our CPG customers. And as I said, that we do across the whole portfolio. We're seeing -- particularly in Western Europe, we're seeing interest in the non-cocoa solutions for ChoViva, the brand that I talked about before, but also the high flavanol opportunity, the high flavanol innovation in AMEA, and this is gaining really good traction in Japan as well as in China. So if I sort of summarize lower bean prices, so therefore, customers going a bit long. Secondly, a very specific big initiative from some of our large customers that will help the market. And third, we're seeing if we are focusing our efforts behind scalable innovation platforms, we believe that particularly on a regional basis, we're seeing increased interest. So I would say, these are very positive signs. And therefore, we believe that the second half, we can return to a growth picture.

On customer service levels, yes, I look back to a number of years ago. And particularly in the last 1.5 years or so, we have been below our historical averages. I don't want to call out one customer service level, because you need to drill down a little bit. And customer service can, for example, become low if your portfolio is not exactly the customer needs. So can you deliver against an unconstrained demand? That's a question. And in many cases, we haven't been able to do so, and that's why we're making these investments.

The second one is, due to disruptions, do you need to cancel contracts or cancel deliveries that the customer has asked for. So in some of our key segments, we've seen customer service levels even somewhat below 80%. They are now improving fast. And again, that's where we're laser-focused on to get them to the highest possible level now. And I think that's something that we do progressively well. So without calling particularly percentages too much, I would say we weren't at the level that we were a number of years ago due to disruptions, due to many process changes, due to the whole transformation impact. We're now going back to fewer initiatives, restoring customer service on those areas where we really need it and preparing for a midterm picture. And obviously, I'd like to come back to you in June on what that looks like.

I think that concludes the overall -- if I'm not wrong, this was the last question?

Correct. We currently have no further questions.

Thank you, everyone, for spending time with us this morning. We are looking forward to come back to you in June with a full update on the Focus for Growth program and to have more interactions with you in the next couple of days as well as after the June conference. Thanks a lot, and speak soon.

Thank you.

Hello, and welcome, everyone, to the Barry Callebaut Q1 Key Sales Figures for the Fiscal Year 2025/2026. My name is Becky, and I will be your operator today. [Operator Instructions]. I will now hand over to your host, Sophie Lang, Head of Investor Relations, to begin. Please go ahead.

Good morning, everyone, and welcome to our 3-month key sales figures conference call for 2025/2026. I'm Sophie Lang, Head of Investor Relations, and I'm joined today by our Chairman, Patrick De Maeseneire; and our CFO, Peter Vanneste. Given our additional announcement this morning on the CEO transition, Patrick will join us for the first 15 minutes of the call only to share a few words on the transition and to take a few questions. Peter and I will then proceed with the usual Q1 presentation followed by Q&A.

I'd like to remind you that the session is focused on our Q1 volume and sales update, and we will keep that Q&A session focused on discussion of these key figures. As usual, please limit yourself to no more than 2 questions. I'd also like you to take note of the disclaimer on Slide 2 and remind you that the conference call and webcast are being recorded.

I will now hand over to our Chairman, Patrick De Maeseneire. Please go ahead, Patrick.

Thank you, Sophie. Good morning to all of you, and thank you for joining this call. You indeed received our press release this morning about our CEO transition effective January 26. A couple of words to this change. Peter joined Barry Callebaut as CEO in April 2023 with the clear mandate to transform our company into a simpler, leaner and more agile organization. Next to leading BC Next Level, Peter has navigated our company through the perfect storm with unprecedented cocoa bean prices, market turbulence and a challenging geopolitical situation. Now with this unprecedented cocoa crisis behind us and BC Next Level nearly completed, it is time for us to embark on a new chapter of growth, value creation and industry leadership. The Board and I are therefore happy to welcome Hein Schumacher as our new CEO.

With over 25 years of experience in the industry, Hein is a clear veteran in the food sector. Hein is indeed a seasoned and a decisive leader with a unique blend of expertise in food, business-to-consumer, business-to-business and ingredients, as well as a proven track record in creating significant shareholder value from 2 CEO positions with Unilever and Royal FrieslandCampina. Hein has lived and worked in various countries and regions, including the U.S., the U.K., Europe, Singapore, and China. In other words, he has experience from developed and developing countries.

We came to the appointment of Hein after an extensive search process. During his time as CEO of Unilever, Hein implemented a comprehensive growth plan that allowed the company to sharpen its focus, increase execution discipline around power brands and key geographies and achieve shareholder value growth. Prior to Unilever, Hein led Royal FrieslandCampina as CEO during times of very volatile commodity prices, and he strengthened the company through major restructuring initiatives, which resulted in a more focused business and a significant revenue increase. Previously, Hein worked for Kraft Heinz for a decade, first as Chief Strategy Officer, before moving to Heinz China, and later on as EVP of Heinz Asia Pacific region business, where he did a successful turnaround of the business, which spanned China, Indonesia, India, Japan and Australia.

While our business continues to navigate market and volume pressures, we have a clear opportunity for future growth. Barry Callebaut is the world's largest chocolate and cocoa ingredients producer, supported by unmatched scale, a deeply integrated value chain, a strong innovation track record, and close customer relations.

We agreed with Hein on the following 3 priorities: First, return to growth with increased customer focus to reenergize also Gourmet and go for a bigger share in the emerging markets. Second, drive the people agenda to create a customer-centric and winning culture as the engine of that growth. Third, strengthen further our balance sheet. The key word here is, of course, deleveraging.

As said, Hein will start already next week, Monday, January 26. To ensure a smooth handover and continuity, Peter will be available for the transition to Hein. More than 30 of the 36 BC Next Level initiatives have been implemented and the last steps are targeted to be completed by the end of the fiscal year.

Last point, the Board wants to thank Peter, who will pursue other career opportunities, for his immense work and leadership during challenging times, and wishes him all the best for the future.

Before leaving the call now and handing over to Peter Vanneste for the update on Q1, I'm happy to take your questions on our CEO transition.

Operator, please go ahead for the Q&A on the session.

We will now move to the Q&A for the CEO transition. [Operator Instructions] Our first question comes from Alex Sloane from Barclays.

I guess from my side, while the Next Level saving actions, as you've laid out, are largely complete, the fruits of those actions are kind of yet to accrue to the bottom line. So is the CEO change and pivot to focus on growth and customer service may be an acknowledgment that some of the actions that have been taken have gone too far from a customer service level perspective and reinvestment might be required to reignite that growth. I guess put another way, the message on the conference call in November at the full year results was there was likely CHF 100 million of net savings that could accrue in fiscal '27 from Next Level that weren't visible yet, but were going to accrue. Do you think that's still realistic? Or do we think that maybe some of that will need to be reinvested?

Alex, thanks for the question. I wouldn't say that this change will require reinvestment. I would say it's more a shift of focus in the organization. As you know, we have gone through, and I mentioned it, through the biggest transformation in the history of the company in the past more than 2 years. And what we had not foreseen was, of course, these cocoa market price increases and volatility and a difficult very geopolitical environment.

That required a lot of focus internally into the company. And I would say, the focus now with Next Level almost being totally completed, like I said, with 30 of the 36 work streams being done with I cannot say a bit more stable environment, but at least on the cocoa side we have a much more stable environment, we can really shift the focus now outside being closer to our customers, increasing volumes with our customers again. And that's absolutely the objective of this change.

Our second question comes from David Roux from Morgan Stanley.

I think much of my question was actually answered there. I think I would just be quite interested in terms of timing, whether we should expect -- given the fact that we're coming to the end of the Next Level savings program, whether we should expect or when we could expect another strategic update? Would that be over the course of this year? Or do we wait until next year for potentially CMD, et cetera?

David, as I said, we agreed with Hein on 3 priorities. And of course, there are always many more in the company, but the return to growth is our first priority, driving the people agenda, our second one. And strengthening the balance sheet, that's more in the camp of our CFO, Peter Vanneste, but he's working hard on that one. So those are our 3 priorities. So I don't think that there is much need for a different strategy or a different focus. It's just that we're shifting the focus from the inside to the outside.

Our next question comes from Jon Cox from Kepler Cheuvreux.

A couple of questions from my end. One on just the overall shape of the group. There's been the reports about maybe the owners have been looking to split the company into maybe cocoa and chocolate components. And clearly, the management have been very public saying we prefer being integrated. And I'm just wondering if this had any part of the reason for the change in CEO, and potentially Mr. Schumacher would be more interested in running a group focusing on the chocolate more on towards an FMCG rather than the sort of a commoditized cocoa business? That's one question for you.

The second question, it's Peter Feld bailing out not yet completed this savings program. When it started, your EBIT was around CHF 650 million-odd, and you said you're going to be giving CHF 250 million savings over a few years, of which CHF 188 million would be dropping into the EBIT line. I'm just wondering where we are on that whole program, because it looks like you're saying he's gone, now we're focusing on growth. Does that mean we shouldn't expect this CHF 188 million to come down anytime soon. And actually, maybe we're looking at half of that amount coming through? This year, consensus is like CHF 720 million. I think next year is about CHF 770 million.

And then just lastly on that, you say, growth strategy, you had these sort of weird targets about post the whole restructuring, you're going to grow low single-digit mid and then EBIT doing low single-digit mid. Do you think you're going to give any clarity on those targets now that you're going for growth in the future?

Thank you, Jon, for your questions. On your first question, Barry Callebaut has, since going public and since the merger with Cacao Barry, been a fully integrated company, and we have the absolute intention to stay that way. I was, of course, aware of the Reuters article that went out there, and we immediately stopped that internally, or contradicted that rumor internally saying, we've been always a fully integrated company that gives us a tremendous cost advantage. It gives us full control over the quantity of the bean, the quality, the sustainability, the traceability.

We have, as one of the few companies, our people on the ground in the origin countries to ensure that quantity, quality, sustainability, traceability. So there is absolutely no reason why we would change that model. It would give us a competitive disadvantage if we would change that model. So no difference on that one.

On your second and third question, if I would be the CFO, I would redirect you to the first half results, but I'm not the CFO. So I'm handing over to Peter.

Yes. Hi, everybody. Good morning. I mean, in Next Level, basically, as Patrick already said, I mean, the majority of the projects have been hardwired in the organization. They have been implemented. It's more about now making it part of the running business. Just to give you an example, GBS is in place. So it's in the 4 hubs that we have. So now it's really about standardizing, ensuring the effectiveness and the efficiency. We do the BCOS program in the efficiency, and the KPIs of the factory is about rolling out and embedding it again in the daily running operations and having additional SKU reduction is behind us. But it's, of course, as we generate new SKUs through innovation, it's, of course, getting into making sure we apply the discipline of the one in, one out. So it's more about finalizing and embedding it.

