Elopak ASA Stock

Good morning, and welcome to the second quarter results presentation for Elopak. My name is Christian Gjerde. I'm Head of Treasury and Investor Relations. Today's presentation will be held by our CEO, Bent Axelsen; and our CFO, Ola Buaroy. The presentation will last for around 30 minutes, followed by a Q&A session where the people here in the audience and the people joining online can ask questions. So with that short introduction, welcome, Bent.

Thank you, Christian, and good morning, everybody, in the room and online. Nice to be back after the summer. I'm going to just jump straight into the quarter. This quarter really is marked by the geopolitical uncertainty, the higher raw material costs and changes in the consumer behavior. But I think against this backdrop, we have stayed focused implementing our strategy, but also keeping a tight control of our cost base.

So this quarter is an improvement compared to the softer start of the year. We grew our revenues to EUR 304 million. This is a growth of 4.9% or 5.7% on a constant currency basis. We delivered 8.7% growth on a constant currency basis in America. Despite the tragic and serious incidents with one of our suppliers, which I will come back to later in the presentation.

The revenue growth in EMEA looks to be low, 3.3%, but actually fundamentally is higher because carton and closure grew by 8%. So EMEA is really delivering on the top line this quarter. And altogether, that gives us an adjusted EBITDA of EUR 45 million with a margin of 14.8%. In Q1. In Q1, we started to point out the increasing raw material prices following the Middle East conflict and customer surcharges have been implemented to mitigate this. And these surcharges were implemented during the second quarter.

Based on this performance and our sound balance sheet, the Board has declared a dividend of EUR 0.065 per share for the first half of 2026, which is close to 53% of our normalized net profit and also in line with our dividend policy. And not the least, in this quarter, we also announced Hakon Volldal as our new CEO, and his start will be no later than 1st of January 2027.

Let's take a deeper look at the figures. So we mentioned the 5% growth. The main driver of this growth was the continued ramp-up in Americas, but at a slower rate than desired. If we look at the carton and closure revenue alone in the group, it's 8.4% reported. And we're also happy to report the growth from EMEA with the 8% growth for carton and closures. And this was supported by, I would say, impressive 16% growth in the Roll Fed business coming from onboarding of customers in Poland. And what is relevant to add is that this strong top line performance in EMEA is also supported by attractive phasing in the quarter.

Now if we look at the year-to-date figures with a softer start of the year, that is a growth of 0.4% or close to 3% or 2.9% on a constant currency basis. If we move to EBITDA, the EBITDA is impacted by higher raw material costs following the Middle East conflict because these raw material prices, the price increases, they impacted our P&L sooner than the impact of the customer surcharges. So we expect when we get the surcharges on a run rate basis, a recovery in the second half of the year.

I think the highlight, I would say, of this quarter is that if you look at the second quarter, it's actually 1 percentage point better than Q1 this quarter. So we really demonstrated that we have the ability to deliver this gradual improvement that we communicated in our Q1 earnings call. And this uptick does not come from -- mainly from the price increases in euro, but it really comes from the margin accretive growth in America.

Now if we look at the strategy, the strategy slide we always show. And I think when we look at the world today with the geopolitical and market backdrop, the strategy repackaging tomorrow remains firm with the 3 priorities: realized global growth, strengthen leadership in core and leverage plastic to carton. The largest top line growth comes from the global growth priority. And within global growth, America is by far the most important growth priority. America represents 50% of the targeted growth -- organic growth between '27 and '28. Hence, we think it's important to use this opportunity to give you an update of the tragic accident that happened with one of our suppliers. We will use this section to do a deep dive of that in this quarter.

Now as many of you know, this tragic incident occurred on May 26 at Nippon Dynawave's paper mill in Longview, Washington. This is one of our major suppliers of liquid packaging board in Elopak. The incident has resulted in supply chain constraints in Americas, and we work very decisively to secure supply continuity and minimize the impact in the short term.

Now the lacking pulp production at Nippon will constrain board supply to the market. The board mill operation is currently suspended. However, there are no direct damages to the board machine nor the coating line. We are taking contingency measures. So our supply to our existing customers are secured through Elopak's network of strategic suppliers. We also do tactical inventory management that will be used to manage shorter and temporary shortfalls.

If we look at the longer term, the board capacity remains supportive for growth. I think it's a very important point, and we remain confident in fulfilling supply commitments to our customers. However, the incident has further affected the regional market dynamics in America and in combination with factors that we talked about in the first quarter in the Americas related to plant-based, it will impact the growth in the year ahead in America.

Now insurance and the commercial agreements are expected to cover most of the costs to Elopak. We will continue to work actively with suppliers, customers to manage this situation. And I believe that our growing role as a trusted partner in the American market will help us navigating through this challenge.

I now have the pleasure to introduce Ola Buaroy, our CFO, so -- who will guide you through the financial section. So welcome, Ola.

Thank you very much, Bent, and good morning to everyone. So I'll start giving some more color on the raw material impact following the Middle East conflict. So as previously reported, the conflict has led to higher raw material prices on our unhedged positions. We have seen increases on LDPE. We have seen increases on alu and the same with freight.

In Q2, we implemented customer surcharges to offset the increased input prices. However, due to the time lag from when we started to see the increased raw material prices to when the customer surcharges came into effect, the EMEA profitability is impacted in the second quarter. However, we expect to see the full benefit of the surcharges from Q3 and onwards, which will lead to a recovery.

So moving on to the more underlying performance. EMEA delivered satisfactory top line growth in the quarter with revenue increasing both year-over-year but also quarter-over-quarter. If we look at carton and closure revenue in isolation, we saw a growth of almost 8% in the quarter. And that was mainly driven by higher volumes in both Pure-Pak but also Roll Fed growth in addition to the surcharges already implemented in the second quarter.

We continued to see the positive development within the UHT dairy category in the second quarter. That was a development we started to see also in the Q1 presentation. And I think we also reported on that in Q4 2025 presentation. So we're pleased to see that, that is continuing, and we are growing in our core markets in EMEA, in particular in Germany and Hungary.

On the other hand, the soft -- the somewhat soft ambient juice market continued also in the second quarter. That's a trend we have seen for a while. However, the impact was less severe in the second quarter than what we saw in the first quarter. That's partly a timing thing, but it's also due to the fact that juice consumption is typically picking up around summer season. On Roll Fed, we are pleased to see that we still have the recovery in the second quarter. We reported a recovery in the first quarter after an extended period of Roll Fed volume decline in Europe. So we're pleased to see that recovery and it came through, in particular, our new customers in Poland and also Ukraine.

So moving on to the equipment side, which typically fluctuates somewhat between the quarters. We are reporting a decline on equipment this quarter. That's partly a timing thing as we commissioned fewer machines this quarter. But it also -- we have to remember that we reported a very strong quarter in the second quarter in 2025 on the equipment side. So that's also an important part of the explanation. And the equipment revenue is also the main explanation for why the year-to-date revenue in the segment is declining.

So if we summarize the revenue development in EMEA in the quarter, we grew with almost 8%, looking at carton and closure, equipment revenue declined, while aftermarket revenue was almost flattish leading to 3.3% revenue growth in EMEA in the quarter.

Turning to margins. We saw the impact of the timing effect on the Middle East or the raw material price increases following the Middle East conflict. And that led to almost a 1% margin decline to 17.8% in the quarter. But as expected or as mentioned, we expect this to pick up and be fully recovered in the second half of the year.

When it comes to India, we know that India is a more volatile market by nature with different tender mechanisms. We reported margin pressure in that geography in the first quarter. We have implemented targeted margin management measures in this quarter, and we have started to see the result of it, especially on the costing side, which has led to improved margins in India in the quarter. However, India is still margin dilutive for the group.

Overall, to conclude on EMEA, the margin has improved since the beginning of the year. We reported a margin of 17.4% in Q1, while now it has improved to 17.8% despite the time lag impact following the raw material elevation.

Crossing the Atlantics, turning to Americas. In the Americas, we delivered revenue growth and improved margins despite the somewhat challenging market conditions. And also the Nippon incident occurred end of May. If we look at carton and closure revenue in isolation, we grew by almost [ 12% ] in Americas on a constant currency basis. We continue to grow market share in Americas.

We had new business with our existing long-standing customer relationships, but we also gained new business or business with new clients in the quarter. And it was both enabled by the investments we have done into increased production capacity in the U.S. If we have a look at the market side in Americas, and also as we reported during the first quarter, we continue to see the softer than previously expected demand within the plant-based category, while within, call it, the more traditional dairy market and demand remained stable.

Looking at the equipment side in Americas, we commissioned fewer machines in Americas. However, if we are looking at the strong order backlog in Americas and in particular, within the school milk segment, we are confident that it will pick up again. And it's also supporting the investment in our third production line in the U.S., which is dedicated to a large extent to school milk.

Turning to margins. The margins in the Americas improved by more than 1 percentage points to 22.9% in the quarter. As Bent pointed out, it's driven by increased operational leverage and production output in the U.S. as the plant was in a ramp-up phase during the first half of 2025 as we remember. So that was as expected. The Nippon incident led to some production inefficiencies in Americas in the quarter that had a slight negative impact on the margins in Americas in the quarter, not super significant, but it had a slight negative impact. We assume that will be covered later by commercial agreements and also insurance coverage, but there's a time lag impact.

And when it comes to Nippon and also reiterating what Bent said, our priority is now to fulfill our supply commitments to our customers and a bit depending on how the situation develops, it could potentially have an impact on the short-term growth trajectory in that segment.

So to summarize the EBITDA development in the group in the quarter, it went from EUR 44.2 million to EUR 45 million, and it had a margin decline of 0.5 percentage points in the quarter. Without the timing impact from the Middle East conflict, the margin would have been stable. The positive effect you see on the net revenue mix is driven by increased volumes in Americas, but also in EMEA and also to some extent, the surcharges implemented already in Q2.

While the raw materials is impacted by the elevated raw material prices we have started or that we saw during Q2. The 4.3 -- the level of [ 4.3 ] should not be seen as a sustained level of where the raw material prices will be going forward as it consists of a few elements. So it will depend on how the raw material situation develops during the second half of the year, we have seen that prices have softened somewhat, even though still at an elevated level. But Q2 also had an element of inventory turn impacting the figure.

We are pleased to see that we are reporting a strong cash flow generation in the quarter. Despite the CapEx investment of EUR 28 million and the dividend payment of EUR 27 million, our net debt remains fairly stable. Looking at cash flow, cash flow from operations. On top of the EBITDA, we are freeing up around EUR 16 million caused by reduced net working capital. That's partially explained by reduced inventory in the Americas following the Nippon incident and we had to withdraw on the stock in Americas. But -- and we also have some phasing items on the net working capital, but it's also a result of our systematic work to improve the company's net working capital position.

If we're looking at cash flow to investments, where the majority relates to equipment replacement and maintenance program in Europe, as previously announced. We also have some CapEx on the U.S. plant still. And it also consists of filling machine investments. During the quarter, we also received the final installment related to the divestment of the Russian plant we did back in 2022. So that transaction is now fully settled.

Moving to cash flow to financing activities. The key driver was the dividend payout to our shareholders related to the second half of 2025 that took place during the second quarter this year, while interest paid and lease payments were at normal levels. And that brings our net debt to EUR 293 million end of the second quarter.

Looking at our financial position, it remains solid. We are still at a leverage ratio at 2.2x also after the CapEx investment in the quarter and also after the dividend payout. When it comes to return on our capital employed, it's fairly stable, around 15%, reflecting a consistent relationship between earnings and our capital base. Maybe most importantly, we continue to make progress on the U.S. plant investment. We have year-to-date invested EUR 109 million (sic) [ USD 109 million ] and we expect additional EUR 19 million (sic) [ USD 19 million ] before we have completed the 3 production lines. And there are no changes from what we have reported previously, meaning that the overall investment budget remains unchanged.

So for the summary and outlook, I give the word back to you, Bent.

Thank you, Ola. Thank you. So let me summarize. The second quarter of '26 demonstrated an improvement from the softer start of the year. Based on the performance and a solid balance sheet, the Board has declared a dividend of EUR 0.065 per share for the first half, corresponding to 52.5% of adjusted normalized net profit. Gradual improvements are expected to continue through the second half of 2026, but this is subject to raw material prices and foreign exchange volatility.

And finally, a challenging operating environment in Americas and global market and geopolitical headwinds are expected to impact growth in the year ahead. That summarizes our presentation, and we are now ready to take your questions.

Perfect. Thank you, Bent. Thank you, Ola. So we will now be moving to the Q&A session, starting with questions from people here in the audience. [Operator Instructions]

Marcus Gavelli from Pareto Securities. So at your CMD in 2024, you outlined the aseptic growth and India as one of the key margin drivers within the EMEA business. The aseptic market is certainly not very good at the moment. And I assume also you are doing some cost measures in India, but the rollout there, it also looks maybe a bit delayed. Could you -- do you feel that you are behind on that margin trajectory for EMEA with the current state? Or do you feel with the measures taken in India that we're getting in there?

Thanks. So I think it's -- let's then separate between the Europe trajectory and the India trajectory. I think if you start with the Roll Fed business, that, that business is more saturated with supply compared to what we believe to be the case during Capital Markets Day. So it's a crowded space. So there is some overcapacity of Roll Fed product that we expect to continue in the years ahead. When we will reach the balance, it's difficult to say because the lead time to invest in new capacity is not so long in India.

