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Hironoshin Nomura: [Interpreted] It is time. From now, we would like to start Nxera Pharma's FY 2025 Full Year Financial Results Briefing. Thank you very much for joining despite your very busy schedule. I will be serving as the MC today, CFO, Nomura. Today, we have Mr. Chris Cargill, CEO; COO, President and Nxera Pharma, Japan, Toshihiro Maeda; CSO, President and Nxera Pharma, U.K., Dr. Patrik Foerch attending the meeting. We have simultaneous interpretation as usual. Please click the globe icon and select the language, Japanese or English and you will be able to hear the interpreter's voice. If not, you will be able to hear the original voice of the speakers. In the first half, I will be presenting, and there will be Q&A session in the second half of the session. We have the materials shared on the screen. We are also uploading on the website. If you would like to have the materials from Investors, IR Library, Presentation, please access the materials. In the latter half of the session in Q&A, institutional investors, analysts and media people, you will be able to ask questions by raising hand. The others will be able to submit questions from Q&A button. You will be able to submit questions at any time and we would like to respond to your questions as long as the time permits. Without further ado, we would like to move on to the presentation. I will talk about the financial results. After that, Chris will talk about the operating highlights, Mr. Maeda will talk about the Japan commercial business update, Patrik will provide update on U.K. R&D progress and lastly, Chris will talk about FY 2026 objectives and beyond. Now please turn to Page 5 of the materials. This is Page 5 of the materials. Here, summary of FY 2025 full year financial results, along with the past trend by revenue segment is indicated. The revenues against the JPY 28.8 billion last year, this was JPY 29.6 billion, slight increase. Milestone revenue decreased from JPY 11.2 billion to JPY 7.9 billion and the product sales grew from JPY 14 billion to JPY 17.8 billion. I will talk about the details later on, but especially QUVIVIQ product supply and royalty became the drivers of the product sales. The milestone is declining. The blue is declining. But in 2024, Neurocrine had $35 million, close to JPY 5 billion, milestone revenue, but primarily low milestone in 2025. In terms of profit core OP was minus JPY 400 million. IFRS basis was minus JPY 8.4 billion. On a year-on-year basis, SG&A was compressed by 4% to 5%, about JPY 800 million. Clinical study development and investment in obesity, the expenditure in R&D increased by JPY 2.7 billion. There were impairment in part of the assets, primarily due to incur of JPY 1.8 billion one-off costs related to business rebuilding and structural reform. It is not included here, but the operating profit was JPY 20.05 billion deficit, and there was the costs related to the change of the terms of the corporate bond of JPY 4.6 billion in IFRS basis. In Slide 6, this is by business domain and core operating profit and accounting operating profits are shown as the breakdown. On the far left, in blue is the platform business. This is so-called bioventure-type business model. The red one to the right is a commercial business, so-called pharma-type business model. Platform profit is largely dependent on milestone for partners. Self-control is unfortunately difficult. But on the other hand, commercial, by growing that, we are targeting for the stabilization of the revenue. This is the company policy. As explained, in platform business, large-scale milestone was lacking. There was increase of R&D expenses. As a result, the core operating profit turned deficit. But last November, as we announced individually, we are rebuilding business for turning profitable. Commercial business is growing steadily on a core basis. It became in black, JPY 6.5 billion, targeting for stable growth in the next fiscal year. As for the forecast, later on, Chris will cover this in FY 2026 objectives. Please move on to Slide 7. As I mentioned about the R&D expenses, I would like to talk about the difference on a year-on-year basis in detail. Last November, we showed this slide in R&D Day. The trend has not changed significantly, but the development products in the clinical stage last year, reached the peak of expenditure, and we announced in August last year, but there was significant increase in investment for obesity area, and there was exchange rate fluctuation compared to the assumption. So this is very brief, but I would like to conclude the explanation on the financial results. Next, Chris will talk about the business highlights. Chris, over to you. Chris Cargill: Thank you, Nomura-san, and good afternoon. Now let me start by saying FY 2025's financial results, particularly the operating profit level were unacceptable. We have initiated changes to management, changes to research strategy and implemented cost controls, and I expect the benefits from these changes to become apparent in the second half of this year, FY 2026. Our strategy is clear. We aim to strike a balance between investing in research to create future value, while at the same time being as close as possible to breakeven or profitable financial status. Now there are many factors in our industry that are 100% outside of our control, such as scientific or clinical outcomes or partner-regulated strategies. However, how we allocate our capital is within our control, and we must do better. In FY 2025, we did continue to invest in programs and products that will shape our future growth. And I am proud to say that our Japanese operations are highly profitable on a stand-alone basis. Our U.K. drug discovery operations require a sharper strategic focus and stricter capital allocation. And in FY 2025, we took necessary steps to correct this. Please turn to Slide 9. Sales of PIVLAZ and QUVIVIQ exceeded our goal of over JPY 17 billion net product sales. And as I mentioned, I'm extremely proud of our teams in Japan for their continued commitment to expanding access for patients to these important products. After the year-end, we completed the in-license of vamorolone for Duchenne Muscular Dystrophy, or DMD, adding a late-stage rare disease product with a strong strategic fit for our business in Japan and the high-growth APAC region. In our drug discovery business, we were unsuccessful in completing a new high-value business development partnership deal in FY 2025. However, we did successfully begin a new Phase II trial with our EP4 antagonist program. And the early clinical data from this program is very encouraging as we aim to fast follow Ono's product with the same mechanism of action. Now following the acquisition of Idorsia's business in Japan late 2023, almost all planned PMI or post-merger integration investments across IT and business systems are now complete, which means we can look to operate much more efficiently going forward. And our goal of positive IFRS operating profit was missed due to the GPR52 option not being exercised last year in FY 2025. Please turn to Slide 10. So we do continue to advance rapidly both the drug discovery business and commercial side of the business. Our U.K. drug discovery business progressed 5 programs in Phase I, 5 programs in Phase II and 2 programs in Phase III trials across our key focus areas. Our commercial business in Japan experienced strong growth across 2 commercialized products, PIVLAZ and QUVIVIQ, and it is poised to advance 2 clinically derisked rare disease products as we expand the late-stage clinical pipeline. I believe we're on track to continue strong growth trajectory through 2026 and beyond. Please turn to Slide 11. PIVLAZ delivered $13.5 billion in sales, 7% year-on-year growth, and it's now firmly established as the standard of care in Japan. QUVIVIQ delivered $4.3 billion net sales and is now showing strong momentum with our partner, Shionogi in Japan as the 2-week prescription limitation ended in December 2025, and we expect 30% annual revenue growth for QUVIVIQ this year in FY 2026. And as I mentioned, our new late-stage product of vamorolone is highly synergistic with our existing development and commercial infrastructure. And we expect once launched that the product will contribute meaningfully to our business. Please turn to Slide 12. Now as I mentioned earlier, despite the heavy R&D expenditure last year, we did build value by advancing our wholly owned in-house drug discovery programs as well as strong momentum from our core partners, Neurocrine and Centessa as they advance our partnered programs. Now in our partnered portfolio, Neurocrine maintains the world's most comprehensive portfolio of muscarinic agonists to treat neuropsychiatric disorders, and these were all developed using our NxWave drug discovery platform. The most advanced program, the muscarinic M4 agonist, now called direclidine, is in Phase III trials for schizophrenia and top line clinical data is expected by the end of 2027. There are also several other muscarinic agonists advancing through Phase I and Phase II studies across multiple indications. Now Centessa is advancing its lead asset, ORX-750, towards a registrational program this year to treat narcolepsies type 1 and 2 as well as idiopathic hypersomnia, all huge areas of unmet medical need. And in our wholly owned in-house portfolio, we have 2 Phase II-ready assets now, NXE'149, a GPR52 agonist for schizophrenia and NXE'744, an EP4 agonist for IBD. These are both undergoing competitive licensing processes. And our aim is for both of these programs to be partnered by the end of FY 2026, if not sooner. NXE'732, our EP4 antagonist for advanced solid tumors is progressing through Phase IIa trials with Partner Cancer Research U.K., and we expect data in 2027. Our CSO, Dr. Patrik Foerch, will discuss these programs in further detail, including an outline of some of the strong indicative clinical data we have seen so far. Please turn to Slide 13. Now we recently refocused the U.K. drug discovery portfolio to prioritize areas with the greatest potential so that we can broaden our patient impact. Now this includes an innovative portfolio of next-generation small molecules for obesity, metabolic and endocrine disorders with very significant total addressable patient markets. We also work with global investment firms to create new biotech-focused companies to advance medicine through clinical development, and we disclosed plans for a new company yesterday via a press release, and we look forward to hopefully launching this company from stealth very soon. Now our GPCR know-how and our flexible chemistry approaches remain unmatched, and we plan to continue to deliver differentiated best-in-class medicines to address these high unmet areas of need. I'm going to hand over now to Maeda-san to discuss the Japan and APAC clinical development and commercial businesses in more detail. Thanks, Maeda-san. Toshihiro Maeda: [Interpreted] Thank you. Then I would like to talk about Japan and APAC. Please turn to the next page. First of all, the actual of our first commercially available product, PIVLAZ and its highlights as of 2025. Since the launch, this was used and positioned as the standard of care in Japan for the prevention of cerebral vasospasm in patients with aSAH. And as of the end of last year, it has grown sales to JPY 13.5 billion. And this fiscal year 2026, we are expecting to see the stable growth of over 4%. On patient base from 34% in 2022, the share expanded to 74% in 2025, securing dominant position in the domestic market. On the right-hand side, you see the 2025 highlights. Since the launch to December 2025, PIVLAZ patients reached 25,470 patients. In STROKE2025, over 100 abstracts were presented. Looking at this year, summarizing the Practical Guide to the Administration of Clazosentan, it is expected to be published in March. So we are expecting to have further promotion of use in the medical field. As you can see, PIVLAZ has established clinical value, market penetration and scientific evidence and growing steadily as the mainstay product. Next page, please. Let me now turn to the explanation on QUVIVIQ. QUVIVIQ is the novel dual orexin receptor agonist, so-called DORA, and this is an insomnia treatment drug, especially recently in Japan, rapidly establishing its position in the treatment paradigm for insomnia in Japan. On the left-hand side graph, you see Japan market size, and you can tell that the DORA overall is expanding. The right graph shows the sales of QUVIVIQ from JPY 1.3 billion in 2024. Last year, it reached JPY 4.3 billion. On a year-on-year basis, it exceeded 224%, demonstrating powerful growth. This fiscal year, it is expecting to see further growth to JPY 5 billion to JPY 6 billion -- 7 billion. Next slide, please. On this graph, you see the sales and profit structure of QUVIVIQ and the cost reduction outlook in the future. At this moment in time, the profit is basically royalty income. But in the future, independent low-cost supply chain will be formulated, and we are targeting for profitability from product supply already established Nxera independent supply chain from the licensor last October. Regulatory approval on second API source was obtained in October 2025. In the latter half of this year, second API is expected to contribute to profit. Going forward, cost optimization of raw materials, drug product and packaging sourcing optimization through that, we are targeting for further improvement on the profit margin. Next slide, please. From here and onward, I would like to introduce newly introduced DMD treatment drug, AGAMREE. DMD is a rare and life-threatening neuromuscular disorder characterized by progressive muscle dysfunction leading to ambulation loss, respiratory failure, heart issues and premature death. No efficacious therapy apart from corticosteroids. However, presently, there are many severe adverse events with the existing steroid treatment. AGAMREE is the first class drug candidate to treat DMD that binds to the same receptors as corticosteroids, but modify the downstream activity to express the different characteristics. The company has the development rights for Japan, Korea, Australia, New Zealand and DMD treatment is concentrated in limited number of centers. And there is approximately 70% sales synergy with PIVLAZ, which is extremely strategic product for the company. Next slide, please. On this slide, it shows the characteristic of AGAMREE. Compared to conventional corticosteroid, there is a higher likelihood of reducing adverse events significantly. The GUARDIAN study showed durable efficacy and markedly improved safety versus standard corticosteroid, specifically growth maintenance, lower fracture rate, lower incidence of cataract. Important indicators for patients are improving. Looking at the sales forecast in other countries, we're expecting to see robust growth in North America and Europe. AGAMREE is strategic product, which has potential to become long-term pillar of the company. Lastly, on the last slide, I would like to talk about the sales synergy between PIVLAZ and AGAMREE. DMD treatment is concentrated in a limited number of centers, and there is approximately 70% commercial overlap with PIVLAZ. Therefore, the network we've already forged with university hospitals can be leveraged for deployment of AGAMREE. Through this sales synergy, speedy market penetration and efficient sales activity will be possible. As an overall portfolio, we can expect to see a high level of synergy effect. This concludes my commercial business explanation on Japan and APAC. Now I would like to turn over to Patrik to talk about the R&D update. Patrik Foerch: Okay. Thank you. My name is Patrik Foerch. I'm the Chief Scientific Officer. And I'll now move over to our pipeline of innovative drugs developed through our NxWave drug discovery platform. Next slide, please. At the end of last year, we renewed our R&D focus to prioritize the programs in areas with the greatest potential for patient impact. We launched a new wave of oral small molecule programs targeting high potential targets in obesity, metabolic and endocrine disorders by leveraging our NxWave platform to deliver novel differentiated small molecules. We have 2 Phase II-ready assets, NXE'149, our first-in-class schizophrenia candidate and NXE'744, our EP4 agonist for IBD. Both of them are undergoing competitive licensing processes, which we announced earlier in the year during JPMorgan Conference. NXE'732, our novel immunotherapy for advanced solid tumors is in a Phase II clinical trial with our partner, Cancer Research U.K. And I will be providing more details on these programs over the next few slides. Next slide, please. NXE'744 is a gut-restricted selective EP4 agonist with dual mode of action. It's combining an anti-inflammatory activity and is promoting mucosal healing in IBD. All first-in-class study elements have completed dosing in the clinic. And in the SAD and in the MAD studies, there have been no concerning safety signals detected so far. Importantly, no systemic exposure, but very high gut tissue levels were observed in healthy volunteers. And we are very pleased that in preliminary analysis, this gut-restrictive profile was also confirmed in a cohort of UC patients. In addition, we are very excited about the interim analysis of our indomethacin study, showing a highly significant reduction of around 50% of indomethacin-induced permeability in our NXE'744 treatment group and thereby confirming target engagement. This asset is now Phase II ready, and we are currently engaging in a competitive licensing process and are in discussions with a number of major pharma companies. Next slide, please. NXE'149 is a first-in-class GPR52 agonist offering a novel mechanism that addresses the positive, negative and cognitive domains in schizophrenia. NXE'149 has successfully completed Phase I studies and is fully enabled for Phase II. Data from the Phase I show predictable pharmacokinetics and CSF sampling confirmed high levels of central penetration. NXE'149 clearly engaged brain circuitry relevant for the treatment of schizophrenia and also demonstrated increased alertness, which is reflected in a better cognitive performance following 10 days of treatment with NXE'149. This potential first-in-class asset is now fully Phase II ready and is undergoing competitive licensing that we announced during the JPMorgan Conference in January. Please move to the next slide. NXE'732 is a potent and selective EP4 antagonist aimed at reversing immune suppression in solid tumors. And in a Phase I study, we're very encouraged to see 2 partial responses in microsatellite stable CRC and in PD-L1 resistant RCC with tumor shrinkage of over 30%. The data also showed a very good safety profile and strong target engagement supporting its potential as a best-in-class profile. The Phase II expansion study is underway in combination with atezo and is being led by our partner, Cancer Research U.K. Please move to the next slide. As we announced earlier in the year, we are leveraging our NxWave to design the next generation of small molecules for obesity, metabolic and endocrine disorders. As we communicated, we launched a broad new pipeline strategically focused on best-in-class therapies to achieve long-term weight maintenance through convenient oral small molecules. We are targeting a number of receptors, GLP-1, GIP, amylin plus multiple others and are focused on safety, tolerability and expanding access to a diverse patient population. Our metabolic disease portfolio underscores the versatility of our NxWave platform and our commitment to tackling major global health challenges. Next slide, please. Moving on to our partner portfolio. Our long-standing collaboration with Neurocrine showcases Nxera's GPCR discovery power and industry-leading muscarinic pipeline. Neurocrine's muscarinic portfolio now includes 5 clinical stage programs spanning selective M4, M1 and dual M1/M4 orthosteric agonist, addressing cognitive and psychotic syndromes across a range of psychiatric disorders. Our most advanced candidate is a M4 selective direclidine, which is currently in Phase III for schizophrenia and in Phase II for bipolar mania. NBI-'570, the dual M1/M4 agonist also initiated a Phase II trial in schizophrenia in Q4 last year. This continued momentum underscores the quality of our assets and is a major validation for our platform. Please move to the next slide. Centessa is advancing a portfolio of potential best-in-class orexin receptor agonist discovered through our NxWave. The most advanced asset, orexin 750 is in development for the treatment of narcolepsy type 1, type 2 and idiopathic hypersomnia. Initial Phase IIa data show robust efficacy in addressing wakefulness needs of patients across all 3 indications, and this matches rival molecules from competitors. A registrational program is expected to initiate in Q1 this year, positioning ORX-750 as a potential best-in-class treatment for hypersomnolence disorders. And I now hand back to Chris to outline the objectives for 2026 and beyond. Chris Cargill: Wonderful. Thank you, Patrik. Please turn to Slide 30. So looking ahead to the next 12 months, these are our priority objectives. We want to achieve net product sales of more than JPY 19.5 billion across PIVLAZ and QUVIVIQ. We aim to secure at least one additional late-stage product for Japan and APAC as we continue to build out our highly profitable pharma business unit in Japan. We want to execute or sign one or more high-value partnership deals from our portfolio of wholly owned in-house programs, and we want to initiate at least one new Phase II trial with a partner. Of course, we want to reduce total costs in the business by over 10%, and we aim to achieve full-year profitability on an IFRS basis. Slide 31, please. So for the full year 2026, achieving both core operating profit and operating profit is our aim. As you can see from the chart, top line revenue growth, excluding any new business development deals, has been strong since FY 2023, reflecting our commitment to building a highly profitable commercial pharma business in Japan and APAC. And if we can achieve multiple milestone payments from our existing partners and successfully out-license multiple Phase II-ready wholly owned in-house programs, then I expect to see a strong year of performance. We will continue to review our wholly owned in-house portfolio dynamically and allocate capital more effectively. Slide 32, please. Now this slide provides a bit more detail about our 2026 guidance. The drug discovery platform side of the business should be able to reach breakeven on a core basis. We expect to see continued strong growth from our Japan and APAC commercial business. And with disciplined execution and continued cost rationalization, we believe profitability is achievable for FY 2026. I'll just add one more point, and I said this at the beginning, we implemented changes to management, changes to pipeline and cost reduction initiatives, and we expect the second half of 2026 is when these changes will start to wash through our financial statements. Please turn to Slide 33. So the year is shaping up to be another strong year of execution as we work towards our 2030 vision. As you can see on this slide, we are expecting several potential catalysts, both internal and partner-led as multiple clinical trials reach key development milestones with partners. Slide 34, please. The 2030 vision rather, remains intact, and it is to build a high-growth, highly profitable Japanese biopharma company. We're very happy with the addition of vamorolone to our late-stage portfolio. It provides further growth potential towards reaching our goal of $50 billion of annual revenues and operating profit margins above 30% by the end of 2030. So we're very excited about what's to come this year, and we believe we are well positioned for success much beyond 2030. So thank you for your time. Management team and I are very happy to take any questions now. Thank you. Operator: [Interpreted] [Operator Instructions] The first question is from Hashiguchi-san from Daiwa Securities. Kazuaki Hashiguchi: [Interpreted] Hashiguchi from Daiwa Securities. The performance outlook, the forecast, I would like to know the basis for the forecast. The lower limit does not include the new partnership. But on the other hand, with respect to the milestone, there are some which may incur and which may not, and there are the ones with high probability and not. And for the lower limit, the uncertainty of a milestone, how are you factoring in? And on the other hand, between the lower limit and the upper limit, it is JPY 15 billion. And this JPY 15 billion, with what kind of idea is this based on in order to set this figure? Hironoshin Nomura: [Interpreted] Yes. Thank you for the question. There were 2 questions. And since this is related to the performance forecast, I would like to respond. And if there is any additional remark, Chris will respond. Page 32 is the breakdown of the lower amount, especially the top left platform milestone part. How much uncertainty is involved? I understood this was the question. The platform milestone, as Mr. Hashiguchi mentioned, this is milestone in the first place. So we still do not know. It really depends on the progress as we have been explaining. And there are many pipelines in the late stage of the clinical stages. And also, there's also public comments as well. And we have accumulated the figures as a result of that, and we have deducted some of the figures, and that will arrive at JPY 40.3 billion. And the milestone is JPY 2.5 billion, and that is equivalent to the milestone. This is quite conservative, not everything. But even what is likely to occur is deducted. So this is the milestone part. And moving on to the second part of your question. So your second question was JPY 15 billion and the rationale for JPY 15 billion. The rationale for JPY 15 billion, this is BD. So there is no solid rationale. From our perspective, this is our aspirational target. Of course, if these 2 out-licenses go well, there is a possibility of exceeding JPY 15 billion. But rather than having the rationale, the 2 assets we have, this is more of the expectation to our 2 assets. So Chris, do you have anything to add? Chris Cargill: Thank you, Nomura-san. I mean Hashiguchi-san, I think the easiest way to think about this is lower end of the range is my minimum expected performance from the business. And the top end of the range is if there is absolutely 100% perfect execution across all elements of revenue generation. The important caveat is, as I know you know, we operate in the biotech industry. So there's lots of risks. But equally, a lot of our large sized milestone income comes from partners. And that is without -- it's not within our control. So this is our best guess estimates for my minimum expected performance, both internally and across our partner portfolio. However, we need to have an aspirational goal because if we are successful in marketing programs that are in our pipeline and executing new business development deals as historically, we have demonstrated we are very good at doing, then perfect execution leads us much closer towards the top end of that range. So that is -- that would be my additional response to your question. Thank you. Kazuaki Hashiguchi: [Interpreted] I have one additional question. And the structural reform effect is expected to incur in the second half of the year. And also compared to the full year expense of this year, there will be less expense in the next fiscal year. Am I correct to understand this way? Or that effect or benefit, that there is a possibility for reinvestment. So it is not possible to decrease in the next fiscal year. Am I correct to assume this way? Hironoshin Nomura: [Interpreted] Thank you for the question. Your question is related to the expense this year and the next year. So I would like to ask Chris to respond. Chris, can you respond? Chris Cargill: Yes, certainly. As I mentioned during the presentation, our goal is to reduce costs across our business -- across our core businesses. So our business today is very heavy on costs throughout research and development, which is expected. We also have costs across G&A, which is another area that we will be focused on reducing expenses. And technology is helping us in being able to drive down cost in that part of the business. I think the business has made great progress in reducing sales and marketing expenditure, particularly last year. So we are becoming much more efficient in our commercial organization. Of course, if we can reduce costs by as much as I expect that we will, that should have the benefit of increasing our chances of achieving profitability. But we always have opportunities to reinvest capital, and we will continue to do so if we believe that there are high-value programs or high-value other opportunities that we can invest in that will create value for the future, particularly things that will contribute to our 2030 vision. That would be how I would respond to that question. Thank you. Operator: [Interpreted] Matsubara-san from Nomura Securities. Matsubara: [Interpreted] I am Matsubara from Nomura Securities. Can you hear me okay? Hironoshin Nomura: [Interpreted] Yes. Matsubara: [Interpreted] My first question is about EP4 agonist. It's for IBD. And there are different mode of actions being available, TYK2, IL-23 as oral compounds, they may come and EP4, how would you differentiate that from others? And then what are the discussions taking place with your potential licensing partners? Hironoshin Nomura: [Interpreted] Thank you very much. So this is about R&D. So Patrik, would you be able to answer this question? Patrik? Patrik Foerch: Yes. I'm happy to take that question. You're right, there are multiple assets on the market or in clinical trials for IBD. Where we see a clear differentiation for EP4 agonist is that we're having, as you pointed out, a dual mode of action, anti-inflammatory as well as a barrier repair function. Most of the treatments in IBD at the moment are anti-inflammatory with a clear efficacy ceiling. And when we see how to position EP4, I think there are 2 separate TPPs. You can see EP4 agonist as a monotherapy in mild to moderate cases. But equally, there's also a clear opportunity to use our EP4 agonist small molecules as an add-on to biologics to break through the resistance barrier and efficacy barrier that most of the treatments have at the moment. So as an add-on to classic biologics, which are approved. And a last comment to the process. As we started off this partnering discussion during JPM, we got very good tractions. We have quite a few discussions with some of the major players. The mechanism certainly resonates. And what is very clear, the target engagement showing functional response in the indomethacin challenge study is very well received and the overall package that we have in our -- from our Phase I studies, again, is clearly recognized that this is a very consolidated package understanding the mechanism as well as positioning this program to move forward into a Phase II trial. Hironoshin Nomura: [Interpreted] I have additional comment. So existing ones for anti-inflammatory suppressing the immunity, but ours is completely different. It promotes the recovery. And Patrik mentioned add-on. So it's very different from the existing one. So we can differentiate ours from others. That's all from me. Matsubara: [Interpreted] So it has a different mode of action. So you are expecting the milestone upfront and this compound may actually exceed the expected value going forward. Hironoshin Nomura: [Interpreted] Yes, I'd like to give you a brief answer to that question. So realistically speaking, yes, there is a possibility. But at JPMorgan, as has been explained, several companies have shown interest. And these big companies, more than 5 companies are in discussion with us. But when it comes to actual deals, to what extent they are serious. So this is something that we would have to pursue going forward, but then we have quite high expectation. Matsubara: [Interpreted] My second question is about obesity and your development strategy. So oral GLP-1 and GIP drugs are being available and for subcu, INHBE, so which maintains the muscle mass while reducing the body weight. So these are new ones. And then you are spending a lot of money for R&D right now. But going forward for obesity, what would you be doing to overcome your competitors? Hironoshin Nomura: [Interpreted] Thank you very much for your question. So this is about R&D. So Patrik, would you be able to take this question? Patrik Foerch: Yes, happy to take that question. You're absolutely right. This is a very competitive field. We are very much aware about that. However, when you look at these targets obviously GPCR targets where -- which is right in our wheelhouse, where we are best placed to come up with very selective high-quality molecules. And with the exception of GLP-1, most of these targets are very much driven by, as you said, subcut or generally peptide molecules. When you look at the cost of goods, and convenience of administration, the next wave of these targets is clearly small molecules where we are very well placed to follow the data coming out of the frontrunner molecules and then follow up with a very clearly defined TPP for a best-in-class small molecules, especially as we see that the whole metabolic area, the whole indication field expanding very, very rapidly. So we are working, and you might have seen the announcement of our Metabolic Advisory Council to have very clearly defined TPPs for our metabolic pipeline that we can position our selective and highly efficacious small molecules exactly at the right position in the market. Chris Cargill: Nomura-san, I might just add a comment to that, and thank you very much, Patrik, for your answer. Our approach to this area is not solely about obesity. We are thinking much longer term. Many of the top pharmaceutical companies have GLP-1s. And as Patrik said, they are either subcutaneous injectable peptides. They are going to need small molecules to follow on to those franchises, and they are going to need GP antagonists, amylin agonists, et cetera, as part of their portfolio of combination therapies that will go with the GLP-1s. But it's not just about obesity. This is about chronic weight management for the long term and longevity. So the way that we see the market shaping out over the next 10 to 20 years, we want to see really strong health outcomes for patients the world over and the market will eventually shift towards once-daily oral small molecule approaches to treat not just obesity, but the range of comorbidities that come with that and then longer-term chronic weight management, which will produce health outcomes across the board. So it's not just an obesity play in competition with current obesity companies. It's about thinking about longevity for human beings and health outcomes over a much longer time horizon. And that's why we are planning to offer a portfolio for pharmaceutical partners to look at where we've got oral small molecule approaches to all of the necessary targets to deliver on those goals. Thank you. Operator: [Interpreted] Moving on to the next question. Pathology Associates, Dion-san. We cannot hear anything at the moment. Can you hear my voice? It seems like there is technical trouble. So excuse me, Dion-san. We would like to move on to the next question from Jefferies Securities, Yamakita-san. Miyabi Yamakita: [Interpreted] Yamakita from Jefferies. Can you hear me? Operator: [Interpreted] Yes, we can hear you. Miyabi Yamakita: [Interpreted] I have 2 questions. The first question is on cost. The SG&A cost in platform, you see a slight increase in SG&A. And this is for the promotion of out-licensing. I would like to know the details. And the overall cost, suppose it is difficult to achieve profitability, how much buffer do you have? Is it a level you cannot go further for the reduction? Can you give us the sense? Hironoshin Nomura: [Interpreted] Yes, I would like to respond to the question. Starting from SG&A increase, as you said, this year, we need to be more active on BD activities and IT investment for the purpose of efficiency, we need to continue this year as well. And in commercial business, we had some SG&A costs. But in platform, there was a transfer internally. So it is slightly shifting. So that's the technical part. Combining that together, there is a slight increase. On the other hand, if we cannot achieve profit, then we -- do we have room for further cost down? The answer is both yes and no. Of course, we are continuing such efforts. And when we face such circumstance, we need to consider additional measures. But this cost reduction from the second half of this year, Chris mentioned that we will be addressing more seriously, but our outsourcing company, if we need to stop that, there will be further time buffer to that. In that context, we will be making such efforts. So in that context, it is yes. But can we do this flexibly? Unfortunately, we will be too late if we start that in the second half of the year. So if possible, in the first half of the year, we would like to accurately grasp the business situation and BD. We would like to make sure that we can close the big deal. So we are now focusing on that now. Chris Cargill: Thank you, Nomura-san. I might just add 2 comments. I mean we are an extremely cost-conscious operation. Now we will always be looking to take costs out of our business and become more efficient. For example, over the last 3 years, we've been making enormous gains from implementing new IT systems and business systems that we will be able to extract significant efficiencies from going forward. And as Nomura-san said, I expect those efficiencies to come to bear in the second half of 2026. So we will be able to operate significantly more efficiently going forward. That is something I'm very, very excited about. Of course, we can't take too much cost out of the business. If you get to a point where you remove too much, the business will stop functioning. So it's a balance, and we always need to be able to invest for the future so that we can achieve our 2030 vision, which is to have JPY 50 billion of sales and 30% or more operating profit margins. But I just want to give all of the analysts and investors out there the comfort that both Nomura-san and I are continuously -- and the broader management team as well, but in particular, it is very clear across my management team that we are always looking to reduce costs wherever any cost can be taken out of the business and technology can be used to be more efficient. Thank you. Miyabi Yamakita: [Interpreted] That's clear. And coming to my second question, it's about licensing out. And these days, the Japanese companies are struggling on out-licensing and partnership. And that is probably because of the uncertainty in the U.S. drug price. Especially for the large assets, the global pharmas are scrutinizing quite seriously, and there will be more requirement for additional data compared to the past. Is my understanding correct? And you mentioned that the discussion is ongoing in JPMorgan. But with the current data available, do you think you can close the deal? If additional data is required, what will be required? Do you already know what is necessary? So what is the environmental change in out-licensing? And I would like to know how you would like to react to that? Hironoshin Nomura: [Interpreted] So on BD, Chris -- I would like to ask Chris to respond. Chris, are you able to respond to the question? Chris Cargill: Of course. Yes. Thank you. And I'll make a very bold statement. I think we have one of the best business development teams of any company that's listed in the biotech or biopharma space in Japan. If you look at our track record over the last 10 years, the number of partnerships that we have been able to execute with top 20 global biotech and biopharmas, I honestly don't think that there are any companies in our peer set that can match what we can achieve. We have a fantastic team. We have a business development group that is split across 2 territories. We have key members in Japan. We have key members in the U.K., and we have extremely strong business relationships with the biggest and best pharmaceutical and biotech companies in the world. So I think we have a fantastic opportunity to do business development this year. Of course, whether or not we can convince another partner to do a deal is another question. But from our capability standpoint, I think we've got a fantastic opportunity. Now to your point around other Japanese companies potentially struggling with business development, that's a very broad statement. I don't necessarily believe that is true. There is clearly -- for the very large companies, they are operating in a very difficult environment right now, particularly those that have U.S. businesses. There's a lot of uncertainty from the regulatory perspective, and there's also a lot of uncertainty around pricing and how that will ultimately shake out. The best thing about our business, though, is when it comes to business development, we're pretty much Japan only focused on the way in. So we are in-licensing products for the Japanese market from small to midsized biotech and pharma companies that are not as concerned or susceptible to some of these global regulatory or pricing pressures. As you will see, at the start of this year, we were able to in-license vamorolone. That was a competitive process. We did that process from start to finish in 8 weeks. So when we choose to execute, we can execute very quickly and very effectively, and that has always been a strength of our team. From the U.K. drug discovery side of our business, where we are out-licensing programs, we're typically giving global rights away or certainly, we are giving rights to global ex Japan, which ultimately hands the project or the program over to the partner, and they have full control at that point. So I don't think that we're really going to see any problems. I think we're really well positioned, both on the way in for products that we're trying to bring into Japan and on the way out where we're trying to license programs, particularly for the U.S. market for a U.S. biotech or U.S. pharma company to control. So that concludes my response. Thank you, Nomura-san. Hironoshin Nomura: [Interpreted] I think we are running out of time. So I would like to conclude this Q&A session for direct questions. We have a lot of questions in the Q&A box. But I think there are 2 questions that are similar about the Japan business, which I would like to take up. And it's about vamorolone. Vamorolone, one thing is that PMDA skipping the Phase III, do you have any feedback from PMDA regarding skipping Phase III for vamorolone? Another one is assuming that you are to conduct a bridge study, while you have cost pressure, can you invest enough resources for the bridging study? So Maeda-san would like to answer this question. Maeda-san, please? Toshihiro Maeda: [Interpreted] Yes. Thank you very much for that. So the first question is about the feedback from PMDA. We are in the process of planning to have the consultation with PMDA. And probably in the second quarter, we will have more visibility regarding that point. And if possible, as you have pointed out, we would like to have this consultation as soon as possible. But given the past track record, this is -- unless it's a really, really special case without having any Japanese data, you can't really file. So from the past experience, it could be difficult. But given the recent attitude of PMDA for pediatric and rare disease development, they have been quite flexible. So we'd like to have thorough discussions with PMDA so that we can skip Phase III trial. Another one is about bridging trial. If we have to conduct a bridging study, it's not going to be a large-scale trial. That's what we assume. And therefore, as you can see, the Japan and APAC budget within this budget framework, we will be able to afford such a bridging trial. That's all from me. Hironoshin Nomura: [Interpreted] I hope that responds to your question. There are many questions in the Q&A box, and we are sorry, we have not been able to respond to you. But for the ones we weren't able to respond, as usual, we would like to respond through our official web blog. It may take some time, but I hope to ask for your understanding, and we would like to upload this video to our website. And now unfortunately, the time has come. So thank you very much for joining this session. With this, we would like to conclude FY 2025 full year financial results briefing. Thank you very much for your participation. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Welcome to Camurus' Q4 Report 2025. [Operator Instructions] Now I'll hand the conference over to CEO, Fred Tiberg. Please go ahead. Fredrik Tiberg: Thank you, Einar, and hello, everyone. Welcome to our fourth quarter earnings call and full year. As customary, please note our forward-looking statements, which I will assume that you have read. So moving over to the agenda, we will begin today's call with an introduction and business highlights, followed by financial, commercial, and R&D pipeline reviews before finishing off with the key takeaways and Q&A. With me in the call today is Anders Vadsholt, Chief Financial Officer; and Richard Jameson, Chief Commercial Officer. So a quick overview of Camurus. We are a rapidly growing commercial stage biopharmaceutical company focused on developing and delivering innovative long-acting treatments for people living with serious and chronic illnesses. We have become a global leader in opioid dependence therapy with our products, Buvidal and Brixadi. Our commercial reach covers Europe and Australia, and we are now expanding into the U.S. as we gear up for upcoming product launches. At the core of our offerings is the FluidCrystal technology, which supports advanced long-acting injectable treatments and has proven successful through both our commercial and clinical results and collaborations. Alongside our meaningful investments in the R&D pipeline, we have maintained sustainable profitability since 2022, placing us in a good position for ongoing growth. Now turning to full year highlights. In 2025, we achieved several significant milestones that further strengthened our leadership in opioid dependence treatment and our ongoing expansion. We continue to build momentum with Buvidal and Brixadi, expanding their reach and impact across key regions. Importantly, the first of our new wave products, Oczyesa, received regulatory approval for acromegaly in both EU and the U.K. Supporting our strategic expansion into the U.S., the commercial infrastructure is now firmly established, positioning the company for upcoming launches and long-term success in this critical market. During the year, we also entered a strategic license agreement with Lilly, opening new opportunities in the long-acting incretin therapy space. The year also marked substantial improvements in sustainability performance, evidenced by high external ratings and reinforcing our commitment to responsible and sustainable business practices. As a testament to the performance of our teams, full year revenues for 2025 continued their positive trajectory, reaching SEK 2.3 billion. At the same time, profit before tax increased to just above SEK 0.9 billion, accomplished while maintaining significant investments in R&D and expanding the U.S. operations. In the fourth quarter, results demonstrated a balanced performance with an overall positive conclusion for the year. Brixadi royalties in the U.S. showed strong year-on-year growth of 47% and increased 82% at constant exchange rate. Buvidal sales declined temporarily due to FX headwinds and the change in our U.K. distribution model. The launch of Oczyesa in Germany represented a notable milestone as it is the first European country to introduce this product to patients with acromegaly. Turning to R&D. We resubmitted the NDA for Oclaiz, which the FDA now has accepted with a PDUFA date in June. Additionally, we reported compelling Phase Ib results for CAM2056. [Technical Difficulty] Operator: [Foreign language] Yes, and now we seem to be back again. Yes, and we're back. You can continue now, Anders. Anders Vadsholt: Okay. Thank you. Camurus reported quarterly revenue of SEK 464 million, down from SEK 553 million, a 16% decline compared to the same period last year, while quarterly product sales reached SEK 342 million, reflecting a 27% decrease. This reduction is primarily due to a change in the U.K. distribution model. Consequently, we repurchased SEK 93 million worth of inventory from our U.K. wholesaler. Quarterly royalty income from Brixadi sales in the U.S. increased by 47% year-on-year, reaching SEK 122 million. A potential milestone payment from Braeburn relating to Brixadi sales is now expected in 2026. Full year revenue reached SEK 2.27 billion, up from SEK 1.87 billion, representing a 21% growth or 30% at constant exchange rates. Product sales increased by 6%, while the Brixadi royalty income increased by 87%. When reviewing operating costs, marketing and distribution expenses decreased by 12% during the quarter, but increased 7% over the year. The annual increase was mainly driven by the commercial rollout of Buvidal in Europe and Australia as well as company's expansion in the U.S. In R&D, we observed a 20% -- 25% reduction in cost during the quarter and a 24% reduction for the full year. This reduction results from the completion of clinical trials of CAM2029 and CAM2056 with new trials scheduled for 2026. Some costs related to the SORENTO study have been deferred to 2026. The increase in general and administrative expenses is primarily due to a change in Camurus' internal cost allocation model. And additionally, we have boosted our investment in digitalization throughout the organization. The operating result for the quarter decreased 32% to SEK 113 million, while the full year results increased with 86% to SEK 874 million. Buvidal sales and Brixadi royalty income mainly drove the increase. Looking at the quarter's cash flow. The cash position increased by SEK 211 million, mainly driven by the operating activities, which contributed SEK 111 million and a change in working capital, adding SEK 144 million. Investment reduced cash by SEK 46 million, resulting in a net cash position of SEK 3.7 billion, a 30% increase from previous year. Moving to 2026 financial guidance. The key considerations for the guidance are anticipated market dynamics and competitive developments, pricing conditions, and the reimbursement landscape, clinical progress and regulatory outcome, and not least the current macroeconomic uncertainties. We expect an increase in OpEx to be primarily caused by organizational expansion and increased R&D activities. An additional SEK 200 million will be allocated to expanding U.S. operations in preparation of the planned Oclaiz launch mid-2026. And R&D expenses are expected to increase by roughly SEK 150 million. We provide guidance on revenue and profit. We have shifted from reporting profit before tax to operating results. Revenues consist of product sales, including royalties and milestones. Potential license income from new and existing development partners are not included. Our full year 2026 outlook is as follows: Revenue guidance is SEK 2.6 billion to SEK 2.9 billion, an increase of approximately 21%, operating result in the range of SEK 0.9 billion to SEK 1.2 billion, an increase of approximately 20%. The numbers are reported or measured at constant exchange rate. With that, I would like to hand over to Richard. Richard Jameson: Thank you, Anders. So I'll start with Camurus markets. As already stated, invoice sales were impacted due to a onetime accounting adjustment associated with the change to the U.K. distribution model at the end of the period. Importantly, though, across markets, the underlying in-market growth remained solid, growing at 5% quarter-on-quarter with notable performances from Australia, which continues to grow from a high base and Buvidal is maintaining its leadership position in the long-acting buprenorphine segment. And in the Nordics, where Buvidal continues to gain market share, which has increased by the competitor withdrawal from the market. And the U.K. showed improved growth, mainly from the criminal justice system as NHS England funding is reaching those treatment centers. On a full year basis, overall growth was 17% at constant exchange rate versus 2024 with a growth spread across geographies. Those markets with high Buvidal penetration, such as Australia, the Nordics, grew at 15% from their high basis. A positive contribution was achieved from the larger European markets that have lower penetration due to access issues. These markets grew in the region of 21%. And at the end of '25, there are an estimated 7,000 patients currently in treatment with Buvidal, a net gain of 3,000 patients in the quarter. There remains a significant growth opportunity to Buvidal and notably in those larger European markets. As I already mentioned, in countries where funding and access hurdles have been addressed, penetration is high. In Australia, Nordics, Scotland and Wales, Buvidal share ranges from 26% to 70% with an average of 35% of all patients, and we expect continued growth in 2026. In the larger markets where access is currently limited to Buvidal, Buvidal has gained single-digit share of patients in treatment. So it represents a significant opportunity when the funding and infrastructure issues are addressed. In England and France, the main challenge remains the prioritization for funding in this area. In Spain and France, there are restrictions on Buvidal access, either which patients are approved for treatment or limitations on the treatment setting where Buvidal can be prescribed. We achieved a notable success in Q4 where we reached agreement in Spain with the Spanish Ministry of Health to remove restrictions on the patient populations for Buvidal, allowing access to the large methadone segment. And in Germany, physician remuneration remains the hurdle. Additionally, we continue to expand geographically in other markets where our focus is penetration to deliver double-digit growth in 2026. Now to address the challenge -- access challenges in these high potential markets, the teams are focused and delivering on critical policy affairs programs that call for and drive improved patient access. On the next slide, there are some examples of the outcomes already achieved from these programs and the growing support from across stakeholder groups for broader access to long-acting injectable buprenorphine, which we expect to drive growth in 2026. So take these in turn, in the U.K., the Home Office Select Committee, the Justice Committee, the Independent Review on Drugs and a recent report from the Experience in Wales have all called for improved access to long-acting injectable buprenorphine. We are already seeing good access in prisons, though challenges remain in the community setting, and we have ongoing discussions with the Department of Health to address this. In France, reports from both the senate and the assembly have similarly made calls for improved access and some progress has been made in funding for Buvidal at both the national and the regional level. In Germany, again, there's wide stakeholder support from physician societies, patient organizations, and policymakers such as the drug policy group in the Bavarian Parliament for change in the remuneration system to allow access to innovative treatments. The progress on this is slow. However, it is understood that there are ongoing discussions on this topic with the regional and federal associations of physicians and the health insurers. In Spain, as mentioned already, restrictions on patient access have now been removed. With this growing policy support for better access, we continue to work with payers to find ways to deliver on changes that will allow more patients to benefit from the advantages Buvidal brings. Now moving across to the U.S. Brixadi continued its strong performance in the year with Q4 royalties of SEK 122 million, up 10% from previous quarter and 40% -- 47% year-on-year. For the full year, Brixadi royalty grew 113% at constant exchange rate versus '24. According to our estimates, Brixadi has captured at least 30% of the long-acting buprenorphine segment. In the U.S., this segment, the long-acting buprenorphine segment is now above SEK 1 billion in annual sales. Looking ahead to '26, continued market penetration is expected. The key areas of focus remain conversion of patients from daily sublingual buprenorphine. Note there are an estimated 2 million patients that access treatment on sublingual buprenorphine in a year. Also improving access for patients outside of treatment or in the criminal justice setting. And we -- and Braeburn, our partner, continues to communicate the evidence base and the clear value proposition of Brixadi. So overall, we remain optimistic about the prospects of Brixadi in the U.S. and the potential for significant growth in the coming years. And in parallel to this, we are preparing for the launches of Oczyesa in Europe, the first monthly subcutaneous octreotide medication that enables convenient self-administration for patients and enhanced octreotide plasma exposure. The European launch has now been initiated in the Wave 1 countries that have an estimated 4,000 to 5,000 acromegaly patients currently treated with first-generation SRLs. The response to Oczyesa from physicians and patients has so far been encouraging with a positive view on the product profile and the clinical data and market research shows a high willingness to switch to Oczyesa from current SRLs. In our first launch market, Germany, we've seen a strong start with the uptake in the first month of launch an estimated 20 patients, which is about 1% share and high patient engagement with the advantages of the simple self-administration. In addition, initial feedback from other payers has been favorable and pricing is now approved in the U.K. and Norway, where we're now ready to launch. And with the resubmission of the NDA for Oclaiz, we're also gearing up, as Fredrik said, for the U.S. launch mid-2026. The team is launched ready with a clear understanding of the market, a developed go-to-market strategy that includes market access, advocacy, and distribution