In terms of savings, which was part of your question, as we already also addressed in the year-end communication in November, these initiatives are delivering savings. I mean, we have been -- just an example, BCOS and the GBS centers are clearly having those savings. At the same time, we also faced some exceptional costs more related to the market disruption in cocoa, which we are very focused on cycling out to make sure that we can make those steps into the direction of our long-term ambition in terms of stepping up the profitability. We'll come back on that in due time, but that's, I think, what we are working on.

Our next question comes from Thomas Sykes from Deutsche Bank.

Just one question on your IT and digital, because it's been a relatively small amount of BC Next Level expenditure. And as you become more customer-centric, and those customers will have spent a lot on their IT and digital transformation themselves, do you believe that you've spent enough on that to be a modern business dealing with the volatility that you're likely to see, because it does feel like quite a low amount that you've spent on that side of the transformation, please?

Maybe I'll take that one. I mean it's not that much of a low amount, and I'm not sure where you get your information from, but we've stepped up very significantly on the digital spend and investments as part of this whole program, the OpEx that we have reinvested -- that we have invested in Next Level. Barry Callebaut does have an important digitization journey ahead of it. It's been part of the pillars of Next Level, and we are going to continue on that journey, obviously, focused in the direction, as Patrick has been mentioning, in terms of internal versus external focus. But it's clear that, that is not leaving our agenda.

It's almost doubling in both CapEx and OpEx. So it's really a substantial investment.

I guess it's just as a proportion of that spend in absolute amounts. It doesn't feel that large given the size of the business, but I take the point on the percentage increase.

The final question that we have time for on this topic comes from Ed Hockin from JPMorgan.

It's really on the BC Next Level program. I think that when it was communicated at the time, there was a growth agenda embedded in that program as well with the focus on growing in Asia, focus on growing in Gourmet and focus on growing in compound chocolates discussed recently. So what I wanted to clarify was why was Peter not the person to lead this second part of the Next Level program and to embark on that growth agenda? And should any of those priorities on growth, be it Asia, Gourmet compound chocolate, is any of that changed? And is it just a refocus? Or will there be some other tangible changes in the growth agenda as well?

I would say there's no change. But like I said, we went through the biggest transformation in the history of the company, didn't foresee the volatile geopolitical organization (sic) [ environment ], nor did we foresee at that moment that cocoa prices would grow above GBP 10,000 per tonne, so you have to take that into account. And as a consequence, as you have seen, the demand -- the consumer demand also went backwards. Putting leaders in the position, what people often forget is the right leader in the right position at the right time. And the right time is often forgotten. And doing a transformation requires a certain profile of leader, going for a growth trajectory requires another profile. And that's what we have been looking at since a number of months, and that's what we have also openly discussed with Peter, and that's why we came to this conclusion.

Thank you. I will now hand the call back over to Patrick to continue.

Thanks again for attending this call. If you would have more questions, you can always contact me either over Sophie or directly. And with this, I would like to leave you now in the good hands of our CFO, Peter Vanneste. Thank you all, and have a great day.

Thank you, Patrick. Let me now start with a short summary of the quarter 1 key figures. As anticipated, we started this fiscal year softly. Our Global Chocolate volumes were in line with the declining and challenging market, and additionally impacted by the production pause in our St. Hy factory in Canada, which we informed you about in November.

At the same time, volumes declined significantly in Global Cocoa due to a negative market demand and the continued prioritization of our volumes to higher return segments within Cocoa. Overall, our group volume, therefore, landed at minus 9.9% with more resilience in strategic areas like Cacao Coatings and AMEA. Importantly, we see resilience in strategic growth areas, and we believe that the continued lowering of cocoa bean prices is an encouraging sign for market stabilization. And in that context, we reiterate our guidance for the fiscal year and are very focused on preparing for return to growth.

Let me get into some more details. Starting first with an update on what has been happening in the cocoa markets. Cocoa bean prices have come down significantly as no doubt you've seen over the past months with prices 30% lower since the start of our fiscal year and even falling below GBP 4,000 last week and some more yesterday. Importantly, the structure of the cocoa futures market has also improved significantly.

The forward curve is now in a flat to slight carry structure. This means that the cost of buying cocoa today is the same or cheaper than buying cocoa in the future. And this contrasts with the steep backwardation we saw in the market this time last year, which significantly increased the rolling cost associated with our hedging. Importantly, the flat curve also incentivizes our customers now to book today rather than wait for lower prices in the future.

The '25/'26 crop is developing in line with our expectations with strong early arrivals in Côte d'Ivoire and Ecuador. And since cocoa farmers outside West Africa have been benefiting from higher cocoa prices, we also have seen those origins increasing investments in items such as fertilizers and seedlings, which is clearly positive for future supply. Alongside weak cocoa bean grindings, this is helping to bring some replenishment of global stocks of cocoa and the market should be entering its second consecutive year of cocoa surplus.

Of course, these movements in the cocoa market have been creating a knock-on effect on both the B2B chocolate market and also the B2C market. The historic cocoa bean prices of last year resulted in a significant B2B pricing in fiscal '25. And in turn, our customers have been reacting through destocking, pack sizing, reformulations and et cetera. to prevent and protect the consumer from the full price increases. Some large brands have also reacted to their volume pressure by filling their own excess capacity first. Now with bean prices lowering, our pricing at BC has also started to sequentially lower. And in fact, we already passed our pricing peak in quarter 2 last year.

This is positive for stimulating future B2B demand, and we are starting to see early signs of that through our forward bookings. As you know, we contract several months in advance with our customers, and we have seen our customers more willing to book further in advance again. At the end of November, our future booking portfolio was at 20% higher level than at the same time last year, when the cocoa bean prices were spiking.

At the same time, it takes customers some time to price through to end consumers, which has now happened with Nielsen data showing that global cocoa pricing -- chocolate pricing, I'm sorry, in the market are now more than 30% higher than the pre-cocoa market spikes. As a result, there's clearly some price volume elasticity given the extent of pricing. However, we believe consumers will adapt and adjust to these new price levels and ultimately continue to buy chocolate given the high engagement of the category. The category has seen a similar short-term reaction like this in the past. We also see upside because our customers have mostly priced through higher bean prices. And with bean prices now lowering, this will incentivize category reinvestments and promotions, which should help to drive back consumer demand and volume.

After those market dynamics, let's now move to how those and other factors have been impacting our quarter 1 performance. Of course, we faced short-term headwinds in quarter 1. As discussed, the market dynamics have been very challenging with Nielsen B2C market volumes declining by 6.1% in our first quarter. In addition, volumes were impacted by the temporary pause in production at our St. Hyacinthe plant in Canada due to a technical malfunction with one piece of roasting equipment. This factory is a significant contributor to our overall North American production and was closed for around 3 weeks in September, October with the issue now resolved.

In Global Cocoa, we sharpened our focus on returns to prioritize volumes within cocoa to segments where we see the better returns. And that, of course, in the context of our agenda of deleveraging. At the same time, it's clear also that our growth foundations remain resilient. Our compound business, which we now call Cacao Coatings, saw flat growth overall within a declining market. We've continued to support our customers with innovation and reformulation with around 600 R&D projects currently underway on Cacao Coatings. We're also exploring non-cocoa solutions with ChoViva, the chocolate alternative without cocoa with a phased international commercial rollout in process. The AMEA region saw positive growth well ahead of the market and with good expected momentum ahead of us. And finally, as mentioned, across all regions, we're seeing our customers increasing their forward bookings, which is an encouraging sign for stabilization and future growth.

Now let me dive into our volume growth in a bit more detail by region and segment now, starting with Global Chocolate, where volumes declined 6.8%, largely in line with the 6.1% decline of market volumes as per Nielsen. First, to the left of the page by chocolate region. Western Europe saw a 5.2% volume decline as demand continued to be impacted by higher prices and knock-on effects on customer behavior that were relatively a bit larger in that region. Central and Eastern Europe declined by 2.7%, significantly better than the market, as local accounts saw solid growth, especially in Turkey, while the large food manufacturer customers saw some challenging environment.

North America reported a decrease of 14%, heavily impacted by the St. Hy plant closure, as I just discussed, as well as a continued challenging customer and macro backdrop. Latin America saw a slightly negative development at minus 1.4% ahead of the market, as strong momentum in Gourmet was offset by large food manufacturing navigating the impact of the higher prices. Finally, in AMEA, volumes grew by 0.6% with improved demand in China, continued momentum in India and additional business secured in Australia, partly offset by market pressures we've seen in Japan and South Korea.

To the right of the page by segment, while Gourmet market has been more resilient, also now it has been impacted also by the higher prices and knock-on customer demand impacts with customer reducing elevated stock levels. And there was also here some impact from the St. Hyacinthe closure. Meanwhile, as we have discussed, Food Manufacturers were impacted by customer behavior shifts in the context of those significantly higher prices. And Global Cocoa, I already talked about.

Now as this is a sales and revenue update only, I will not go into reporting beyond that, but I briefly wanted to talk about leverage given that this is one of our key focus areas yesterday, today and tomorrow. We are certainly working further on the key actions we have already started to implement last year, and then I talked about at the November communication. In particular, first of all, reducing working capital, especially inventory, with key actions to maximize our bean blending capabilities, diversified to origins with shorter cash cycles, working on the underlying processes. Secondly, enhancing our financial agility with less cash-consuming solutions for margin calls that we have established with the letter of credit facility and making progress on inventory financing solutions, and also several end-to-end value chain projects like demand planning improvements and contracting flexibility.

In the first quarter so far, we reduced our gross debt by prepaying the EUR 262 million term loan in September, as well as reducing our commercial paper outstanding and bilateral facilities. As we already discussed in November, we do expect a temporary step-up in leverage in half year 1 due to the fact that this is the peak buying period given the cocoa seasonality. Historically, we have seen bean prices -- when the bean prices were back at GBP 2,000 range, we saw around a 0.4x historic leverage step-up in H1 versus the end of the prior fiscal year, again, linked to the seasonality. Of course, with higher bean prices, that increases that magnitude of this step-up. However, obviously also offset by the operational actions we are taking to reduce working capital every single day. Through this initiative for the full year, we do aim to reach the below 3.5x leverage by the end of August 2026.

And finally, we have reiterated our guidance for fiscal '25, '26. Let me remind you of the volume elements in this particularly, given this is a sales update. We do expect to see the mid-single-digit decrease at the group level and within Global Chocolate. In Global Cocoa, we expect the mid- to high-single-digit decrease as the business enhances its focus on the higher return segments, especially powder. The first half year is expected to be challenged as customers and consumers continue to manage the high prices in a soft market. And we're expecting an improvement in the second half with lower bean prices being an encouraging sign for market stabilization, as I mentioned before.