I think it's fair to say that the Middle East conflict is not helping our plans related to Pure-Pak introduction in India because the logistics costs are almost prohibitive to start the growth based on import. It's possible, but it's far from an optimal solution. So my take on India is that the growth rate -- the growth in India is lower than what -- where we need to be in order to deliver on the top line as we talked about in 2028. Where we will end, it's very difficult to say because when things start to fly in India, it starts to fly very quickly. But it's very important that the factors that we cannot control really are stabilizing.

Now when it comes to, I would say, aseptic in Europe, I think we are demonstrating ability to grow in that segment. I think overall, the trajectory in what we call core Europe is quite in line with what we talked about back then, but the drivers behind that growth have varied. Plastic to carton shift that we've been somewhat softer. Consumption decline maybe a little bit sharper. Our market share growth also higher net-wise, aligned with what we talked about in the Capital Markets Day.

And just one on the Americas. Understanding that the operational environment is a bit tough right now, but could you try to remind us of where you are currently with Line 2 in terms of utilization? And also, again, visibility is low, but at the moment, do you plan to slow that utilization or ramp up of utilization down? Or is that still very much up in the air what you decide to do? Just also because you said Line 2 and Line 3 will be in parallel [indiscernible].

Exactly. So I think the way we talk about America now is more how are we going to deliver the total top line for America. And the ambition remains, which is to deliver EUR 480 million based on the currency back in September 2024 for the total group. Now how we're going to deliver that growth will be to utilize the capabilities of the 3 different lines. So different lines have different capabilities, producing different products.

So I think how we are ramping up Line 1, Line 2 and Line 3 really depends on the product mix that are desired and demanded from our customer base. We have started with Line 2 going according to plan. And Line 2 has the capability to deliver formats that we do not produce at Line 1. So the ramp-up plan in terms of getting the lines installed, get them commissioned is going according to plan. And the growth will be more in -- as you pointed out yourself, a more parallel approach, reflecting the needs of the markets from a portfolio perspective.

Any further questions from the people in the audience? No, Okay. Then we also have a couple of questions coming in online. So starting with first one from Jeppe Baardseth, Arctic Securities.

Could potentially higher board prices in the Americas due to the Nippon situation be captured through our pass-through contracts. And do these contracts provide a dollar-for-dollar pass-through on cost increases. Or do they also allow you to maintain margins?

That sounds like a CFO question. Ola?

Yes, I think it's -- the situation in Americas is still somewhat unclear, right? So now our focus is to supply our customers according to what we have agreed and also supporting their needs. When it comes to the prices or the board prices in the future, I think it is a bit early to say. We have a good collaboration with all our suppliers. We have a network of suppliers in Americas. And we have the usual rounds with them, and we will -- I think it's fair to say that we will come back to that later on when we are seeing how this situation develops.

I do also do have -- we will have commercial arrangements. We have insurance coverage, which will protect in this intermediate period. There could be timing effect in terms of when they can acknowledge that settlement. So as we've also pointed that out in the second quarter report.

Thank you, Ola and Bent. So one more question from Jeppe. When were the customer surcharges implemented? And when do you see -- expect to see the full financial effect? Yes, a few more follow-ups, but I'll leave it at that first.

That's much our capacity to remember. So the surcharges that were implemented middle of the second quarter and which means that our expectation is that we are on the run rate starting in Q3.

Thank you, Bent. Do the surcharges apply across the entire customer base in EMEA or to only certain customers or contracts?

So they apply to most customers, and it depends a little bit on the contract structure. But in general, I would say, all customers will get the surcharges more or less.

And then the last part of Jeppe's question. Are the competitors implementing similar surcharges or could this potentially have an impact on your market share development?

Yes. So we are, of course, monitoring also what our competitors are doing. So I would say, to a very large extent, this is an industry thing. So we are not alone.

Thank you. So that was the last one from Jeppe. Then we also have one from Elliott Jones-Myklebust in Danske Bank. Given potential board availability issues in Americas is it too optimistic to assume medium-term targets are hit in '27. I think you probably refer to '28, but midterm targets in Americas.

Yes, I can take that question. So when it comes to 2028, we are reconfirming the ambition to deliver EUR 480 million based on the currency in September '24. But we also -- what we write in the report is that the board constraints and the following dynamics, which comes on top of the plant-based consumption decline will impact the growth in the year ahead. Consequently, that means that the growth is not going to be as linear as we assumed in the Capital Markets Day.

Thank you, Bent. That was the last question that I had received online today. So if there are no further questions from the people here in the audience, we will round off today's quarterly results presentation.

Thank you very much.

Thank you, everyone.

Thank you.

Good afternoon. My name is Dag Mejdell, and I'm the Chairman of the Elopak Board of Directors. And it's my pleasure to welcome you all to this virtual Annual General Meeting, where all shareholders are participating digitally. I would like to thank all shareholders who have logged in today. Together with me in the room is our Interim CEO, Bent Kilsund Axelsen; and Chair of the Nomination Committee, Tom Erik Myrland.

Before we start on today's agenda, Christian Gjerde, who is Head of Treasury and Investor Relations, sitting next to me here, will give you some practical information regarding the digital participation and voting. So over to you.

Thank you, Dag. So you are watching a webcast of the Annual General Meeting, which appears at the bottom or top right of your screen labeled live or broadcast. You can increase the screen size by clicking/tapping on the icons. When you log in, you will be able to see the number of shares you are voting for and you can choose the language you want the system to use. You are free to change the language at any time.

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Thank you, Christian. Now let's look at the list of shares represented at the meeting, which I have received from DNB's registers department, who is keeping track of today's figures. 213,224,227 shares are represented in the form of advanced votes. 14,527 shares are represented by proxy and 7,500 shares are represented through instructions to the Chair of the Board. This means that 213,246,254 shares are represented, amounting to 79% of the issued share capital. The figures that I just referred will be presented in the minutes, which will be published shortly after the Annual General Meeting.

So let's then review item #2 on the agenda, which is election of Chairperson and a person to sign the minutes. The Board proposes that I, Dag Mejdell is elected as Chairperson of the meeting and that Christian Gjerde is elected to co-sign the minutes together with me. We have not received any comments to this proposal, and we will therefore proceed to the vote. If anyone has not voted yet or wants to change the vote now, the time is to do so now. We will wait a little bit so that everyone gets a chance to vote. And I would also like to vote -- to point out that you're also free to vote on the remaining items at any time you like.

[Voting]

The voting has closed now. Yes. Then I got the results from the voting and the resolution has received sufficient majority and has been adopted as proposed. And again, the exact figures will be recorded in the minutes, which you can see after the general meeting.

So let's then go to item #3, which is approval of the notice and the agenda. And we have not received any comments regarding this item, and we'll proceed to the vote. If anybody has not voted yet, you have to do it now. We will wait a little bit so that everybody can do so.

[Voting]

And we have now closed the voting. This proposal has also received a sufficient majority and has therefore been adopted as proposed, and it will be recorded in the minutes.

So let's then move to item 4 on the agenda, which is approval of the annual financial statements and the annual report for 2025, including allocation of the results for the year. And the Board has proposed that the annual financial statements and the annual report for 2025 is approved by the shareholders' meeting. The Board has also proposed that a dividend of EUR 0.102 per share is declared for the second half of the financial year 2025. As you will know, we changed our procedure of paying dividends last year, and we paid a first dividend for 2025 back in the second half of '25, and this is then the final dividend for the year.

We have not received any comments to this proposal, so we will therefore proceed to the vote. And please vote now as we will be closing the voting shortly.

[Voting]

The voting has closed now. And the resolution has received a sufficient majority and has been adopted as proposed. And this will also -- the exact voting will be recorded in the minutes from this meeting.

We then proceed to item #5, which is consideration of the report on corporate governance for 2025. The company's report on corporate governance for '25 is subject to an advisory approval by the general meeting. The Board has proposed that the meeting approves the report on corporate governance on an advisory basis. And we have not received any comments to this proposal, and therefore, we proceed to the vote. And please vote now as we will be closing the vote very shortly.

[Voting]

And we have now closed it. And the resolution has received sufficient majority and has been adopted as proposed and will be recorded in the minutes.

So by that, we move to item #6, which is consideration of the report on management remuneration for 2025. This report is also subject to an advisory approval by the general meeting. As you will have noticed, we have continued to develop the report compared with the last year's report and give some more transparency and details on certain remuneration elements. Otherwise, the majority of the report follows the same structure as the previous year's report.

We have not received any comments on the proposed report, and we will, therefore, proceed to the vote. If anyone has not voted yet, please do so now as we will be closing the vote shortly.

[Voting]

And we have now closed the vote. And the resolution has received sufficient majority, and therefore, it has been adopted as proposed, and this will also be recorded in the minutes.

We then move to agenda item #7, which is election of Board members. And the Nomination Committee has proposed that the general meeting approves the reelection of Manuel Arbiol, Marianne Ødegaard Ribe, Sid Johari and Anna Belfrage for a period of up to 2 years. The other Board members are not up for election this year.

We have not received any comments regarding this item, and we will therefore proceed to the vote. If anyone has not voted yet, please do so now, and we will be closing the vote shortly.

[Voting]

And we have now closed it. And we have got the results, which is that all the 4 Board members have been reelected as proposed, and this will also be reflected in the minutes from this general meeting.

Then we move to item #8, which is election of one observer to the Board. We have been having an observer to the Board for several years. And the Nomination Committee is proposing that this practice is continued and that Anniken Fougner, who is currently the observer to the Board is reelected for another term of up to 2 years.

We have not received any comments to this proposal, and therefore, we will proceed to the vote. If anyone has not voted yet or wants to change their vote, please do so now. We'll wait a little bit, and then we will close the vote.

[Voting]

And we have then closed the vote. And the result is that Anniken Fougner has been reelected as observer to the Board of Directors. The exact figures from the vote will be recorded in the minutes.

Then we move on to item #9, which is election of members to the Nomination Committee. And the Nomination Committee has on this item further proposed that the general meeting approves the reelection of Kari Olrud Moen as member of the Nomination Committee for a term of up to 2 years. The two other members are not up for reelection this year.

We have not received any comments to this proposal, and we will therefore proceed to the vote, and we will be closing it shortly. So please vote now.

[Voting]

And we have then closed the vote. And the result of the vote is that Kari Olrud Moen has received sufficient majority of the votes and is thus elected as proposed by the Nomination Committee, and this will be recorded in the minutes from the meeting.

We then move on to vote on item #10, which is approval of remuneration to the Board and the committees. Again, I refer to the recommendation from Elopak's Nomination Committee, who has proposed that the general meeting approves the remuneration to the Board members and the committees as follows: Chairperson of the Board, NOK 1,045,000, shareholder elected Board members, NOK 522,500; employee-elected Board members, NOK 209,000.

Then the Board has two subcommittees and the proposed fees for these committees are, first of all, for the Board Audit and Sustainability Committee that the Chair receives a fee of NOK 167,000 per year and members do receive a fee of NOK 104,500 per year. For the other committee, which is the Succession and Compensation Committee, the proposal is that the Chair has a fee of NOK 94,100 and other members NOK 62,700 per year.

We have not received any comments to this proposal, so we will therefore proceed to the vote, and we'll be closing it shortly. So please vote now.

[Voting]

We have then closed the vote and yes, we have also here received the results and the proposals has received a sufficient majority and has therefore been adopted as proposed by the Nomination Committee. The exact figures will be recorded in the minutes from this meeting.

Then we move on to agenda item #11, which is remuneration to the Nomination Committee. And the proposal here is also contained in the recommendations from the Nomination Committee of Elopak, who has proposed that the general meeting approves the remuneration to the members as follows: Chairperson, NOK 104,500 and members NOK 73,200 a year. We have not received any comments regarding this item, and we will therefore proceed to the vote. So please do vote now as we will be closing the vote very shortly.

[Voting]

We have now closed it. And I get the message here that the resolution has received sufficient majority and has been adopted as proposed by the Nomination Committee. This will also be recorded when it comes to the exact voting numbers in the minutes from this meeting.

Then we move on to item #12, which is approval of remuneration to the auditor for 2025. This has been handled by the Board, and the Board proposes that the remuneration to the auditor for 2025 shall be paid in accordance with invoice. The audit fee was EUR 461,000 for Elopak ASA and EUR 1,191,000 for the group for the financial year 2025.

We have not received any comments to this proposal, and we will therefore proceed to the vote, and please vote now as we will be closing the vote shortly.

[Voting]

We have now closed the vote. And the announcement I get here is -- or the confirmation I get is that the resolution has received sufficient majority and has therefore been adopted as proposed by the Board. And this will also be reported when it comes to the exact number of votes in the minutes.

That means that we move on to item #13, which is the Board's authorization to increase the share capital. This is an authority that the Board has had over time. Of course, we are careful in utilizing it, but for flexibility and various purposes, it is a practical way of solving the need from time to time, make increases in the share capital for specific purposes. So the proposal that the Board make to the shareholders' meeting here is to grant the Board an authorization to increase the share capital by up to approximately 10% of the current share capital.

The reason for this is that the Board considers it beneficial that the Board continue to have this authority and that we have the flexibility to issue new shares in connection with acquisitions if a part or the full payment is done by the issuance of shares, also to issue shares in connection with incentive programs for management and other employees and also for share option programs for the employees. And finally, also to have the possibility to raise new equity to strengthen the company's financing and balance sheet. But we rarely use these authorizations. But as I said, initially, it's for greater flexibility in the day-to-day management of the company.