plans. During the review time of the NDA, we will take the opportunity to build the sales leadership, followed by the sales team's onboarding and look forward to the execution of the launch plan if approval is granted. And on this, I will hand back to Fredrik. Fredrik Tiberg: Thank you so much, Richard. I will continue with a brief summary of the R&D advancements in the fourth quarter. So starting out with the progress in the octreotide depot program for acromegaly, gastroenteropancreatic neuroendocrine tumors and polycystic liver disease. The overall clinical program for CAM2029 is nearing completion across indications. We have successfully wrapped up the ACROINNOVA program, which delivered strong results from 2 pivotal Phase III studies and an open-label extension. In gastroenteropancreatic neuroendocrine tumors, SORENTO study is making solid progress and remains on track for reaching the critical readout of primary efficacy results in the second half of the year. Additionally, the open-label extension of the POSITANO study continues to advance following the achievement of positive results for the primary endpoint during the core phase of the study. Now moving over to development update by indication. In acromegaly, we received significant milestones. Oczyesa, as we mentioned before, was approved both in the European Union and the U.K. in 2025, marking a major regulatory success in the year. Following this, we launched Oczyesa in Germany in the fourth quarter and broadening out our commercial presence in Europe. Turning to the U.S. We resubmitted the new drug application for Oclaiz to the FDA on the 10th of December after receiving green light from our contract manufacturer partner. And the FDA accepted this after the year as a Class 2 review, setting a PDUFA date target of 10th of June 2026 and positioning Oclaiz for potential U.S. approval and market entry shortly thereafter. Moving over to GEP-NET and the ongoing Phase III study. As you know, SORENTO is the largest clinical study to date for GEP-NET using a somatostatin analog, directly comparing CAM2029 with current standard of care. The study is progressing according to plan with a target of 194 progression-free events required to reach the primary endpoint readout in the second half of the present year. Importantly, compared with earlier trials with SSAs in this indication, SORENTO has enrolled patients with more advanced disease, including a majority of Grade 2 and Grade 3 neuroendocrine tumor patients. As we await the results, our teams remain focused on robust study conduct, rigorous data cleaning, and maintaining the highest study quality to enable rapid and reliable top line result announcement. The upcoming results will represent a major milestone for Camurus, marking the culmination of nearly 5 years of patient treatment and study efforts. Commercially, this represents a significant opportunity for the company with global peak sales estimated around USD 2 billion currently. Finishing off with the CAM2029 in polycystic liver disease, where we have in the process of completing the 30-month POSITANO extension phase, as mentioned before, our regulatory and clinical teams have prepared an end of Phase II meeting with the FDA scheduled for March to discuss the design of the pivotal Phase III study. In summary, we achieved significant progress with 2029 across the 3 indications, and we anticipate an eventful period ahead. Moving over to the early pipeline. A clear highlight of the fourth quarter was the positive top line results from our Phase Ib study of the monthly formulation of semaglutide CAM2056 in patients with overweight or obesity. This study featured a randomized comparison to the current weekly semaglutide formulation as well as dose escalations. The results exceeded our expectations and showed that CAM2056 achieved faster and greater reductions in body weight and blood glucose compared to Wegovy with a similar safety and tolerability profile up to the highest dose. This slide summarizes the Phase Ib study design for CAM2056 with the 5 dosing regimens across 80 patients using both randomized and dose escalation parts. The study allowed us to compare directly against weekly semaglutide and to define the optimal initiation and titration strategy for a monthly formulation. On the next slide here, as you can see, CAM2056 delivered substantially greater reductions of body weight and A1c compared to the weekly semaglutide over the treatment period. By day 85, that is after 3 months of treatment, Group 4 achieved a 9.3% weight reduction with CAM2056 versus 5.2% with weekly semaglutide dosed according to label. And A1c declined by 0.44% versus 0.12%, which is in the significant clinical domain. The data clearly demonstrates the potential of FluidCrystal based formulation of semaglutide. And going forward, our next steps will be to build on the promising Phase Ib results, we are actively preparing for a Phase IIb study planned to begin in the second half of the year. In parallel, our R&D teams are preparing the final product presentation, which will feature a new auto-injector pen device to enhance dosing convenience for patients. The positive outcomes from the study not only support continued development of CAM2056, but also provide strong validation for the FluidCrystal technology platform. As such, these results reinforce the potential of using FluidCrystal technology for additional long-acting incretins as well as other peptide-based therapeutics, including in our ongoing collaborations with Lilly and the partnership -- the new partnership with Gubra. So with this, it's time to wrap up with some final comments. And I think we can say that 2025 was a year where Camurus made significant progress with major R&D milestones, solid growth, and high profitability. This year we aim to -- this year with that, I mean, 2026, we aim to expand our market leadership in opioid dependence treatment, launch Oczyesa and Oclaiz for acromegaly in Europe and the U.S., pending, of course, FDA approval, and move SORENTO to positive data readouts. New clinical trials will also begin for promising candidates like CAM2056. For further growth and diversification of our business, we will invest in our partnerships, intensify business development to secure new collaborations and potential strategic acquisitions. Our solid financial, operational, and scientific base gives us a clear path to sustainable value creation, and we are well positioned to make 2026 a transformative year. And with that said, I will thank you all for listening, and let's move over to Q&A. Operator: The first question comes from the line of Romy O'Connor from Lanschot Kempen. Romy O'Connor: Two questions, if I can. The first, in the annual report, it says that the core component phase of the SORENTO trial is now set to be completed in H2 '26. Can you clarify what this core component is? And is the top line data still then estimated for mid to late 2026? And the comments on the new auto-injector pen device. Can you provide any more color on this? Is this just for the CAM2056 asset? Fredrik Tiberg: Thank you, Romy. Well, with the core phase, we mean the randomized part of the study. So to the point where we can start reading out the data. And as to the injector -- auto-injector for CAM2056 that we are working to develop, we have been working with this for quite some time, and it will be a new device adopted specifically for CAM2056. Does that answer your questions? Romy O'Connor: Clear. Thank you so much. Yes, it does. Operator: The next question is from Gonzalo Artiach from Danske Bank. Gonzalo Artiach Castanon: Gonzalo Artiach from Danske Bank. Thank you for taking my questions. I have a couple of them. The first one, I'm trying to understand the FX impact, especially in the U.S. Could you give us some color on this on FX impact that you see there in the U.S., to trough is 17% headwind, if I understand correctly, on USD to Swedish krona, so how did you end up with 35% headwind? And the second question is on your 2027 goals. Have they changed based on how 2025 closed? I see that you guys still target 100,000 patients with Buvidal, but do you have any words on margin development? Are you still targeting around 50% for 2027? And anything on top line goal for that year would be appreciated. Fredrik Tiberg: So I think I'll leave the first question over to Anders when it comes to the dollar rate and its impact on our FX rates. Anders Vadsholt: Yes. So we've had a lot of fluctuation in the currencies during the year, primarily in the Australian dollar and the U.S. dollar, as you state. So it all depends on when we book, it is more a technical thing, when you book the invoices and so on, that's where you see the effect. But we have seen a decrease over the year from January all the way to December. So yes. Fredrik Tiberg: Gonzalo, can you give me just -- is that -- can you repeat the second question? Gonzalo Artiach Castanon: Yes, it's on your 2027 goals or targets that you have disclosed in the past. And what do you have to say in terms of your margin approach? Are you still targeting around 50%, your EBIT margin? And on the top line, any words on that also? Fredrik Tiberg: Yes. So we established the vision for 2027 in 2022, and we are working concisely and with a high dedication to achieve that. Obviously, there is still ways to go, but we are -- we maintain our goals currently, including the margin goals of approximately 50%. I want to highlight that this is and remains a vision for the company. Operator: The next question comes from Pauline Hendrickson, from Van Lanschot Kempen. Pauline Hendrickson: My question has already been answered. Operator: The next question is from Christopher Uhde from SEB. Christopher Uhde: So my first question is just whether -- to what extent your guidance range might reflect any concern about ongoing FX headwinds because, obviously, it was a headwind for your '25 delivery and you cut the guidance partly as a result. And obviously, it's only going to get worse. So you're fighting with one hand tied behind your back. That's my first question. Fredrik Tiberg: Anders, do you want to comment on? Anders Vadsholt: Yes. So -- yes. So we have definitely taken the currency exchange risk into consideration when providing the guidance. So -- and then we've made a thorough analysis on several expectations for the development. And also, I would say, when we look into the U.S., this year, we predominantly have income. Next year, we're also beginning to have some expenses because of the buildup. So it's -- now it's a more natural hedge. But of course, we are very much exposed to the U.S. dollar. Christopher Uhde: Okay. That was the first one. Secondly, I noted that you had mentioned the milestone from Braeburn in 2026. So is it fair to assume that that's in guidance? And can you give us an indication of the size? Is it similar to the last one you got from them? Fredrik Tiberg: So yes, good question. Obviously, we did not realize the milestone in 2025. So that -- but there are good reasons to expect the first milestone. We haven't received any sales milestones yet from the collaboration, but it's good -- there are good reasons to expect it in 2026. The size, you could say, I don't think we have given any exact size. It's the smaller of the 3. So -- and the total amount is $75 million. Christopher Uhde: Okay. Great. Thanks. That's helpful. Then my next question is on -- so SORENTO, is it in the -- likely to be in the early or late second half at this point, do you think? Fredrik Tiberg: I think there is still some uncertainty about that. I mean it depends on the accrual rates month-by-month and quarter-by-quarter. And of course, it's very difficult because it's an event-driven trial, it's very difficult to give exact predictions and it may vary between how patients were enrolled. We have, of course, our models, but they do give quite a big wide interval still. So we will get some more updates here, of course, in the early part of the year. And the more data we get, the better we are able to give an idea about when exactly we can start to read out and -- close and start to read out data. Christopher Uhde: Okay. Those are my sort of housekeeping questions. Then I have a question on revenue per patient because last 9 months, you can see a dip for Buvidal of about 25%, it looks like. How much of that is actual price pressure versus FX? And I have other questions if it's okay. Fredrik Tiberg: I'll leave it over to Richard to explain. Richard Jameson: Yes. So I mean, there's -- the first answer is the price is pretty stable across our markets. We're maintaining that without a problem. So there is obviously a country mix depending on the volume there because there are different prices in different markets and then the rest will be down to FX. Christopher Uhde: Okay. And -- all right. So then, I guess, just if you could -- is there a little bit more you can give us in terms of what's going on in the U.K. and Germany in terms of the status, and France, I should say, you did comment a little bit, but do you have any hints on whether momentum is gathering, let's say, for Germany, for example, with remuneration reform? Richard Jameson: Yes, sure. And good questions. I'll start with Germany then, is the one you mentioned there. So yes, I mean, as I said, there's quite a lot of support for change in this remuneration system. It's something that we cannot be involved with as an organization, but we understand there is ongoing and advancing discussions between the both national and federal physicians associations and the health insurances to change that, so they can open up access. And we've seen the growth -- there was a report came out of the Bavarian -- the drug strategy group of the Bavarian Parliament calling for the same thing. So I think there's growing momentum there. It's a bit unsure how we can say when the outcome will come, but we know there's ongoing discussions. And for the U.K., to answer your question there, it's -- we know Wales and Scotland are going very well. They have high penetration. They have funding available. England is our challenge. But again, there, there's clear demand from across many groups, as I said, from criminal justice, from health care, from health care professionals, and patients to have funding. We've seen the NHS England who are responsible for treatment in prisons making a significant commitment to funding over -- that started mid this year, mid-'25 and is continuing. And hence, we're seeing the growth we're seeing in the U.K. coming mostly from prisons. We know the U.K. government have now announced a 3-year funding settlement for public health, including a ring-fenced proportion for opioid dependence treatment. So we're in dialogue with the Department of Health, NHSE and other stakeholders to identify ways that the funding can be allocated to long-acting buprenorphine to meet the demand that's there. Christopher Uhde: Okay. That's very helpful. Can you -- is it possible to kind of give us gating events that remain for these things to happen in both Germany and U.K. and France, like specific events that -- so we... Richard Jameson: I think that's very difficult. This is policy change. And with the remuneration, we're not involved in that. So it's very hard to be able to judge when the timing on those things are. Operator: The next question is from Viktor Sundberg, Nordea. Viktor Sundberg: Yes, continuing maybe on the U.K. I guess this is perhaps the main uncertainty going into 2026. Can you give a bit more insights into if there's any stocking left at distributors that could impact sales here in 2026? And just remind us maybe if -- yes, when funding is expected to trickle down to clinics to improve the sentiment in the U.K.? Richard Jameson: Yes, sure, sure. So there's no more stock in the channel to answer that one quickly. Then the answer -- I mean, the NHS year runs from April to March. So the latest announcement from the government will come from April. How long that would take for the funding to reach the clinics is a moot point. We know that this year, there was an announcement, and it's been very slow in reaching the clinics, which is one of the reasons that it's been a bit slower than we anticipated after the announcement. So we're obviously doing everything we can to encourage responsible people to make that available to patients as soon as possible because there is a clear unmet need and patients are waiting to go on to treatment with Buvidal. Viktor Sundberg: Okay. So maybe it's more towards the end of 2026 or second half. Is that fair? Richard Jameson: I don't think we can say that now. I think there is potentially it could come. We know there's been a delay in '25 and people are putting pressure on that, so it could come earlier. Viktor Sundberg: Okay. And just on guidance also, could you specify a bit more what you mean with pricing conditions and reimbursement as something that could impact guidance, both on the upside and downside? And what the most important points here is also on -- in the U.S. here to keep in mind when you talk about competitive development that you mentioned in your guidance? Markus Johnsson: Yes. When it comes to pricing, of course, it is our current understanding of the pricing landscape, both for, of course, most importantly, for Buvidal and Brixadi. And we don't see that there is a big differences from year-to-year, at least not from 2025. It's relatively stable landscape there. When it comes to Oczyesa, I mean, we don't have that many uncertainties either because we got the approval, of course, in Germany of the price, and we have proceeded now with Norway and other markets. So I think that's what we mean. We are relative -- we are building it on our current understanding of the pricing situation and the reimbursement willingness in our different markets. Viktor Sundberg: Okay. And I just had a final one also on FluidCrystal maybe in general. You have had a lot of data pointing to that FluidCrystal also enhances existing drugs bioavailability in your trials. And I guess we saw evidence of this again in your trial with semaglutide. But have you done any more analysis on that on your semaglutide data supporting that bioavailability is higher with FluidCrystal enhanced semaglutide versus Wegovy? And do you expect this efficacy advantage to be sustained in your next trial? Do you get both long-acting, but also increased efficacy here for this product? And also maybe related there, what would be the difference here in the Phase IIb trial? Is it just more patients or any other key changes that we could expect? Fredrik Tiberg: That's a really good question. I mean when it comes -- I don't think we have talked about bioavailability specifically. What we referred to was that we had the same Cmax concentration with -- at a much higher dose with -- well, at a 4x higher dose with CAM2056 as the now approved product. So that's -- we have obviously done a lot of analysis on the relationship between our different variables in the study and time and so forth. Going to the Phase IIb study, the main question will be to see how the weight reduction is developing over longer period of time. So it will be a significantly longer study. And we will also look at some details around the dosing mechanism, although we have now identified what we believe is the optimal dosing regimen. So we will definitely produce new data that will be presented in various different settings, on the PK/PD and relationships. But for the specific question about the study, it will be a longer study, and it will be a controlled study in the first case. And then in parallel with that, we will do the Phase III preparation development. Operator: Next question from Oscar Haffen Lamm from Stifel. Oscar Haffen Lamm: A couple of questions on my side. The first one, maybe on the guidance for 2026. Could you give us a bit more granularity on your expected contributions from Buvidal, Brixadi, and Oczyesa in this guidance? Fredrik Tiberg: Yes. I mean we are -- as we said in the report, we are expecting Buvidal to continue to grow in the region of what we saw in 2025. So I think that's clear. We also have a view that we're expecting good performance from the U.S. and Braeburn with Brixadi development. So that's, of course, a very important component of the development or the expected development for 2026. I think we have to say that Oczyesa, of course, is going to be launched in a few markets, but it's going to be early in the launch cycle compared to the developments that we have, of course, for -- in the opioid dependence area. So the contribution there will be low. And I think we should focus on the big components. And then, of course, we have excluded any potential revenues from ongoing development programs. And they are as always digital. So we thought it was better to leave them out. But there is, of course, the potential of some upside in that range. Oscar Haffen Lamm: Okay. Then another question. You maintain your objective of 100,000 patients on Buvidal by the end of '27. This will obviously mean a strong acceleration in the next 2 years, maybe higher than what you've shown in the past. So my question is, I mean, where will this growth come from? Are you already seeing some signs of acceleration in Europe, for example? Fredrik Tiberg: I'll leave that to Richard. Richard Jameson: Yes. I mean, as I said, we saw growth of 20% plus in the big European markets, so Germany, U.K., France, and Spain, and that's the big opportunity here. We're working very closely with a whole group of stakeholders to try and improve access here. Some of those could be quite material if successful, that will give access to many more patients. So that's why we believe the 100,000 is still possible in that time. But it is predicated on some -- solving some of those funding challenges that we're facing, which we're making good progress in doing. Oscar Haffen Lamm: Okay. Thank you. And just one last question. What is currently the proportion of Buvidal sales are coming from the U.K.? I don't know if you've already disclosed this or not. Fredrik Tiberg: I don't think we have disclosed it, and we're typically not giving the relationship between different markets. Operator: Next question is from Georg Tigalonov-Bjerke from ABG Sundal Collier. Georg Tigalonov-Bjerke: This is Georg from ABG. I have a couple of questions as well. So first, I'm wondering if you can give any insight to where the German patients adding roughly 20% year-over-year growth are coming from? And then secondly, regarding Oczyesa, when do you expect to launch in France, Spain, and Italy? Fredrik Tiberg: So when -- the first question you had, was that regarding Buvidal? Georg Tigalonov-Bjerke: Yes, regarding, I mean, what kind of German patients, I mean, are you getting or adding at the moment that were... Fredrik Tiberg: Okay. Yes. I'll leave it to Richard. Georg Tigalonov-Bjerke: The year-over-year growth, 20%. Yes. Fredrik Tiberg: I'll leave it to Richard. Richard Jameson: Yes. So it's a mix. There's patients in the criminal justice setting that are outside the remuneration challenge, which we see growing. There are other physicians who are more open to prescribing a long-acting and in the community setting, and that's coming from there. So it's a mix. I can't say there's one specific segment or other. Prisons is key, but also so is the community setting. Fredrik Tiberg: And when it comes to the other question, I mean, we are starting in the Wave 1 countries. In parallel, we are doing our market access work for the rest of Europe. And we will kind of announce -- as you have seen for Buvidal, we have added countries now for -- we are in our 7th year, and we are still adding new countries in the markets. But I wouldn't say that we are expecting to see France on board, for instance, until at the earliest next year. Operator: Next question from Dan Akschuti from Pareto Securities. Dan Akschuti: Just 2 more questions from my end. And one would be if you could share any comments with regards to your communication with Eli Lilly. Is that frequent on a monthly basis, for instance? And are they happy with the data? And the second question would be just on the inventory there that you got back for the U.K. How long is the shelf life for that? Or can you reallocate that to other geographies if the U.K. would take more time? Fredrik Tiberg: Yes. So on the first question, I have to say that we -- through our contractual relationship with Lilly, we have -- are not able to communicate too much about the progress on important things that are material to the company, we will progress and communicate. So I think the information that is available now is what we can say about the current state of that collaboration. So on the second question, Anders? Anders Vadsholt: Yes. So yes, we can definitely sell the product continuously. So it's -- yes, so there's no question about that. So that's very simple applied to that one. Fredrik Tiberg: We have 36 months shelf life on the product. So typically, that's not a problem for us. Operator: The next question from Mattias Haggblom from Handelsbanken. Mattias Häggblom: I have 2. So I'm coming back to this 100,000 patient target. So with the net additions of 30,000 required to get there, should we think of net patient wins as linear from here? Or should we think of them rather as back-end loaded as more and more reimbursement hurdles are removed? And then secondly, for the vision of revenues of SEK 4.5 billion for 2027 shared back at the CMD in 2022, at the time, the composition was SEK 3 billion from Buvidal and SEK 1.5 billion from pipeline. When I look at it from consensus, it's largely at the SEK 4.5 billion level, but the composition is different, SEK 2.6 billion from Buvidal and SEK 1.9 billion from pipeline. So I'm curious to hear if you have any feedback or thoughts on that composition, at least in light of some of the pipeline contribution being delayed due to CDMO inspections as well as slower accrual events in the SORENTO trial. Fredrik Tiberg: You can start. Anders Vadsholt: So I'll take the first one on the pickup of patients. I mean I don't think there's a clear answer on this one because it depends on when we achieve the funding. So yes, obviously, it's more likely to come later as we get there, but we're in quite advanced discussions with some areas that we could move more quickly. So that would depend on some changes that we need to make in discussions with the stakeholders involved in this. So I don't think there'll be a clear answer on that. Fredrik Tiberg: I mean we do see also that we have a contribution for the expansion into new markets. Some of them have responded relatively slowly, like Portugal, but we do see significant growth opportunities. So there is -- I mean, it's a mix there, and it's not easy to give you -- so far, we have been quite linear as was shown in the figure here earlier. So we need to pick up some more patients to reach the 100,000 in -- by the end of 2027, for sure. And the SEK 4.5 billion, yes, I mean, the mix, obviously, in 5 years, things happen in terms of the different programs advancing. We have maintaining our ambition. You see basically how Buvidal is evolving and the contribution can be closer to where we were expecting it. We have uncertainty to how quickly the Brixadi sales will continue growing. We are hopeful there, of course. So those would be 2 major contributions. The delay in SORENTO in the trial -- or not trial execution, but in the event rate may have an impact. And in that case, we will need to reach the goal, we will need to add additional revenues. On top of this, of course, we also have a number of milestones that can come in, in 2027. But I would say, overall, we are not that far from the distribution that we mentioned in the 2022 CMD. But obviously, we weren't exact and will not be exact. Operator: Next question is from Erik Hultgard from DNB Carnegie. Erik Hultgård: The first is what drove your decision to change distribution model in the U.K.? And what impacted the timing of the decision, i.e., why now? My second question relates to Oczyesa and the 20 patients that you have on therapy in Germany. Is this mainly switch patients? Or are you also getting naive patients? And where do the switches come from? Is it both Sandostatin and Somatuline or mainly Sandostatin switches? Fredrik Tiberg: Okay. I'll leave the first question to Anders. Anders Vadsholt: Yes. So it came out from the volatility in the U.K. market. So that caused us to more or less aligned with the U.K. model with the rest of our distribution strategy. That's why we went to a different model and also because we have the upcoming launch of Oczyesa. But then also when I look to the future accounting principles, how you report, especially IFRS 15 and 18, then this model is much more suited for us. So that was why we did it. And it made sense to do it by the end of the year. So it was very clear. Fredrik Tiberg: And on the Oczyesa patients, I would say that all of them were switches from both treatments. We should, of course, be aware that there was only basically a little, 1.5 months or so recruitment time since the launch and availability of product in the market. And I think we saw a good pickup in that time period. And I think we'll see continued -- I mean, the positive note is that most patients in