Let me conclude with the following key takeaways before opening for Q&A. First, our key focus is on returning to a growth trajectory with strong customer focus, as you have understood from Patrick as well. Second, what we see in the cocoa markets today is already starting to reflect in increased forward contracting, which is an early sign of market stabilization. And third, we are driving innovation and enhancing customer experience to future (sic) [ fuel ] that future growth.

And on that note, thanks a lot for listening. We will now move to the Q&A session, and I will hand over to the moderator to start that Q&A.

We will now have our Q&A for the Q1 key sales figures. [Operator Instructions] Our first question comes from Daniel Bürki from ZKB.

Regarding pricing, it was still pretty significant in the first quarter. When do you expect your pricing impact, let's say, go into negative territory? That's the first one. And then regarding the volume recovery, what phasing do you expect? Do you already expect positive volumes in the second half? Or we just have to think about '26, '27?

Thanks for your question, Daniel. On the first question on pricing, as I mentioned in my presentation, we have seen our peak pricing in the second quarter of last year, which was then 70% up versus the year before. We've seen a sequential slowing down. In Q1, our pricing is still 25% up versus, again, same quarter last year, but gradually coming down in absolute. And you know, as we are typically contracting several months in advance, we expect to turn negative at some point during the quarter 2, the existing quarter, assuming, again, the bean prices stay at the level or go down versus the level that they are today. Therefore, we do expect H1 pricing to remain positive in general, but H2 should be, in terms of pricing, negative versus H2 as we follow the market in a forward selling mode. So that was your first question.

Your second question on the volume recovery. As I mentioned, we have reiterated our guidance for the full year with mid-single-digit volume decrease. There is still some consumer reaction in the market today. We do believe that this is temporary. As I mentioned, we've seen this kind of pattern before, maybe a bit less disruptive than this time around, but the market recovers after consumers have adopted and customers, in terms of promotions and so on, have adopted and accepted the hiccup.

We do expect some customers to start reinvesting in the category. We see our order book and forward selling book improving. So in Q2, we do expect an improvement versus Q1, but still in a soft market. And H2, we will see a further improvement versus the first half for sure, to the extent of which, of course, we'll have to, well, go back later. We're still in a bit of an uncertainty on how the market will react, but certainly an improvement versus H1.

Our next question comes from Matteo Lindauer from Vontobel.

I have a question on the bigger picture of Barry Callebaut. My question is on customer relationship. Could you tell me how is the sentiment with your large outsourcing contracts, because you said you want to increase volumes with customers. And my question is how you try to tackle them, because we have been analyzing potential upcoming renewals, and I would like to get a view from your side.

Thanks for the question, Matteo. On the large customers and the outsourcing, I mean, this is still -- this has been a bit soft over the last, let's say, 1 year, 1.5 years, because the whole market -- our customers, the whole markets have obviously been focusing a lot on the disruption, pricing and the volatility that has been happening in the market. So big shift. So admittedly, the focus has been a bit less on the short term on outsourcing.

Now we do see that it's still quite high on the agenda and the top of mind of -- and the trends in outsourcing. The long-term trends for outsourcing in our view and with the discussion that we have remain very intact, because the underlying dynamics have not changed. If anything, they have been aggravated or enlarged with what's happening in the market. It has become an even higher capital-intensive environment with the bean prices, in our mind, there to stay at higher levels than they have historically been. And some of our customers do have other priorities than investing in the next chocolate line.

On top of that, the complexity of the industry is really not decreasing. Sustainability regulation, EUDR, despite the changes in the timing, I mean, these complexities continue to increase. In terms of assortment as well, specialties, innovation, Cacao Coatings, the industry becomes more complicated, which is where we can play a key role because of our scale and reaching all of that. So the topic is absolutely not of the agenda for the next years, but admittedly, of course, it's been a bit of focus in the last 1 year, 1.5 years.

And you talked about contract renewals. Obviously, this is part of general business, right? We have long-term contracts with key partners. We have a lot of key partners. So it's a normal course of business that every so many years, we have a renegotiation happening on some of those contracts, which also is an opportunity for us and for them to adjust to the new market reality.

Our next question comes from Samantha Darbyshire from Goldman Sachs.

I just want to stick with the outsourcing topic. Can you talk a little bit more about the pipeline itself? You've given some really good ideas about structural reasons why outsourcing should still be a priority for customers. But given we've had a lot of disruption in the last few years, there have been disruptions at your factories as well. How are you thinking about customer appetite working with Barry Callebaut specifically?

And then also just kind of coming back to the stabilizing trends in H2. What are you seeing in terms of visibility for customer contracting? The last couple of years, there's been less visibility as customers haven't committed as much further out. You have said the cocoa curve dynamics are more conducive to those longer-term commitments. But where are we at in terms of visibility in those commitments versus what you might have had, say, 3 years ago? And then just kind of sticking with that as well, when you think about customer pricing, cocoa is now significantly below GBP 4,000 a tonne. In theory, could we see some customer promotions starting to step up in H2? So I'm not just thinking about the brand investments from marketing, but in terms of consumers seeing lower prices as well.

Thanks, Samantha, for your questions. I will also look at Sophie to keep me honest to the different questions that you asked. So if I forget one, let me know, Sophie. The first one, I think, was still on the outsourcing. We have been making -- and you were referring to some of the, like, I guess, St. Hy incident that we had. We've been making very significant investments into a new quality rigor, and we certainly have leveled up our game with the next level investments when it comes to product quality and product safety.

The tightened regimes and firewalls that we have established for our customers, they work. We handle those potential issues with a lot of prudence and take the actions to measure and protect our customers at all time. Sometimes that lead to delay of shipments, sometimes that leads to some hiccup. But overall, I think we are proving and we're getting a very good feedback from our customers on the massive progress we're making there. And at the end of the day, I think that will give a strong asset in the continued discussions we're going to have on outsourcing with our customers.

In terms of visibility forward, we have seen a very significant improvement in customer coverage levels and forward bookings during the quarter as the bean prices have been lowering. You will remember me talking about the opposite more than a year ago, as we saw the bean prices going up in a very backwarded market, consumers -- customers holding back on ordering, holding stocks lower. We've seen the opposite right now and our November portfolio has been 20% higher than the portfolio in the same time a year ago. So this is a very encouraging sign for next quarters, as we believe the market is going to recover, which is also a little bit back to your third question, right, around the GBP 4,000 barrier on the market that has been reached.

As I mentioned, the customers on average have priced up 30% versus the peak cocoa prices, which is on average -- again, I'm not going to talk about individual customers, which is on average, again, sufficient to cover price levels where they are today. That will give oxygen to the business and the chocolate market. So we do believe we will see some increased activity promotion in the market together with, again, customers adopting and adjusting to the increased prices. So that's part of the increased momentum that we see happening towards the half year 2.

Our next question comes from Jörn Iffert from UBS.

Two questions, please. The first one is coming back what the industry is doing to stimulate the chocolate market volumes. According to your market intelligence, I mean, would you be surprised to see structural lower list prices of the consumer players in the next 1 or 2 years? Or would you expect really more its marketing budgets going up and you see here and there some temporary promotions? This would be the first question, please.

And the second question, if you allow me, sorry, I was a bit late to the call and sorry when you have elaborated on this, but the midterm targets after the CEO change, I mean, are the midterm targets confirmed? Or could also be the case that maybe here and there some contracts are not prolonged in outsourcing, that there's a setback first before the midterm targets could start to kick in again?

Thanks, Jörn, for your questions. On the first one, we have a very diverse group of customers, as you know very well, from artisans to the big FMCG companies. I am not going to talk on their behalf of what they can or should be doing. But I do expect, as I mentioned, that they will continue to put investments into the chocolate category. I mean, at the end of the day, even if some promotions were dialed back, chocolate is a category where consumers react and respond on promotions. So once the margins have been restored also for them, I'm sure they will reorient to those categories that are the most engaging for the consumers. How and which tools and levers, I mean, I think I will leave up to them.

In terms of the midterm guidance, we absolutely believe, and you will remember that in the past, we talked about the 3% to 4% market growth and then a 10% EBIT margin. The 3% to 4% market growth, we absolutely believe we're turning back to that. The question, of course, how fast now and it's -- but I do think we do believe that the turn has been set there. So we certainly believe that we're going there after the delay, of course, we've seen in the last few -- 1 year, 1.5 years.

In terms of profitability, this business absolutely can step up profitability. There is no change in that belief or ambition. Now when you talk about the 10%, of course, we have to nuance the metric a little bit, because we used to be -- 1.5 years ago, Barry Callebaut was an CHF 8 billion company. Now we're a CHF 15 billion company. So as a percentage, of course, that has a different meaning. So it's also important to look at the EBIT or profit before tax per tonne. But the profit step-up ambition is certainly still there. There is a lot of opportunity in this business to move ahead. And that's one of the things I have in mind as well as we are navigating through the end, hopefully, of the market disruption as we've seen it.

Our next question comes from Antoine Prevot from BofA.

With cocoa price falling down, how are you seeing in terms of like your ability to pass on financing costs still to your customer? I mean, ultimately, your bonds and balance sheets have kind of like a long duration, right? And so with cocoa price falling, is it still kind of like an easy discussion on those financing costs?

Yes. As you know, in the majority of our business, we have a real-time costing, and financing cost is part of what we are pricing through. That counts both ways, right? That counts up and down. So as we are decreasing our debt and our exposure on that front and our financing cost, that obviously has also a repercussion there. So you can imagine that we continue to do that going forward. And at the same time, we are working with our customers, and that's probably the most important thing. We're working with our customers really to work on the cash cycle in general, which is where we really have the big wins, working on bean blending, diversifying origin mix for both us and our customers.

The differences in differentials, the differences in cash intensity of different origins has increased over the last 1.5 years. So there is a key optimization to be done by being more flexible on origins and on blending. And that's where Barry Callebaut absolutely has a big advantage as we are present as a market leader in all the origins. We have been stepping up our bean blending capabilities. So that's, first of all, the first lever that we play and discuss about with our customers to seek that win-win from that angle.

Our next question comes from Alex Sloane from Barclays.

Just one, Peter. Just you referenced a few times customer orders being 20% higher. Do you mind just explaining what exactly you mean by that, and when and how that translates to your kind of reported volume growth? And then just on the free cash flow, I appreciate you're not going into detail today, but you historically gave that rule of thumb, GBP 100 per tonne move, circa CHF 75 million change in working capital. I mean if we apply that to the kind of current spot levels, I mean, it would look like the free cash flow for the full year could be quite a bit higher than the guide you gave in November, maybe closer to CHF 2 billion versus that CHF 1 billion guide. I appreciate that's going to be H2 weighted. But is there anything else we should consider with regards to that rule of thumb as to why it might be different this year?