We have not received any comments regarding this item, and we will, therefore, proceed to the vote. So please vote now as we will be closing the vote shortly.

[Voting]

We have now closed the vote. And also on this proposal, I can confirm that the resolution has received a sufficient majority and has therefore been adopted as proposed. And the exact figures will be recorded in the minutes.

And that actually brings us to the end of this shareholders' meeting soon, but I have some problems here. We have -- we are also asking for an item 14 for a Board authorization to acquire own shares. And the Board proposes that the general meeting passes a resolution to grant the Board an authorization to acquire the company's own shares with an aggregate nominal value of up to 10% of the current share capital. The Board considers it beneficial that the Board continues to have this authorization that we also have had in previous years.

Treasury shares obtained by the company may be used in connection with share-based payment and Elopak's long-term incentive programs and also for general corporate purposes. So in many ways, this is an alternative to the proposal that was adopted by the shareholders' meeting under item #13 to issue new shares that we rather buy shares in the market.

We have not received any comments regarding this item, and we will therefore proceed to the vote. So please, if you haven't voted yet, do so now, and we will then be closing the voting shortly.

[Voting]

Which we now have done. And the resolution has received a sufficient majority and has been adopted as proposed. And this will also be recorded in the minutes.

Finally, but not least, item #15, which is an authorization to the Board of Directors to distribute dividends based on the approved annual accounts for 2025. In accordance with the approved dividend policy for Elopak, it is expected to be semiannual payments of dividends. To facilitate payments of dividends pursuant to the dividend policy, the Board proposes that the general meeting authorizes the Board to resolve payments of dividend based on the company's annual accounts for 2025.

We have not received any comments to this proposal, so we will therefore proceed to the vote. So please vote now as we will be closing the voting shortly.

[Voting]

Which we now have done. And I get confirmation here that the resolution has received a sufficient majority and has therefore been adopted as proposed. The exact figures will be recorded in the minutes and will be reflected there.

That was the final item on the agenda, and thank you all for your participation.

Good morning, and welcome, everybody, to this first quarter results presentation for Elopak. My name is Christian Gjerde, and I'm the Head of Treasury and Investor Relations. Today's presentation will be held by our CEO, Thomas Kormendi; and our CFO, Bent Axelsen, and will last for around 30 minutes, followed by a Q&A session, where we will take questions from the people here in the audience as well as the people joining us online.

So with that short introduction, over to you, Thomas.

Thank you, Christian, and a warm welcome to all of you here on the beautiful, beautiful spring day in Oslo. It's really great to see so many of you here in person. So Q1 let's get started. As you know, some of you will know, just 2 words on who we are. We are actually in the business of sustainable packaging. All we do, the only thing we do is fiber-based packaging. We do that with protecting essential commodities, not the least dairy products, but also other products such as juices, soups. And in all of this work, we are committed to reducing the use of plastics.

So Q1, what -- let's look at the performance here. Well, first of all, we report a revenue pretty much stable in terms of -- stable when you look at the constant currency. We're reporting a 3.9% decline. But on constant currency, given the exchange rate primarily in U.S., we're looking at a stable development.

Secondly, as you know, and some of you who have followed us, we've had a strong -- very, very strong development in Americas. And actually, our development in the U.S., in the Americas continues with 6% growth on a constant currency basis and also another strong quarter for Little Rock. Little Rock as you recall, that we started up last year in April, and that has now onboarded more and more customers in Line 1.

So although we have seen and we have reported earlier, somewhat slower onboarding of our customers. And when I say onboarding, it's not about acquiring customers, but it's about onboarding their designs, onboarding their materials. That has been somewhat slower. We still remain absolutely confident in the midterm targets related to Americas.

Second -- thirdly, the EBITDA. We came in at EUR 41 million, which corresponds to around just short of 14%. And we also came in at an earnings per share slightly above the previous -- the year-on-year quarter last time. What we also see, even though we have also during this last quarter, invested quite heavily in the expansion in Americas, we still come in at a very solid 2.2 leverage ratio, which is actually slightly impacted as well by the currency impact of Americas.

Very importantly, of course, and I'm coming back to that in a little bit broader sense. But as everyone around us know, we have a turbulent world around us, particularly in the Middle East. It does impact a lot of the raw materials, including our raw materials. And it does have a cost impact on our side as well. I will come back to some of the mitigating effects that we are addressing this with in the coming slides.

Now on the revenue. As I said, revenue overall stable, although we report a EUR 12 million lower revenue. This is primarily related to the commissioning of filling machines. And as you may remember from Q4, where we reported a very strong filling machine commissioning, the commissioning of filling machines is not a linear curve. It will vary a little bit between the quarters.

If you look at the EBITDA, you could -- there is a decline of EUR 3.6 million versus same period last year. However, EUR 2.5 million of this relates entirely to currency impact from the U.S. dollar. And the remainder as well as the impact that we've had in this period relates to some one-off effects that we've had. We've also seen a tough margin pressure in India, including pressure on margin, pressure on volume. And we have also front-loaded some of the strategic initiatives that we have taken already in Q1. So all of that impacts the EBITDA for this period.

Now we have also initiated a program and some of those initiatives have already taken place. During this quarter, we have had restructuring effects in the likes of EUR 1.3 million, which is part of the program of reducing our -- addressing our costs, and these will have been adjusted in the EBITDA from Q1.

Back to the Middle East and the extraordinary cost impact. Now everybody in the world now knows where Hormuz Strait is, very exactly where it is. Everybody knows what the impact is beyond just the surrounding countries. What you see in our world is a very significant increase in LDPE. On the slide, you will see that the LDPE increase is around 160%, which is, by the way, a picture we -- some of us will recognize from '22, where we saw raw materials explode as well, not the least on the plastic side, but also aluminum foil and other raw materials in general.

We are now seeing the increase, right? And what we have done is that we have, of course, addressed these increases by implementing and introducing extraordinary surcharges on the pricing side towards our customers, given the price -- the cost pressure that we are seeing. These have been introduced. They are being implemented as we speak. And they are, of course, related to an existing price level on LDPE, on polyethylene, on naphtha, but also an expected development. So this carries a certain uncertainty because none of us know exactly how this develops. So what we have introduced is a mechanism that will allow for this kind of uncertainty.

And it also brings me to the strategy of Elopak. And we remain absolutely committed and confident in our strategy that consists of these 3 pillars. The global growth, as we know, is not the least related to America, which is the big growth driver we have. We have Little Rock up and running. Little Rock is accretive. Little Rock is producing in high volumes. Little Rock is producing in multiple shifts in Line 1.

We are establishing Line 2 as we speak, and we have already agreed and announced that we will do Line 3 as well. Little Rock is the foundation or rather Americas is the foundation of the realizing global growth. But beyond that, it's also India, and it's also MENA, where we are now working as well as we have announced earlier on expanding our portfolio, getting more aseptic products in, getting more ESL long extended shelf-life products in.

The second one is the leadership in the core. And as we have talked about earlier, we have a strong position in chilled fresh business in Europe, and we continue to build that with a number of initiatives related around sustainability, related around the PPWR, et cetera. But the third one is the one that I'd like just to spend a little bit of time on because the third one relates to the plastic to carton conversion. And of course, in times that we see now, right, LDPE increasing off the roof, we see that competitive solutions such as PET will have increased by 60% for a PET bottle with the impact of LDPE.

So while -- actually, while clearly, it impacts everyone in packaging with rising raw materials, the situation we see now is that primarily the impact will relate to the plastics products, which will, at some point, potentially improve the understanding among customers, among retailers that the carton packaging in a much, much wider sense than what we have now creates stability in cost, creates a much better transparency in cost and is a an alternative not only for sustainability reasons, but also for cost reasons when it comes to packaging other products than just milk and juice. And that is what we do in the third box, leveraging the plastic replacement because this is the area where we work with the nonfood products. This is the area where we work with alternatives to plastics, which can be very closely related to our business or a little bit further related, where we can utilize our strong know-how in liquid products, in filling of liquid and semi-liquid products.

So in short, the current development poses a certain amount of challenges for anyone in any industry, primarily because it's uncertain what comes out of the ongoing conflict, but particularly for the carton industry and for packaging in our case, it does also provide the understanding, the certainty among customers that carton actually provides a whole range of advantages in their cost portfolio and their product portfolio beyond the fact that it is the most sustainable solution.

And with that, I think I will hand over to you, Bent.

Thank you, Thomas. Before we dive into the numbers, I would like to address 2 changes that we have done to how we report our figures. The first thing that we are doing is that we are moving the R&D activities and associated corporate activities from the EMEA segment to what we call other and elimination, simply because this unit is serving both segments, not only EMEA. So this will improve the comparability and clarity when we are reviewing the relative performance between EMEA and America.

The second change that we are doing is reflecting an adjustment to our operating model where the aftermarket services and spares part are now run by the local regions together with the blanks, together with the closures. Today, or in the previous reporting regime, all these financials were reported in EMEA. Now the America part of these financials will now be reported in the Americas segment because these are services and spare parts sold to the American market. So we think this is a logical change. The 2025 figures are reclassified in this report, and there is more information in this presentation file and in the report. So let's start with the EMEA segment.

In EMEA, we are reporting stable volumes with results impacted by one-off effects and timing effects related to filling machines. The revenues are EUR 208 million, down 7% from last year. If we look into this reduction of EUR 16.5 million, EUR 6 million is related to timing of filling machines sold by EMEA to external customers, while EUR 9 million is related to reduced sales from EMEA to Americas internal sales. So altogether, EUR 15 million is basically timing related to filling machines.

If we go then to the carton and closure revenues, they are moderately down compared to last year, and that is a result of a negative mix impact, which I will dive into. The Pure-Pak volumes, they are stable in the EMEA segment. What you see here is that there is a decline in the aseptic juice segment. This is what we have reported before. It's a result of the consumer preferences combined with the very high citrus prices that we have observed for the last year. These products are -- we have attractive margins.

We have growth in other segments in UHT milk, but they are sold at a lower price point compared to aseptic juice. We see year-over-year growth in MENA, driven by growth in North African markets and we also see growth of closures as we are growing with customers that both buy our blanks and our closures together.

If we look at Roll Fed, we are happy to report that we are growing the Roll Fed volumes again after several quarters with decline. This comes from onboarding of customers in Poland. But as you know, the pricing points on the margin for Roll Fed is lower compared to Pure-Pak. So it's not enough to compensate fully. In contrast, in India, we are reporting a volume decline in Roll Fed year-over-year. And we are also having, as we reported before, a pressure on margin. The revenue decline is around 13% on a constant currency basis, 26% reported. So that is related to the weakening of the rupee. So as we have reported before, the supply-demand balance is pressured in India. And in this quarter, we saw, particularly in January, February, this also impacting our volume development.

If we move to EBITDA, we are reporting EUR 36 million, down from EUR 40.7 million. The margin is 17.4%. This contains EUR 1.8 million one-off related to an operational matter. It also is a result of the mix effect that I talked about for Pure-Pak versus Roll Fed, but also the fact that India remains margin dilutive, and we also see the absolute impact as the results are down in India year-over-year.

If we move to America, we are reporting around EUR 95 million. As Thomas explained, it's a 6% growth on a constant currency basis, but a decline of 4% because of the weakening of the U.S. dollar. The revenue growth is below our earlier expectations due to the weaker demand for plant-based which is important for our growth in America. We are seeing consumption patterns changing into lactose-free milk, other dairy products, and there's also concern related to cost inflation. We are working very actively to fill that shortfall with other types of business in the quarters to come. In addition, the quarter was impacted by destocking among our customers. In Q4, some of our customers were building inventory in Q4, and they're now taking the stock down to normal level, and that also impacted the top line in the first quarter.

Finally, on the revenue side, we also have a timing effect of filling machines in America with a decline of EUR 5 million for the quarter. If we look at profitability, the EBITDA was EUR 21 million, up from EUR 19.7 million, and the margin is improving to 22%, as you can see. And this comes from the improved production output of Little Rock and with the operational leverage that we get from that ramp-up. And we also would like to remind that 1 year ago, we had negative results of Little Rock because we have pre-start-up costs in that quarter.

The share on net income is EUR 2 million compared to EUR 2.5 million last year, and that is solely driven by the weakening of the Dominican peso against the dollar, while the underlying performance remained stable. And as Thomas explained, we have -- the U.S. dollar has significantly weakened year-over-year and in America results that is measured in euro, that is EUR 2.4 million down. That wraps up America.

So let's look at the bridge from EUR 44.6 million to EUR 41 million. Here, the American development and the margin accretive development in America continues to be the most important growth driver for the company. We see -- in Europe, we see the negative effect because of the negative mix effect with less juice cartons and more Roll Fed, but also the impact from the result decline in India.

Raw materials are largely stable. Behind that number, we have higher board cost as per our contracts. We see higher other prices, but lower PE prices giving this number. In this quarter, our raw materials are not significantly affected by the conflict in Iran. But as Thomas explained, we expect these costs to affect the Q2 cost base and also onwards.

On the operational costs, we have the EUR 1.8 million one-off effects and the rest is related to the wanted increase in R&D is related to inflation is related to the onboarding -- sorry, the frontloading of strategic initiatives in the quarter. The JV results, we have addressed and it comes to the FX combined for the group, that's EUR 2.5 million. And I just want to reiterate the fact that in Americas, we are running this as a U.S. dollar business with dollar revenues and dollar raw material base. If we look at the underlying result, if it adjusts for the one-off, the margin is -- would then have been around 14.4% for the quarter, so in line with the same quarter last year.