Germany are on treatment. So I mean, there are many fewer coming in new patients per month or per time period. So this is a very good signal for us. And it seems to be progressing nicely also into the early part of this year. So we are happy with that. But I think you would -- you should assume that most of our patients will come from switches of current treatment. Erik Hultgård: All right. Great. Then just a follow-up on Brixadi. Do you expect a similar pattern in Q1 of this year as last year when the buprenorphine market declined by double digits in Q1 versus Q4? Fredrik Tiberg: I think there is a change now because, obviously, we had the whole situation with the change from the COVID times that was -- that we saw impacting the 2025 first part because there were still patients that didn't have to do or hadn't had to be exposed to getting new allowances for prescriptions. And I don't think that that dynamic is left there. So we expect to see less of a dip in Q1, if any. It's -- I don't have that information, but I think that's the situation. Operator: Gonzalo has a follow-up from Danske Bank. Gonzalo Artiach Castanon: Yes. It's one on PLD. Could we assume that you guys will start a Phase III this year if you have the end of Phase II meeting now in March, if I heard correctly? And if so, is this baked into guidance? Fredrik Tiberg: Yes. So the important thing here is we will, of course, we are seeking the agency's advice on the study design of the PLD study. And should we get perfect alignment with them in the first meeting, then there is definitely a probability. But even so, I wouldn't say that it would impact our R&D costs significantly, and they are baked into the current expectations or financial results expectations. Operator: Christopher SEB also has a follow-up. Christopher Uhde: Two, if I may. So the first, just one clarification on the U.K. funding. Is there any kind of claw back or rollover on the funding that was allocated for '25? Or -- and if there would be a rollover, how would that impact 2026's funding allocation? Richard Jameson: So I think there's unlikely to be a rollover, but there is new funding for '26 announced a couple of months ago now. So of which some of it -- the public health grant that goes to all sorts of -- is distributed amongst public health requirements and some of it has been ring-fenced specifically for treatment of drug and alcohol. Christopher Uhde: Okay. Great. That's helpful. And then the second question is on the runway remaining in the AMEA region. And I guess within that also, particularly Australia, how much more penetrated can long-acting injectables get in those markets? Richard Jameson: Yes. I think there's still a reasonable opportunity. There's still reasonable numbers of patients on sublingual that would -- many of whom will benefit from moving to a long-acting. And there's also the methadone segment. And we're seeing increasing demand from patients to move to a long-acting treatment from methadone. It's a harder transfer, but the experience that people are gaining and how to do that is growing all the time. And we're seeing, firstly, demand growing and also the numbers of patients moving away. In Australia, for example, we're seeing methadone gradually decline, but there's still -- we have 35% -- some in the region of 35% share for long-acting. So that means that 65% of people still available. Some of those will want long-acting. Fredrik Tiberg: Yes. I think we have said earlier that we believe that we could ideally or even potentially exceed that, that long-acting injectables could reach up to 50% share. And so there is significant growth opportunity left, in our view. We'll see how it -- it's continued developing very well in 2025, and we haven't seen any signs yet that that will be stopping. Operator: The next question is from Shan Hama from Jefferies. Shan Hama: I've got 3, if that's okay. Could I actually just press you on what the guide actually bakes in for Brixadi growth in 2026? I know it was asked before, but could you perhaps compare that to how Brixadi performed last year and what that would look like for the momentum in 2026? Fredrik Tiberg: I think what we said is we are believing that Buvidal will continue to grow in a steady fashion. And the remainder of the, what is baked in, should be essentially Brixadi growth according to our projections. Shan Hama: Okay. Understood. And then my next question, please, is with the end of Phase II conversation that you have with FDA in March for the PLD indication, where does that place potential Phase III start and therefore the timing of the costs for that study? Fredrik Tiberg: Well, yes, importantly, it depends, of course, on which response we get from the agency. And I mean, starting up a Phase III study and having the first patient treated, it typically takes at least 9 months and probably a little longer than that. Shan Hama: Understood. Make sense. And then just my final question, please. Could you just clarify the England funding situation? So there's funding that was meant to -- well, from last year that was meant to arise that never hit the clinics. When is that expected? And then you said, is there another round of funding that could come or be communicated by April that was then hit in 2H? Could you just clarify the timing of the funding? Richard Jameson: Yes. So there's 3 sources. Firstly, the NHS England funding for prison, so which is reasonably significant, is already in place in clinic and is driving growth in the U.K. The broader community-based funding, that's the bit that struggled to come through. We don't know really what's going to happen in Q1. But what we do know is from Q2 onwards, from April when the NHS year starts, there is this new committed funding by the government, of which, for public health, of which a large proportion is allocated specifically to drug and alcohol addiction. So we anticipate that coming in. We anticipate last year as well and it didn't reach it. So we have to wait and see. But I think the pool for access to long-acting buprenorphine is very clear from various sectors. And I think that we -- I think we're confident that it's going to come through in '26 at some time. Operator: The last one is from Romy a follow-up from Van Lanschot Kempen. Romy O'Connor: Just one follow-up from me. Can you please provide some more color on your M&A and BD priorities for 2026? And is there any specific criteria or areas that you are looking at? Fredrik Tiberg: Yes. Nothing has really changed from previous year. We are looking, as I said, for -- mainly our target is pre-commercial, commercial assets that are synergistic to our current business in Europe, U.S., or the more global setting. So that's the main target for us. So that would be in endocrinology, rare oncology, and potentially other rare disease indications, and CNS. And then we are working more exploratively, of course, also with early potential developments, including licensing transactions and early licensing just to fill the early pipeline. But I would say, I mean, our core focus is on late-stage opportunities, as mentioned earlier. Operator: No more questions. So I hand the word back to you, Fredrik. Fredrik Tiberg: So thank you, everybody. I think and hope you see that we have a solid foundation for the year to come. And I look forward to updating you all together with the team on our Q1 presentation and meet you in between. So thank you very much for listening in and asking very insightful questions. Thank you.
Operator: Thank you for standing by, and welcome to the Cochlear Limited HY '26 Results Analyst and Media Briefing. [Operator Instructions] I would now like to turn the conference over to Mr. Dig Howitt, CEO and President. Please go ahead. Dig Howitt: Hi, everyone. Thanks for joining us today for our first half results announcement. So let me get started and said we'll do a presentation upfront and then open for questions. We always do like to start with our mission and particularly this half where we've been very focused on the launch of Nexa, which is the core of our mission of getting people here and be heard and some highlights of being able to talk to professionals about their excitement around the technology in Nexa and what that brings for the future and to be able to meet a bunch of recipients who have -- excited by the technology and be able to benefit from features like Smart Sync. Let's get into the result. So the -- as I said that this year -- this half is really all about Nexa. And certainly a big undertaking sort of launch, Nexa, and I'll explain a bit more about what's involved in just a few minutes. And overall, we see -- saw a very successful launch that really does set us up for the second half and certainly sets us up for the future. And in doing that, and I'll go into some of the detail, we saw price increases, and we did see some delays in those price increases and delays in sales. And that's really what's brought us short of where we expected to be in the first half. That's led to the sales revenue being down 2% in constant currency and the underlying net profit of $195 million. So what that means for the outlook, and I'll talk more about the outlook a little bit later, but at a high level, we now think we'll come in at the lower end of our original guidance range before we adjust for the recent rise in the Australian dollar. And the reason for that being at the lower end rather than just in the range more broadly is the shortfall in the first half. We don't see that we will catch up in the second half. And then on to FX. Obviously, Australian dollar has been on quite a run just over the last few weeks. If it stays about where it is today, that's about a $30 million net profit hit through the half. And you'll see later on, we provided a bit more detail because it has been moving around so that if it does continue to move around, you can have a chance of estimating what that impact will be. But let's go on to talk through the segments. And I want to spend a bit of time on Cochlear implants, obviously, with the Nexa launch because the key with a launch like this is a significant exercise right across the company. It's a change to our manufacturing process, obviously change to the distribution. It also involves new software in all of the clinics around the world that are using Nexa. So we think about just the logistics of that launch. It's a significant effort across the organization. And it does take time. And so we said at the start of the year that our performance, our revenue and our profit will be weighted to the second half, and it still is. And so if you think a bit more about Nexa, so first of all, as we know, we had approvals in Western Europe and parts of Asia Pacific at the start of the half. So we're able to start shipping into a number of countries in Western Europe and Australia from early in the half. We did then have to install software. Some of that went quickly, but for instance, in the NHS, our new software got stuck in a queue in the NHS. So it was actually some months before we were shipping Nexa into the U.K. in the half. In the U.S., we got FDA approval in early July. We started shipping in September to hospitals that had recontracted with us for Nexa. So again, we've really in the U.S. sort of got 4 months of Nexa sales in that first half for the hospitals that contracted upfront and some of them took longer, which meant even less impact of Nexa in that half. We did -- as we went into this, we said, at the start of the year, we would seek price increases in countries where the reimbursement system enables a price increase for new technology. In most of the countries where that's the case, that does mean contracting hospital by hospital. So that's the case in Germany. It's the case in the U.S. And in going through that, we have been able to achieve the price increases that we set out to do, albeit took a bit longer in some instances. And obviously, when we're negotiating price, it's an opportunity for our competitors to compete with us quite aggressively. And we expected that to happen. We saw that happen. We saw a number of instances where -- when we were pushing for price, our competitors were offering discounts for bulk purchases in those hospitals, and that enables them to get a bit of stock on the shelf, so certainly a few cases where we lost a little bit of market share going through the contracting process. That's a bit of a description of what happened. Where do we end up and the way we end up is important for the confidence that gives us looking forward. So the result of all that is, by December, over 80% of our developed market sales were in Nexa. So that's obviously a very significant shift. We did see in November and December across key markets, a 10% lift -- those key developed markets, a 10% lift in our cochlear implant units compared to the prior year. And so that's sort of a good indicator of the impact that Nexa had once it was installed. And we did get a low single-digit price increase. So we got the price increases we sought in the markets that we went for, ended up with a low single-digit impact and obviously, not much of an impact for that in the first half given the timing. But as a result, we ended up with just a low growth in -- of overall CI units. Now we do know, while we've been very focused on Nexa, that the key to our success is driving growth in the cochlear implant market. So we have continued to execute our growth strategies, and we continue to push -- launch new growth strategy, I'll talk a little bit more about that, and push more resource into driving growth, particularly in the adults and seniors. And one example of that is we're launching right now some new messaging on cognition using the latest results from independent studies, showing the link between cognition and hearing loss, the benefits to cognition from using cochlear implants and starting to use that to, again, to raise awareness of the need to treat. So move on then to look at emerging markets. Emerging markets, we said going into the year that we expect to see volume growth but at lower -- but in the lower tiers. And that was particularly because of the China volume-based pricing, which came in, in March last year. So we had the full 6 months. And we also had that against a comparable half where we had noted higher-than-normal premium tier sales in emerging markets. So we saw very good volume growth in the emerging markets but did lead to lower overall revenue, and that's directly as a result of the volume-based pricing in China. That's said, we did execute very well in China. We're holding a strong market share. We're seeing strong growth and the team there have managed that transition very well. So overall in cochlear implants for the half, so the sales down 2% in constant currency, a little bit up in developed but down in emerging. We're -- certainly from my perspective, very pleased with how we executed on the Nexa launch, pleased with the execution through emerging markets. And both of those things set us up well for a strong second half in cochlear implant units. Okay. Let's move on to services. Now services was in line with our expectations post work with cochlear implants. So we're a little bit behind where we expected to be. Services was in line. We did see growth in developed markets of 4% in constant currency. And this follows on what we've been talking about is -- and executing on, is we've strengthened our digital marketing and new platform, better able to segment and target people eligible for upgrade, stronger messaging around Nucleus 8 based on direct feedback from people who have gone, particularly from Nucleus 7 to Nucleus 8 and the benefits of that emphasizing the waterproofing in Nucleus 8 and the launch of Kanso 3. All of that led to that 4% growth in developed markets. And what we see looking forward is stronger -- even much stronger growth in the second half, particularly with the retirement of Nucleus 7 in the U.S. We've seen a significant uplift in people inquiring about upgrades just over the last few weeks, which is in line with our expectation but gives us confidence of our outlook for services into the second half. And then on to Acoustics. So Acoustics, down 3% in constant currency. And if we look at that by market, we actually continue to see good -- very good growth in the underlying markets for acoustics and particularly Osia, and we saw it particularly through Western Europe and Australia. One of our competitors launched a new product just over 12 months ago into the Acoustics segment, and we know that sort of the second 6 months after launch, where you start to see the impact of that launch, we saw that. We lost a bit of share actually in the U.S. and the U.K. And that's better with the new product. People are going to try it. We remain very confident of our product features and product benefits, particularly in terms of hearing outcomes with us here over the competition, and we have significantly better MRI indications. And so while we've lost a little bit of share, we still hold a very significant share in that acoustic implant market, and we expect to regain some of that share plus see market growth as we look into the future. But did see an impact from a competitive launch a bit over 12 months ago, and it is that sort of 6 months later where you start to see that impact. Okay. Before I hand over to Sarah, I do want to make a few points on our strategy. As we talked in the release about some restructuring that we have been doing across the company, which is really something we've been working on over the last few years, it's all about making sure that we are making the company fit to drive growth and fit to get scale as we grow. So there's 3 things that I wanted to call out in areas where we've been doing quite a bit of work to drive growth or set ourselves up for the future. The first of those is the transition to the cloud, which had been a program that has been very visible for the last 4 or 5 years. And this is just about switching our platforms over the cloud. It's also about actually getting consistent and aligned processes across the company and reengineering our data to get consistent data architecture and data structures. Those 2 things combined with the systems enable us to get scale as we grow. And they also become platforms for the use of AI, which is going to be part of us getting efficiency, part of us getting scale but also getting insights into how we drive growth. So those programs continue to progress well. The second area that we've worked hard on over the last 6 months and certainly since the Nexa launch is to restructure our R&D. And it's the right time to do it after a big launch, but as our products are now much more complex than they used to be, our R&D organization is larger than it used to be, quite naturally, and in doing that, what we're doing is restructuring to make our R&D more modular, which improves accountability but also enables us to target the capabilities we need and make sure we get concentrations of the right capabilities we need for future technology development, so important piece of work there that's well underway and appropriate to do after the Nexa launch to make sure that our R&D organization stays future-fit and able to continue to develop an outstanding range of products. And then the third area is around driving growth. And we know that's the key to our longer-term success. We continue to work hard to lift the growth rate, particularly in the adults and seniors segment. We've got a number of programs we've talked about over time, but we continue to add some new programs and new experiments, particularly focused on referrals and referrals out of the medical channel rather than perhaps the hearing aid channel. And we're diverting more of our sales and marketing resource towards growth and towards building these referrals. And that's both -- require some organizational change to do that and some reskilling of some of our commercial teams to have that sort of different conversations that they have in the referral channel than they might have either in hearing aid or in the cochlear implant clinics. So we've done some restructuring across our commercial organizations to set ourselves up there, too. But just 3 important areas of strategy that we were making changes that don't have any benefit now but are setting ourselves up to have a benefit into the future. Okay. With that, I will hand over to Sarah. Sarah Thom: All right. Thanks, Dig. So I will take us starting with the profit remarks. And you see the sales revenue has declined by 2% in constant currency. But Dig's taken us through those details, so I won't go into it further right now. We go to gross margin. You see a 2 point decline to 73%. Now this was largely expected, and there's 3 things that I'd call out in here. First is the mix shift to lower-margin emerging markets in the first half, including the impact of the China volume-based pricing coming through. Second is Nexa. At launch, Nexa has higher COGS. We expect that. But we also expect that as we come up the experience curve as the commercial volumes grow, we do expect that to decrease over time. Finally, Chengdu is a facility that is continuing to ramp up. We're really happy with the production we're getting there, but there's still room to go in that facility. So we'll continue to see Chengdu be a small headwind to gross margin for another year or so. Our operating expenses declined 2%. That's a net effect. As Dig talked about, we've continued to invest to drive the long-term sustainable growth and to invest in R&D. So that's strengthening our sales capabilities, getting more scalable and how we support our go to market, investing to strengthen the referrals pathways in the way that Dig talked about. And then also putting investment into R&D so that we support that project and services pipeline that we have coming. However, at the same time, we've been very deliberate in this half about phasing our costs into the second half as to balance out the second half weighting of the revenue profile that we expected to have. Finally, we're cycling a few ones-off projects that finished up in the first half of last year and are finished at this point. That brings us to the underlying net profit margin of 17%. What you see below that are some items I'd call out, in particular, the $24 million of cloud-computing-related expenses, which we expected to invest there and will be reported as a significant item below the line. You'll see the fair value losses on investments of $9.6 million. That's related to Saluda, which is a small long-term financial investment that we've had that was revalued on their listing back in December. Let's go on to the balance sheet on the next page. Right. The main feature of the balance sheet is the $48 million increase in working capital. Now that's a factor mainly driven by having fairly conservative safety stock coming into this half and holding that as we launched Nexa, Kanso 3 and Baha 7 progressively rolling out around the world. We continue also to build that stock ahead of what we expect will be a big second half. We also continue to expect that, that inventory will moderate over the second half. The other thing I'd note on here is you do see that $36 million change in trade receivables. That variability is pretty normal and largely due to our emerging markets. If you remember back to the end of FY '25, we had seen receivables increase due to the larger emerging market orders, and this is just the unwinding of that as the receipts come through. I'd note that other net liabilities increase of $33 million. That's an increase in net tax assets, and it's very much a timing effect that will unwind by June. Let's talk about cash on the next page, if we can, please. All right. All right. The main feature in the cash flow you see is the $103 million decrease in net cash. There's a few factors behind that. We have a number of quite lumpy payments in that first half. The $48 million increase in working capital that we just spoke to, there's a $34 million cloud investment that we mentioned. There is those taxes paid, noting that that's $30 million higher than what's expensed in the P&L due to the timing effects. And there's also the discretionary bonus that gets paid in the first half. Now this was $16 million, which is much smaller than our STI normally is. That reflects that, in FY '25, there was no STI paid to senior levels of management. Final call out on here is our capital expenditure of $40 million. That is continued expansion in our Lane Cove and Malaysia facilities. All right. Dig, back to you for the outlook. Dig Howitt: Okay. Thanks, Sarah. So onto the outlook, and I've touched on this upfront but just a little bit more detail here, is we're aiming to help 60,000 people hear this year. And obviously, as we said at the start of the year and I said upfront, weighted to the second half but we were a bit behind where we had expected to be for cochlear implants, which means now the lower end of that $435 million to $460 million range, we don't expect to catch that back in the second half. I've talked to each of cochlear implants and services where we had some good confidence on the signs we're seeing of an uplift in the upgrades in the second half, and that's something, as we talked about, we've been working towards, is getting that upgrades and services number back up. I expect some lift in Acoustics as well as we both see the market growth, we'll get some share and with the Baha 7 available there from an upgrade perspective. Now in terms of the foreign exchange, we've gone into more detail here. That guidance range was set at $0.66 and $0.56 for the Australian dollar to the U.S. and the euro. If it stays where the spot rates are now, that's about a $30 million hit across the second half. We have just provided there that for a little bit more detail. So for each cent change against the U.S. dollar, it's about a $3 million impact for that in the half; and for each cent in euros, it's about $4 million. And that's around our exposure for this half and also takes into account our hedging coverage for the half as well. Okay. So let's finish the presentation and now move into questions. Operator: [Operator Instructions] Your first question today comes from David Low with UBS. David Low: Dig, if we could just start with the restructuring, just to be clear on that, when you talk restructuring, are we talking charges that we should be thinking about coming through the P&L? And I guess the more important question, you talked about the seniors pathway. Can you talk a little bit about how things are playing out there? And maybe touch on where you think market growth is, particularly in some of those key markets where seniors have been a strong driver, please? Dig Howitt: Yes. Yes, David. So on the first one, the cost of the restructuring, we take -- we just took up through OpEx through the P&L, and we've done that for the last couple of years. It's a reasonable amount of money but not huge amounts, but it's quite an active -- it is an active program of making sure that we keep the organization ready for the future as we're changing and as the markets now, technology changes. In terms of growth, yes, look, it is the most critical issue for us. What we've seen is some good progress on our DTC front. So Nexa's been an opportunity to reengage with people who we've engaged in the past while they haven't been ready or haven't been in indications, and we've seen some good progress there. On the flip side, the referrals from hearing aids have been a little bit softer through the last half. Possibly, that's in line with what the hearing aid companies are saying about slower growth in hearing aid units. But the big opportunity for us is to -- has always been, is to generate more referrals. We've been working hard in hearing aids on that. We are now doing more on the medical channel. We've done quite a lot of analysis of the people who turn up at clinics that we don't have connection with before they get to a clinic and where have they come from. And what we're seeing is quite a number of them have had referrals from other ENTs, sometimes from GPs. So we're now running some programs to experiment with how do we engage those people who are already referring to get them to refer more and who are physicians like them who would also be able to -- who see people who are in indications but also able to refer. So further programs there. And as I said, we're also rolling out messaging on cognition, the links between cognition and hearing loss, and that, we've talked about many times, is a really important long-term part of our strategy. The reason -- one of the big reasons people don't get referred is people don't see hearing loss for seniors, particularly, as a very important medical issue. And as the evidence grows that not treating hearing loss increases the incidence of dementia and an evidence showing treating hearing loss and treating hearing loss properly with cochlear implants for people with severe to profound loss significantly reduces the incidence of dementia, that evidence is there. As it keeps growing, it's important that we communicate that in the right ways to professionals and also to consumers. So David, is that enough... David Low: Yes, that's a lot. Can I just ask quick financial