Yes.

That was around how the customer coverage being higher translates into...

Yes, I forgot your first question. Sorry. Yes. So as you know, we are forward selling business, right? So we have basically 6 months, you can say, forward selling, and then we close contracts with our customers on that horizon. Now there's no longer -- with a flat market basically now, so the outward prices 6, 12 months from now at the same level as the nearby prices, so there's no incentive for our customers to wait for lower prices. We've seen this increase of portfolio that I have been talking about. So that's the visibility that we have.

Of course, there is still some flexibility to call off orders. There's some flexibility in the market with our customers to do that. So this is part of the answer. Calling it off is then the next step in doing all of this. But that's how it basically then translates in the actual sales that we're having forward. But it is for sure an encouraging sign of the future market and sales evolution for BC.

On your question on cash flow, I obviously was expecting that. Now this is a sales and revenue update. So I'm not going to get into a lot of new details. But yes, we've guided the market to a CHF 1 billion positive cash for the fiscal year, assuming a price range close to the GBP 5,000 range that then should deliver this leverage below 3.5x in combination with all our efforts that we're doing that I talked about in the call as well.

We also said that half year 1 would be negative free cash and half year 2 would be the moment where we generate a positive free cash. That phasing is still there, obviously, because the seasonality is certainly there. We've been buying a lot of beans in November, December and right now. Now with the bean price going down, obviously, that helps, right? So that will improve that position that we've been talking about before. It will also improve, to some extent, what we had forecasted for half year 1, be it that there's a bit of phasing, right?

It doesn't happen immediately, and we have also this letter of credit facility that I talked about before, which helps to smoothen the impact of cash when it goes up. We're no longer exposed to margin calls when the bean price goes up to an immediate magnitude. It also phases a bit backwards when the bean prices come down. But overall, I mean, yes, the rule of thumb and the lowering of the bean price obviously helps in reducing especially our inventory values.

Our next question comes from David Roux from Morgan Stanley.

Peter, I've got 2 questions. So the first one is just on the impact from the factory closure in North America. Can you quantify the volume impact from the St. Hyacinthe closure? I mean, my understanding was this was limited to 3 weeks, and the factory has about 300 to 400 kilotons of annual chocolate capacity. So suggests to me that excluding the impact, North America volumes were actually closer to flat. Perhaps you can just confirm this.

And then the second point is just going back to your comments around the guidance, which, as you pointed to, was underpinned by an assumption of the bean price around GBP 5,000 per tonne. I mean, given that we're now near GBP 3,000 level, is there not upside risk to this guidance, I mean, notably on free cash flow and also profit before tax?

Thanks, David. On the North American volume, yes, so St. Hy, I think it's -- probably about half of what we've seen in North America in the quarter has been driven by -- or the decline that we see in North America, so remember, the minus 14% year-on-year in quarter 1. About half is linked to this temporary pause of the St. Hy plant, which, again, as I mentioned, is behind us. So we don't expect significant impact in Q2, maybe some residual effect of ramping up with some customers, but it's mainly been in Q1, about 50%.

Don't forget that the North American market as such is also still down. If you look at Nielsen, it's about 6% down in the first quarter. So you could argue that without St. Hy, we're more or less in line with the market in North America. So about half is St. Hy, but the other half is more general market and macro, which continues to be complicated still in North America.

On the second question, I think you came back on the free cash flow guidance for the full year around the GBP 5,000 level. I mean, I can just repeat maybe what I mentioned before, right? I'm not going to give a more specific guidance at this point. But obviously, we do see that as a tailwind and it will help to get our inventories down, be it with a bit of phasing, and again, with the bulk of our cash flow generation being in the second half of the year.

Our next question comes from Tom Sykes from Deutsche Bank.

So just on the volume guidance, what are you assuming about the Nielsen market sellout, if you like? And what are you assuming about customer inventory levels? I mean, you've said before that some customer inventories are low. And then you say that Gourmet is coming off high levels of customer inventories. So if you do see an improvement in restocking, do you think that will be in Food Manufacturing? And interestingly, do you think that will also be in cocoa?

And then could you just help in terms of the SG&A reduction, because a lot of the temporary increase in SG&A was because the pricing was going up so quickly and you needed people to reprice contracts. So given that the price is falling so quickly, why do you not need those people to remain in the admin position to reprice things on the way down? What is it you're not doing on the way down that you were doing on the way up, please?

Yes. Thanks, Tom, for those questions. On Nielsen, yes, in general, we have seen lower stock levels at some of our customers, which is probably also linked to having people like me as their CFOs trying to keep stocks down when the value is really up. So I don't think they will immediately go back to that. And we're not -- long story short, I'm not calculating that we're going to have a big effect from stocking up again, but much rather from the market turning into more positive territory and consumers again adjusting to the bean prices that are now translated into the market.

In Gourmet, indeed, we had a bit of a slightly different story or a situation where some of our Gourmet customers really had high stocks and then cycling them out has impacted the Gourmet business a bit over the last few quarters. But yes, I think that's what we see. So looking forward at Nielsen, it's really about consumer adjusting to the higher prices, and our customers having and seeing more space given the lower bean prices.

On SG&A, yes, I mean, we had some offsetting costs, as I did mention in previous calls, in some of the saving programs that we had that were needed. I think, fundamentally, our pricing mechanics are similar, pricing up and going down. But there's, of course, a few elements that have been quite disruptive over the last year. And I just want to quote 2. One is the whole tariff situation in North America, which required exceptional interventions. Now I assume that's not going to be the same in the next year than it has been in the last year. Secondly, also, we had to do some upgrades in the way we do it and to make our systems and our process a bit more robust to enable the frequency of pricing up or down in some of those extra areas. So there's a few areas that I believe we've implemented that we can cycle out. But obviously, we have similar dynamics in pricing up and pricing down in general.

Thank you. This concludes our Q&A session for today. So I'll hand back over to Peter for closing remarks.

All right. Thank you, everybody, for joining our call today and for your questions, both on the part that Patrick presented, and myself. I appreciate that. The IR team is available for any further questions you might have, as always. And we are looking forward to seeing some of you at the Innovation Day we have in Wieze in a few weeks from now. So thanks for your attention, and have a good day.

This concludes today's call. You may now disconnect your lines.

Good morning, everyone, and welcome to Barry Callebaut's Full Year Results Presentation for 2024-2025. I am Sophie Lang, Head of Investor Relations, and today's session will be hosted by our CEO, Peter Feld; and our CFO, Peter Vanneste. Following the presentation, we'll have a Q&A session for analysts and investors. Please do limit yourself to no more than 2 questions. Before we start, please take note of the disclaimer on Slide 2. And I'd also like to inform you that the webcast and conference call today is being recorded. With that, I'll hand you over to our CEO, Peter Feld.

Thank you very much, Sophie. Good morning, everyone, and welcome to our fiscal year results presentation for '24-'25. Today, we will also be sharing a strategic update covering the actions we have taken and are taking to build a more resilient Barry Callebaut, delivering on our Next Level objectives and how we are unlocking future growth and shareholder value.

Let me start with a few key messages. As you will hear in more detail from Peter Vanneste shortly, in H2, we returned to cash generation and made strong progress on our deleverage agenda. This was supported by actions we've been taking on our BC Next Level journey and to step up resilience to market volatility.

As we look to the year ahead, we have three clear focus areas: deleverage to less than 3.5x net debt to EBITDA and delivering strong cash generation; preparing for a return to growth with a clear focus on customer experience, competitiveness, and unlocking new innovative solutions for our customers; and third, relentlessly addressing optimization opportunities for the new environment.

With that, I will hand over to Peter Vanneste to talk to the results.

Thank you, Peter, and good morning, everybody. Let me walk you through the full year performance in a bit more detail now. Starting with a short summary. After significant cocoa bean price increase and volatility in half year 1, the market has stabilized in half year 2, and we have been taking decisive actions to reduce working capital, enabling strong cash generation and deleveraging.

At the same time, the cocoa market turbulence created a challenging B2B environment, and we took some prioritization decisions within cocoa, both of which impacted our volume development at minus 6.8%. When it comes to profitability, recurring EBIT growth of 6.4% in constant currency was supported by pricing through the increasing cost of financing and mix. After major pressure on net profit in half year 1, half year 2 net profit benefited from the further cost pass-through actions we have taken.

Let me go into more details. Starting with leverage. We delivered major progress in the second half of the year, enabled by our working capital actions, which I will talk more about in the next slide. Back in half year 1, we saw a step-up to 6.5x net debt over EBITDA as higher prices during the peak harvest meant that we needed to finance significantly higher inventory value.

For the full year, our intentional actions enabled us to land at 4.5x leverage, significantly progressing towards our ambition of being below 3.5x by the end of fiscal '26.

Our leverage adjusted for cocoa beans or RMI is actually today at 2.7x. But in fact, if we also adjust it for cocoa inventories as well as beans, so only cocoa, not even excluding chocolate and other stocks, our adjusted leverage is below 1x. But actually, you can see that on the right-hand side of this slide, and it's important to realize that our net debt of CHF 4.3 billion is actually fully backed by high-quality inventory at CHF 4.7 billion value.

When it comes to reducing our net debt going forward, we have very intentionally established a balanced debt maturity profile with around CHF 700 million falling due in the next 5 years on average every year, enabling repayments with our strong liquidity position.

So going through those working capital actions in more detail. We have been diversifying our sourcing with increased purchases from origins like Brazil and Ecuador, which do have significantly shorter cash cycles and reduce our forward contracting. This goes hand-in-hand with our actions to step up our bean blending capabilities so that we can optimize recipes for our customers.

Next to that, we've also been optimizing our purchase timing and inventory levels and reducing forward contracting, for example, when it comes to safety stocks, where we have been somewhat overcautious in the past. At the same time, we also took action to enhance the flexibility of our financing options with the introduction of a letter of credit facility last August.

And this allows us to replace futures margin call cash outflows with a letter of credit, benefiting from both liquidity and agility in volatile times. It delivered 200 million operational cash inflow now, but it's especially an important buffer in case of potential future bean spikes and volatility.

The next level focus on improved planning and logistics processes with better end-to-end coordination also had an important impact on our inventories. And finally, of course, the increase of EBITDA is also contributing to our good progress on the leverage through the pricing through of the higher cost of capital, delivery of the next level savings and prioritizing higher return segments within Global Cocoa.