Let's move to the cash flow. So the -- if we look just starting at the net debt, that is increasing by EUR 21.6 million. The main contributor to that is actually the strengthening of the NOK against the euro that gives a loss on our green bonds. What is important to remember is that this is mitigated by our cross-currency swaps, but we don't report the positive gains, the gains from the currency swaps in our net debt. So that is EUR 16 million.

If you start to continue with the cash flow from operations, we are reporting around EUR 20 million based on an EBITDA of EUR 41 million. We have taxes paid of EUR 4 million, and we are also reversing the accounting results from the joint ventures to get to the EUR 20 million. When it comes to cash flow from investing activities, that is around EUR 12 million. This is based on the continued expansion in Little Rock and also the normal maintenance programs, also the replacement of equipment in Europe.

Maybe one more thing before I move on to the next element is to come back to working capital because I jumped that, that is EUR 14 million negative effect, and that can be split into 2 factors. It's the timing. EUR 17 million worsening is related to settlement of account payables for our filling machines. So that is really a one-off because we are settling machines that we have commissioned some time ago. Structurally, we see a reduction of inventory around EUR 5 million. This is a result of the structural work that we are doing to improve the inventory turnover.

Now what we would like to say is that this reduction is a little bit more than what we think is sustainable. So we expect some moderate increase of the inventory to get back to normal levels. Filling machine inventories also went down following the sales in the quarter. Now we are ready to go to the cash flow from financing and loan payments, which is minus EUR 14 million. That is included in the lease payments, the interest payments and also purchase of treasury shares. This brings us then, including the FX effect to EUR 286 million net debt.

The leverage ratio is 2.2 compared to 2 at the end of the previous quarter. This is following this, I would say, the technical increase of the net debt bringing by the FX effects, but also the continued investment in the U.S. plant. The ROCE declined by 0.6, and that is a result of a lower last 12 months adjusted EBIT. And the capital employed actually is now stabilized since year-end. The accumulated investment in the U.S. plant is $106 million, and we have around $22 million to go to get -- that will take us to the full 3 lines in Little Rock.

Let's -- before I give the word back to Thomas, let's just address how we think about the -- where the quarter is ending to compared to what you would have expected. So as you know, we are not guiding individual quarters in Elopak. But if you go to our Q4 earnings release, we said that we would deliver on our midterm targets. So if you convert that into implied Q1 guiding, that could be an expectation of EUR 50 million and versus a reported adjusted EBITDA of EUR 41 million. This gap is 50-50 between structural market implications, market effects and one-offs.

Within the 50% market effects, 30% is Americas, 10% is Europe and MENA and 10% is India approximately. And the remaining 50% is related to the phasing of filling machines and phasing of fixed costs and also one-offs. In addition to the price increases that Thomas was talking about, we are obviously working with our cost base to delay and reduce spend where it makes sense without jeopardizing our long-term value creation.

With that, this concludes the financial section. So back to you, Thomas.

Thank you, Bent. And so overall, I think it's fair to say that we have seen somewhat softer market conditions generally in Q1 than what we've seen earlier. And one of the impacts that Bent just mentioned was, of course, the plant-based, which is a significant business in U.S. and part of the growth that we are looking for in U.S. What we also see, and that is very important for us is to say the ongoing crisis, ongoing situation in the Middle East causes extraordinary cost increases in all industries, including ours, and we are now mitigating this with price increases, in fact.

We call it surcharges, but it is higher prices to compensate for this. We are seeing that, but we are also doing, as Bent explained, the other side of the -- whatever it's called, but we're also looking at our own cost base and at the same time, taking some steps to ensure that we are adapting and keeping our costs at bay in times like these.

I think also, though, it's very, very important to remember, and for those of you who were with us from the IPO, where we had a year of '22 with increasing costs, with increasing a lot of turmoil, this is a resilient business. This is a business of basic food, basic food stuff that people need. So even if we have ups and downs as we do have, like any other industry, we are in a very resilient world. And the demand for our kind of products will continue even when economies around the world and including the -- our part of the world will be more or less constrained through consumer spending.

So what we are saying is despite this volatile political -- geopolitical situation that we're in and with all the potential impact, we expect to continuously also improve from Q2 and onwards, our results in a moderate and gradual way. That is how we look at the year and that is how we are going to address the year and the cost situation that we experienced thing.

So with this, I'd like to thank from my side and hand over to you, Christian, please.

Thank you, Thomas. Thank you, Bent. So with that, we will move to Q&A, starting with the people here in the audience first. So if you raise your hand, I will come out with a mic. Please state your full name, the company that you represent and make sure to speak into the microphone.

Elliott Jones from Danske Bank. Just firstly, you mentioned some plastics prices up 60%. Obviously, it's a near-term headwind to you guys. But I'm just wondering your -- some of your plastic competition. Is this something that customers have started talking about that you're hearing? And is that something you can capitalize on kind of longer term?

So what I did say is that PET in specifics, you would look at the cost of a PET bottle will have increased about 60%. If you look at the LDPE that is being used in our carton as well, we're looking at, as you saw on the slide, somewhere around 160% cost increase, really, really, really significant. So what you typically see in the industry and many of our customers will have a mix of plastics and cartons, right? So what -- and they will, depending on where they are, provide private label and/or their own brands.

The decision they make then is what kind of format am I using? If it's a brand, you don't easily change from one format to the next for all the obvious reasons. But what does happen in times like this is that the consideration is what is the right format moving forward is much more relevant when it comes to costs as well as sustainability. We have been very clear that from a sustainability point of view, the carton solution is the absolute superior solution versus plastics, both from a renewability point of view, from a CO2 point of view and also eventually, as we move on, you'll see it from a recycling point of view.

Now what we are seeing then here is that with the insecurity that is created in PE pricing, when you are a customer, when you are a retailer, you're going to look -- you are looking now at carton saying, this creates a stability, it creates transparency. It creates a predictability in cost that plastics cannot guarantee because it's all about the oil price. It doesn't mean, though, short term that everyone changes into carton sadly. But that's not going to happen because of equipment, because of industrial production, et cetera. So these take time, but it's very, very important in the longer perspective and very important for the new areas that we're discussing where the consideration should we -- should we not suddenly tilt hopefully more towards, yes, we should go carton.

And then just 2 more quick ones. Just on the Americas segment, you talked about this being affected by developments in plant-based. Can you kind of provide more color as to how that could affect maybe your medium-term growth targets in the Americas? Would that kind of delay the pathway to 100% utilization rates in the lines that you've announced? Or do you see it easy to kind of replace those volumes near term?

I would never use the word easy, right? But I think what is very important is we commit to our midterm targets for Americas. That is the simple story. And we are absolutely convinced with the plans we have in place that we are going to deliver on this midterm target. Remember, that's EUR 480 million calculated on the exchange rate --.

At that time...

At that time, right? So we don't know what happens to exchange rate, obviously. But that plan stands, will be delivered accordingly.

Got it. And then just on the EMEA mix effect. Am I right in thinking that it's not obviously an easy fix in terms of reversing that in Q2? Should we expect that kind of mix effect to continue maybe in the next few quarters?

So when it comes to the juice development, that is a trend that we have reported for quite a few quarters. So we expect that trend to continue. It depends a little bit on the citrus prices. So I think we need to distinguish between the consumer preferences and focusing on sugar versus the cost of juice because of the citrus prices and the diseases that have been worse in recent years, Yellow Dragon disease, I think it's the name, and that has reduced the supply of citrus. So that is not a quick fix at all.

When it comes to the Roll Fed business in the Europe, we have then finally been able to grow that business after several quarters with decline. Some of that decline was related to the cap regime back in the days, I think it was 1st of July 2024, which is more of a one-off, and there also have been increased pricing competition. What's going to happen to the Roll Fed business where we are able to continue to grow that business? It depends on the whole raw material situation and the whole Iran conflict because it's -- Roll Fed is the most competitive product group that we have in Elopak. So yes, to juice on Roll Fed, we will wait and see before we can call it a positive trend. We need some more quarters in the bank.

Ole-Petter Sjøvold, SpareBank 1 Markets. So first, a question on the contracts for Little Rock. I mean, as we understand it, it's no take-or-pay, but it's when the customers take materially lower volumes, the price could be up to negotiation. So could you give some insight into this? And could we potentially then see some sort of compensation later this year that should relate to Q1?

It's a little bit difficult to answer, but if you take the mechanics in this, right, the way we normally do this, and we have, of course, some very, very big customers around the world, including U.S. These customers will say to us, look, we would like to -- we would like you, please, to produce X amount of volume, and we will then agree a price on that volume. When they make that commitment, which is a commitment, it doesn't necessarily mean that if you do something less, then there is a compensation. There are -- we also have those models, I have to say. But in the bigger context, it is much more of, I say, can you fill our needs.

So what would typically happen is after a while, if that volume is not -- we're not seeing the volume coming for different reasons. Typically, one reason is they have more stock than what they thought, honestly. You would think they know, but it's actually, in some cases, many plants and there are -- so the volume will arrive later. That's one area. The other area is, of course, there can be -- they say, well, we're going to use more suppliers simply for contingency reasons and procurement reasons, et cetera, et cetera.

Now in the latter case, right, so we say on a more continuous basis, we're going to see lower volume than what we have agreed. We will renegotiate price. Price and volume always correlates. So if you're not delivering the volume, we need to have a different discussion on price. If you're saying we are not delivering volume because of some stock reasons, typically would not happen.

Got it. And a final question for me. On the price surcharges you're implementing right now, I mean, you guys typically hedge LDPE prices and aluminum prices in Q3, Q4 on the majority of your exposure. Are you able to increase prices for the full extent of what your price or cost should increase if you didn't hedge? Or is it only your open exposure able to push out to increase prices?

That's a very good question. And the reality is, of course, that we, as well as our competitors, right, everybody hedges as you would do normally. So when we increase our price, we have to think about our competitors as well, and we keep that in mind. So typically, what you would see in extraordinary situations like this is that everyone tries to limit the cost increases that are needed to cover the cost, right? And we live in a competitive world, so we do the same.

But it's also very clear that hedges are for this year, right? So what happens next year when you need new hedges, and we don't know where the raw materials will be at that time, that's another set of increases that would come on top of that. But we are not in a position that we can increase only based on our own costing. We have to look at market conditions as well, of course.

If there are no further questions from the audience, then we will move to the questions that we have received online. So starting with a question from Geir Olsen. More than 90% of your revenues comes from cartons and closures. Could you provide some color on the revenue mix across key end markets such as milk, juice, liquid detergents and other categories and highlight where you are currently seeing the most -- the strongest growth?

Yes. So with our disclosure principles, we do not report on end user segments. I would say when it comes to the biggest contributor of growth, that continues to be America for us. And America for us is milk. It's a combination of plant-based, in particular for the growth in Little Rock, but also dairy. Juice in America is limited. So milk, America is the biggest contributor.

As far as what we call nonfood is concerned, it's still a very, very limited part of the business as of today, but we believe that to be an interesting and significant business opportunity in the long term. That really depends on the hunger for green alternatives and to which extent green is back on the agenda again because of the new energy crisis. And there's a lot of discussions in media, whether this is now a forced green agenda coming from the conflict. And I think this is probably where I should leave that comment, IR.

I think you're right, Bent.

So thank you for that, Bent. And then moving to the next question or questions, I would say, coming from Hakon Fuglu. I'll do them one by one to make it easier for you. First question, have you been impacted in the quarter by raw material cost and/or logistical costs?

The implications of the Iran conflict is very limited. So we haven't commented on those in Q1. There could have been some freight increases in the region in the beginning or in the end of the quarter. But when it comes to the raw material impact, which is a big part that has not impacted Q1. And let me remind that we have an inventory turn of around 2 to 3 months, so which means a spot price increase end of March will take at least 2 months for that to impact the reported costs in our accounts.

Thank you, Bent. And moving to Hakon's second question. What's your hedge position on raw materials for EMEA? And should we expect similar price increases this time as we witnessed during 2022?

So when it comes to PE, we are hedged south of 80%. When it comes to ALU, which is a smaller part of the cost, we are hedged mid-50s. PE is around 11%, 12% of the material cost as reported in our P&L. Aluminum is around 5%, if I remember correctly. To your second question, I think the difference between '22 and 2026 is that in '22, it was PE, it was ALU, it was electricity, which was maybe the biggest relative increase we had, it was pallets, it was inflation on almost everything.

The situation that we're looking at right now is a situation mainly related to PE. We saw the price increases on the chart and also the ALU. So the breadth of the inflation is not the same so far. So it's not the same as '22. I think the situation reminds me more of 2021 when we saw the raw material start to increase following the aftermath of the pandemic. And in 2021, this was not yet a broad inflation. So '26 reminds me more about '21, and I hope that '27 will not become '22.

Thank you, Bent. Then a couple of more questions from Hakon. How much of the phasing/one-off costs for the quarter is related to Americas?

So I have to think about that. When it comes to America, there are some one-offs related to the destocking effect, but we have not quantified that in the report, but it's part of the picture. And it's -- when you start to generate the results, you see the impact of that destocking effect. It's there, but it's not a major effect in our numbers. The main proportion of the one-off is related to EMEA.

Thank you, Bent. And then the last question from Hakon. Is production Line 2 at Little Rock ramping up according to plan?

Well, it's actually too early to ramp up production in Little Rock on Line 2. So -- and the plan was not that it would ramp up yet. So you could say it's according to plan, if you like. We are not ramping up yet. We're installing. We're preparing, but we have not ramped up the production yet on Line 2.