questions. Profit margin, actually. I know you're saying 17%, but it's, frankly, 16.5% versus the 18% we're used to. What should we expect second half full year? And I did think the hedging program over the years, I'd been led to believe that it was pretty effective at protecting the next 6 months at least, so I'm surprised at the level of exposure. Maybe it's changed. Maybe I'm out of date. Could I get you to touch on those 2 topics, please? Dig Howitt: Yes, I mean, I can talk about some of those. So certainly, first of all, the margin in the outlook will be -- excluding currency, we expect to be a bit under 18%. The currency is going to bring that down further if it stays where it is. Our hedging program is only a partial hedge. It's really hedging the cash flow that comes back to Australia. We're not trying to hedge our net profit. It's more about hedging the cash flow, which gives us time to adjust. And in this outlook, what we're not going to try and do is trying to adjust our cost base, particularly given how quickly the Australian dollar has risen, to change the -- to have an impact in F '26. We are looking at F '27 and looking at the cost base and trying to get our -- take the action we need to, to get the P&L back in line with our -- the long-term structure of the P&L. And if you go back and look, I think, in 25 years, if you go back and look at our 25-year charts in the annual report, the Australian dollar's moved between $0.60 and $1.10 over that time and that there's pretty good consistency in the COGS, in the OpEx, in the net profit margin. You can see it moves around a bit when the currency moved extremes, but hedging gives us time to react and normalize it. And assuming the Australian dollar stays up, that's the action we will take again as we've done in the past, is to get our P&L back in line with our long-term targets. Operator: Your next question comes from Andrew Goodsall with MST Marquee. Andrew Goodsall: Just with Nexa, if I remember correctly, you wanted to be in about 90% of your jurisdictions by now. Could I just check where that's at? And then the 10% growth that you highlighted in developed markets, just where you think that is relative to underlying market growth? Dig Howitt: Yes. So Andrew, we've got to just over 80% in December. That will continue to lift. So countries like France have a -- well, like have a CE Mark. They have a registration process. that sort of takes 6 months or more. So we're expecting to get that registration in the second half in France. Japan and Korea are always a bit slow. They're expecting to come on. So we expect that Nexa percentage to continue to lift, but quite reasonably happy with being at 80%. And there's still a few contracts that we haven't locked down and we expect to lock down over this quarter that will give us a bit further lift in the U.S. and in Germany, particularly. In terms of the outlook for market growth, we think our CI developed market number -- developed market growth will be a bit under 10% as we look into the second half. And I think that's pretty much in line with market growth. We did -- we have lost a little bit of share, as I said, in some of these -- particularly in some hospitals around the contract in the first half, which we'll get back as a short-term impact that we're having through the Nexa launch back focused very much on how do we drive growth and how do we drive that adults and seniors growth. And we've seen some good progress over the last 4 years, but we know we've got more to do to get that growth rate at the level we want and sustained the level we want. Andrew Goodsall: And just a quick second question on buyback that you haven't made any mention. Looks like it was not really utilized in the first half and maybe that reflects where your cash flow was. But just any comment on that going forward? Dig Howitt: Yes. So the -- yes. No, that's a good observation. Buyback remains in place, but we -- we've got a target for our cash level. Yes. And we're a bit under that at the moment, so we want to get our cash back up to there, which we will do. The inventory is high. I'm very comfortable with that going through a launch but -- through the launch. And with stability, we'll get the inventory back down, and we'll see the cash generation pick up on the back of that. Andrew Goodsall: The buyback will sort of work around that timing? Dig Howitt: Yes, yes. So certainly, it's going to -- it remains on foot, but we want to see the cash flow improve a bit. Operator: Your next question comes from Davinthra Thillainathan with Goldman Sachs. Davinthra Thillainathan: Dig, just picking up on that bit about market share loss, I guess, in the first half. Curious, do you feel like that was more in the U.S. versus Europe, I guess, in the developed markets? And then somewhat related to that, we've sort of picked up commentary in places like Germany. As an example, to sort of get the price uplift that you're putting through for Nexa, you kind of need the hospitals themselves to get an uplift in their funding through DRG reimbursement as an example, and that can take some time to come through. Could you please just highlight if that's correct and how long it could take to come through, please? Dig Howitt: Yes. Okay. So first of all, just on the -- where we've lost a bit of share, it's more actually on a sort of a hospital-by-hospital basis rather than sort of market specific, so certainly some cases in the U.S., some in Germany. And it is where our competitors saw our launch coming and sensibly responded with some pretty strong messaging and marketing. That's what we'd expect. But also from a price perspective, I said, we've seen instances of discounts for buying bulk. And yes, then they get their implants on the shelves, and they'll get used over time. So those sorts of things have an impact in the short run. It's very sensible strategy on their part through a launch but not -- it's a short-term issue on share, not a longer-term piece. In terms of DRG and price increase, so a price increase for a device isn't directly linked to DRG. But if hospitals aren't getting an increase in the DRG and the DRG is basically the amount of money that they are reimbursed for the procedure that covers the device cost plus the hospital costs, plus the surgeon costs, if the DRG doesn't move and the product price does, then the out of money in the hospital to carry out the procedure is reduced. So hospitals do push back on that. So yes, that creates sort of tension in the negotiations. And we knew that going in and therefore, get some pushback. But equally, when you have an opportunity to get a price increase, we should go when it's right for us to go and see what we can do. And I said we got the price increases we were after, so the negotiations were quite difficult in places. We did better in some places than others. In terms of the DRG rising, yes, it is that, over time, the device price does have an impact. There's often an assessment process that looks at the cost of procedures and looks at the DRG, and so if the procedure cost goes up because of the device, then there can be an increase. We certainly know the reverse is true. If you pull -- if we pull the device price down, then, often, the payers will look at that and see the procedure cost is less and pull the DRG down. But it's not necessarily a linear relationship, and neither is it specifically time-based. If this happens on a point in time, in 18 months' time, you then see a proportionate impact. Davinthra Thillainathan: Great. Maybe one for Sarah then on your gross margin. I noticed the reduction relative to your previous guidance by about 100 bps. Could you help us understand the moving bits there? I believe the Nexa delay is likely a contributor, but I would have thought the other sort of bits that play into it, sort of manufacturing perhaps in terms of your inventory build as well that has occurred. So is that a drag in the second half? Could you sort of help us work out what's driving that 100 bps, please? Sarah Thom: Sure. Look, it is a combination of factors and it's those things that you said. So part of that is that we were holding a reasonably conservative level of safety stock because when we go into this product launch and over this first half, remembering, we have Nexa, also Kanso 3, also Baha 7 all coming out to the market. What you don't want to be doing is get caught short if it suddenly goes faster than you expected, right? So as Dig has talked through, we did go through this. You have to go through this contracting process. You have to get the software installed and all of that. And as he said, it took a little bit longer. But we've been holding some inventory at safety stock levels so that if it went the other way, we were prepared for that. So that's a contributor. Certainly, the contributing factor around the -- needing to build and make sure we have the right stock ahead of the second half, which as we've talked about, we do expect to be significant, we've got that inventory as well. It will start to moderate over the second half. Operator: Your next question comes from David Stanton with Jefferies. David Stanton: Perhaps I could talk to more longer term at least initially, call it, F '27 plus. Should we be thinking about greater than in that 10% volume growth into F '27 given the ongoing rollout of the Nexa? And what are the implications, again, longer term, '27 plus for that previous NPAT margin guidance, please? Dig Howitt: Yes. Okay. So first, thanks for your questions. So yes, look, we continue to aim to get at sort of 10% revenue growth year-on-year and do that over the long term. I think we're working through what F '27 will look like now but certainly expect us to continue growing. I'm not going to give you a rate of -- I'm not going to give you our guidance for '27 right now. That would be premature. But over time, the opportunity to grow is there. Our growth programs are having an impact. We're expanding and putting more into those growth programs, and the evidence for people to be treated continues to continues to grow. And we see that in our consumer surveys is, right, there is definitely growing awareness of the links between hearing loss and cognition in candidates. Sorry, David, I think there was a second part beyond just the... David Stanton: And what's the implication for margin, implications for margin, please? Dig Howitt: Yes. Look, I think, as I said earlier, in the shorter run, the Australian dollar does put pressure on our margin, mitigating to some degree by the hedging but not completely. But as you've seen over time, as the dollar moves, we'll adjust where our costs are, what we spend and how we spend it to try to get that margin back in line. That's why those lines are pretty consistent over 25 years in terms of net profit and R&D investment, gross margin. David Stanton: Understood. So 18% underlying is still the target over the medium term at least. Dig Howitt: Yes, still taken over the medium term. I think certainly with the currency, where it is, it's not going to happen this year. We'll see where the currency goes over into '27 and the outlook there, but again, I'm not going to give guidance on margin for '27 at this stage. David Stanton: Understood. And perhaps to ask in a different way questions already been asked. This reorganization, what does that do to -- in the short term at least to G&A as a percentage of revenue? Will there be any changes in the second half from that, please? Dig Howitt: No, we'll manage it within the envelopes that we set. We had a reasonable restructuring cost in the first half, and we have 1% OpEx growth. So we are -- we know what we've got coming, and we budgeted around it. We manage around it. Operator: Your next question comes from Saul Hadassin with Barrenjoey. Saul Hadassin: First question, Dig. At the full year '25 results, you spoke to 10% plus growth for units in developed markets. You haven't given a specific rate this half. But in terms of what you just said around what you're seeing in the marketplace now as it relates to market growth and your share, can you give us an update as to what you think unit sales growth will do this fiscal year based on the revised guidance? Dig Howitt: Yes. Yes, look, we think on the -- on developed markets, we'll be under 10% this year as part -- if we're pretty much sort of flat in the first half, 20% in the second half is beyond what we think we can do. Yes, even with Nexa in, so over the year, it is going to be a bit under 10%. Saul Hadassin: And I guess on that point, Dig, it sounds like from what you've been saying on the call that the opportunity in the seniors market is there, but you're having some degree of difficulty at least accessing that or tapping into that. Is that what we should be reading through? I mean in terms of a sustainable rate of growth for developed markets, when you factor in pediatrics being flat and the growth coming from adults and seniors, I mean I'm not sure you gave an actual percentage growth rate for the market. But should we be thinking that developed market growth at an industry level is more like upper single digit rather than 10% or 10% plus? Dig Howitt: No, we certainly still think 10% is well achievable. We -- the potential is there. We're working hard at getting. And if you look back over the last few years, we certainly saw stronger growth back in '23 and '24. That slowed into '25. We expect that we should be able to lift that up with the activity that we're undertaking. Saul Hadassin: Great. And last one, just on services and the idea that you should get some uplift based on expressions coming in from recipients noting the obsolescence. The feedback from clinics in the last few months out of the U.S. is that insurance companies continue to be problematic in allowance for processor upgrades, including wanting to see clinical notes to see whether there is, in fact, any issue with the processor. You've mentioned strong recovery or strong growth of processors in second half. How confident are you that you'll be able to deliver on that revenue line? Dig Howitt: Yes. Look, certainly, what we are seeing is that the insurance companies are pushing harder requiring more information. We've set up so that we're able to provide that information because clinical notes are normally there. It's just a matter of getting the access to them. And we have seen an uplift in interest and inquiries because of the N7 retirement, and that uplift's certainly in line with our expectations. So that gives us confidence in the outlook that we have set. And that's in the U.S. And then in Western Europe, too, we've seen stronger upgrade performance in that -- in the last half as well and expect that to continue into the second half. Saul Hadassin: And just on the, Dig, last point, in the context of the revised guidance, can you give us a sense of what strong growth means in a percentage terms in terms of that services revenue line in second half? Dig Howitt: No, we haven't broken -- gone into breakdown of the -- by line what we expect in the second half. But we are anticipating a strong -- a significant uplift in services. Operator: Your next question comes from Steve Wheen with Jarden. Steven Wheen: Dig, I just wanted to ask about the, I guess, the delay in the contracting process that you saw during first half. With that contracting, I mean, was the issue that was causing some of that frustration price? Or was there other factors to the contracting process? And now that you've got 80% of your target contracted, can you just give us an indication of have they all made the software upgrades as well? Dig Howitt: Yes. Okay. So on the software -- yes, yes. So the software installation issue early on, particularly in the U.K., a few places but that's -- there's just a logistics and time to do it, but that is done. And then in terms of the sort of the contracting more broadly, [ when it says ] price, yes. And it's just people push -- it's a range of things from the obvious if people push back on price and say and justify. And in hospitals, there's particularly more rigor around prices. So yes, we put a price increases, say, yes, okay, we've got a value committee and that value committee meets in 3 months' time. And we take all our price increases there. So there's nothing we can do apart from wait for the 3 months for -- to elapse and for those meetings to be held. In terms of it taking longer than estimated, look, we haven't done a price increase like this around a new implant in a very long time. So we put our best estimate of what it would take us and with some ambition in it as we should, and we've fallen a bit short of that. But we overall got the results that we were looking for. Steven Wheen: Yes. Okay. And so as part of the contracting process, do they -- are you asking those customers to commit to a certain volume? Or it's they're just agreeing on price only and then it remains to be seen what they order? Just to ask you that from the perspective of your confidence in the second half. Dig Howitt: Yes. Yes, there's a whole range. So certainly, in some places, there is price and volume lengthening. Others, it's just a price. Steven Wheen: Yes. Got it. Just one quick question on the accounting for Sarah. Last year, at the end of FY '25, you released the STI provision into the P&L because they weren't going to be triggered and indicated that you will be rebuilding that provision during FY '26. Just wondered where you got to with the rebuild and whether or not you would be rebuilding it to that sort of level given sort of the performance of first half. Sarah Thom: Yes. Look, we are continuing to rebuild that, so you see that coming through in the employee benefits provision. The rebuild happens like it normally does, which is over the year. So we've accrued for about half of that, but the rebuild will continue. It's -- I think [ if ] I'm answering your question. Steven Wheen: Yes. So you're saying $25 million of provision has been put into the P&L this half. Where does that sit? Is that in the SG&A line? Sarah Thom: So the employee benefits provision has increased. It's offset by what's paid in that discretionary where that came out this year. Dig Howitt: So from a P&L perspective, yes, it's through the SG&A -- well, it's actually through every line item, right? So there's people in COGS who you get the STI. So some of it goes through there, some through SG&A, some through R&D. Wherever we got people, there's a provision being held. Operator: Your next question comes from David Bailey with Morgan Stanley. David Bailey: You've given some commentary around the expectations for developed markets for the full year unit sales, I'm talking here, so maybe a bit less than 10%, good growth in the second half. Just on the emerging market side, I do note that there was some very strong growth coming through in the second half of '25, particularly in China, I'm guessing. Maybe just help us understand what you're expecting for unit sales growth in emerging markets in the second half and maybe an overall number for unit sales for the second half or full year considering. Both developed and emerging markets would be helpful. Dig Howitt: Okay. So we do expect strong growth in emerging markets across the board, so both CI and in acoustics into the second half. We've got a lot of the emerging market business works off sort of either tenders or orders, and those orders, we get reasonable visibility in advance. So we can see quite a strong forward order book. It's particularly into Q4, and so that sits in our outlook. And similarly, as we saw a strong second half, a number of those orders are sort of annual orders into some countries. So they come back at the same time of year. Be easy for us if they didn't occur in Q4, but that's -- they don't care about our financial year. Look, in terms of where do we expect overall CI growth for the year, we haven't given a guide on the number, but we do expect pretty strong unit growth overall. Part of that is driven by China, but we see, obviously, a pickup in the developed markets in the second half and pickup more broadly in emerging markets as well. So we haven't given a guidance on to the CI unit number. David Bailey: Okay. That's fine. Maybe just a more of a medium-term question. I've asked this before, so -- but I'll ask it again, just on the totally implantable. It looks like there's been a new pivotal study coming through on clinical trials for Cochlear. Can you maybe just talk a little bit about the potential timing for Cochlear? And maybe it looks like there is a competitor, could launch toward the end of calendar year '27. Just what are you sort of seeing in terms of that space and potential launches for others versus what Cochlear might be able to achieve? Dig Howitt: Yes. Look, exciting area. We have got pivotal studies up on clinicaltrials.gov and recruiting for totally implantable. The pivotal study is a step to regulatory approval, so with a new technology like that, do need to complete a pivotal study, meet certain end points around safety and around hearing performance that the regulators then take into account in review. So those studies are going to run probably 18 months or so. It sort of depends on recruiting speed. There's a 6-month and a 12-month follow-up, and then there's a regulatory process on top of that and being a new product is not necessarily on standard regulatory time lines. So still a few years away. Yes, we got the other competitors on the journey. I -- the thing I'd say, I think, is that the time lines are unpredictable, both around the study, around the results and then around the regulatory process. We are certainly confident or very confident of the performance of our TICI. And we first did a TICI 20 years ago. We've done a couple of feasibility studies with -- over the last 6 or 7 years with the technology to give us confidence in the technology. So -- and us going to a pivotal study, it's an indication we're confident of the performance of the product and the ability to meet the regulatory hurdles. But that doesn't give you a great guide as to exactly how long it's going to be, but it's still at least a few years away. Operator: Your next question comes from Craig Wong-Pan with RBC. Craig Wong-Pan: Just with services, you saw good improvement in developed markets but a decline in emerging. Do you have any ideas of why there was that decline in the emerging markets? Dig Howitt: Yes, we do. Certainly, part of that is just -- is timing. I said emerging markets, those orders can happen in a lumpy way. And part of it is that part of upgrades in China is caught up in the VBP process, so that's had some impact. Craig Wong-Pan: Okay. And then just a question on gross margins for Sarah. The drivers there, you talked about -- of that compression, so mix, Nexa and then Chengdu. Could you provide any color as to the splits between those? Like what we -- was there any kind of particular one that was bigger than others? Sarah Thom: Look, we don't provide a detailed breakdown of that. I mean the mix shift to lower margin in emerging markets and the Nexa higher COGS for right now, which will come down over time are reasonable share of that. Chengdu, as we've said previously, is kind of just under 0.5 point and will continue to be that working out for the next year or so. Craig Wong-Pan: Okay. And then just a question on the restructuring that was done. You're still guiding to 13% of sales for R&D. Is there any benefits kind of beyond the FY '26 where that comes down because of this restructuring or through the sort of SG&A lines as well? Dig Howitt: So the 13% in R&D wasn't from the restructuring. It was just with our lower sales last year, we chose to continue to invest at a rate -- at a sort of dollar rate in R&D and have the sales catch up, so that will get back to 12%. No, this restructuring is -- don't expect sort of changes in margin or the lines. It's about making sure that we've got the right resources in the right places with the right skills. So it's -- and some of it will give us efficiency for sure, but then we will use that to reinvest either in growth or in a new technology area. It's very much making sure that we've got the right capabilities for the future and the right structure and accountability for the future that enables us to get scale, but it's not done with the goal of it will just deliver efficiency in itself. Craig Wong-Pan: Okay. And then just last question on the drug-eluting electrode. There's 2 studies out there, I mean, that you're conducting. When could we expect some readouts from that? Dig Howitt: So those studies, one of them has closed. So we've seen the data, but we'll use that data -- that data is for the regulators, so that's our priority there. We go through -- over time, we'll probably disclose some of that data as much to our customers on what we see, but we haven't made decisions on when we do that at this stage. And as I said, the core purpose of that data is for the regulators. I think perhaps I would add to that. We're pleased with the results that we are seeing without showing the data. I can certainly say we are seeing what we had expected to see. Operator: Your next question comes from Sacha Krien with Evans & Partners. Sacha Krien: Look, first of all, on services, just on your second half expectation, just wondering if you can give us a sense to the extent to which payers are approving upgrades on service discontinuation since 1 Jan. I mean you talked about inquiries. I just want to get a sense of how much you're seeing approvals on that basis. Dig Howitt: Thanks, Sacha. So the -- once we retire a product, so we're no longer repairing it, then it does enable -- it does open up for the insurers to be able to cover it. And obviously, that -- they do that because they want to see that the processor has a proper life or it isn't repairable. So it does sort of open that path up. And obviously, we have to retire products because there's actually an ability for us to support the components. Those using electronic components, which have pretty short life cycles, there is a limited time that we can support the external products, and that's the reason for retirement. I think insurers recognize that. But something that's external can't run forever and can't be repaired for it because it just -- it's not technologically possible. Sacha Krien: Yes, that makes sense. I just -- we've had some feedback that some payers are saying it actually needs to be broken rather than not repairable. So I'm just -- I guess, I'm just wondering, are you saying that the majority of payers will basically approve on the basis of service discontinuation? Dig Howitt: If the -- so there's actually not really a difference between not repairable and broken because if it needs repair, there's something broken and if they can't be fixed, then the processor's broken. So there's not -- it's perhaps semantics rather than a real difference. Like the person can keep using the processor. The insurers might expect them to do that. If they can't and we're unable to repair it, then they will replace it. Sacha Krien: Okay. Then, FX, I know you're not giving guidance for '27, but I'm just wondering, roughly, if we're talking about a $30 million headwind in the second half, does that equate to about $60 million next year on the same currency levels as today? Dig Howitt: It depends, right? The amount that we put in that number has changed every day this week as the Australian dollar's risen to say, yes, that number's sort of... Sacha Krien: Yes. It's only got worse there, right? Dig Howitt: Yes. Yes, so who knows? But I said, look, there's hedging there and then we will work to adjust our cost base to track back to the margins that we're aiming for. Obviously, doing that at a sensible rate while we can keep investing in the business. And that's what we've done over time, and we'll continue to do that. Sacha Krien: Okay. And then last question. Just wondering if you can give us a sense of pediatric developed market growth during the period. I know it's been a bit soft. Does that come back at all? Dig Howitt: Yes, look, we did see it was flat through pretty much to the half, but we did see some declines in a few places, which has been unexpected. Certainly, the U.S. was one, and I think there's probably some local conditions around sort of some of the support and infrastructure there but broadly flat. Sacha Krien: Yes. I mean the repositioning or restructuring that you're talking about towards the medical channel, does that mean you could -- there's a little bit less confidence in being able to achieve that sort of market growth without these changes that you're making? The growth has slowed and -- with the focus that you had. Dig Howitt: Put it more as we have -- as we grow, we're able to expand the growth programs that we take on. And as we implement our growth programs, what we always said is we experiment and we learn. And from that, we then adapt the programs. So I'd say this is a natural extension of the work we're doing and what we've learned along the way and the application of more resource to driving growth, which is part of us growing and part of us reprioritizing our internal activity to make clearer choices on resource allocation and putting more into growth, which, again, is just part of the strategy process and as we