So what does that mean for free cash flow? Free cash flow declined by CHF 312 million for the fiscal year with a return to a strong cash inflow of CHF 1.8 billion in half year 2. When we look there at the moving parts, let's maybe start with the brown box, which is the cocoa bean price impact. This had a negative CHF 1.1 billion cash impact for the year with CHF 664 million positive inflow in half year 2.

The bean price did close at a similar level at year-end versus the start of the year, which was around GBP 5,300, but with much higher prices, of course, and higher volatility during the year. We saw a negative impact from the bean price for the fiscal year still for two reasons: one, liquidity swaps; and two, some phasing.

Now as you might remember, in fiscal '23, '24, we had taken significant liquidity swaps to better allocate our cash flows to our business cycle. And this has postponed margin call payments in the range of several hundreds of million Swiss francs into fiscal '24, '25, so this fiscal year. And this has been the main driver of this.

Secondly, also our long cycle of business between the bean contracting and the customer sales and given the much higher prices a few months ago, there's also a bit of a phasing impact when the bean price comes down. So we do expect some further benefit to come if the bean price, of course, stays stable at a lower level.

Moving to the green boxes, which is the operational free cash flow. We see here a positive contribution of CHF 1.2 billion for the fiscal year, of which CHF 1.4 billion in the second half of the year. Here, we see the major operational benefits from the next level actions on working capital reduction and financing flexibility that I just described in the previous page.

Finally, looking at the yellow box, we invested 388 million for the fiscal year behind investment in CapEx and we see next level. Looking ahead with all of this, given the harvest timing and a typical H1, H2 cash trajectory profile, half year 1 of this fiscal year, the coming fiscal year is expected to see negative free cash flow before we see further strong progress in half year 2.

Moving to the market disruption now that we have seen over the past years. I will only talk briefly here as Peter will also go into more detail. But we all know, of course, that the bean prices have increased significantly in the first half of the year. In response to that, the strength of our cost-plus business model allowed us to successfully pass these higher prices through to our customers, driving 56% pricing for the fiscal year and even higher at 85% on our cocoa business.

We saw our peak pricing in quarter 2, with pricing remaining high though in half year 2, but a bit lower sequentially. At the same time, it does take our customers some time to price through to the end consumer. So we have been impacted by a challenging B2B market as they manage the transition and adjust to the higher prices.

And in particular, our customers have been reducing pack sizes and reformulating in some cases, certainly also adjusting their stock levels and their forward cover, calling off orders sometimes later. And finally, a few of our very large customers who also produce chocolate in-house have been prioritizing capacity as they saw temporarily lower demand.

Nevertheless, our customers have also taken significant pricing with Nielsen data showing chocolate prices in the market that are around 30% higher than what they were before the bean price increased.

Within the next few months then, we know that it will still be challenging, but we do expect market dynamics to improve because of this and also given the recent decline that we've seen in the bean price. We, therefore, expect our customers to take only limited further pricing, and we have seen customers willing again to contract further out in light of these lowering prices.

On top of the market dynamics, there's also been a number of BC-specific factors for the decisive actions we took in this environment. In Global Cocoa, we sharpened our return focus to prioritize volumes within cocoa and also towards chocolate, where we see the higher returns in the context of higher bean prices and our deleverage agenda. The impact is expected to continue into half year 1 of fiscal '26.

In North America, the intervention in our Toluca, Mexico factory at the start of the fiscal year saw a residual impact as we worked through all of that to get customers back and requalified. And finally, our SKU rationalization efforts, which are now complete, impacted volumes for Gourmet, especially in Western Europe.

At the same time, we did focus our strategic direction on the growth platforms, which have shown resilience. Cacao coatings, which we used to call our compound business saw positive growth overall, particularly driven by high single-digit growth in Western Europe and double-digit growth in Latin America, where we have supported our customers with innovation and reformulation.

In Specialties, we saw particularly strong growth in our inclusions business. And finally, in EMEA, the region was impacted by the China microclimate, but we saw double-digit growth in key geographies like India, Indonesia and the Middle East, supported by innovations, our actions to delayer our route to market and portfolio segmentation.

These market dynamics have led to 5.3% decline in chocolate volumes. And for the group, we saw a decline of 6.8%. So the group decreased more than chocolate as Global Cocoa declined by 12.8% with a strong impact from the negative market demand to the higher prices on the one side, but also due to the prioritization reasons that I outlined before.

I will, therefore, focus this slide on Global Chocolate first by region and then by segment. Starting by the regions to the left of the page, Western Europe saw a 6.6% volume drop as the demand there continue to be impacted by higher prices and the knock-on effects of all of that on customer behavior as well as some effect of SKU rationalization.

Central Eastern Europe declined by 4.4% with a very challenging customer environment, particularly for food manufacturers that are local. North America saw a decrease of 6.7% as new customer wins were offset by the difficult market environment and the impact of the Toluca intervention I talked about. Latin America saw a strong growth of plus 6%, driven by innovative customer solutions, particularly for cacao coatings, again, compound. And finally, EMEA saw slightly negative growth as the demand pressures in China and the developed markets offset the double-digit growth I just discussed for India, Indonesia and the Middle East.

By segment, to the right of the page, Gourmet has been more resilient as growth in EMEA, Latin America and CEE was offset by the challenging environment we saw on that in Western Europe and North America, again, here impacted by the SKU reduction and the Toluca intervention. Meanwhile, the Food Manufacturers segment was impacted by customer behavior shifts in this context of volatility and significantly higher prices as we've seen across the whole market and as I talked about earlier.

Moving to profits. And first, recurring EBIT. Later, I'll talk about net profit. Recurring EBIT was CHF 703 million, increasing by 6.4% in constant currencies. Looking at it per tonne, we saw a 14% increase, showing that the impact from the lower volumes was significant. Now EBIT benefited from mix as the higher profit segments like gourmet specialties and cacao coatings saw better growth than the overall group. Importantly also, the cost-plus model enabled us to successfully pass on the higher financing costs of this high bean price environment with a strong improvement in pass-through in half year 2 after some gaps we had seen in half year 1 as it does require time in a forward selling business to pass this through.

Third, delivery of the BC Next Level cost savings also benefited EBIT. At the same time, we've also seen a number of offsetting costs, some temporary, some structural. In particularly, unprecedented market disruption costs, especially in half year 1, such as the impact of steep backwardation on rolling costs and high market prices that are raising carry cost of our inventories.

These already improved significantly in half year 2. Also, we saw an impact of the lower volumes on the fixed cost base and inflation. And finally, we made some structural investments in customer experience and internal capabilities. For example, digital investments, supply chain investments such as enhancing our bean blending flexibility and capabilities, people investments and some other cost inflations, partly due to the cocoa environment like higher insurance costs on the much higher value of the beans that we are transporting around.

Closing this section on recurring net profit. Net profit was at CHF 250 million or CHF 267 million at constant currency, down 36% in local currencies. However, it's very important to distinguish between half year 1 performance of minus 69% and half year 2 performance, which was flat versus last year.

Half year 1 net profit was heavily impacted by the speed and the magnitude of the bean price increase and the corresponding working capital impact and the time it takes to fully pass through this higher cost in a forward selling business.

Half year 2, however, we did see a strong improvement to being flat versus last year, showing the strength of our actions with around 3% profit generation versus half year 1, driven by further actions to price through higher cost of financing, our cost of financing increased sharply to -- with 170 million year-on-year in sync with the higher working capital needs that we had throughout the year and the additional funding we raised for that. And we took actions to price through those financing costs, which further took effect in half year 2.

Second, a bit of market stabilization with significant easing of the backwardation in the cocoa market. And this means that the gap between the near term, the more expensive prices has been narrowing versus the long-term less expensive prices. So that has been helping in half year 2. And third, the impact of our end-to-end value chain projects and planning improvements.

With that, I will hand over back to Peter, who will talk more about the actions that we take to enhance the resilience of BC and make us an even stronger leader in this industry.

Thank you very much, Peter. So the last 2 years have been, in many ways, unprecedented. The market environment has radically changed. The entire industry was disrupted. Today's full year results presentation provides an opportunity for us to reflect about what we've done and about the journey ahead of us.

So looking back, how we have been delivering BC Next Level while taking decisive actions in a radically changing environment. And looking ahead, how we are pulling all levers to deleverage and decouple from the bean price while enabling growth and returns. So let's dive in.

So BC has seen unprecedented time over the past 2 years. We are unlocking our full potential with BC Next Level by progressing relentlessly to weather the new normal. We've launched our strategic investment program, BC Next Level 2 years ago. We are advancing Barry Callebaut to become the trusted adviser of our customers, best value, best service, best sustainability and food safety and quality with the goal of creating a better customer experience, a better scaling Barry Callebaut and a onetime cost improvement of 250 million.

As you know, due to the disruption and bean crisis and also the tariff situation in North America, we announced a delay by 12 months. Now let me be clear. BC Next Level is delivering. More than 30 initiatives are hardwired, way more than halfway through. But unfortunately, due to these external shocks, the savings uplift will only be visible in the bottom line later.

We have achieved a lot since we have started our journey 2 years ago. We've talked about the BC Next Level transformation during our results presentation about our new operating model, our footprint optimization, the SKU reduction to name a few topics shared so far. But BC Next Level is much more than this. It is a strategic investment program with 36 initiatives that bring tangible benefits to Barry Callebaut and importantly, our customers.

Now we won't have time to look at all of the 36 initiatives today. I want to focus on a few to illustrate the benefits that BC Next Level brings to BC and our customers. Before we go there, I want to thank our teams in Barry Callebaut who have worked tirelessly to get us where we are today. Thank you very much.

Starting with food safety, a cornerstone of our business. We have elevated food safety to the next level and installed 3 fire lines for safety to provide certainty to our customers at all times. One, full product testing before releases, 100% positive release; two, rigorous supplier compliance; and three, investments into technology and factory design. A great example are the auto samplers we have been installing, precise, repetitive and efficient sampling for best results. All of this is part of our larger food safety agenda.

As part of Next Level, we've done many things to improve our supply chain performance. I want to share 2 examples today. The first one that you see on the page right now, we have introduced real-time track and trace for all our road shipments in Europe and North America. We are testing this as we speak and will soon be ready to have everything at our customer fingertips.

Customers will know when their order is ready, when it leaves our factory, when it arrives at their factory, if there is any delays. On time, in full, in spec and quality delivery is a critical part of our customer journey. The benefits are obvious. With a similar intent, we've launched Ocean Edge with DHL to give end-to-end visibility on our ocean freight. We've massively improved ocean shipments with efficiency benefits, detailed tracking, centralized document repository. BC Next Level is a key enabler for a more scalable Barry Callebaut.