Thank you, Thomas. Then we have a question from [ Cole Hopen ]. Focusing on surcharges and price increases. Firstly, can you give some color on how you approach these commercially with customers? Are the surcharges just for logistics or polymers as well? I'll take that part of it first and then --.

Yes. So what we do is we sit down with our customers. We explain them the situation in all of the agreements we have. We have what is called sit-down clauses. Clearly, this is an extraordinary situation, extraordinary event hitting pretty much all industries, definitely also ours. So there is a wide understanding that's needed. The cost increases are -- the cost surcharge that we are introducing relates to both PE as well as logistics.

Thank you, Thomas. And then the second part of Cole's question, have our liquid packaging board suppliers also approached you for logistical surcharge costs?

If our suppliers -- so -- and this is actually -- maybe I should have qualified my previous statement. When we deliver our material from our plants to our customers, there's a mix of Incoterms. Some will pick it up themselves, somewhere -- in some cases, we will arrange the transport, et cetera. And with our suppliers, it's the same thing. It depends on who it is and what the Incoterms are. So if -- and in some cases, it's very transparent, we simply pay whatever the transport is and in some cases, included in the price. So it's difficult to give one answer on that.

Thank you, Thomas. Then we have a question from Niclas Gehin in DNB. You write in the report that you are confident in reaching your midterm target for Americas in 2028. Can we also expect for you to reach your midterm targets for 2026?

Well, you have to look at the -- you have to take the outlook statement for what it is. And I think the way we have phrased it is we think the underlying business is doing well. We also recognize the fact that there is a lot of uncertainty around us out of our control, one of which relates to, of course, as we keep saying, the Middle East, but also other impacts. So for that reason, we are not guiding on '26 beyond what we said in the outlook statement.

Thank you, Thomas. Then we have a question from Marcus Gavelli at Pareto. Assuming price hikes, price increases will not be fully passed on to customers before later this year, so some lags in the implementation of that. Should we expect near-term margin squeeze? And are the ongoing price increases sufficient to fully offset the cost increase that you are seeing today?

So should I take the first part of the answer. So --.

I can think about the second.

Yes. So I will speak slowly.

Exactly.

So when we are looking at this, we need to consider a couple of things. So one thing is the inventory speed. So when we have a price hike in the spot prices, how long time will it take before it will hit the cost base in our P&L. The second element is the timing that these surcharges becomes effective and we are in the process of working and implementing those price increases as we speak. So based on the information we have today, it's difficult to assess which force is stronger, but we stick to what we say in the outlook that we believe that second quarter overall will start a gradual improvement compared to Q1.

And then the -- just repeat the second question, please, exactly.

Second question he is basically asking, are we passing all the full net of the open price increase to our customers.

So I think when you think of the price surcharge, right, this is based on partly what we know, i.e., the existing price levels of PE. It's also based on what we think and we don't know how long these price impacts will last. So what we have passed on now is actually what we need to cover the cost of the significantly increased cost that we are experiencing.

If these costs tend for whatever reason become even higher, then it's a different situation, right? And we need to reassess and we need -- and as I said before, we've put in a mechanism that will allow for some movement in this. But it's very important to understand for everyone, including our customers, by the way, that this is a volatile time. We have little to very, very limited visibility on how cost will develop. And we have various indexes when it comes to PE, et cetera, but they tend to be, let's just say, not very accurate historically. So we have to look at it, but we are implementing a plan.

We're implementing a surcharge to cover for the costs. And it's important that we cover for cost. And it's just like in '22, when you cover -- if you look at it from a margin point of view, it does have an impact. There is no way around it. If you increase by the cost levels you have in price, there is a margin impact on that.

Thank you, Thomas. Then we have a final question from Martin Melbye at ABG. Could you please comment on the change in the competitive situation in Europe?

I'm not entirely sure what the question means when it changed compared to what and compared to when.

Yes. I think he's referring to the update that we gave to the market in February where we talked about increased price competition in Europe.

Right. So what we have seen during the end of last year is more intense competition in the core markets of Europe, in the chilled business, in our core business. And that, in a way, to be honest, is not surprising given that we have had good development and success in building our market share from a strong point to an even stronger point. And of course, at some point, you will expect that there will be reactions and competitors trying to win back lost territory. That has been the case that attempts have been made.

But so far, knock on wood, we have been in a good position to defend our positions and defend our strongholds where we are now. Since then, nothing significant has changed in that respect. And -- but I think it's also absolutely normal and expected, whether it's in Europe or in America, that competition as we are growing, as we are building our business, competition will try to fight back. And we will try to do our very best to defend our positions and keep growing the business as we have done for the last many years.

Thank you, Thomas. I see that concludes our online questions for today. So thank you, everyone, for joining this fantastic morning in Oslo. I wish everyone a good day.

Thank you, everyone, for listening to me so many times. Thank you and all the best.

Good morning, and welcome, everybody, to this fourth quarter and full year results presentation for 2025 for Elopak. My name is Christian Gjerde and I'm the Head of Treasury and Investor Relations.

Today's presentation will be held by our CEO, Thomas Kormendi; and CFO, Bent Axelsen. The presentation will last for around 30 minutes, followed by a Q&A session where the people here in the audience and the people following us online will be able to ask questions.

So with that short introduction, Thomas?

Good morning. Thank you very much, Christian, and a warm welcome to all of you here in wintry, beautiful Oslo morning and pretty cold one as well.

Today, we're going through Q4. And on a personal note, let me just say it is a great pleasure to present Q4, closing off what has been a really, really strong year for Elopak. And I think on behalf of all of the Elopak team members here, my colleagues, we are incredibly happy about the result we are about to present.

First things first. And just to remind everyone, what is it actually we are doing? We are on a mission where we are offering sustainable packaging. And that we do in commodities, we do it across the world. We, through this, enable nutrition and also all the time are thinking and considering how we impact and how we enable the reduction of plastics.

Let's then go to the performance. And as I start off by saying, it's been a very strong quarter, and it actually rounds off what has been a momentous year for us, both in terms of results, but also in terms of the strategy execution that we have executed during this year.

Now firstly, we have -- we're seeing a quarter of very solid growth around 15%. That leads to an increase in EBITDA by more than EUR 5 million and a margin level of around 14.6%, which is a strong result, and it's also driven essentially by a number of elements, including evidently the growth we're seeing, but also the pricing initiatives we have, also the operational excellence, the cost controls we've had, all of that has led to this result. I'm coming back to that.

Americas, clearly with Little Rock now in place, Line 1 producing, delivers 28% growth. And also, very importantly, the Little Rock plant is now, for the first quarter, accretive to the group. Remember, we said in Q3 that we were now cash positive in Little Rock, and now we are with -- in this quarter, also accretive to the group.

We also record the highest ever cash from operations, more than EUR 63 million, and that leads us to propose a dividend in the range of EUR 0.102, a total of 59% in terms of net profit.

I think it's fair to say that it's been a year where we have strengthened our strategy, particularly, of course, in U.S., but also in other areas that you will see throughout this presentation.

Let's firstly think about the revenue side. And this is the first year actually where we are breaking the EUR 1.2 billion mark. And we're doing that, thanks to clearly the growth in U.S., but also very solid growth in commissioning of filling machines, which will give you, as you know, is a good indicator of coming sales. It's a very strong indicator of how our customers look at the offerings we have, the equipment we have, the services we have.

Looking at the EBITDA level, we are delivering roughly EUR 9 million more on a full year basis. And as you can see, increasing margin levels to about 15.3%, well in line with our midterm targets and also throughout a level in Q4, which is driven by essentially growth in America, but also growth outside of America like India.

Let's go to the strategy and a couple of words around this. And some of you will have seen it before, but it is important to highlight that what we have seen throughout the last few years, '25 not being any exception, is that we are following these strategy points pretty disciplined, in fact.

Clearly, it's about the realizing global growth where Americas is the #1 priority for us, frankly, in terms of capital allocation and also in how they now deliver the growth. But it also includes MENA and India.

We have the strengthening leadership, which is all about our core business in Europe, our developments around delivering sustainable packaging, delivering on regulations, up-and-coming regulations. And then lastly, the plastic to carton shift. which we have talked about a number of times, and I'm going to highlight examples of that now.

What we haven't talked about very often throughout these quarters are the efforts that we are doing around the operational excellence. And we do that across the group. We do it in our manufacturing facilities, reducing waste, improving our waste figures, and increasing our OEE figures, getting more out of our assets, but we also have a number of other examples on that.

And let me just go through 3. Firstly, and this we always take because this is also part of our midterm targets, and that relates to safety. And while all incidents, obviously, are too many, any incident is one too many, we are seeing a development in the right track. We are down now to 4, which is for us, historically, a low level, in fact.

This is a TRI level of 4. And if you go a couple of years back, we would have been at a lot, lot higher level. It's thanks to a discipline in the organization and a very high level of commitment in the team driving the safety awareness and the safety culture in Elopak.

The other one, which we are very happy about because this is a strong indicator of why -- how we're going to grow in the future as well is, we maintain our fixed cost base while increasing our revenue with about 6%. Clearly, this is a testament to the fact that this is a very scalable industry. We do see the possibilities of driving more business through our organization and then hence, increase our effectiveness and productivity.

And finally, on a very important point relating to our working capital, we are now seeing efforts that are finally paying off, I can say, on inventories, reductions by 17%, and also an overdue collection, which is down quite significantly. So all of that is, I think, is a sign of health how we are driving and building the operational efficiency while driving growth and securing the profitability.

Now on a completely different topic, but related to plastic to carton. Very often, we talk about non-food. We talk about areas outside of our core categories. But we also focus on the business that is very close to us, the dairy business, and not only in milk, in this case, also in cream.

And interestingly, and this is not something you would necessarily see everywhere. But in Germany, as an example, you will have a significant amount of cream packed in plastic cups, essentially. You can look at the slide and you see the classical plastic cups, which are used for cream.

Now together with one of our close customers in Germany, NordseeMilch, we've been working on a project on replacing some of these plastic cups by cartons. This actually results in somewhere around 65% to 80% -- 85% less plastic for the retailers. So clearly, very interesting from their point of view. But also and very importantly, it also results in higher efficiency in transportation, logistics costs go down and overall TCO, total cost of ownership, which is in favor moving it from plastics into carton.

It's something that is only just beginning with the end of last year when we started it. It's something we believe strongly in. We will have -- will be -- can be rolled out to more customers. A lot of that is, of course, private label in Germany. But as you will see also on the quote, we think this is a really, really good example of even in smaller parts of the -- in core categories close to our heart, how we can work on the plastic to carton replacement.

Right. And I think with this, Bent, I will hand over to you and join you in a second again.

Thank you, Thomas. Let's jump straight to it, starting with the EMEA segment. For EMEA, we reported revenues of around EUR 222 million. That is a growth of 8%. That growth is mainly driven by the increased sales of filling machines, which was at a really high level in the quarter.

That being said, this is compared to a rather softer quarter last or the year before for filling machine. And there -- back then, we also had a higher share of rental. So that is also exaggerating the growth level to some extent.

The carton business and the closure business is rather stable year-over-year. What we are seeing is that there is a decline in the juice segment. This is very much driven by the high citrus prices that is depressing demand. That is then compensated by growth in the UHT segment, where we have customer wins, and we also grow with selective customers.

The closure business is basically following the carton demand. In MENA, the business case is stable. We have a resilient demand in an environment that is quite competitive these days. When it comes to home and personal care, this segment is developing slower than expected. It takes more time to develop a new category, but we still believe in the long-term potential of this segment and the global mega trend.

If we look at Roll Fed, as we have reported before, we see a decline in Europe, but the rate of the decline is lower. So we are hoping for that the tide will turn to some extent, and we will look forward to how that will develop in the following quarters.

In India, on the other hand, the Roll Fed growth continues to be strong. We report a revenue growth of around 6% in India. And that is despite a weak season for juice where adverse weather has dampened the juice demand, and we also continue to see overcapacity and very strong competition and price pressure in the overall India market.

When it comes to profitability, we are reporting EUR 31 million, slightly below last year. The margin is 14% versus 15% and that margin reduction is due to the fact that we are growing at a high rate in India. And we are selling a lot of filling machines in the quarter, and both those 2 factors dilute the average margin for the segment.

On the operating cost side, what we are happy to see is that improved efficiency rate reductions are offsetting inflation and the continued increased R&D activity level.

If we move to Americas, we are reporting around EUR 100 million. That is 18% growth. And on a constant currency basis, that is 28%. This is, obviously, the impact of the successful ramp-up of the Little Rock plant, where we are steadily onboarding customers throughout the quarter.

In addition to Little Rock, we have very strong performance in the Canadian assets and that enable growth in the fresh dairy segments. All in all, this is also supported by a continued trend where dairies are prioritizing supply security, and they want to have a dual sourcing strategy and here, Elopak comes in.

In addition to the volume growth, we also have carton price adjustments in America following the higher raw material costs. The EBITDA is EUR 23 million. That's up from EUR 19 million the year before, and the margin is improving to 23%. This is driven by the volume growth, obviously. But in addition to that, we have attractive mix effect in the business.

And we're also very happy to report that Little Rock as a plant is delivering margin -- accretive margins to the group, in line with what we have talked about when we talked about this investment for the first time. So very happy to see this development.

Also in America, we are seeing a benefit from improved operational efficiency, and that also includes improvements in waste. So that is good to see that we can grow and have operational efficiency at the same time.