develop as a company as an organization and get -- we get better visibility over what we're doing, better data on what we're doing and are better able to redirect resources to higher-value activities. Operator: Your next question comes from Elizabeth Davies with Bank of America. Lyanne Harrison: This is Lyanne Harrison. Can you hear me? Dig Howitt: Yes. Lyanne Harrison: So just coming back to the Nexa pricing. I understand you took a low single-digit pricing this time. But given that you hadn't taken price for a long time, also the efforts that went into the contracting. Why didn't you ask for higher prices, whether it's mid- or high single-digit increases? Was there any change to your -- sorry. Dig Howitt: Yes. No, good question for clarification. So low single digit is the outcome we achieved across the board. In some markets, we can get increases. In some, we can't. So where we went for increases, we went for more than that. The sort of weighted average of that gives us low single digits. So yes, you're quite right. If we're going to take the effort and the delay, we want to push for more of a high single digit, but we know we couldn't get that. It's not all the places we had that opportunity. Lyanne Harrison: Okay. And so then with that pricing strategy, where you were able -- or where you had taken smaller increases, are you likely to go back to those hospitals or customers a bit more frequently to try and get increases later down the track? Dig Howitt: Yes. Look, it varies by market. We certainly have -- again, depending on the circumstances in market. So in the U.S., we have been working for a while to get more regular price increases through. In other markets, we don't have that opportunity. And one of the things we have with Nexa and with the upgradability, which we've talked about in the past is in markets where you can't get an increase until you've got clinical evidence of a benefit with Nexa and its upgradability, as we explore that, as we demonstrate some of the benefit that we think's there, there is potential to go back to those markets to make the case for a price increase based on the evidence of improvement in outcomes or quality of life. So yes, we've got quite a comprehensive pricing strategy around Nexa, of which we've implemented some of it so far. And some of it will extend in and extends over several years into the future as we think about and bring about the potential. Lyanne Harrison: Okay. And then the next question for Sarah on gross margin. So understanding Nexa has higher costs or higher COGS currently, but you expect that to decrease over time. At what point do you expect, obviously, Nexa with increased prices, et cetera? When would that become sort of gross margin neutral or a gross margin tailwind? Sarah Thom: Look, on that one, I mean, I'd look back to prior products where we know that it takes a year or so for those COGS to kind of come. As we come up the experience curve, it does take time. But that's what helps us bring those COGS down over time. Lyanne Harrison: Okay. And then just one last question following up on what Sacha was asking about that medical channel. What proportion of your referrals come from that medical channel at the moment? Dig Howitt: Yes, it does vary by market. But in some of our markets, we're seeing half of -- there's a component of our referrals that we get through DTC. That can be sort of 30% to 40%. But depending on the -- 20% to 40% depending on the market. Then we have between 60% and 80% that is self-preferred, gets there in another way, and up to half of that can be medical channel referrals. So it's quite a significant part of the business and certainly, we have current referrals that we don't get involved in, and we can see the opportunity to expand that further when we look at the base of potential referrers against those who are referring. Operator: Your next question comes from Laura Sutcliffe with Citi. Laura Sutcliffe: I think you mentioned back in August that you were seeing some surgeries delayed by choice waiting for the Nexa. I was just wondering if considering your exit rates in November and December, whether you were starting to see some of those come through and if perhaps they've provided a boost at that point during the year or whether they're coming steadily or whether you're still waiting for them. Dig Howitt: Yes. I think to the extent surgeries were delayed and they're certainly worse, we think they were caught up through the half. Now what's hard to know, though, is because surgical slots can be tight, those that got caught up in the half but didn't push -- someone who was scheduled and maybe was scheduled in December is now scheduled into the middle of February because someone who was -- see, what I mean, it sort of pushes the pipeline down a bit. But I think, fortunately, we did see some deferrals but not a huge number through that early period. So the gains from -- the gains we get from here are going to be more around just market growth and picking up share. And rather than sort of backlog of -- certainly backlogs for surgery, they're more than normal than they are just deferred Nexa. Operator: Next question comes from Christine Trinh with Macquarie Capital. Christine Trinh: Just a quick one from me. It sounds like quite a lot of work is going on to kind of tap into that seniors market, medical channel, direct to consumer. I just want to know how we should be thinking about sales and marketing going forward over the next year or so. Dig Howitt: Yes. No. Thanks, Christine. No, we will manage that within the bounds of our normal G&A. So we're talking about reallocating resources internally, not expanding G&A to do it. Operator: Your next question comes from Siobhan Drury with EY. We'll move on to the next question from Elizabeth Davies with Bank of America. Lyanne Harrison: Sorry, it's Lyanne Harrison here again. I had one follow-up. Previous reporting calls, you talked about the cost of living challenges that was weighing on services revenue. Are you still seeing that as a headwind through this first half? Or has it alleviated somewhat? Dig Howitt: Look, I think it still sits there in the U.S. where there's a copay, and sort of macroeconomic conditions, it still sits there. But yes, look, we haven't called it out explicitly. I think we did that on the way down because it was definitely part of the services falling. It is still an underlying issue as is the insurance pressure that's been talked about. But with those things, we remain confident of the ability to grow services into the second half. Operator: There are no further questions at this time. I'll now hand back to Mr. Howitt for closing. Dig Howitt: Okay. Look, thanks, everyone, for joining the call. Appreciate your time. Thank you.
Operator: Ladies and gentlemen, thank you for holding, and welcome to the BWP Half-Year Results Investor Briefing. [Operator Instructions] However, you will have an opportunity to ask questions immediately afterwards, and instructions will be provided on how to do this at that time. I would now like to hand the call over to the Managing Director of BWP, Mr. Mark Scatena. Mark Scatena: Thank you, and good morning, everyone, and thanks for joining us. My name is Mark Scatena, Managing Director of BWP, and I'm joining you from Perth. With me today is Andrew Ross, Head of Property; and David Hawkins, our Chief Financial Officer. Today we're pleased to present BWP Group's results for the half-year ending 31 December 2025. BWP has released to the ASX this morning its half-year results announcement, half-year report incorporating the 4D, and investor briefing presentation. I'll now take you through the key aspects of the presentation before we take questions. Turning to Slide 3. To commence today, we acknowledge the traditional owners of country throughout Australia and their continuing connection to lands and waterways upon which we depend. We pay our respects to their elders, past and present. Turning to Slide 6 and portfolio highlights. The half-year result reflects continued progress across BWP's strategic pillars of portfolio optimization, profitable growth, and portfolio renewal. Portfolio optimization outcomes were underpinned by the completion of management internalization and progress on the Bunnings lease reset, resulting in an extension of the portfolio weighted average lease expiry to 7.5 years, an increase of 3.1 years on the prior corresponding period. Like-for-like rental growth for the 12 months to 31 December 2025 was 2.6%, supported by strong leasing outcomes in the large format retail portfolio, where leasing spreads increased by an average of 7.6%. The portfolio recorded a valuation uplift of $155.9 million, reflecting improved rental income and a firming of the weighted average cap rate of 13 basis points to 5.27%. Developments and repurposing activities, namely at Fountain Gate and Broadmeadows in Victoria and Noarlunga in South Australia, were advanced during the period. Supporting profitable growth, the group completed the acquisition of HomeCentre Morayfield in Queensland for $48 million at a market capitalization rate of 5.75%. The fully leased large format retail center was acquired off-market, funded from existing debt facilities, and was earnings accretive from settlement, further increasing BWP's exposure to large format retail. Reflecting the group's operating performance, an interim distribution of $0.0958 per security has been declared and will be paid on the 27th of February 2026 to security holders on BWP's register at 5:00 p.m. Western Standard Time on 31 December 2025. BWP today reaffirms full-year distribution guidance, subject to no major disruption of the Australian economy or material change in market conditions, expecting total distributions for the year ending 30 June 2026 of $0.1941 per security, representing a 4.1% increase on the prior year's distribution of $0.1865. Portfolio renewal and capital management activity also progressed during the half, including the divestment of a non-core asset at Morley in Western Australia. Post the balance date, the divestment of Port Kennedy in Western Australia was completed, and the group also entered into an unconditional contract for the sale of Chadstone in Victoria for $86 million, with settlement expected in June 2026. In October 2025, the group completed a successful debt refinancing, issuing a $300 million 5-year Australian medium-term note, which was strongly supported by both domestic and offshore investors, further diversifying our funding base and enhancing balance sheet flexibility. Moody's revision of our credit rating upwards to A3 stable further underscores the strength and resilience of the balance sheet, positioning the group well to support future growth opportunities. Turning to Slide 7 and key portfolio metrics. Statutory profit after fair value movements and income tax was $221.8 million, compared with $157.1 million in the prior period, an increase of 41.2%. Profit before fair value movements and tax of $66.4 million was largely in line with the prior corresponding period, with increased rental income offset by one-off transaction costs associated with the internalization and lease reset. The underlying net tangible asset backing of BWP's securities increased during the period to $4 per security at 31 December 2025, reflecting the unrealized gains on revaluation of investment properties and the increased number of securities on issue post the internalization. Turning to Slide 9 and financial performance. While I won't spend time on Slides 9 and 10, they do provide an overview of financial performance for the half, with key metrics focused on income, expenses, portfolio valuation, distributions, investments, and cash generation and our capital structure. Turning to Slide 11 and funds from operations. Funds from operations increased to $70.4 million, up 6% on the prior corresponding period, with a distribution reflecting 98.6% of FFO. Distributions for the half were fully supported by cash generation, despite increased repurposing activity providing a headwind to rental income. BWP continues to target a distribution payout ratio of 90% to 110% of FFO, providing flexibility to accommodate the impacts of activities such as development and repurposing. Turning to Slide 13 and portfolio evolution. This Slide summarizes the evolution of the BWP portfolio and reflects the contribution of site repurposing, Bunnings upgrades and expansions, and increasing participation in the large format retail or LFR sector to the composition of BWP's portfolio. Whilst investment in Bunnings Warehouses remains BWP's primary focus, large format retail has become an increasingly important component of our portfolio. Since 2020, BWP's LFR portfolio has grown to approximately $1.2 billion, driven by rental growth, acquisitions, and asset repurposing, placing BWP as Australia's fourth-largest owner of LFR assets. Importantly, leveraging the post-internalization reduction in the cost of capital provides BWP with increased capacity to continue growing all aspects of the portfolio, including LFR, and supported by a tenant-led expansion and site repurposing pipeline of approximately $100 million. Turning to Slide 14 and large format retail dynamics. Continued tenant strength, together with an undersupply of lettable area, is driving an attractive rental growth outlook for large format retail. And population growth, rising residential property values, and low unemployment have underpinned strong retailer performance, with listed large format retailers continuing to demonstrate resilient sales growth. Given this context, with cumulative lease expiries within the LFR portfolio to the end of financial year 2029 representing some 10% of annual portfolio income, opportunities exist to drive positive leasing spreads through effective portfolio optimization and tenant curation. Turning to Slide 15 and portfolio composition. The large format retail market is material in size, with an estimated value of $25 billion, and importantly exhibits strong ongoing transaction activity or asset churn that supports portfolio growth through asset recycling and acquisitions accretive to BWP's cost of capital. And whilst BWP's market share of the LFR market is significantly less than its share in Bunnings Warehouse ownership, the addressable market size and the higher rates of churn present an opportunity for BWP to grow its portfolio over time, leveraging the group's asset management and development capability, supported by its balance sheet strength and post-internalization cost of capital reduction. Turning to Slide 16 and an update on the transition to an internalized model. Upon completion of the internalization transaction on the 1st of August 2025, BWP has prioritized systems enablement, team employment arrangements and resourcing to support growth and improve the delivery of investor relations and sustainability initiatives. Collaboration with Wesfarmers to support the transition to an internalized model has been effective, with expansion planning and upgrade principle development advanced with Bunnings during the half. The internalized model remains a key enabler of BWP's strategy, supporting a lower cost of capital, improved alignment with security holder interests and greater operational flexibility to pursue value-accretive growth opportunities. Turning to Slide 18. Activity across the portfolio continued to be underpinned by strong tenant covenant quality, extended lease duration and disciplined asset management. The reset and extension of 62 Bunnings leases materially increased portfolio WALE to 7.5 years as at 31 December 2025, while leasing activity within the large format retail portfolio continued to support income growth. Occupancy of 96.7% reflects the impact of stores vacated for repurposing at sites including Fountain Gate in Victoria and Noarlunga in South Australia. And BWP's rental income continues to be supported by a high-quality covenant mix, with approximately 97% of income derived from Wesfarmers Group and other national retailers. And turning to Slide 19. Rental income growth for the portfolio reflects the benefits of a balanced lease structure and the increasing contribution from large format retail assets. For the 12 months to 31 December 2025, like-for-like rental growth was 2.6%. Growth was driven by fixed and CPI-linked rent reviews across the portfolio and strong leasing spreads in large format retail lease renewals, partially offset by market rent reviews on 2 Bunnings leases, being Chadstone and Hawthorn in Victoria. Turning to Slide 20. Leasing activity within the large format retail portfolio delivered positive outcomes, with leasing spreads across 8 large format retail tenancies averaging 7.6%, reflecting strong rental reversion. Also, incentives remain low during the half, reflecting both tenant demand and the quality of BWP's portfolio. These outcomes continue to support income growth, despite increased repurposing activity during the half. Moving to Slide 21 and cap rates and valuations. The entire portfolio was revalued during the period, resulting in a weighted average capitalization rate of 5.27%, representing compression of 13 basis points over the half. Net fair value gains for the period totaled $155.9 million, with this valuation uplift driven by both improved rental income and cap rate compression. Market transaction activity increased during the period, reflecting improved alignment of buyer and seller expectations and continued investor appetite for assets underpinned by strong covenant quality. Turning to Slide 22 and repurposing. During the half, BWP's repurposing activity gained momentum, with construction commenced at both Fountain Gate in Victoria and Noarlunga in South Australia, and progress also made on the Broadmeadows HomemakerCentre expansion in Victoria. These projects reflect BWP's capability to execute across feasibility, planning, construction and leasing, with a strong focus on preleasing outcomes and disciplined capital deployment. Repurposing activity remains a driver of future income growth and portfolio renewal, enabling the group to reposition assets to higher and better use while maintaining balance sheet flexibility. Moving to Slide 24 and tenant expansion activity. As a key driver of profitable growth, BWP continued to progress agreed tenant-led expansion projects comprising total commitments of $81 million across a number of sites. Key projects include the $14 million expansion at Bunnings Pakenham in Victoria and the $11 million Carco redevelopment and expansion at Midland in Western Australia, both expected to commence prior to 30 June 2026. These projects are characterized by long lease terms, attractive rentalization rates, and strong tenant alignment, and reflect BWP's strategy of deploying capital into lower-risk, income-accretive opportunities within the existing portfolio. Pleasingly, planning has advanced regarding the five Bunnings store expansion projects agreed as part of the internalization and Bunnings lease reset and capital investment transaction. Turning to Slide 25 and acquisition activity. During the half, the group acquired HomeCentre Morayfield in Queensland for $48 million at a 5.75% market cap rate from an unrelated third party. The fully leased retail center offers approximately 12,100 square meters of lettable area, with tenants such as Amart Furniture, Nick Scali, Super Cheap Auto, and Sydney Tools. The off-market acquisition was funded from existing debt facilities and was earnings accretive from settlement, further increasing BWP's exposure to the large format retail sector, which continues to benefit from favorable supply and demand dynamics. Turning to Slide 27 and portfolio renewal. Portfolio renewal activity during the half focused on actively recycling capital through the divestment of noncore assets and redeploying capital into opportunities and projects that enhance portfolio quality and growth. The sale of the ex-Bunnings Morley property in Western Australia for $19.5 million and the ex-Bunnings Port Kennedy property, also in Western Australia, for $14.3 million were both completed at premiums to book value. Subsequent to period end, the group also executed an unconditional contract for the sale of the Chadstone Homeplus Homemaker Centre in Victoria for $86.0 million, with settlement expected in June 2026. The divestment followed the negotiation of a lease extension with Bunnings to July 2030 and an extensive public sales campaign, achieving a realized internal rate of return of 15.2% since its introduction to the BWP portfolio via the NPR transaction. The proceeds of the Chadstone sale will initially be applied to reduce drawn debt. These transactions demonstrate BWP's disciplined approach to capital recycling and the ability to capture value through active asset management. Moving to Slide 28. BWP's capital position remains strong, supported by diversified funding sources, extended debt maturities and investment-grade credit ratings from both S&P and Moody's. During the half, the group further diversified its funding sources and extended debt maturities, supporting increased balance sheet flexibility. Gearing at 31 December 2025 was 24.7%, which remains well within the Board's preferred range of 20% to 30%, while the weighted average cost of debt remains stable at 4.4%. And on to Slide 29. The group completed a new $300 million 5-year bond issuance, further diversifying funding sources and extending the weighted average maturity of debt. The group has sufficient available liquidity to address upcoming debt maturities, including the $150 million bond maturing in April 2026. BWP's diversified mix of domestic and international bank facilities and capital market funding positions the group well to support ongoing repurposing and tenant-led expansion activity and future portfolio growth opportunities. Turning to Slide 31 and governance. As disclosed in November 2025, our Chair, Tony Howarth AO, has retired from our Board, with the current chair of the Audit and Risk Committee, Ms. Fiona Harris AM, to succeed Tony as Chair. Fiona's appointment as Chair reflects strong Board support and alignment and will provide valuable continuity as BWP transitions to its new role as an internally managed business. On behalf of the management team and investors, I'd like to acknowledge and thank Tony for his significant contribution, strong stewardship, wise and commercial counsel and effective leadership of the Board. Tony is leaving BWP well-positioned following the recent internalization and lease reset and extension transaction. Turning to Slides 33 and 34 and our outlook. For the balance of the 2026 financial year, BWP will continue to deliver on its strategic agenda of portfolio optimization, profitable growth, and portfolio renewal. The group will remain focused on embedding the internalized model, with initiatives centered on systems enablement, remuneration alignment with security holder interests, and also additional resourcing, particularly in areas supporting growth, being investor relations and sustainability. The second half of the 2026 financial year will see the progression of material capital expenditure commitments, reflecting significant site repurposing activity and tenant-led expansion projects, with capital expenditure of between $60 million and $70 million expected for the 2026 financial year, subject to construction progress and project timing. BWP will continue to assess and pursue accretive growth opportunities, leveraging the reduction in the cost of capital achieved post-internalization and the group's diversified funding positions. Large format retail remains a key focus area, with favorable market conditions, including low rates of new supply and strong tenant performance, expected to support portfolio optimization through tenant mix curation and leasing spread opportunities. BWP's largest tenant, Bunnings, remains well-positioned, supported by external operating environment and its continued focus on expanding and innovating its addressable market. Rent reviews are expected to contribute incrementally to property income in the second half, with 93 leases scheduled for CPI-linked or fixed percentage increases, incremental to the 73 completed in the first half. In addition, three market rent reviews of Bunnings Warehouses are in the process of being finalized and are expected to be completed during the second half. Finally, and subject to no major disruption of the Australian economy or material change in market conditions, BWP affirms total distribution per security guidance for the 2026 financial year of $0.1941, or 4.1% above last year. And that concludes our prepared remarks, and I'll now hand back to the moderator to facilitate any questions, where myself; Andrew Ross, BWP's Head of Property; and David Hawkins, BWP's Chief Financial Officer, are available. Thank you. Operator: [Operator Instructions] Your first question today comes from Cody Shield from UBS. Cody Shield: So you've got the expansion and repositioning CapEx here. You're talking about more LFR acquisitions potentially. I mean, where do you guys see gearing landing over the next 12 to 18 months, and where would you like that to sit? Mark Scatena: Thanks, Cody. Look, we have guided clearly to CapEx in terms of the outlook, so we have that CapEx profile to deploy this year, which we're very pleased to deploy into some very strongly performing incremental investments through repurposing and expansions. So we're very pleased with that. There's some more capital to deploy to complete some of that activity into FY '27. So if you think about the headroom and availability we have, we expect gearing probably to approximate kind of what it currently is, perhaps trend a little bit lower over time. But that's, of course, absent any inorganic activity that might play out. But I think if we deploy into the existing pipeline of asset repurposing, I think you'd probably expect gearing to broadly remain consistent. Cody Shield: Okay. That's clear. And then just on the CPI escalations, I mean, they look a touch light for the period. What kind of lag do you have on the CPI that goes into that? Mark Scatena: Can you just repeat that question, Cody? Sorry, we just missed that. Cody Shield: So just on the CPI-linked escalations 2.6%. I mean, what kind of lag have you got on the mechanisms? Just thinking, because the CPI over the last, let's say 6 months to December '25? Mark Scatena: It's about 3months lag. Cody Shield: Okay. But that 2.6% then, I mean, it's a touch light, isn't it? Mark Scatena: I think the one thing we'd probably point to on that and we call this out, I think on Slide 21. And that is if you just look at the composition of that lease outcome mix for the year, you can see we disaggregated that -- sorry, I should say, Slide 22 -- no, sorry, Slide 19, apologies. Slide 19. No, we disaggregated that. So we did that to give a little bit more flavor to the composition of that leasehold mix and the outcomes for the half. So you can see the composition there in regards to both CPI and the fixed movements, and we've split that across the Bunnings leases, and then we've had the LFR as a separate component there, and then we've given the aggregate in that fourth column. And we've also pointed to market rent reviews, and we have a footnote there that refers to 2 market rent reviews in the Bunnings market rent reviews, which had a cumulative outcome of 4.4% down for those assets. So I think one of those was Chadstone, which is a disposal asset. If you add back essentially those market rent reviews, again, one of those is now, or will subject to completion not be within the portfolio, that the overall growth in terms of income for an all-lease portfolio for the half was 3%. So again, essentially that some strong leasing spread outcomes in LFR offset by 2 market rent reviews in Bunnings, knowing that we've got 62 leases that we reset through the lease reset at the start of the half. Operator: Your next question comes from Tom Bodor from Jarden. Tom Bodor: Just picking up on that CPI question and the difference between the Bunnings CPI indexation at 2.5% and the LFR at 2.9$. Were there some caps on some of those Bunnings leases that had CPI escalations? Mark Scatena: Yes. Yes, Tom, there were. There's a few leases in the portfolio that have got that cap in there. And just so everyone knows, these are actual actioned CPIs during the period. So yes. Tom Bodor: Were those ones that were capped though, they were just 2.5% because the cap's 2.5%? Mark Scatena: Correct. Right, Tom. Tom Bodor: That's clear. Just on the guidance, you at the full year you said $5.6 million of capital profits released as an assumption sitting behind your guidance on DPU. Has your expectations changed around this $5.6 million number? Mark Scatena: Tom, I think it's a good question in the sense that we guided to that headwind which was the repurposing shortfall in comparable rental income given, as I said, that repurposing activity, so we wanted to be very clear on that. Clearly, we have some transaction costs as well, which we bore in the half. I think if you look at essentially the FFO uplift at 6% and the distribution and the payout being slightly less than that, I think again we're providing for some flexibility in the second half. I think that guides to that. So