The next example I want to give is our new factory operating system, BCOS, a milestone in Barry Callebaut's history, a global standardized way of working to be established in all our factories. 29 locations are going live by the end of this year. We see remarkable results in a factory where we have already introduced BCOS so far. The training and the mindset shift enabled a 20% more efficient production on a 6-month period across the lines that started first. This is huge and the benefits will be coming in the future.

All our new factories like Brantford in Canada and Neemrana in India that we've started up this fiscal year are starting with BCOS from day 1 with all its benefits. BCOS is a backbone to create a better scaling Barry Callebaut for the future.

The next example is our global business services that now operates from our 4 hubs: Lódz in Poland, Hyderabad in India, Monterrey in Mexico and Kuala Lumpur, 24/7 capabilities around the globe. All four hubs are fully up and operational. Lódz and Hyderabad drive global processes, Monterrey and Kuala Lumpur support regional operations.

GBS brings significant benefits and efficiency benefits for Barry Callebaut. But importantly, it is also the base for better, more consistent service to our customers around the globe. Integrated processes, standardized workflows, end-to-end process ownership, clear benefits for BC and for our customers.

And the last example for today, and we're only covering a fraction of the BC Next Level programs. If you haven't realized by now, our annual report and this presentation looks slightly different. We've launched Masters of Taste as our new brand purpose with our global power brand Callebaut. It underscores our deep commitment to be #1 trusted adviser for our customers.

As you know, taste is by far the most important purchase driver in the chocolate industry, confirmed by 84% consumers globally. This brand purpose for us brings all of Barry Callebaut employees and our partners together and helps to drive a stronger value perception with our 15,000 customers globally, especially in the Gourmet segment.

As earlier and shortly after announcing BC Next Level, the cocoa crisis hit the industry. For decades, cocoa and chocolate prices have been comparatively stable with relatively low volatility. We all know what happened over the past 2 years. The first price spike in '24, making chocolate 3x more expensive within 4 months, a second spike in '25. Today, we're still 2x higher compared to historic levels.

This unprecedented situation on bean price, volatility and supply introduced challenges and require decisive action. We needed to tackle a lot of challenges resulting from the high and volatile bean prices and the more difficult supply situation. Increased working capital requirements to fund the inventories, rapidly increasing our leverage as well, changes in customer behavior, more short-term bookings, delayed call off, a lot of conversations with customers not used to such rapid changes in prices.

Challenges for the industry to source the beans from the right origins and the right quality. Demand and supply forecasting challenges in uncertain environment with ripple effects throughout the entire value chain, a lot in parallel, and we have been addressing it.

We have acted swiftly and decisively, including by deciding to push forward with BC Next Level. To address the bean price volatility, we installed cross-functional task forces to effectively respond to the temporary price spikes, clear action plans in rapidly changing market conditions.

I would say it brought all of Barry Callebaut closer together as a team. The level of collaboration across cacao, chocolate and the different departments is probably the highest it has ever been. As a joint team, we've secured the right financing for this environment, including the 2 billion of bond issuance in January and February '25, less cash-consuming solutions for daily market volatility as explained by Peter earlier.

But also lots of actions to secure the bean supply. We quickly diversified and expanded our traditionally more Ivory Coast and Ghana-focused origin mix. We drastically reduced our bean and produced stock inventory through various measures to minimize working capital needs. And we have a clear plan what needs to happen in the future to make Barry Callebaut even more resilient.

Let's look ahead. The focus forward is clear: deleverage and return to growth. Before we get into it, I want to provide an outlook on the cacao market. Our views differ short term versus long term. Short term, in other words, for the upcoming crop cycle over the next 6 months, we are cautiously optimistic on supply. It is expected to be broadly similar to this past year, likely a slight decrease in West African crops to be offset by growth in the other origins. Cacao prices at 2-year lows, also positive, but the volatility remains structurally higher than before the crisis and customers are all still adjusting to the changing environment. So temporary price spikes are not out of the question yet.

Long term, structural challenges remain for the industry to solve, climate change, diseases, farming conditions. We are leading the industry to secure supply, and I will share more details in a minute. The main message I want to leave with you, we are preparing Barry Callebaut to weather higher prices and volatility for longer while working to decouple the business from bean price fluctuations.

Let's get into the crop. Prices. We've all observed the recent significant drop in cacao prices. Three topics I want to highlight. One, the cacao terminal market is now below GBP 5,000, a level we believe our customers have largely priced through in retail. That's good. Short term, the market seems to have found a price that works for farmers, processors, our customers and consumers. Too early to tell, but cautiously positive to see.

Two, for the first time in 2 years, the forward curve is flat. You pay the same for cacao delivered in December of this year and December of next year. This is very important. It incentivizes our customers to book rather than wait for lower prices in the future. It also reduces rolling costs associated with hedging significantly. The flat curve is good news. Three, volatility has reduced, but it is likely here to stay, which brings us to the next slide.

Volatility. Looking at the daily change in cacao prices, let us think in before '24, cacao prices changed around [indiscernible] changes on a daily basis. This is unprecedented in terms of speed of change. Volatility has come down, yes, but we continue to observe strong reactions around selected news and [indiscernible].

To be resilient in this environment and to protect us. Volatility is likely here to stay, and we are prepared for it. Our quarterly pricing, which is tied to cacao prices, of course, has peaked in quarter 2, '24, '25. Nielsen quarterly pricing, the sellout data is only now starting to stabilize, in line with a typical 3 to 6 months B2B to retail delay we see in the industry.

We believe customers and consumers are adjusting to the new normal. Consumers' appetite for chocolate remains strong. It is the #1 preferred consumer flavor by distance. Customers, we believe, have largely priced through the current terminal market levels, and we are proactively collaborating with them on recipe optimizations, new product launches and other efforts. Short term, our customers will still continue to navigate consumer readjustments on a case-by-case basis, but we believe we are through the worst as an industry.

Let me also say, chocolate has been far too cheap for far too long. We believe actions are required to ensure long-term supply of our beloved cacao. As I said in the beginning, the long-term structural challenges are not resolved. A significant part of today's cacao supply is at risk due to climate change and disease. We are tackling this proactively, and we are leading the industry to ensure a predictable long-term supply across four areas with ingredient innovation.

Mid-July '25, we announced our partnership with the Zurich University of Applied Sciences to explore cacao cell culture technology. And today, we are pleased to announce a long-term commercial partnership with Planet A Foods. More on a few slides, 2 examples amongst many taken to deliver new chocolate experiences with less or no cacao content.

Through our sustainability program supporting the leading consumer goods companies of the world, the scale of these programs is massive and by far the largest in the industry. I want to use the opportunity to reiterate that we are ready for EUDR. We are supportive of the legislation. It is important to give the entire industry a level playing field. We are ready for -- at Barry Callebaut for our customers, and we believe traceability is the right thing to do. And we are also driving investments into small order farming and large-scale high-tech farming.

So how are we progressing with our Future Farming Initiative? Our Future Farming Initiative is designed to modernize sustainable cacao farming at scale, a catalyst to the industry to invest in farming. Under the leadership of Steven Retzlaff, who led over 2 decades our Global Cacao business, we are going forward, and we are having good news on that side. Many elements are in place to scale the future of farming. The team is making strong progress.

We've built a team of industry-leading experts working tirelessly. We have the largest nursery established in Brazil, two farms to test and improve farming methods, and we're driving productivity investments such as our AI-based cacao port harvesting robot. We've also identified a funnel of properties that fit our criteria for large-scale cocoa farming. Advanced discussions with partners and landowners to put funding and scaling models are in place. So the ingredients to really unlock the future farming opportunity are here today. The team is now working on executing the plan.

So talking about our long-term priorities. We remain focused on our four strategic growth priorities and continue to drive improvements in execution. A few thoughts how we are progressing on each of them. One, deeper partnerships. We are the trusted partner of choice for innovation and reformulation. Customers are looking towards us to provide our solutions or our new commercial centers of excellence are driving capabilities and impact while our new customer segmentation allows us to be more tailored in our service offering.

Since the cacao crisis, outsourcing was not the top priority on our customers' agenda. Today, we are making progress nicely on some larger opportunities for the future. We remain bullish on outsourcing as a key enabler to strengthen our strategic partnerships and by more deeply interlinking our supply chain to bring benefits of our scale to our customers.

Two, as shared, we've launched Callebaut Masters of Taste. We also successfully launched our pilot direct-to-consumer web shops in Germany and Austria for our Gourmet business and launched our digital Callebaut Academy.

Three, we are continuing to improve the scalability of our specialty offering through a more focused portfolio, accelerating innovation in cacao coatings and expecting and expanding into non-cacao solution and experiences.

Four, we continue to see a huge opportunity in getting to fair share in EMEA with China completely untapped. The team is progressing nicely in key markets as evidenced in the numbers that Peter has shared with you earlier. We are preparing for a return to growth to innovate, lead and grow.

Our Net Promoter Score that our customers have given us has increased significantly compared to last year, a great step towards the ambition of delivering best customer experience. This increase is driven by a few factors. Our customers especially highlight our product quality, the effective solution advisory, our understanding of their business needs and the breadth of our portfolio. This is our ambition, being the trusted adviser to our customers. Great to see the progress on customer experience.

We have in Barry Callebaut chocolate solutions for any customer needs from cacao products to decorations and inclusions. Our ambition is clear, leading in chocolate, growing in cacao coatings and launching non-cacao. I spend -- I want to spend a bit more time on 2 of them, cacao coatings previously named compounds and non-cacao solutions, and we will go a little bit more into these exciting news.

There are many reasons to accelerate our growth in cacao coatings or as we call them before, compounds. It is very high on any customer's innovation agenda right now, and it makes financially sense. Lower capital intensity than chocolate, you need less beans per ton of product, higher returns than chocolate with attractive profitability, higher growth than chocolate driven by current cacao price dynamics and push into reformulations.

You see this reflected in our numbers. Cacao coatings is outperforming chocolate in most regions. I want to call out Western Europe, in particular, the largest chocolate region in the world, where we see promising growth in cacao coatings. While our global chocolate business overall has declined, cacao coatings have grown substantially in many regions, if I may add. More to come. We are continuing to invest in this exciting category, and this brings me to another exciting news to share.

Earlier today, we have announced our commercial long-term partnership with Planet A Food, the German food tech innovator behind ChoViva. This partnership marks a key milestone in diversifying our portfolio and capturing the exciting opportunities in chocolate alternatives without cacao. It is also exemplary in how we innovate, lead and grow by embracing technology to open further avenues for growth while enhancing our resilience to today's cacao market volatility.