On the other hand, when it comes to our joint ventures, the results or the share of the net profit from these joint ventures are -- have declined to EUR 1.9 million from EUR 2.7 million, and that is reflecting a softer demand and change in consumer pattern in Mexico and Central America.

If you go to the bridge from EUR 41 million to EUR 46 million, we start off with the revenue mix. As I mentioned, this is obviously driven by the American expansion with a strong growth. And it's also a result of price increases initiated throughout the year in Europe. And these 2 in combination are the main factors for the effect of EUR 9 million.

The raw material cost base is stable. And below that, we see higher board prices that are almost offset completely by reduced LDPE prices.

As you see on the chart here, we are very pleased to see that the operating costs, if you adjust for inflation, they are actually down compared to last year. And that is a result of a systematic initiative in the company where we are reducing the use of external services, stricter travel policies and generally improved efficiency in the way we are spending our money.

The last bridge element, we have already talked about the joint ventures, but we see we have a currency impact of EUR 1.9 million, and that is a result of the weakening of the U.S. dollar.

If we then move to the quarterly cash flow, we are very happy to report that not only this is a quarter with strong profitability, but it's also a quarter with good working capital turnover. So we start with the left, we start with the EBITDA, and we see we have a reduction of working capital of around EUR 28 million.

Thomas talked about improved inventory of packaging material, reduced overdues. The high rate of commissioning of filling machine have also reduced the inventory of the filling machines. This -- we do have inventory increases in U.S. naturally because that comes with the growth.

So the structural part of it is around EUR 7 million, EUR 8 million. And in the quarter, we have an unusually high account payable of around EUR 20 million, and we believe that EUR 20 million increase will reverse in the first half. So of this reduction, there will be a reversal, which will be close to EUR 20 million sometimes in first half because these accounts payables they are going up and down with the business cycle and the settlement of our raw material contracts.

In addition to that, we are paying the EUR 9 million of taxes. The other is basically a reversal of the share of net profit because that is not a cash flow item, giving the EUR 63 million cash flow from operation, which is the highest figure we have seen in the quarter so far.

Cash flow from investing activities is EUR 23 million. We see the investment of EUR 28 million, and that is EUR 8.5 million related to the U.S. plant. We do have our normal maintenance programs in our plants. Filling machine CapEx is lower than normal because we are selling more of the machines versus renting them out, and that reduces the CapEx.

The cash flow from financing activities is minus EUR 32 million. That reflects the dividend of EUR 22 million and lease payments and interest. And as you can see from the chart, we have a reduction of around EUR 8 million in net bank debt if you compare Q3 and Q4.

We want to talk about the year as well. And also for the whole year, we are happy to report that we are generating enough cash flow, both to pay dividends. We are -- for the year of '25, we are paying 1.5 year of dividends because we changed from one dividend payments per year to semiannual payments per year. So we do that. We have the investment program in Little Rock. And despite that, the bank debt year-over-year is stable. So we are very pleased to see that.

And with that combination, that also brings the leverage ratio to 2x, exactly on 2, which is our midterm target. And that is a result of the profitability, the improved working capital that we have generated throughout the quarter.

And I think what is good to see is that the leverage ratio as such is coming down from Q3, but so is the absolute level of debt, which is going from EUR 272 million to EUR 264 million.

If we move to the return on capital employed, it's still picking up, getting closer to 16%, now 15.7%. And then we see the effect of the growth and operational leverage from our American assets. We still have some investments to do. We have invested $96 million so far in Little Rock, and we have $32 million to go for the investment in the third line that we announced in the previous quarter. So a good year with good profitability and very strong cash flow.

So with that, I will give it back to you, Thomas.

Thank you. So where does this then lead us? And I think summing up of what we have just seen here, it's clear that we talk about solid growth. We talk about EBITDA growth of more than EUR 9 million, revenue growth of about EUR 50 million, leverage ratio already now down to 2x, which is in line with our midterm target. And then the dividend for the second half of last year, leading to a full year of around 59% of our normalized net profit.

And all of that actually is in line with what we said back at the Capital Markets Day for our midterm targets. And what we are seeing now when we look forward and look to the full year, we expect to deliver -- continue to deliver in line with the targets that we have communicated back then in '24.

So with this, I thank you very much for your attention, and we'll hand over to you, Christian.

Thank you, Thomas. So with that, we will start with Q&A. So taking questions from the audience first. So I'll come around with a mic. Please state your name and the company that you represent.

Ole-Petter Sjovold, SB1 Markets. So 3 questions, if I may. First, on the utilization on Line 1. What sort of utilization are you currently running? And is your customer ready to receive all the products?

Question 2 is, did you add on any further offtake from Line 2 and 3 during the quarter?

And question 3 is on the Roll Fed market in Europe. Could you touch on the price levels you're currently seeing being offered from your competitors? Is this at sustainable levels? Or is this another antidumping potential case?

Three questions. Let me try on the utilization. So what we said during all of last year, actually -- well, not all, after the ramp-up started is that. We saw a ramp-up somewhat slower than what we had planned. But as you can see, we mitigated that by producing more in Canada. So overall, the figures for Americas turned out very, very good.

What we have seen in Little Rock is that the issues we commented on before, which had to do with some of our customers, their designs, onboarding some of their plants took longer. And we saw at the end of last year, we were getting very close to the right ramp-up speed. We also saw, which was extremely positive, that the efficiency in manufacturing, when we measured in terms of waste, et cetera, we were really, really at a level that was actually slightly ahead of what we had thought. So it was a mix.

So when it comes to the full year, we did not fully ramp it up to the level that we thought, but the speed at the end was -- is right, if you put it like that, very close to being right at least.

The question on Line 2 and 3, right? So what is happening now is we are installing Line 2. What is also happening is that Line 3, as you know, will be installed by the end of this year and during '27. So in the meantime, we are currently working on some movements of products just to make sure that we get the best efficiency in Little Rock from that point of view. But it's frankly more technical how we move from one or the others and you have to do with sizing and things like that.

Roll Fed, so the Roll Fed market is, as we've communicated and Bent said, it's very competitive. It's very competitive. Pretty much everywhere we look in Europe, you have excess capacity and you have more capacity coming in, maybe not directly in Europe, but in the Middle East, which can also support into Europe.

What we have seen in Europe is a stabilization of our Roll Fed volume to a certain extent. It's -- we have seen and we have actually walked away from quite a lot of business because it was at an unattractive margin before. And now we see that we are at a more stable level.

If you ask, is it sustainable with the pricing levels we're seeing, I think the answer is no. It's not. It's not sustainable to make the kind of investments that are being made and then produce at -- with margins that are being produced. It's not sustainable. It's also a business when you look back a couple of years, you have seen companies close, you've seen bankruptcies, et cetera. It is a business with overcapacity in Europe, and it's not sustainable to supply at the margins that are, in some cases, being supplied. We are not doing it.

Marcus Gavelli, Pareto. So just first on the filling sales machines today. Could you try to elaborate somewhat on the geographical split on that, just first within EMEA and if you can -- as most granularity is preferred, but if you could provide any color on where do we see filling machine sales firming up? And also on the order book as well, how you see that now looking into 2026 versus when you look into 2025?

So if we look at the filling machine, we look -- we think about filling machines in 2 perspectives. Bent talks about commissioning, right, which is, obviously, very important for us. This is when they start producing and we get them out of our working cap and inventories.

When we look at the order intake, we are seeing good order intake in U.S. rather -- yes, in actual U.S. in this case, U.S. but also in Europe. And we're seeing it in South Europe and also we see in Northern Europe. There is no -- I cannot give you an answer saying one or the other area right now is a lot more -- a lot stronger. Last year, South Europe for us was, from an order intake point of view, very strong actually.

I think it's also if you want to see the split between America and EMEA, you can look into what I believe is Note 2 where you see this split between the segments.

And just on the -- let's call it the aseptic rollout, you're trying to -- it's at least in your IPO and CMD, you used a lot of time on the aseptic rollout and how you want to develop that into Europe. How are you seeing that? You didn't use too much time on it in the report today. You say Roll Fed volumes are stabilizing. Are we seeing that same trend in the aseptic segment?

Yes, I think if we look at the overall market on aseptic and for us, aseptic Pure-Pak currently is Europe only. And Bent pointed out as well, the juice sales, not specifically linked to our business, but in general, is under a lot of pressure due to high raw material costs, citrus prices, et cetera. You will go into any shop here and see it's become pretty costly with juice. We see that as well on our aseptic Pure-Pak business.

On the other hand, we see higher than market growth in our UHT sales. So machines that are producing clearly UHT milk, but also other non-juice related products will tend to see good sales right now. Then you have, as always, exceptions also in juice. There are some customers who do better than others. But overall, juice consumption is strained.

And also to add to that, I mean, there's a completely different dynamic between the Roll Fed business where we have lost market share, not only because of the pricing pressures, but because of tethered cap regulation where customers move to other formats. So there is a shift in format change -- in format preferences. So it's not all price competition. But there, we lost some market share.

In Pure-Pak aseptic, we don't lose market share. It's a system where we sell the whole package. So these 2 businesses are perceived very different by our customers, and it's also run by us in 2 very distinctly different ways.

Okay. No further questions from the audience. Okay. Then we will move to the questions that we have received online. So I will start with questions from Jeppe Baardseth, Arctic Securities first.

What was the gross margin, excluding India and equipment sales? And how does this compare with historical levels? Additionally, could you clarify the gross margins for equipment sales and for India, respectively?

So this is -- I don't know what you say, Christian, but that is probably beyond the disclosure level, but maybe I could add some color. When you sell a filling machine in Europe and many of the machines and you will find that and you'll in the notes, they are commissioned in Europe. When you have a sales, you have very limited margin. That is a fact. So you really cannot compare filling machines with blanks.

When it comes to the blanks and closure business, in Europe they are rather stable and the margin level of the blanks business also are rather stable, if not slightly improving.

When it comes to India, India margins do indeed impact the margin in Europe. We have not disclosed those effects accurately. All I want to say around that is that we are taking measures to not only improve pricing in Roll Fed, but also work on the raw material side, both the way we work with our suppliers from a price point perspective, but also from a value engineering perspective. I think that's probably as far as we can go to stay consistent with our disclosure level, Christian.

Yes. Thank you, Bent. Continuing then with additional questions from Jeppe. What factors are driving the slower-than-expected growth in home and personal care volumes? Approximately what share of total sales does home and personal care segment represent today?

So let me start by the factors, what is driving -- maybe the question is why are we seeing the speed of ramp-up that we are seeing? And there are a couple of reasons for it. Firstly, I think it's important to remember, we are trying to do something new, right? We are trying to change something that has been around for many, many, many years. That takes a while. And many of these companies that will be working in these categories are large FMCG, large multinationals who frankly take their time. They have the equipment installed, they have the production base installed. There has -- it doesn't mean necessarily that everything will deliver in line with our plans or even their own plans.

But there are other things in it as well, right? There are things that when you look at the non-food area, we are seeing quite a diverse picture. We look at it from a Nordics perspective, it's moving very, very fast. We see more and more equipment. We see more capacity needed. We go further down in Europe. We have retailers who, in some case, actually, in the case of Lidl will have set up a system around plastic recycling. And then that is a strong motivation for them to maintain -- to drive that business in its own right.

And then we have, of course, companies and areas where we say, is it the right size? Is it the right format? Is it -- is there something around the way it looks? We are actually, as we speak, launching generation 2 of our system, which offers a different way of displaying our cartons, displaying non-food products in a more, I think, you can say, creative -- and using some of the advantages that are given through the designs, et cetera, which we think will overcome some of the obstacles in this.

But I think the reality is, big FMCG areas tend to be slow moving. And there's a lot of testing going on. There is more equipment going in now. We are very committed to making this a success. We strongly believe it will be, but we have to accept that it's taken a little bit longer time.

I think you've [ answered ] that. So the consumer priorities in 2026 compared to 5 years ago, they have changed. So there are other concerns and carbon footprint is probably not as high on the list from a consumer perspective. The companies and the brand owners, they still have their commitments, but that not necessarily the value proposition they are bringing to the consumers where the convenience will be the key criteria.

Back -- on the question of how big it is today? I think you can say that today, the non-food volume is insignificant. But when we laid out the strategy, there was an expectation and an ambition to grow more than what we have done in 2025. So it's more to report that the trajectory so far since we laid out the strategy is not at the speed that we expected it to be, albeit from a minute starting point.

Thank you, Thomas. Thank you, Bent. So continuing with one last question from Jeppe, relates to the competitive landscape in the U.S.

So are we seeing any indications of additional demand following customers' supply chain derisking to call it that?

I think you can say yes, shortly without being too specific around it. I think there is an understanding and a recognition that we are putting capacity in. We are investing in Americas. That is not done by any of our competitors. And hence, there is a sense that from a contingency point of view, it's customers who we have typically not been -- have not been ours are now coming to us as well. It is frankly also part of the plan and why we established both Line 1, 2 and 3. So I think this is in line with what we had hoped and expected.

Thank you, Thomas. That's a good segue to the next question from Charlie Muir Sands from BNP.

How much of Little Rock's capacity has now been sold or committed to customers across the 3 lines?

I'm a little bit uncertain to us how explicit we are this in terms of disclosure. What we have said, you remember, is by the time we invest in Line 1, it was sold out. That was number one. Then we said we invest in Line 2 and we didn't sell out Line 2 because we wanted this to start up and get some experience. And then when we invested in Line 3, I think we said 80%, 90% was sold out. So that is the level we have had.