we're pleased with that FFO growth. We're pleased with broadly that underlying set of earnings. But at this point, Tom, there's a lot to play for in the second half, as there always is. So we're hopeful that that level of capital profit release isn't required, but I think there's some flexibility in that guidance. Tom Bodor: Bodor: So you're tracking ahead of the $5.6 million where we sit today compared to what you thought 6 months ago? Mark Scatena: Yes, well we are, but again, a fair bit of activity, Tom, so we just want to make sure we're holding that. Tom Bodor: Okay. Clear. And then just the final one, I guess maybe be interesting how the relationship with Wesfarmers has evolved post-internalization. Is it sort of obviously you've said they've been constructive in terms of internalizing and the process there, but what about just sort of broader discussions around their needs and wants as a tenant? Mark Scatena: Yes, I suppose there are 2 components there, Tom. There's the Wesfarmers shared service agreement, and that is going very well, and that's entirely to expectation. They've been very supportive and enabling as it relates to continued strong technology support, continued strong insurance program support as we run off into our own program. So again, very pleased with that as it relates to Bunnings. I think as we called out during much of the lease reset and internalization discussion, our topics of interest and our topics of mutual discussion have moved into upgrades and expansions, and we're spending a lot more time discussing those prospects as part of that transaction element. So I would say that relationship's positive, still commercial and robust, as it always is, but I think it's pleasing that we have more of a focus on expanding our tenant's portfolio, which is incredibly important as a good landlord. And we've diverted some of that activity away that we were spending on market rent review. And there's also a very positive impact to that as well outside the Wesfarmers relationship, and that is that the asset management team, our leasing team, have more time to spend on perhaps the non-Bunnings part of the portfolio, and we're very hopeful that we are deploying that released effort into good activity. We talked a lot about leasing spreads, et cetera., in the LFR portfolio, so that is a key focus of the team. Operator: Your next question comes from Lauren Berry from Morgan Stanley. Lauren Berry: I just wanted to pick up on the payout ratio guidance that you've given as a range of 90% to 110% of FFO. Like if you look at the top and bottom end of that range, it's about like a $25 million to $30 million swing factor between those bookends. So just wondering why you've given yourself such a large range to play in there. And if there's any, I guess, read through to how you're seeing the next couple of years downtime from redevelopments? Mark Scatena: Thanks, Lauren. I wouldn't read too much through that. I think you've seen for the half, we've paid out just shy of 99%. I think historically that has broadly approximated 100%. That's our intent going forward. But I think we just wanted to have some flexibility, Lauren, on the basis that we've been a little bit more active, there are some timing differences coming through the FFO line, for example, given some transaction activity. So I think it's more the flexibility and agility to meet, I suppose, some of that activity, Lauren. But yes, our intention most certainly is to pay out as fully as we can in terms of FFO. So I think it just gives us some flexibility, Lauren, that given the lumpy activity, we just wanted to give some allowance for that. Lauren Berry: Yes. Sure, sure. Do you foresee more of these timing differences occurring in FY '27, or will '26 kind of be the bulk of them? Mark Scatena: No. Most of the repurposing activity is happening essentially this half. That will carry forward into the first half of '27. So I think we've guided to Fountain Gate's completion in September, and then Noarlunga a little after that, and then our Broadmeadows Homemaker Centre a little after that into the first half of the calendar year. So yes, we'd expect most of that repurposing timing difference to be completed in the first half of the next financial year. Lauren Berry: Okay. And just on the developments, are you able to give us a little bit more color on what kind of yield on cost you're looking at for the LFR opportunities? Mark Scatena: Yes, I suppose there are a couple of things there. And if the yield on cost you're talking about the repurposing, Lauren, I think the deployment of that $60 million to $70 million we guided to. I think we've always said that there's a hierarchy, and the hierarchy that we really like to deploy capital into that repurposing activity, and our expectation there is that yield on cost is 10% and above. So that's our expectation. And then you can see clearly we then deploy into existing tenant expansion and upgrade activity, and that has a typically a lower yield, and then of course we've got the inorganic M&A activity. So that's the hierarchy. So in terms of that repurposing, we'd expect kind of double-digit yield on costs. Lauren Berry: Double-digit, are you talking about just on your -- so when you've got like the development cost, say Fountain Gate, $32 million, you're saying like the yield on cost on that would be double digits? Mark Scatena: Yes. On the CapEx. Lauren Berry: Yes. Okay. And then just final one from me. I mean, you've given a lot more on LFR as it relates to your portfolio. Do you see a certain portfolio split evolving over time, say exposure to LFR versus stand-alone Bunnings? Mark Scatena: No, no, we don't have a pie diagram expectation, a pro forma that we, for example, tried to showcase on Slide 13. I think it's more we'll deploy capital, Lauren, into activity that we think is very good for security holders and supports our objective, of course, of improving income and the portfolio over time. So that's the premise. What we've called out is that we are a relatively decent player in that segment and in that sector. And so we think we have some skill, we understand the lease structures, the tenant mix, and how we put capital into those assets. And the important thing is that the market is larger than the Bunnings Warehouse consolidated market, and it churns at a faster rate. So that means opportunities perhaps become more available in that portfolio. So that growth we expect to be more attainable over time, and we wanted to point the market to that. So we really like the sector. We absolutely love Bunnings Warehouses. We'd love to participate in both, of course. It's more just the addressable market and the churn of opportunity, and we wanted to explain that. Operator: Your next question comes from Andrew Dodds from Jefferies. Andrew Dodds: I'd just be interested to hear your comments around the 3 assets that were excluded from the Bunnings lease reset. I think from memory these were Rocklea, Wagga Wagga, and Geraldton. I think 1 or 2 of them might have had expiries coming up. So just any color you can provide on those three would be great. Andrew Ross: Yes, sure. And it's Andrew Ross here. Geraldton, Bunnings has indicated to us that it's a property that they don't want to remain at, and in fact, they are in the process of relocating to a new site, not far away from the existing store. It's a much bigger store, newer store. So we've known about that for almost 2 years now, and we've disclosed that to the market. Wagga is another property that Bunnings had indicated to us some time ago -- years ago actually, that they were going to build a bigger store in Wagga and relocate to that one. That hasn't eventuated at the moment. So just recently, Bunnings actually exercised the next 5-year option, which is from the 31st of March 2021 -- 2026, for 5 years. And the third property that you mentioned is Rocklea. Bunnings also indicated to us, I think it was either earlier this year or late last year, that it was a store that they were going to close, and they were closing it as a result of rebuilding the Oxley store, which is about 3 kilometers away. It was flooded in the 2022 floods, and they've rebuilt it and doubled the size of that Oxley store. So their business decided that Rocklea was a closure. Andrew Dodds: Okay. So then your sort of view around FY '26 being I guess the peak sort of vacancy period, just combining your comments now with the pre-commitments you've got on Fountain Gate, Broadmeadows, and the other development site, I mean, all else equal, it means FY '27 is shaping up to be a pretty good year in terms of occupancy across the portfolio, I'd imagine. Mark Scatena: That -- it will absolutely improve, and we're looking forward to having some new assets as well, well some repurposed assets in the portfolio and some new tenants. So -- but again, most of that will happen in the second half. Andrew Dodds: Okay. And then just finally, on the sale of Chadstone, I noted in your release that it's a 6-month settlement period, so not until kind of 30 June. Is this sale subject to capital raising by the acquirer? Mark Scatena: No, no. That's not our understanding. Andrew Ross: It's an unconditional contract. Sorry, did you hear that? That was an unconditional contract to sell Chadstone. Andrew Dodds: Yes. No, got it. Operator: Your next question comes from Howard Penny from Citi. Howard Penny: Just my first question on transaction volumes and interest in your asset space and subsector at the moment. You give us a chart showing that cap rates have, at a market level, started to compress a bit over the last 12 months. But are you seeing a lot more interest and activity in large format retail and Bunnings centers at the moment? And just looking forward, maybe over the next 18 months, do you expect a higher level of activity in the subsector? Andrew Ross: Yes, Howard, look, as you can see on Slide 21, there's a lot more dots on that page in 2025 than in the 4 years prior to that. We are seeing a lot more activity in Bunnings Warehouse transactions. There's been a number that have actually transacted off-market. And we're also seeing a lot more interest in large format retail. I mean, BWP's talking to a number of agents about off-market opportunities for LFR, and BWP might be successful in some of those. Some of those might not even come to the market. So I guess what I'm trying to say to you is we're being proactive in terms of talking to the market and potentially trying to buy some assets off-market. We're seeing some strong interest, some strong competition from other players in the LFR sector, and we think that that's only going to get more competitive. Mark Scatena: I think, Howard, we're just -- sorry, just Mark here as well. We called out that asset churn is higher in that segment, and I think by implication there'll be more transactions in LFR. And I think if you couple that with the undersupply of lettable area and strong demand drivers like population, I think you would expect perhaps that some of those dots in LFR perhaps will happen at a higher rate than some Bunnings dots. Andrew Dodds: And you make a point just on the undersupply. And I just thought, do you have a sense of the difference between the decision to sort of build new assets versus buying existing assets and the profitability of those two decisions at the moment across the sector? Mark Scatena: Not from a sector perspective. I think if you put yourself, Howard, in our shoes, again, taking an asset -- a brownfield asset, repurposing that, that is very accretive deployment of capital with strong yields on that investment. So I think as we called out earlier, that sits at the top of our hierarchy of capital deployment. So that's something we're very attracted to. And Morayfield as an example, if those transactions can be configured in the right way, we can acquire good, again, existing assets at yields that are accretive to the cost of capital. So they're the things we are very keen on looking at. Andrew Dodds: And just a final question just on leasing risk. Post the MPR transaction, the WALE has increased and the leasing risk seems to have been reduced. But just thinking of the leases coming up over the next 24 months, have you had any success in getting some decreasing that leasing risk to some degree already? Andrew Ross: Howard, we're in discussions with a number of the non-Bunnings tenants in our portfolio, some 18 months from now, their lease expiries. So we're having a lot of discussions with them about trying to renew those leases at the moment. And I guess at the annual results, I'm hoping that we'll be able to report a lot of leasing deals to derisk that leasing income risk in future years. Yes. Andrew Dodds: Well, that's all from me. Congratulations on the results. Mark Scatena: Thanks, Howard. Operator: Your next question comes from Murray Connellan from Moelis Australia. Murray Connellan: Was wondering whether I could get you to comment on the average lending margins across your book at the moment, please. And I guess just taking a look at some of the expiries that you've got coming up, looks like the majority of them are still a couple of years away, but I guess just curious to hear about where you feel your average lending margins are relative to market and what the opportunities may be to compress those over time as far as you can tell. David Hawkins: It's David Hawkins speaking. We've always been kind of really well supported by our debt providers. So we don't -- as most of our bank debt is on bilaterals, we don't really disclose our individual margins on those banks. But the best thing I can guide towards is our recent MTN transaction where we had margins of 105 basis points, which is pretty relatively close to what our margins are across the board. And in refinancing, we've got $150 million MTN maturing in April, which we refinanced or raised the money early late last year to cover that maturity. Most of the bank debt maturity, we can roll just going back to the banks to discuss extensions as required. Murray Connellan: Would you be able to comment at all on I guess just what -- I guess, directionally, what you might be expecting over the course of the next few years? David Hawkins: Subject to any market dislocation, I think we're pretty close to where our margins are. We probably won't get much more savings because we're relatively tightly priced as we are at the moment. Operator: Your next question comes from [ C.K. Tan ], a private investor. Unknown Shareholder: Yes, from me, I think one of the questions got answered, directions of the interest rates. I think this morning, basically what I'm seeing is that you guys are actually going into large format. So I trust that you guys have actually done quite some research in it. And I actually admire your ability to actually buy things off market. Question here is this. Obviously, when you look at cap rates, right, it's got to be accretive before you actually buy something. But on a replacement cost basis, do you guys actually look at it from a replacement cost basis? Because right now, I think one of the biggest concerns across Australia, not just large format, but any construction activities, obviously, it's very, very difficult to get things done. Cost of materials, labor availability and maybe even reliable construction team just to actually get projects executed. I mean, you guys can tell me how difficult it is, but would you actually comment on that? And also by lifting your exposure in large format, what sort of like risk profile, do you think is a compromise on the risk profile they're actually taking on? Mark Scatena: C.K., I'll start. Maybe I'll just start with the LFR question and come back to replacement cost. So yes, what we wanted to characterize in the portfolio composition slides we presented is that we're a large-scale investor in large format retail. And that portfolio is something that has transpired over many years, and some of that is a function of interest in the sector, some of that is a function of Bunnings vacating and us deploying some capital into some highest and best use, and that highest and best use has been large format retail for some of those sectors. So we wanted to characterize our portfolio, C.K., just to demonstrate that we're a competent investor and operator of large format retail freeholds, and we have developed and invested capital into that sector. Now in regards to your comment on risk, I suppose we look at where the opportunities to grow accretively are, C.K., and that's why again we've quantified the addressable market and the churn. And perhaps the growth is more attainable in large format retail than Bunnings Warehouses, just because again those assets, those Bunnings covenants are incredibly tightly held, the churn is not as much, and the pricing is tighter. So I suppose when we look at an LFR asset like Morayfield, there's some recognition that we are up -- a little bit up the risk curve, reflected somewhat in the cap rate. But we like that addressable market. We understand the lease structures, the tenants we're comfortable with. We think the tenants have a strong outlook, or historically have had strong trading outlooks. And the fundamentals of the large format retail sector and those tailwinds of population growth and undersupply, we think they are good settings for investment into that sector. So that I suppose why we are happy to acquire. As it relates to replacement cost, I think you're absolutely right. Part of that undersupply factor has been that replacement cost is quite high. And that's a function, as you've articulated, a function of construction cost and prevailing costs. So we buying existing assets at the moment that is good deployment, investing into existing brownfield assets and improving those assets like we've done is good deployment of capital. We don't typically absolutely represent that versus replacement cost, but I suspect if we did, they would again look favorable relative to the replacement cost. Unknown Shareholder: Yes, I mean, I would like to guess as much, but obviously I think, over the years, you guys haven't been very active in terms of like going out there to acquire. And I do agree through our historical conversation, the Bunnings Warehouse market is very, very tight. So unless you decide to actually take on more leverage like the other competitors that can potentially buy, but adhering to your conservative strategy, probably you may have to look into large format to actually do acquisitions accretively. Yes, that's what I mean. I'm in total agreement. Yes. Andrew Ross: C.K., Andrew Ross here. What I would like add on what Mark has talked about is it's not our intent to go out and buy vacant blocks of land and build LFR centers and have a drag on our earnings. The 3 repositionings or repurposings that we've talked about in our slide deck, being Fountain Gate, Noarlunga, and Broadmeadows. They're -- well, Fountain Gate and Noarlunga is a result of Bunnings vacating those stores. Broadmeadows is not a Bunnings site and never was a Bunnings site. It adjoins the Bunnings that we own in Broadmeadows, but this is a property that we bought a couple of years ago, and we're developing on the surplus land there. Now all these development costs, we've tendered those costs and we know what they are. And so we also know pretty much what the rents are, being 3-quarters leased for Fountain Gate and Noarlunga, and we've got strong interest for the balance there. So we're pretty confident that we're going to achieve return on capitals above 10%, and Mark alluded to that earlier from one of the other questions. So with buying other LFR, we're focused really on existing centers. So it's not so much going and buying them and developing them. That's what I'm kind of trying to say to you. Operator: Your next question comes from [ Claire McHugh ] from [ Green Street ]. Unknown Analyst: Just a quick one from me, just coming back to Lauren's points around the payout ratio. So I know that AFFO isn't a metric you disclose per se, but if we just look at sort of recent history, I think you spent around $6 million to $8 million a year on recurring maintenance capital. So is this a consideration as you're thinking about your FFO payout target? I mean, would it not be a little bit more prudent to have it to run it lower just on that basis, essentially given that maintenance capital is unfunded? David Hawkins: I mean, that's why we give kind of a range of 90% to 110% on the FFO. Our stay-in-business CapEx or recurring CapEx hasn't been material over the years. We expect, as part of the lease reset, we've agreed about $5 million a year with Bunnings on that, so we expect our stay-in-business CapEx to kind of be around the $10 million to $15 million dollars going forward. Unknown Analyst: Okay. So is it fair to say whilst you've given that range that it'll err on the lower end of that spectrum? Mark Scatena: Again, lots of clear movements in, as we bridge into FFO and then into AFFO. So I think we would hope that on average we're in the mid part of that range. I think that's why that range is like it is. So we would hope that again the median is somewhere around that number 100, and that's our aim. But again, some flexibility to allow us to address some topics. Operator: [Operator Instructions] Your next question is a follow-up from Andrew Dodds from Jefferies. Andrew Dodds: Just quickly on the development funding mechanism you agreed on with Wesfarmers, which was 200 basis points above the 5-year swap rate. I'm just interested as to when this kind of rentalization gets struck, just given the movement in the 5-year swap rate, and if this is kind of factored into the guidance for this year. Andrew Ross: Yes. The rate gets struck once both parties have got Board approval and are moving forward with the development. So there's a number of developments there that are in different stages of planning approval and Board approval. So at this point in time, we haven't agreed, or Bunnings hasn't notified us that they want to proceed on any one of those developments, although we're getting very close to one or two of them. David Hawkins: None of those developments have been included in the guidance for FY '26. Mark Scatena: So Andrew, I think in the presentation, Andrew, I think we said those projects would commence towards the back end of the calendar year '26. So if you think there about a construction time frame and then assume that, that rentalization commences when that payment is made at the completion, I think that gives you some guide to perhaps when those that income is realized. Andrew Dodds: Okay. And do you realize a coupon on that CapEx as it's drawn, or just upon completion? David Hawkins: So with all the Bunnings redevelopments, it only occurs on payment at the end. So Bunnings takes on all the construction risk, and we receive the rent the moment we make the payment at the end. Operator: Your next question comes from Richard Jones from JPMorgan. Richard Jones: Just the MER you called out at 50 basis points. Just how is that tracking, and where do you think that will trend over the next 12, 18 months? David Hawkins: Richard, David here again. That MER of 50 basis points includes 7 months of the old management fee structure. So we expect that to trend down to around 40 basis points going forward, subject to no changes. Richard Jones: Excellent. And just a follow-up just on Rocklea. I think you called out it was vacated in October last year. What's happening at Rocklea? Mark Scatena: Richard, I'll let Andrew, but we're in the process of tenanted that, and so we're hopeful that that tenancy will commence relatively soon, which I'll let Andrew give some color on that. But that's been a bit of a projected. Andrew Ross: Yes, so we've been talking with a potential tenant to lease the whole building there, Richard, and I'm -- we're close to doing a deal there, but we haven't finalized a deal yet. So hopefully we can have that leased before the 30th of June. Richard Jones: Okay. Is anything incorporated in the $60 million, $70 million CapEx in repurposing for Rocklea? Andrew Ross: No, because my current negotiations are they take the building as is. Operator: That's all the time we have for questions today. I'll now hand back to Mr. Mark Scatena for any closing remarks. Mark Scatena: Thank you, everybody, for attending today's results briefing, and we really look forward to seeing many of you, well, speaking to many of you over the coming days and seeing again a lot of you in March in Melbourne and Sydney. Thanks so much for joining in today, and have a lovely day. Operator: That concludes our conference for today. Thank you for participating. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Cochlear Limited HY '26 Results Analyst and Media Briefing. [Operator Instructions] I would now like to turn the conference over to Mr. Dig Howitt, CEO and President. Please go ahead. Dig Howitt: Hi, everyone. Thanks for joining us today for our first half results announcement. So let me get started and said we'll do a presentation upfront and then open for questions. We always do like to start with our mission and particularly this half where we've been very focused on the launch of Nexa, which is the core of our mission of getting people here and be heard and some highlights of being able to talk to professionals about their excitement around the technology in Nexa and what that brings for the future and to be able to meet a bunch of recipients who have -- excited by the technology and be able to benefit from features like Smart Sync. Let's get into the result. So the -- as I said that this year -- this half is really all about Nexa. And certainly a big undertaking sort of launch, Nexa, and I'll explain a bit more about what's involved in just a few minutes. And overall, we see -- saw a very successful launch that really does set us up for the second half and certainly sets us up for the future. And in doing that, and I'll go into some of the detail, we saw price increases, and we did see some delays in those price increases and delays in sales. And that's really what's brought us short of where we expected to be in the first half. That's led to the sales revenue being down 2% in constant currency and the underlying net profit of $195 million. So what that means for the outlook, and I'll talk more about the outlook a little bit later, but at a high level, we now think we'll come in at the lower end of our original guidance range before we adjust for the recent rise in the Australian dollar. And the reason for that being at the lower end rather than just in the range more broadly is the shortfall in the first half. We don't see that we will catch up in the second half. And then on to FX. Obviously, Australian dollar has been on quite a run just over the last few weeks. If it stays about where it is today, that's about a $30 million net profit hit through the half. And you'll see later on, we provided a bit more detail because it has been moving around so that if it does continue to move around, you can have a chance of estimating what that impact will be. But let's go on to talk through the segments. And I want to spend a bit of time on Cochlear implants, obviously, with the Nexa launch because the key with a launch like this is a significant exercise right across the company. It's a change to our manufacturing process, obviously change to the distribution. It also involves new software in all of the clinics around the world that are using Nexa. So we think about just the logistics of that launch. It's a significant effort across the organization. And it does take time. And so we said at the start of the year that our performance, our revenue and our profit will be weighted to the second half, and it still is. And so if you think a bit more about Nexa, so first of all, as we know, we had approvals in Western Europe and parts of Asia Pacific at the start of the half. So we're able to start shipping into a number of countries in Western Europe and Australia from early in the half. We did then have to install software. Some of that went quickly, but for instance, in the NHS, our new software got stuck in a queue in the NHS. So it was actually some months before we were shipping Nexa into the U.K. in the half. In the U.S., we got FDA approval in early July. We started shipping in September to hospitals that had recontracted with us for Nexa. So again, we've really in the U.S. sort of got 4 months of Nexa sales in that first half for the hospitals that contracted upfront and some of them took longer, which meant even less impact of Nexa in that half. We did -- as we went into this, we said, at the start of the year, we would seek price increases in countries where the reimbursement system enables a price increase for new technology. In most of the countries where that's the case, that does mean contracting hospital by hospital. So that's the case in Germany. It's the case in the U.S. And in going through that, we have been able to achieve the price increases that we set out to do, albeit took a bit longer in some instances. And obviously, when we're negotiating price, it's an opportunity for our competitors to compete with us quite aggressively. And we expected that to happen. We saw that happen. We saw a number of instances where -- when we were pushing for