Let me be clear, these non-cacao innovations are not meant to replace traditional chocolate, but to complement them, expanding our portfolio to keep -- to meet growing customer and consumer demand. Together with the team at Planet A Food and its motivating founders, Sarah and Max, we can scale the production of irresistible chocolate-like creations that broaden choice without compromising on taste, quality and our commitment to the planet.

So let me zoom out again. We are well on our way with many strategic actions spanning our entire value chain to make Barry Callebaut less bean price dependent and drive growth. The goal is simple: deleverage, decouple from bean price, enable growth. This is guiding our actions throughout the organization. We are increasing our financial agility, solutions that breathe with the bean price and consume less cash. We are reorienting the purpose of cacao with a clear focus on ROIC targets for the third-party sales.

We're driving a step change in digitization and analytic capabilities. We have improvements in sourcing, as discussed previously, and conscious decisions on product and geographic portfolio to drive growth. Many new products are requiring less working capital. We've improved our operations already significantly, reducing transport time, improved visibility on stock levels, better end-to-end collaboration across cacao and chocolate, all to capture incremental value across our value chain. Our ambition is clear: deleverage, decouple from the bean price and enable consistent profitable growth.

So with that, we're moving to the outlook for the year ahead. While we've seen a stabilization in cacao bean prices, it is clear that we are still operating in a challenging environment. Our customers and the entire industry are still digesting cacao prices 2x above historic levels and the ongoing B2B efforts of that will remain pronounced, particularly in the first half of this fiscal.

Our working assumption is for a bean price in and around GBP 5,000 with continued volatility, albeit at lower levels than last year. While we've taken steps to enhance our resilience to temporary cacao bean price spikes, of course, if this were to happen, it would have an impact on our delivery of '25-'26.

As you know, the largest impact of our cacao bean prices on cash and leverage with a likely knock-on impact on volumes and profit as our customers are likely delaying orders and adjusting their purchase behavior as we saw last year as well as further prioritization in Global Cocoa.

When it comes to guidance, our clear focus is to deleverage below 3.5x and prepare for a return to growth. H1 '25, '26 is expected to remain challenged as customers and consumers continue to manage higher prices, while we aim for improvements in H2. On volume, global chocolate is expected to see mid-single-digit volume decrease. With a focus on ROIC in global cacao, this will result in mid- to high single-digit volume decrease in Global Cocoa.

As a consequence, we see group volume is expected to see mid-single-digit decrease related to bean price developments impacting global cacao return prioritization. In particularly, while we don't typically provide guidance by quarter, we wanted to be transparent and proactive share what we expect as a significant volume decrease in Q1. The key reason relates to North America, where we temporarily paused our production site in Saint-Hyacinthe in Canada due to a technical malfunction with one piece of our roasting equipment.

The factory is a significant contributor to the overall North America production was closed for around 3 weeks. The site is back up running. And while we are doing everything possible to deliver our customer orders as soon as possible, this will have an impact on H1 performance for North America. We've agreed with the Board to invest in a new facility in the United States as well as taking significant upgrade investments in existing network. This decision earlier this year comes with a delay following more clarity on the tariff situation.

On profit, we expect low to mid-single-digit growth in EBIT recurring and double-digit growth in profit before tax recurring, both in local currencies. These are on a recurring base and exclude remaining BC Next Level onetime OpEx investments of around CHF 60 million to be spent on digital and on growth initiatives. So to conclude with three clear focus areas for us this fiscal year.

First, deleverage to less than 3.5x net debt to EBITDA and delivering strong cash generation. Second, prepare for a return to growth with a clear focus on customer experience, competitiveness and unlocking new solutions for our customers, leading in chocolate, growing in cacao coatings and launching non-cacao solutions.

We will be third, relentlessly addressing optimization opportunities for this new bean price and quality environment. So with that, we are building an even stronger leader, and we are confident that Barry Callebaut can win in the new market reality.

Thank you very much for listening. We will now move to the Q&A session, and I will hand over to the moderator to start the Q&A. Thank you.

[Operator Instructions] Our first question is from Jörn Iffert from UBS.

Two as guided. The first one would be, please, on your volume outlook being down mid-single digit in fiscal year 2026. I mean, don't you expect that as you also highlighted, the GBP 5,000 COGS impact on the beans is worked through. We are maybe even entering a deflationary environment in chocolate going to 2026 or at least incremental price will be quite limited.

So why do you expect to underperform the global chocolate market volume growth again in 2026? Is there anything on in-sourcing happening? Is there anything where you see ongoing SKU rationalization on customers? Have you lost the customer? This would be the first question.

And the second question on the cost savings, can you please remind us what is the total aggregated net saving run rate we have seen now in fiscal year '25 in the EBIT? And what are the incremental net saving benefits in fiscal year '26 and then also '27?

Yes, first from my side, thank you very much for your questions. Let me just come back to your first question, which was on volume. Look, I think, as you know, we are a forward-looking business. And as we've just shared, we obviously continue to look very closely at what customers are doing.

We believe, as per our information that our customers have about price through 30% of the price point that we see today. However, there's still discussions and we see still discussions happening between our customers and the retailers as they -- or the end customers as they bring the products into the market.

So that is one of the elements why we're cautiously positive on it, but we have to recognize that we're coming from a low run rate there. The second thing that we have informed you about is the incidents that we had in the Saint-Hyacinthe facility in Canada that obviously had an impact and that we are having behind us, but that obviously will impact the first half year outlook on the business.

The second question that you've asked on -- Next Level synergies. Let me tell you that we've had in the end of the fiscal year '25, about 60% in the numbers and about 70% hardwired for synergies going forward. So progress in line with what we had set out on the agenda there. But as we've explained to you earlier, we have other cost elements that we have to address, and there's a whole array of task forces underway to deal with the new bean price and bean quality environment as we speak.

Our next question is from Jon Cox at Kepler Cheuvreux.

A couple of questions for you. One a point of clarity. i.e., I'm trying to ask another two on top. This Saint-Hyacinthe in Quebec facility closure, that is your biggest facility in North America. Am I right thinking it's like 300,000, 400,000 tonnes capacity? You said it's just closed for a few weeks and you lost some customers.

Can you just elaborate a little bit on that? I'm just trying to parse out what the impact of this thing will be on the guidance for the year. Second question, just to come back on the cost savings. Your EBIT level recurring is the same as it was last year. And I know there's a load of different things going on, but we're not even 10% above we were in terms of recurring EBIT from when you actually started this program.

I'm just trying to get a handle on how much is gone in FX. I'm guessing half of it is gone. So that 187 net EBIT gain we should have expected over 3 years now to 4 years is probably half of that amount. And as part of that, what should we see, because we can see EBIT per tonne is improving. Is it just a matter of seeing that volume growth even when it does improve, we're going to see a big step-up in EBIT growth because you're saying that eventually, it will be shown in the bottom line, but we're just not seeing it at all.

So that's a sort of broader cost savings and final impact. And then just lastly, on the financials line, we had a minus CHF 370 million there, you're talking about CHF 700 million of debt falling due, which is maybe 20% of the debt, which you've sort of used as part of this problems with the balance sheet. Why can't we expect that financials line, the net financials to come down by 20% per year over the next couple of years?

It just -- it's sort of like -- it's a big balloon on that net financials and probably going to contribute to pretty high EPS cuts on FY '26 because it just doesn't seem to be moving down much, even though your efforts on deleveraging are far better than expected in H2.

Thank you, Jon. Thanks for the questions. Let me take the first one. So the St-Hy impact has been an impact that was driven by an equipment that shut down one of our roasting facilities. You're right, it's one of the big factories, especially also for the cocoa that goes into North America. So there's a triple effect that we actually see from that. For me, the important aspect is that we have concluded with the Board to invest significantly in the North America network to bring it to the same performance level that we expect to have in reliability. And combined with the work on BCOS, we were confident that we actually will make the improvements needed for that facility.

This incident has been with us for about 3 weeks. It's a proactive activity that we have done. And obviously, there's a trickle-on effect for our North American customers. Look, we want volume back from any of those incidences that we had from the decision we took in Toluca last year, the same situation here. It's extremely painful. But as I said in my introduction, we have a clear obligation to our customers when it comes to quality, performance, reliability, and that's the rigor that we're putting into Barry Callebaut's new product supply infrastructure to really go forward.

So it's a lot of work that actually is impacted there and that we're doing. I'm thrilled to see that we have approval from the Board to build a new facility in the United States as well as to upgrade significantly the network across North America as we speak.

Yes. And I'll take your next two questions, Jon, on the -- first of all, you're talking about EBIT and the savings. I wasn't really sure you talk about backward or forward, but let me give the overall picture. EBIT has gone up indeed by 6% over the last year. We talked about the moving parts just now in the presentation. There's a positive about the mix for sure. There's positive about passing on those financing costs, right, throughout the year.

There's positive about Next Level savings rolling in, as Peter was talking about. But there is important offsets as well, which are linked to the disruption that we see in the market. Some of them being temporary because we need to price much faster, much more frequently pricing teams in place to do that.

Some of them also a bit more structural, which is really about part of the backwardation costs that we're carrying that were very high, carry costs that are higher, some investment in capabilities like digital insurance costs. There's a lot of offsetting costs as well that have been not making it see as much as you would have seen and we would have seen in the EBIT otherwise.

You asked about ForEx. We had a 45 million ForEx impact. If you then look at the reported, right? We had a 45 million impact indeed last year canceled out with the ForEx and the strengthening of the Swiss francs. We do expect another CHF 15 million on that next year, especially driven by the Turkish lira and the U.S. dollar. So also next year, we'll have smaller, but also as it looks now, a CHF 15 million impact on the ForEx.

So that's what played on that line. And then your last question was about financing costs and the pass on and especially the level, I think you asked. Yes, we landed the year at 377 million finance cost, which is obviously a big increase versus last year, an increase of about 170 million. Very much linked, obviously, to the bean price that spiked and the fact that we then, of course, had to finance this.

There's a lot about the value of the inventories, as I explained in the presentation. So we did the two bond issuances in early this calendar year, which obviously played a big role. That's a step-up that we are seeing. Next year, we will have lower levels. Actually, H2 has been lower than H1 last year already despite this funding of the two instruments in the beginning of the year because we already -- we're working on some of those levers that we've explained in the presentation.

And I think that's the positive news, right, that we are building on the operational sourcing and financial agility to bring back our working capital, which allows us to bring back our financing costs. So for next year, we do expect to be at least 40 million lower than where we've been reporting finance costs this year.

We stay in a very volatile period. We are -- we have the harvest -- the peak harvest coming up, so we need to be a bit prudent. The good news is that we're making this good progress on working capital. The other good news is that we have maturities of 700 million every single year for the next year. So it allows us to pay back debt that we don't think is we need to hold.