Now what I then said is there will be some mixes here, right? Some volume will move, and we may see some movement into Line 2 earlier, et cetera. But overall, that is where we are right now. We are evidently continuing to sell volume and ensuring that the lines will be filled when we move on. But what we're also doing, and this is very important is, we are looking at Americas from a full supply chain perspective. And in Americas, we utilize all 4 factories. So Canada, Little Rock, Mexico and the Dominican. And what we are working on now, and going to work on is to make sure that we get the full optimization between the 4 factories rather than just talking about lines in Little Rock.

Thank you, Thomas. A couple of more questions from Charlie.

What is the 2026 CapEx expectation? If leverage continues to decline, what is your priority for surplus capital, higher dividends, M&A, buybacks?

Right. So we announced Line 3 in the third quarter. We are building the second line Little Rock in the first half of this year. And we're also doing upgrades of some of the lines in Europe. So if you go back to the Capital Markets Day, we said that overall, the CapEx level will be around 5% to 7% of the top line. With that progression of the investment program, we will be on the higher end of that range, if not more, in 2026.

So given the acceleration of the growth program, especially in America, we don't expect that there will be a lot of surplus -- extraordinary surplus cash. But you have seen from the dividend, we have given out now 59% that we are always looking to -- into the balance sheet. And as long as we are investment-grade [ land ] and delivering a leverage ratio of around 2x, and then we are willing to pay the dividends. But 2026 is going to be a relatively high investment level compared to 2025 for the reason I mentioned.

Thank you, Bent. Then we have a question -- last question from Charlie, and it relates to the raw material costs for '26.

So could we comment anything on how we see liquid packaging board pricing developing for '26 and also our other important raw material inputs?

Should I take that?

Yes, please.

Thank you, Thomas. So what we are seeing is that, generally speaking, for the year of 2026, the liquid packaging board raw materials are increasing average. There are pluses and minuses based on the different product categories. But overall, the liquid packaging boards are increasing. And remember that in Europe, we are negotiating multiyear contracts with the opportunity to adjust prices annually. So you will not see any volatility or any changes in the liquid packaging board prices throughout 2026 because those are contracted with very close to fixed price.

When it comes to LDPE, we have reported over a few quarters, a softening of the LDPE. And I would like to remind that we are also hedging the position on LDPE and that hedging rate is typically 70%, 80% either through the commercial contracts or through the financial instruments.

Thank you, Bent. Then I have one question from Hakon Fuglu or actually 3 questions from Hakon Fuglu.

It goes back to the raw material prices again. So how are we able to mitigate the increases that we are seeing on liquid packaging board as an example? And how are you seeing this impacting volumes in EMEA?

Maybe I can start on this...

Absolutely.

On this part because what we have done this year is we have increased our pricing, adjusted our pricing in line with what Bent just said, based on the fact that raw materials are going up. Now these price increases we've implemented early on from this year. They are implemented from January. And that's the one way, of course, we are offsetting it.

The other one is evidently, given that we are also living in a competitive environment, we continue to improve on the efficiencies we talked about during this presentation, operational efficiencies, all the things we can do to offset these kind of increases. Volume-wise, what we see and believe is evident when you have these price movements, there will be ups and downs in the market. But as I said in the outlook, we believe that we are going to deliver in line with our midterm targets as communicated back in '24.

Absolutely. And maybe to add one more thing as a mitigating factor for Elopak, which is quite Elopak specific, is the very strong growth we have in America, and that is giving us operational leverage and diluting the fixed costs. So that is also a way to mitigate and manage EBITDA margins.

Thank you, Thomas. Thank you, Bent. A couple of more questions here before we round off. So continuing with a couple of more questions from Hakon.

Can you comment on end consumer demand in the U.S.? Are you seeing volume growth on milk and other dairy products?

That's actually a very good question because what you see in U.S. is somewhat of, call it, softening or drop on plant-based. And as you -- some of you, I'm sure you will have known that recent years, plant-based gained share on the back of milk, which in turn somewhat declined.

Now for reasons related to health, related to nutritional value, et cetera, there is a little bit of headwind on the plant-based side. And some of the plant-based products are seeing that more than others.

What we hear, but I have to say here, because there are no really solid facts around it, but we hear that, that is then giving the milk consumption a resurgence in U.S., more protein -- focus on protein, et cetera, et cetera. As you know, the milk production and the milk consumption, but not liquid milk, but milk in general, is increasing a lot in U.S. and that has to do with cheese, spreadables, exports into China, et cetera, has been the driver there. But the liquid milk part over some years has been declining. And there are indications that, that is now turning around. But it's -- I think it's early days to say that.

Thank you, Thomas. Then we will take one last question before we close off. That's from Alessandro Foletti from Octavian.

Q4 growth was much stronger than full year growth. It seems that Q4 was -- saw an acceleration. Was this all due to stronger sale of filling machines? Or did you see somewhat of a market recovery?

This is very much filling machines. If you are focusing on EMEA, we do have a commissioning plan. And when you make a commissioning plan that has a tendency to be quite linear in reality. Most of these contracts, these machines get commissioned in the fourth quarter. And I think if you look at December, I don't think we have ever seen so many machines being commissioning in 1 month. This is not because suddenly the interest was much higher, but it was basically a needed catch-up to get back what we lost in commissioning speed in the beginning of the year. So that would be the EMEA part.

And in America, of course, then is real underlying growth, and that is not related to the market, but that is basically the market share we are getting being that second supplier to secure security of supply for the customers.

Perfect. Thank you, Bent. So that concludes our Q&A session and results presentation for today. So I would like to thank everyone for joining both here in Oslo and you joining online.

Thank you very much.

Thank you.

Good morning, everyone, and welcome to the third Quarter 2025 Results Presentation for Elopak. My name is Erica Honningsvag, and I'm the Investor Relations and Treasury Officer. Today's presentation will be held by our CEO, Thomas Kormendi; and our CFO, Bent Axelsen and will last for about 30 minutes, followed by a Q&A session, where the people here in the audience and the people watching online will be able to ask questions.

So with that introduction, I will hand it over to our CEO, Thomas Kormendi.

Thank you, Erica, and good morning to all of you here in Oslo. It's actually lovely to see such a filled room here today. And also, of course, a very warm welcome to everyone joining us on the webcast. Today, we are particularly happy actually to present the best ever financial result for the group to date. So it's a presentation with quite a few milestones, and we are very, very excited to present.

Before we start on the quarter, of course, just for those of you who are not so familiar with Elopak, what we do is, we are in sustainable packaging. What we do is, we protect commodities, we enable nutrition around the world, and we do all of that with a mission of actually reducing the overall plastics consumption. So replacing more and more plastics with more and more carton packaging.

But let's then look at the quarter, and it's been quite a unique quarter, as I said. First of all, we have seen a plus EUR 49 million EBITDA result with more than -- with 17% margin level. It's a very strong result in absolute terms, and it's also within organic revenue growth of 1.2%. Most of the revenue -- most of the result is driven by an incredible strong performance. Again, I have to say, in Americas with 18% growth, and also in a period where our plant in Little Rock, actually for the first quarter, started turning a profit, as we said that it would do actually after Q2 as well.

It's also a quarter where we -- and I will address that more later in the presentation, have decided to increase the capacity ahead of time in U.S. with yet another line. So the third line to be installed and also now a quarter where we say that even though the EMEA business is meeting some consumption headwind generally, we are seeing that the business is resilient and doing well -- in spite of all of this. And finally and very importantly, I'm sure for many in this room here as well, this is a quarter where we have a solid cash generation. We've been able to pay back our net debt and are now facing a 2.1x leverage ratio, again, in line with -- almost in line with the midterm target.

So overall, strong financial performance in the quarter and some very important milestones for the future growth of Elopak. Let's just think 2 minutes on the strategy that we presented back at the Capital Markets Day, and that we've been following up since and where you see that the quarterly result we have now is a direct result of the activities we have initiated throughout this period and on the back of the strategy. Our strategy consists of 3 elements: number 1 relates to the geographical, what we call global growth. For us, global growth for a very, very, very big part relates to America and the continued development in America. Needless to say, performance in America and what I've just shown is a testament that, that is actually paying off.

The second one relates to the development around making our core stronger. And our core in Europe, where we have a significant part of our business, also relates to development, innovation around new materials in line with and meeting the regulations upcoming in EU such as the packaging and packaging waste regulation. A lot of the work in that field is directly transferable into the overall ambition we have in replacing plastics, what we call plastics to carton.

This is a massive area way outside our current business but in adjacent areas, but also in the actual substrate shifts happening in our business, i.e., if you think of it, the milk currently packed in plastics moving into cartons, et cetera. But the potential, of course, is way, way, way beyond that.

Now starting with number 1 and the geographical expansion, let's just turn and think about Americas, again, because it has been quite a journey for us. We -- as some of you remember and seen is, we decided back in '23 to establish a new plant in U.S. And that is on the back of a position we've had in U.S. for -- actually for 20 years. we came to North America in 2000, yes, and supplied North America with plants in Canada, our big Montreal plant and also the plants in Mexico and the Caribbean. In '23, we decided we need plant inside U.S. and then we established the plant -- decided to establish a plant in Arkansas, Little Rock.

In September of the same year, we announced that we are going to put in another line in that plant because we saw increasing demand around our supply, our services, our packaging offerings and generally an opportunity in the market. In April of this year, we had the inauguration of the plant. The plant, I can happily say was built, constructed and made in time and on budget and has been up and running ever since and we are ramping up. And as you have heard earlier, we are now seeing the fruits with the plant turning a profitable business already here in Q3.

So the demand actually in America is very clear. And if you think of it, we have been growing since 2020 on an average 15% a year. That's a 76% actually the growth in the Americas business in a market, in a stable, mature category such as milk and juice. So we have seen that there is a demand for what our services and for that reason, we have also taken the step now to announce the decision that we are going to build, extend our capacity with the third line in Little Rock, allowing us to drive our market share, continue to -- on the growth pattern we've been on, allowing us to establish a much broader portfolio than we had before, simply given that as equipment gets to the manufacturing plant, gets more and more full with existing orders, we need to have a broader setup to be able to offer a broader portfolio.

And that is what we're going to do with the third line. So what is very fundamental is that with this third line that we're actually putting in place somewhere a year ahead of what we had originally thought. But with this, we confirm again that we will reach our targets as presented on the CMD back in '24, the midterm target as well as the long-term target. This will enable us to drive as I said, increase our value share -- our share of wallet with a number of our customers as well as increasing our market share in general in America. Because of the product mix, though, in America, which is in the third line, will be primarily focusing on smaller size packs, including anywhere from school milk size and upwards.

For our large customers in the U.S., they always have a mixed portfolio in their sales, i.e., from very small ones to the larger half gallon sizes. For us, establishing a third line, enables us to get a higher share of wallet with them, supplying them the full portfolio and hence become a better and more valuable supplier to the industry and to our customers in general. So although we have a run rate because of the product mix on the third line, which is different than what we have announced on the first line. We're also going to see that with this, it's accretive to the group, and it's certainly very, very strongly supporting the group's industrial presence in America.

It would also mean that we will have a higher level of flexibility in how we run operations in America. We will have a higher level of operations with line 2. And 3, which will allow us to ramp up line 2 at a faster pace because of line 3 than without line 3. And that has to do with product mix and how you move products and sizes, et cetera. Very important is, we are building line 3 because we have the commitment, full commitment on that line from customers in U.S. So the line 3 acts both as an industrial strategic investment, it has the full backing of customers, and it is definitely accretive to the group, and will strengthen our overall position in U.S.

Now back to our results. And as you will see, we have a revenue that is down, but on -- due to the currency effect in U.S., on an organic level, we are up by 1.2% and up by around 2% for the full year. EBITDA wise, we have a strong performance, which is both in the quarter and of course, in the year, but in the quarter very strongly driven by the development in U.S. And remember, we have a negative currency effect that we'll address later in this period. All in all, we are heading now at 17%. And for those of you who recall our Capital Markets Day targets, we did say 15% to 17% midterm target. So it's -- it's a very healthy level for us to be at in this period here.

There is a one-off though, which has to be set in EMEA of around EUR 1.5 million, which is also part of why we get a positive one-off -- of EUR 1.5 million. With this, as I said, this is actually the highest EBITDA we've had to date, and we are very excited with what that brings to the future. So with this, I think I'm going to hand over to you, Bent, on the financials.

Thank you, Thomas, from financials to more financials, which is fun today. Let's jump straight to it with EMEA. What we can see here is that we are delivering a revenue of EUR 206 million, which is 5% down compared to last year. But if we analyze the performance, the underlying performance, we can say that we do have a resilient performance despite continued soft consumption. Now why is that? If we look at our Pure-Pak revenues, they are stable year-over-year. So what we are seeing despite the soft consumption, we are continuing to increase market share. Specifically for this quarter, we are regaining our business in MENA as fresh dairy is strengthening in that region. And in the -- for the aseptic business, we are growing by taking market share and basically growing with our customers.

If you look at the key contributor to the revenue decline, it's actually related to filling machines. We are commissioning around the same number of machines this quarter compared to last year, but the machines are smaller. So we have a negative mix effect. That actually explains around 60% of the revenue decline. So if you move on, we -- as we have reported before, we still observe a competition in the Roll Fed segment, and that is happening both in Europe and in India.

In Europe, it plays out through lower volumes, albeit at -- the pace has slowed down. So we see a positive development in the Roll Fed area because we see that the trend is slowing down. In India, it plays out with a margin squeeze because it's a crowded place. We are growing organically 19% in India with our Roll Fed business. When it comes to profitability, we are reporting 36.7%, that is up 2% compared to last year. That comes from improved pricing and improved mix in Pure-Pak. And we also have this switch from Pure-Pak to Roll Fed, which is also contributing to the positive mix. And Thomas already mentioned the one-off, which is in Europe, which has also impacted these results by -- positively by EUR 1.5 million. So in conclusion for EMEA, resilient performance despite continued soft consumption.

Over to America, the growth journey continues with a revenue growth of 11% or 18% on a fixed currency basis. So we are still seeing the interest and the demand in our products. So the growth is in revenue, is volume, carton and closures, and it's enabled by two things. Obviously, we have the ramp-up in the U.S., but we're also seeing improved productivity in the assets in Canada and in combination that is then enabling this growth. Also in America, we have a negative revenue impact in regards to filling machine. So it's the same explanation here. We have a mix effect.

In this quarter, we have commissioned school milk machines, and they are smaller in size and also then smaller in revenues. If we move to the EBITDA, we see a very strong growth of the EBITDA, 21% growth of the EBITDA up to EUR 21 million with a margin of 24%. In addition to the top line growth itself, we have positive mix effects but we also do see the benefit of improved asset utilization, and we are leveraging our fixed cost base. It's also -- of course, as Thomas mentioned, very proud that this is the first quarter with positive EBITDA in Little Rock, a milestone for us. We are very, very pleased with that. The ramp-up continues, and it's obviously better than last quarter. But we obviously would have liked to see even faster ramp-up than what we have seen.

When it comes to the joint ventures, we have an EBITDA or a share of net income of EUR 1.4 million. That is actually a decline from EUR 2.1 million and the explanation for that is a softer demand and a change in consumption habits. But overall, the key message is that we do have improved that utilization that enables growth in America.

Let's take the group perspective and start with the net revenue mix. So this is EUR 7.4 million, and that is mainly driven by: one, the growth in America and the positive mix and pricing effects in EMEA. When it comes to raw material, this is again where we have the one-off, which is positive. And then we have a negative effect of EUR 0.6 million for the underlying raw materials. That comes from board price increases, all the price increases, even though the PE has softened year-over-year. Our operating costs are mainly explained by salary inflation of 3%. And also the ramp-up in Little Rock, which also is affecting the operating cost level somewhat naturally. The rest of the fixed cost base in the company remains rather stable.

The last bridge element, we have already mentioned joint ventures and the FX, which also Thomas talked about, that is the result of the 6% weakening of the dollar versus the euro on an average year-over-year basis, leading to the 70%, which is on par with the best we have done.

Let's move to the cash flow. It's probably the most exciting part of the financial this time because we also are not only reporting record profitability, but we are also reporting record cash flow generations -- sorry, cash flow generation from operations. The cash flow from operation is EUR 55 million. It's not only driven by the profitability but also driven by the improvement in working capital. This element is, to a large extent, driven by timing of accounts payables, that can go up and down between quarters. It was quite low last quarter, and then it's higher. So this could vary a little bit up and down, important to notice, but we also have an underlying improvement of our inventory in Europe from our working capital project.

Also here, we are seeing the ramp-up effect of Little Rock. We are also building working capital, obviously, as a part of growing the top line in the U.S. Our cash flow from invested -- investing activities is EUR 11.5 million. We are still having EUR 2.4 million in investment in Little Rock in this quarter. The rest is our replacement program in Europe. While filling machine investments are lower than last year because most of the projects are sales rather than lease and then it doesn't impact the investment line. Cash flow from financing activities is also EUR 11.5 million, nothing special there, which brings us to a net debt of EUR 272 million, so which means that the cash bank debt has reduced EUR 31 million quarter-over-quarter, which we regard as a rather solid.

With this cash flow generation, we are deleveraging the company. As Thomas said, we are bringing the leverage ratio very close to our midterm target of 2x. This comes from not only the payment of the debt, but we also have improved the LTM EBITDA by EUR 3 million. And the good thing with that, it enables future investment in our strategic initiatives and it allows us to continue to pay healthy dividends. And if you check your bank accounts, yesterday, you received dividends in total, EUR 21.5 million. This comes from the second installment of 2024 and also from the first half result of 2025 as we are in this transition year from annual dividend payments to semi -- to 2 payments per year.

If you look at the right-hand side, it's a little bit difficult to see, but the curve is going upwards on ROCE. So we finally are seeing improvement of our return on capital employed, as we have talked about in earlier quarters. And that is coming from the fact that we are finally making profit from our Little Rock investments with the capital that we already have installed there. We have so far invested $86 million in Little Rock. We have $42 million to go, and we expect that around $6 million of those will come this year in Q4.

So in summary, the financial position is really strong. And we are continuing to leverage the company despite the investment program. So this concludes the financial section, which was actually quite great to present.

Thank you, Bent. Good, you liked it. So finally, as you can sense, we are really happy to report to the highest -- and I would change that into the best financials yet for the company. It's EBITDA, as you saw, but it's also the cash generation that we have succeeded with in the period. And it's also a period where we are reaffirming our strategy. We are confirming the strategy we are now putting in and deciding on the third line, really it's putting a strong footprint in the U.S. and in the Americas in general, North Americas. .

We are also seeing EMEA despite these headwinds that we have talked about that we're actually seeing very solid developments in big parts of EMEA, not the least in South, not the least in MENA that gives us the confidence that we're also here on the right track, and we'll continue to develop the business in line with the plans we've outlined in the Capital Markets Day. So all in all, what we are now saying is we expect to deliver within our mid-term targets as you know, which is 4% to 6% organic growth and 15% to 17% on the margin side for the year.

And with this, I think we're going to hand over to questions.

Thank you, Thomas. Thank you, Bent, for the presentation. So we will now open up the floor for questions, starting with the audience here first. [Operator Instructions]

Marcus Gavelli, Pareto. So you have previously said that line 2 will be fully ramped up in H1, '26. At the presentation today, you said that line 3 will coincide with line 2. Could you try to provide some color on what you really meant by that because I assume that line 2 is still on track, and line 3 will come a bit later.

I just want to clarify that we will open line 2 in H1, '26, not ramp up.

Yes, we would ramp -- what we said then was we are going to ramp up during '26, right? It's not that in -- that we are fully done. As we have said, we're going to install line 2 and start ramping up during next year. Thank you. So why are we saying that the two actually help each other? Well, it is like this, right? If you look at the industry and the -- I don't think in a way, the dairy industry is way different than many other industries, our big customers have a variety of sizes, formats, and evidently, we look at their supply -- suppliers, one of which is us to say, can you supply us with a broad set of formats in order for us to essentially become -- in order just to close a partnership with you.

And the close partnership in our industry is really, really important because you know we have very long tenures generally in the industry. The closer we work with someone, the better we can develop it and the longer performance we can actually secure for our customers. So with this move, we ensure that we can use our line 2. On some formats, that would not have been possible had we not had line 3 to complement that. And from a customer point of view, they would then have said, it's difficult for us to move volume into you unless you can also do some other formats. That is the simple -- so it's a little bit opaque when I put it like this, but it is actually what it is.

That's perfect. And then also with what you said in MENA with the volume growth commencing again, could you again try to provide some color on -- is that more of a one-off? Are you seeing some sea change over there? And then also how you think about, I guess, growth into Europe with price increases and so on.

I think sea change is probably overdoing it. But I'm very optimistic around MENA, honestly. And it is what it is. It's a sensitive economy, right? So consumption is impacted by ups and downs, clearly, but the underlying business for us is the strategic direction we have is add more value to our customers in MENA by adding ESL, longer shelf lives, which drives down their cost, improves the performance of the products in shelf, have a better product with a better looking product on shelf, et cetera. And that is actually why we are seeing that we can gain business and are gaining business.

Now the business we are gaining is not necessarily the business you see right now in this quarter because, as I say, there are ups and downs. But why I'm saying I'm positive is because underlyingly, we are moving in the right direction. And then what we have seen in previous quarters, a little bit how Ramadan falls and inventory builds up, et cetera. So in a way, I wouldn't put too much focus just on a quarter when it comes to MENA, much more is the underlying business moving in the right direction, and it is.

And also technically speaking, I think the quarter last year was relatively soft. So part of that is also a rebound, but it's really, as I must say, we need to look into a longer perspective to really get insight from the development. .

Okay. So then we will move forward with the questions that we have received online. Starting with a couple of ones from Jeppe, in Arctic. I will take them one by one. It's regarding the line 3. What are the expected revenue levels and EBITDA margin for the third line?

So what we are saying is run rate is going to be lower than when we talked about line 1. It's a different product mix than what we talked about 1, which was really a very, very -- I wouldn't say simple because that would offend the people of Little Rock, but a different mix than saying actually 1 product versus different products, smaller formats. So it's going to be lower.

We're not complete -- we are not explicit about it because we are looking at the plant in combination of the 3 lines, right? It's not this line, that line, this line. The combination of the lines will generate the result. And in fact, what we're even doing more is we are more occupied with looking at the Americas result than single lines and single factories. And on the Americas result, we can just reaffirm we are going to deliver the midterm targets and the long-term targets. And then we will fix the mixing between the various production lines.

I think the key here is the midterm target. And I also want to note that typically, the way we follow up the American business is in dollars. We did convert that to a euro top-down target in the Capital Markets Day. And back then, the currency was [ 108 ]. So obviously, things have happened to the currency as well. So that could also be good to remember when you are calculating. .

Okay. When do you expect production to start? And what's the planned ramp-up of line 3?

We expect production of line 3 in '27, which means that with these lines, there's a certain lead time when you order them and then installing them, et cetera. And that's why we're doing it now to be able to actually produce in '27.

So does the addition of this line affect the ramp up of line 2?

It does affect the ramp-up because it gives us flexibility to move products around. To the point of saying with the line 3, we can get more customers in who have a mix of products, more customers in will allow us to move products between the lines in a faster pace. And hence, we think it's going to be very beneficial for Line 2 as well. .

And last one from Jeppe. Will this dilutive school milk production form the joint venture?

That is not the intent, no.

Okay. A couple of questions from Luis in [ BNP ]. Can you give some extra color on what the EUR 1.5 million one-off is related to?

I can do that. So basically, over the last couple of years, we paid too much in utility costs in one of our factories. And we got that money back. So we paid the amount. So it's nothing more dramatic than that. So it's basically a retroactive correction.

Is Roll Fed production integrated with Pure-Pak sleeve production or can otherwise repurpose activity?

Can you just take it again, please? .

So is Roll Fed production integrated with Pure-Pak sleeve production or can otherwise repurpose activity?

I assume this refers to -- if you -- okay, let me put it like this. If you look at our plants now, it's integrated as much as in the same plant, we will do both. But it doesn't mean necessarily it's all the same machines, of course, because you have -- in Pure-Pak, you have sealing machines, you don't use for Roll Fed, and you typically have different converters as well where possible. We are doing Pure-Pak and Roll Fed in Åhus, we will be doing Pure-Pak and Roll Fed in India as well. So you will have mixed factories, and you will have factories that are not mixed.

Last one from Luis, what is your competitive advantage in aseptic since you mentioned MENA customers are moving that way?

Right. So that -- I think that's a very interesting actually question and something I could probably give a longer answer to it, but I will make it reasonably short. I think from a -- if you are in the aseptic business, right, you are going to look for something that I mean, let's now, let's go one step back. On the aseptic business, clearly, you need performance, technical performance, you need the performance on the packaging systems, et cetera. So that is the fundament for anyone who goes into this business.

In the case of Pure-Pak, we have a technology that allows us to keep a low waste with our filling machines. That is because it is blank fed versus Roll Fed, and that actually means that the amount of waste during the production is much, much, much lower in those systems. That's number one. That's a more technical operational issue. Our machines, our system is running at a high technical efficiency, which is important, of course. But the market point is -- it is a system that is unique. It is the iconic system for carton packaging, milk packaging and it is actually the consumer preferred system as well from a handling and consumer point of view.

This is, I think, evidenced by the development we have, for instance, in South, where we're seeing solid growth in the UHT long-life milk areas and also in other markets where it is. It is a system with a solid technical performance and a very -- and a high consumer approval. In short, we can do it much, much longer, if you like. You want to buy a machine, let me know.

We can also lease it.

Then we have a question from Ole Petter in SpareBanken. This quarter saw smaller machines both in EMEA and U.S., should we expect an increased share of smaller filling machines also for Q4 and into '26? Or was this a special for the third quarter?

I think this timing has proven to be very difficult to predict. So generally speaking, I would say that Q3 was usually -- was unusual from a size perspective. I think we haven't done an explicit forecast on that. But our hope is, of course, to get back to the big machines. So we can generate more blank sales and also improve our working capital position. But it will be -- this will be always going a little bit up and down between the quarters.

Then we have a question from Amer [ Jabbari ]. How does the cost pressure in raw materials impact your pricing directions in '26?

Right. So this is, of course, early days to be specific around pricing. But what we do see is that there are raw materials, including board, which will go up in the coming period. And for us, of course, it will mean that we will also increase our prices for TransX. I cannot evidently explain the amount, but we will be increasing prices, yes.

Okay. We have a last one, but I think you covered it during the last question, was regarding board price changes for '26.

All right. If there's no further questions from the audience here, I think we will round off today's Q&A session and also the results presentation.

Thank you very much. .

Thank you.