We are doing that already. We pay -- we are reducing commercial paper. We paid back some bilaterals. So we're certainly going to push on that lever as much as again, the bean price environment and the working capital progress is allowing us.

Our next question is from Alex Sloane at Barclays.

Some follow-ups. Just in terms of the volume outlook, I appreciate you haven't sort of quantified the impact of this incident. But I mean, in terms of the phasing of that mid-single-digit decline through the year, would you expect to be in positive growth in the second half of the year? And then secondly, if I can just come back just on -- in terms of -- there's a lot of moving parts on the next level.

But in terms of the CHF 187 million kind of net impact that you're targeting to the bottom line, could you maybe spell out sort of how much of that you actually think will have landed and be visible in fiscal '26? And how much of it will have landed and be visible in fiscal '27 at this point just in terms of sort of how much more is to come because I'm a little bit confused on the moving parts there.

Yes. Thanks, Alex, for your question. Let me just start on volume with a different focus. I think we need to be very clear that we're driving volume growth in the chocolate solutions, which is chocolate is our global chocolate, and we are focusing on that.

As we've said in the outlook, we will have a tough quarter 1 start, and we are seeing H1 to be down. We hope to recover that quite a bit in H2. And that's, I think, the key message that lands us into the outlook that we've given to you on global chocolate mid-single-digit decrease for the fiscal year.

When you look at cacao, then we have guided you that we're focusing the cacao on the core KPI to be ROIC. And for us, that is very important to understand, specifically when it comes to liquor and to butter sales to third party. That obviously correlates with leverage and our objective to decrease our leverage, and that needs to be the #1 priority. So we're focusing Global Cocoa third party on ROIC, which will then result at current bean prices of 5,000 as we have assumed, to a decrease of mid- to single high digits.

As I've explained earlier, when we see the bean price change and just looking back 1 year, you will remember that from the 1st of November '24 to the end of November '24, we literally had seen a doubling in bean price just in 30 days. That obviously has a big implication, and that's why we're giving the guidance in a distinct difference between chocolate, where we will clearly focus on regaining market share and volume. And on the other side, on Global Cocoa, where we'll focus on ROIC in order to manage our leverage -- deleverage objectives.

Yes. And Alex, on your question on the Next Level savings and then the total EBIT, again, and I'll try to be a bit more specific, right? The individual projects that we're delivering on Next Level, as Peter also mentioned, they are delivering, and we do get those savings on, let's say, GBS. We moved all these people in shared service centers. So there's certainly labor arbitrage element, which is straight into the pocket.

There's the factory closures that obviously also help directly. So it's undoubtable that these savings are landing in the P&L as such. But at the same time, we do have significant costs about disruption -- the disruption, the bean quality has worsened, which means that leads to higher cost in our factories. We need to manage higher volatility over the last year that led to our impact on our cost, which means that net, you didn't see the effect.

If we look forward specifically, we will do two things, right? We will continue to deliver and some of it will now roll of those savings of the individual projects into the fiscal year. At the same time, we will be focused on building down some of those temporary disruption costs that I've been talking about.

Order of magnitude, I think you can talk about, about CHF 100 million that will be contributing to the P&L next year. But again, it's a combination of delivering the project as such and managing the cost of disruption down in parallel.

Our next question is from Edward Hockin at JPMorgan.

I've got two, please. One quick one is embedded within your volumes guidance for the coming fiscal year, can you tell us what assumption you're making on the end market volumes, so versus that minus 3.5% that the market declined by in FY '25, what you expect for '26?

And my second question, please, is on the free cash flow building blocks. So if I'm looking at Slide 8 in the presentation. Can you maybe talk about FY 2026, how some of these moving parts should evolve to the operational free cash flow? Should we think of this 1.1 billion, 1.2 billion as a new steady-state level? To what degree should the bean price free cash flow turn positive? And just remind us of CapEx plans, what kind of level we should be expecting for FY '26?

Thank you, Edward, for your question. On the volume guidance, and specifically, when we look at the end consumer market, we continue to be very positive that chocolate will remain the #1 ingredient in any food product globally. It's the key driver for our business.

And as I always say to our employees, we have a great luxury to operate in this business that creates a little happy moment for consumers around the world whenever the sun shines or it's raining. And I think for me, that is the paramount important element here.

We have 2.5 billion consumers entering the market in Asia that now have the opportunity to invest in this category. So great trajectory looking forward. It's a great category, and I'm convinced that we will see stabilization as consumers will also adjust to the higher price points. What we've shared earlier in the presentation is that our customers have in the latest Nielsen report, seen in FMCG, so in what Nielsen really tracks, not Gourmet because that is less covered, actually hardly covered by Nielsen.

We see on the FMCG side that 30% of consumer price has gone up, driven by the chocolate industry. We had guided for that a while ago that, that is roughly by category a little bit different because you always have more or less chocolate on the product, but that's certain of what we've seen. So we believe that consumer prices have been taken at this point in time to the current bean price level of about EUR 5,000 or less or GBP 5,000 or less. So that's the part there.

So we keep on being hopeful that the category, and convinced that the category going forward will be a great category to invest in. However, as our customers are bringing that price further into the market and especially on the gourmet side, where we operate around the world with many distributors who then actually serve the end customers, the smaller bakeries, the patisserie shops, that obviously is a longer cycle that our customers have to work through.

And that is why we believe there's a disconnect still that needs to happen as in that specific industry, the prices probably have not yet gone completely through. So this is why we are thinking that the guidance that we've given to you is an appropriate guidance on the chocolate business because we think that we believe on the long term very clearly that there's a fantastic category to invest and operate in. And on the other side, we still believe that there is some digestion that needs to happen as the entire industry moves to a 2x price point on its key ingredient, cocoa bean.

And on the second question on the cash flow page in the presentation and looking forward, we are looking at, and obviously, that is needed, because we're deleveraging towards 3.5x at least. We're looking at a positive -- a strong positive free cash next year of about CHF 1 billion in our planning, which is based again on that assumption that we made about 5,000 bean price.

Of course, it fluctuates as you -- we all know very well by now, fluctuates a lot around that. Thanks to continuing to work on those big pillars that help us to make the big step in half year 2, the operational agility, the sourcing agility, the financial agility that helps to bring it down.

So specifically to your questions on those components, we will have -- if you're looking at the page, the yellow part, the investment CapEx and Next Level CapEx will have a number next year, which is similar as what you've seen in fiscal '24, '25 with about CHF 300 million CapEx and CHF 60 million one-off investments that we plan to do in Next Level.

And then the rest will mainly be operational free cash flow progress, which is the green part on the side. There's a little bit still rollover of bean price benefit because we're -- if the bean prices come down and the fact that we're forward selling, there's a bit of the benefit that we still need to come, but that's really the small part of what's remaining. The big part to get to the CHF 1 billion will be operational free cash flow further improvements.

Our next question comes from Tom Sykes at Deutsche Bank.

Just trying to sort of nail down the bridge on getting to EBIT growth. So are you expecting the gross profit to be up on volumes being down mid-single digit? Then on the volume outlook, are you expecting volumes -- what are you expecting to happen to volumes, excluding North America, please?

And then finally on -- just to understand the sort of customer behavior, where do you think inventories are for your largest customers vis-a-vis the, the kind of run rate of demand? Because I guess part of the bull case is that there's potentially a restocking as some of those volumes come back or at least as some demand comes back. But it's difficult to understand where quite the sort of industries or your customers' inventories are relative to the run rate of demand. So if you had any thoughts on that, that would be great, please.

Do you want to take the EBIT?

Yes. Your question on EBIT, I think, was specifically on the gross margin and the moving parts on EBIT for next year. Obviously, the biggest impact on EBIT next year will be the impact of the volume, right? The mid-single-digit negative volume is impacting obviously, on the gross margin line. While there will be a mix positive level because we will have as this year, right, over proportionally growing in those areas, specialties, gourmet, that delivered the better margins.

There will be a plus on Next Level savings, which is somewhat above, somewhat below gross margin and offsetting some of those structural cost disruption costs that I've talked about, reducing those. So those are the four big moving parts. There is one other part, which is the pass on of the financing costs, which also has a play on EBIT. If we have less financing cost to pass on, that might have a mechanical effect on EBIT, which is why we're guiding also on net profit before tax. But really, those are the 3, 4 components that drive the EBIT for next year.

Yes, Tom. And then to your other two questions on volume, let me start there. So obviously, we are impacted in North America quite a bit because of the size of Saint-Hyacinthe, as we discussed before. We do see Europe a bit more stable in that situation compared to North America very clearly, as our motives for the factories have improved significantly across all of Europe.

We are also in significant reformulation activity as I mapped out to go from certain chocolate solutions into the cacao coating side of things. And actually, we're leading with innovation on that, which is -- which we're thrilled by our customers actually coming to Barry Callebaut to ask for those innovations to really make a step change. So that's the positive things that we're seeing on Europe.

On EMEA, excluding China, I want to leave China aside for a second. And LatAm, we are a bit more positive, clearly striving to deliver positive growth on these environments. And in China itself, as we've said many times, chocolate hardly exists. It's a long-term growth opportunity for the industry and for Barry Callebaut, and that's what we're trying to unlock, probably not having a huge impact in this fiscal year on China, but we believe that there's a great opportunity going forward in that aspect.

On inventory, let me just share that one of our Next Level activities is also to have a better understanding of our inventory levels at our top customers, especially on the gourmet side. You can imagine that we have good discussions with our larger accounts where we will soon talk about the G20, more than the GCAs, as historically we've done that make up about 65% of the volume of Barry Callebaut globally.

On that volume, we have good discussions with our customers to understand where they are. They have clearly shortened the inventory cycle significantly as the bean prices spiked last year and going into '25 -- calendar year '25, and they retained at low level. So now the good thing is we see a bit more positive momentum since 3 months ago, the bean price actually came down a bit. So we had a bit of a catch-up in that, and we're excited about it, obviously. And as Peter has shared in his presentation, the forward curve is obviously very attractive to actually book today, right? So that's the aspect there.

On the Gourmet side, our new Next Level capabilities is bringing our top customers in Gourmet, the top distributors in Gourmet to actually allow us to see their inventory levels. We're building that database up. The software has been established. We're now in deep discussions with our customers to have far better visibility on that, and that will give us a far better understanding of the flow-through of products as we have that long supply chain from the beans all the way to the end consumer.

At this time, the Q&A session has now concluded. So I will hand the call back to Peter Feld for closing remarks.

Well, thank you very much for attending our annual results conference today. We're very much looking forward to the individual discussions that we will have with many of you later on. Thank you very much for attending, and I'm handing back to the operator.

Thank you. This concludes today's conference. You may now disconnect from the call.