price, our competitors were offering discounts for bulk purchases in those hospitals, and that enables them to get a bit of stock on the shelf, so certainly a few cases where we lost a little bit of market share going through the contracting process. That's a bit of a description of what happened. Where do we end up and the way we end up is important for the confidence that gives us looking forward. So the result of all that is, by December, over 80% of our developed market sales were in Nexa. So that's obviously a very significant shift. We did see in November and December across key markets, a 10% lift -- those key developed markets, a 10% lift in our cochlear implant units compared to the prior year. And so that's sort of a good indicator of the impact that Nexa had once it was installed. And we did get a low single-digit price increase. So we got the price increases we sought in the markets that we went for, ended up with a low single-digit impact and obviously, not much of an impact for that in the first half given the timing. But as a result, we ended up with just a low growth in -- of overall CI units. Now we do know, while we've been very focused on Nexa, that the key to our success is driving growth in the cochlear implant market. So we have continued to execute our growth strategies, and we continue to push -- launch new growth strategy, I'll talk a little bit more about that, and push more resource into driving growth, particularly in the adults and seniors. And one example of that is we're launching right now some new messaging on cognition using the latest results from independent studies, showing the link between cognition and hearing loss, the benefits to cognition from using cochlear implants and starting to use that to, again, to raise awareness of the need to treat. So move on then to look at emerging markets. Emerging markets, we said going into the year that we expect to see volume growth but at lower -- but in the lower tiers. And that was particularly because of the China volume-based pricing, which came in, in March last year. So we had the full 6 months. And we also had that against a comparable half where we had noted higher-than-normal premium tier sales in emerging markets. So we saw very good volume growth in the emerging markets but did lead to lower overall revenue, and that's directly as a result of the volume-based pricing in China. That's said, we did execute very well in China. We're holding a strong market share. We're seeing strong growth and the team there have managed that transition very well. So overall in cochlear implants for the half, so the sales down 2% in constant currency, a little bit up in developed but down in emerging. We're -- certainly from my perspective, very pleased with how we executed on the Nexa launch, pleased with the execution through emerging markets. And both of those things set us up well for a strong second half in cochlear implant units. Okay. Let's move on to services. Now services was in line with our expectations post work with cochlear implants. So we're a little bit behind where we expected to be. Services was in line. We did see growth in developed markets of 4% in constant currency. And this follows on what we've been talking about is -- and executing on, is we've strengthened our digital marketing and new platform, better able to segment and target people eligible for upgrade, stronger messaging around Nucleus 8 based on direct feedback from people who have gone, particularly from Nucleus 7 to Nucleus 8 and the benefits of that emphasizing the waterproofing in Nucleus 8 and the launch of Kanso 3. All of that led to that 4% growth in developed markets. And what we see looking forward is stronger -- even much stronger growth in the second half, particularly with the retirement of Nucleus 7 in the U.S. We've seen a significant uplift in people inquiring about upgrades just over the last few weeks, which is in line with our expectation but gives us confidence of our outlook for services into the second half. And then on to Acoustics. So Acoustics, down 3% in constant currency. And if we look at that by market, we actually continue to see good -- very good growth in the underlying markets for acoustics and particularly Osia, and we saw it particularly through Western Europe and Australia. One of our competitors launched a new product just over 12 months ago into the Acoustics segment, and we know that sort of the second 6 months after launch, where you start to see the impact of that launch, we saw that. We lost a bit of share actually in the U.S. and the U.K. And that's better with the new product. People are going to try it. We remain very confident of our product features and product benefits, particularly in terms of hearing outcomes with us here over the competition, and we have significantly better MRI indications. And so while we've lost a little bit of share, we still hold a very significant share in that acoustic implant market, and we expect to regain some of that share plus see market growth as we look into the future. But did see an impact from a competitive launch a bit over 12 months ago, and it is that sort of 6 months later where you start to see that impact. Okay. Before I hand over to Sarah, I do want to make a few points on our strategy. As we talked in the release about some restructuring that we have been doing across the company, which is really something we've been working on over the last few years, it's all about making sure that we are making the company fit to drive growth and fit to get scale as we grow. So there's 3 things that I wanted to call out in areas where we've been doing quite a bit of work to drive growth or set ourselves up for the future. The first of those is the transition to the cloud, which had been a program that has been very visible for the last 4 or 5 years. And this is just about switching our platforms over the cloud. It's also about actually getting consistent and aligned processes across the company and reengineering our data to get consistent data architecture and data structures. Those 2 things combined with the systems enable us to get scale as we grow. And they also become platforms for the use of AI, which is going to be part of us getting efficiency, part of us getting scale but also getting insights into how we drive growth. So those programs continue to progress well. The second area that we've worked hard on over the last 6 months and certainly since the Nexa launch is to restructure our R&D. And it's the right time to do it after a big launch, but as our products are now much more complex than they used to be, our R&D organization is larger than it used to be, quite naturally, and in doing that, what we're doing is restructuring to make our R&D more modular, which improves accountability but also enables us to target the capabilities we need and make sure we get concentrations of the right capabilities we need for future technology development, so important piece of work there that's well underway and appropriate to do after the Nexa launch to make sure that our R&D organization stays future-fit and able to continue to develop an outstanding range of products. And then the third area is around driving growth. And we know that's the key to our longer-term success. We continue to work hard to lift the growth rate, particularly in the adults and seniors segment. We've got a number of programs we've talked about over time, but we continue to add some new programs and new experiments, particularly focused on referrals and referrals out of the medical channel rather than perhaps the hearing aid channel. And we're diverting more of our sales and marketing resource towards growth and towards building these referrals. And that's both -- require some organizational change to do that and some reskilling of some of our commercial teams to have that sort of different conversations that they have in the referral channel than they might have either in hearing aid or in the cochlear implant clinics. So we've done some restructuring across our commercial organizations to set ourselves up there, too. But just 3 important areas of strategy that we were making changes that don't have any benefit now but are setting ourselves up to have a benefit into the future. Okay. With that, I will hand over to Sarah. Sarah Thom: All right. Thanks, Dig. So I will take us starting with the profit remarks. And you see the sales revenue has declined by 2% in constant currency. But Dig's taken us through those details, so I won't go into it further right now. We go to gross margin. You see a 2 point decline to 73%. Now this was largely expected, and there's 3 things that I'd call out in here. First is the mix shift to lower-margin emerging markets in the first half, including the impact of the China volume-based pricing coming through. Second is Nexa. At launch, Nexa has higher COGS. We expect that. But we also expect that as we come up the experience curve as the commercial volumes grow, we do expect that to decrease over time. Finally, Chengdu is a facility that is continuing to ramp up. We're really happy with the production we're getting there, but there's still room to go in that facility. So we'll continue to see Chengdu be a small headwind to gross margin for another year or so. Our operating expenses declined 2%. That's a net effect. As Dig talked about, we've continued to invest to drive the long-term sustainable growth and to invest in R&D. So that's strengthening our sales capabilities, getting more scalable and how we support our go to market, investing to strengthen the referrals pathways in the way that Dig talked about. And then also putting investment into R&D so that we support that project and services pipeline that we have coming. However, at the same time, we've been very deliberate in this half about phasing our costs into the second half as to balance out the second half weighting of the revenue profile that we expected to have. Finally, we're cycling a few ones-off projects that finished up in the first half of last year and are finished at this point. That brings us to the underlying net profit margin of 17%. What you see below that are some items I'd call out, in particular, the $24 million of cloud-computing-related expenses, which we expected to invest there and will be reported as a significant item below the line. You'll see the fair value losses on investments of $9.6 million. That's related to Saluda, which is a small long-term financial investment that we've had that was revalued on their listing back in December. Let's go on to the balance sheet on the next page. Right. The main feature of the balance sheet is the $48 million increase in working capital. Now that's a factor mainly driven by having fairly conservative safety stock coming into this half and holding that as we launched Nexa, Kanso 3 and Baha 7 progressively rolling out around the world. We continue also to build that stock ahead of what we expect will be a big second half. We also continue to expect that, that inventory will moderate over the second half. The other thing I'd note on here is you do see that $36 million change in trade receivables. That variability is pretty normal and largely due to our emerging markets. If you remember back to the end of FY '25, we had seen receivables increase due to the larger emerging market orders, and this is just the unwinding of that as the receipts come through. I'd note that other net liabilities increase of $33 million. That's an increase in net tax assets, and it's very much a timing effect that will unwind by June. Let's talk about cash on the next page, if we can, please. All right. All right. The main feature in the cash flow you see is the $103 million decrease in net cash. There's a few factors behind that. We have a number of quite lumpy payments in that first half. The $48 million increase in working capital that we just spoke to, there's a $34 million cloud investment that we mentioned. There is those taxes paid, noting that that's $30 million higher than what's expensed in the P&L due to the timing effects. And there's also the discretionary bonus that gets paid in the first half. Now this was $16 million, which is much smaller than our STI normally is. That reflects that, in FY '25, there was no STI paid to senior levels of management. Final call out on here is our capital expenditure of $40 million. That is continued expansion in our Lane Cove and Malaysia facilities. All right. Dig, back to you for the outlook. Dig Howitt: Okay. Thanks, Sarah. So onto the outlook, and I've touched on this upfront but just a little bit more detail here, is we're aiming to help 60,000 people hear this year. And obviously, as we said at the start of the year and I said upfront, weighted to the second half but we were a bit behind where we had expected to be for cochlear implants, which means now the lower end of that $435 million to $460 million range, we don't expect to catch that back in the second half. I've talked to each of cochlear implants and services where we had some good confidence on the signs we're seeing of an uplift in the upgrades in the second half, and that's something, as we talked about, we've been working towards, is getting that upgrades and services number back up. I expect some lift in Acoustics as well as we both see the market growth, we'll get some share and with the Baha 7 available there from an upgrade perspective. Now in terms of the foreign exchange, we've gone into more detail here. That guidance range was set at $0.66 and $0.56 for the Australian dollar to the U.S. and the euro. If it stays where the spot rates are now, that's about a $30 million hit across the second half. We have just provided there that for a little bit more detail. So for each cent change against the U.S. dollar, it's about a $3 million impact for that in the half; and for each cent in euros, it's about $4 million. And that's around our exposure for this half and also takes into account our hedging coverage for the half as well. Okay. So let's finish the presentation and now move into questions. Operator: [Operator Instructions] Your first question today comes from David Low with UBS. David Low: Dig, if we could just start with the restructuring, just to be clear on that, when you talk restructuring, are we talking charges that we should be thinking about coming through the P&L? And I guess the more important question, you talked about the seniors pathway. Can you talk a little bit about how things are playing out there? And maybe touch on where you think market growth is, particularly in some of those key markets where seniors have been a strong driver, please? Dig Howitt: Yes. Yes, David. So on the first one, the cost of the restructuring, we take -- we just took up through OpEx through the P&L, and we've done that for the last couple of years. It's a reasonable amount of money but not huge amounts, but it's quite an active -- it is an active program of making sure that we keep the organization ready for the future as we're changing and as the markets now, technology changes. In terms of growth, yes, look, it is the most critical issue for us. What we've seen is some good progress on our DTC front. So Nexa's been an opportunity to reengage with people who we've engaged in the past while they haven't been ready or haven't been in indications, and we've seen some good progress there. On the flip side, the referrals from hearing aids have been a little bit softer through the last half. Possibly, that's in line with what the hearing aid companies are saying about slower growth in hearing aid units. But the big opportunity for us is to -- has always been, is to generate more referrals. We've been working hard in hearing aids on that. We are now doing more on the medical channel. We've done quite a lot of analysis of the people who turn up at clinics that we don't have connection with before they get to a clinic and where have they come from. And what we're seeing is quite a number of them have had referrals from other ENTs, sometimes from GPs. So we're now running some programs to experiment with how do we engage those people who are already referring to get them to refer more and who are physicians like them who would also be able to -- who see people who are in indications but also able to refer. So further programs there. And as I said, we're also rolling out messaging on cognition, the links between cognition and hearing loss, and that, we've talked about many times, is a really important long-term part of our strategy. The reason -- one of the big reasons people don't get referred is people don't see hearing loss for seniors, particularly, as a very important medical issue. And as the evidence grows that not treating hearing loss increases the incidence of dementia and an evidence showing treating hearing loss and treating hearing loss properly with cochlear implants for people with severe to profound loss significantly reduces the incidence of dementia, that evidence is there. As it keeps growing, it's important that we communicate that in the right ways to professionals and also to consumers. So David, is that enough... David Low: Yes, that's a lot. Can I just ask quick financial questions. Profit margin, actually. I know you're saying 17%, but it's, frankly, 16.5% versus the 18% we're used to. What should we expect second half full year? And I did think the hedging program over the years, I'd been led to believe that it was pretty effective at protecting the next 6 months at least, so I'm surprised at the level of exposure. Maybe it's changed. Maybe I'm out of date. Could I get you to touch on those 2 topics, please? Dig Howitt: Yes, I mean, I can talk about some of those. So certainly, first of all, the margin in the outlook will be -- excluding currency, we expect to be a bit under 18%. The currency is going to bring that down further if it stays where it is. Our hedging program is only a partial hedge. It's really hedging the cash flow that comes back to Australia. We're not trying to hedge our net profit. It's more about hedging the cash flow, which gives us time to adjust. And in this outlook, what we're not going to try and do is trying to adjust our cost base, particularly given how quickly the Australian dollar has risen, to change the -- to have an impact in F '26. We are looking at F '27 and looking at the cost base and trying to get our -- take the action we need to, to get the P&L back in line with our -- the long-term structure of the P&L. And if you go back and look, I think, in 25 years, if you go back and look at our 25-year charts in the annual report, the Australian dollar's moved between $0.60 and $1.10 over that time and that there's pretty good consistency in the COGS, in the OpEx, in the net profit margin. You can see it moves around a bit when the currency moved extremes, but hedging gives us time to react and normalize it. And assuming the Australian dollar stays up, that's the action we will take again as we've done in the past, is to get our P&L back in line with our long-term targets. Operator: Your next question comes from Andrew Goodsall with MST Marquee. Andrew Goodsall: Just with Nexa, if I remember correctly, you wanted to be in about 90% of your jurisdictions by now. Could I just check where that's at? And then the 10% growth that you highlighted in developed markets, just where you think that is relative to underlying market growth? Dig Howitt: Yes. So Andrew, we've got to just over 80% in December. That will continue to lift. So countries like France have a -- well, like have a CE Mark. They have a registration process. that sort of takes 6 months or more. So we're expecting to get that registration in the second half in France. Japan and Korea are always a bit slow. They're expecting to come on. So we expect that Nexa percentage to continue to lift, but quite reasonably happy with being at 80%. And there's still a few contracts that we haven't locked down and we expect to lock down over this quarter that will give us a bit further lift in the U.S. and in Germany, particularly. In terms of the outlook for market growth, we think our CI developed market number -- developed market growth will be a bit under 10% as we look into the second half. And I think that's pretty much in line with market growth. We did -- we have lost a little bit of share, as I said, in some of these -- particularly in some hospitals around the contract in the first half, which we'll get back as a short-term impact that we're having through the Nexa launch back focused very much on how do we drive growth and how do we drive that adults and seniors growth. And we've seen some good progress over the last 4 years, but we know we've got more to do to get that growth rate at the level we want and sustained the level we want. Andrew Goodsall: And just a quick second question on buyback that you haven't made any mention. Looks like it was not really utilized in the first half and maybe that reflects where your cash flow was. But just any comment on that going forward? Dig Howitt: Yes. So the -- yes. No, that's a good observation. Buyback remains in place, but we -- we've got a target for our cash level. Yes. And we're a bit under that at the moment, so we want to get our cash back up to there, which we will do. The inventory is high. I'm very comfortable with that going through a launch but -- through the launch. And with stability, we'll get the inventory back down, and we'll see the cash generation pick up on the back of that. Andrew Goodsall: The buyback will sort of work around that timing? Dig Howitt: Yes, yes. So certainly, it's going to -- it remains on foot, but we want to see the cash flow improve a bit. Operator: Your next question comes from Davinthra Thillainathan with Goldman Sachs. Davinthra Thillainathan: Dig, just picking up on that bit about market share loss, I guess, in the first half. Curious, do you feel like that was more in the U.S. versus Europe, I guess, in the developed markets? And then somewhat related to that, we've sort of picked up commentary in places like Germany. As an example, to sort of get the price uplift that you're putting through for Nexa, you kind of need the hospitals themselves to get an uplift in their funding through DRG reimbursement as an example, and that can take some time to come through. Could you please just highlight if that's correct and how long it could take to come through, please? Dig Howitt: Yes. Okay. So first of all, just on the -- where we've lost a bit of share, it's more actually on a sort of a hospital-by-hospital basis rather than sort of market specific, so certainly some cases in the U.S., some in Germany. And it is where our competitors saw our launch coming and sensibly responded with some pretty strong messaging and marketing. That's what we'd expect. But also from a price perspective, I said, we've seen instances of discounts for buying bulk. And yes, then they get their implants on the shelves, and they'll get used over time. So those sorts of things have an impact in the short run. It's very sensible strategy on their part through a launch but not -- it's a short-term issue on share, not a longer-term piece. In terms of DRG and price increase, so a price increase for a device isn't directly linked to DRG. But if hospitals aren't getting an increase in the DRG and the DRG is basically the amount of money that they are reimbursed for the procedure that covers the device cost plus the hospital costs, plus the surgeon costs, if the DRG doesn't move and the product price does, then the out of money in the hospital to carry out the procedure is reduced. So hospitals do push back on that. So yes, that creates sort of tension in the negotiations. And we knew that going in and therefore, get some pushback. But equally, when you have an opportunity to get a price increase, we should go when it's right for us to go and see what we can do. And I said we got the price increases we were after, so the negotiations were quite difficult in places. We did better in some places than others. In terms of the DRG rising, yes, it is that, over time, the device price does have an impact. There's often an assessment process that looks at the cost of procedures and looks at the DRG, and so if the procedure cost goes up because of the device, then there can be an increase. We certainly know the reverse is true. If you pull -- if we pull the device price down, then, often, the payers will look at that and see the procedure cost is less and pull the DRG down. But it's not necessarily a linear relationship, and neither is it specifically time-based. If this happens on a point in time, in 18 months' time, you then see a proportionate impact. Davinthra Thillainathan: Great. Maybe one for Sarah then on your gross margin. I noticed the reduction relative to your previous guidance by about 100 bps. Could you help us understand the moving bits there? I believe the Nexa delay is likely a contributor, but I would have thought the other sort of bits that play into it, sort of manufacturing perhaps in terms of your inventory build as well that has occurred. So is that a drag in the second half? Could you sort of help us work out what's driving that 100 bps, please? Sarah Thom: Sure. Look, it is a combination of factors and it's those things that you said. So part of that is that we were holding a reasonably conservative level of safety stock because when we go into this product launch and over this first half, remembering, we have Nexa, also Kanso 3, also Baha 7 all coming out to the market. What you don't want to be doing is get caught short if it suddenly goes faster than you expected, right? So as Dig has talked through, we did go through this. You have to go through this contracting process. You have to get the software installed and all of that. And as he said, it took a little bit longer. But we've been holding some inventory at safety stock levels so that if it went the other way, we were prepared for that. So that's a contributor. Certainly, the contributing factor around the -- needing to build and make sure we have the right stock ahead of the second half, which as we've talked about, we do expect to be significant, we've got that inventory as well. It will start to moderate over the second half. Operator: Your next question comes from David Stanton with Jefferies. David Stanton: Perhaps I could talk to more longer term at least initially, call it, F '27 plus. Should we be thinking about greater than in that 10% volume growth into F '27 given the ongoing rollout of the Nexa? And what are the implications, again, longer term, '27 plus for that previous NPAT margin guidance, please? Dig Howitt: Yes. Okay. So first, thanks for your questions. So yes, look, we continue to aim to get at sort of 10% revenue growth year-on-year and do that over the long term. I think we're working through what F '27 will look like now but certainly expect us to continue growing. I'm not going to give you a rate of -- I'm not going to give you our guidance for '27 right now. That would be premature. But over time, the opportunity to grow is there. Our growth programs are having an impact. We're expanding and putting more into those growth programs, and the evidence for people to be treated continues to continues to grow. And we see that in our consumer surveys is, right, there is definitely growing awareness of the links between hearing loss and cognition in candidates. Sorry, David, I think there was a second part beyond just the... David Stanton: And what's the implication for margin, implications for margin, please? Dig Howitt: Yes. Look, I think, as I said earlier, in the shorter run, the Australian dollar does put pressure on our margin, mitigating to some degree by the hedging but not completely. But as you've seen over time, as the dollar moves, we'll adjust where our costs are, what we spend and how we spend it to try to get that margin back in line. That's why those lines are pretty consistent over 25 years in terms of net profit and R&D investment, gross margin. David Stanton: Understood. So 18% underlying is still the target over the medium term at least. Dig Howitt: Yes, still taken over the medium term. I think certainly with the currency, where it is, it's not going to happen this year. We'll see where the currency goes over into '27 and the outlook there, but again, I'm not going to give guidance on margin for '27 at this stage. David Stanton: Understood. And perhaps to ask in a different way questions already been asked. This reorganization, what does that do to -- in the short term at least to G&A as a percentage of revenue? Will there be any changes in the second half from that, please? Dig Howitt: No, we'll manage it within the envelopes that we set. We had a reasonable restructuring cost in the first half, and we have 1% OpEx growth. So we are -- we know what we've got coming, and we budgeted around it. We manage around it. Operator: Your next question comes from Saul Hadassin with Barrenjoey. Saul Hadassin: First question, Dig. At the full year '25 results, you spoke to 10% plus growth for units in developed markets. You haven't given a specific rate this half. But in terms of what you just said around what you're seeing in the marketplace now as it relates to market growth and your share, can you give us an update as to what you think unit sales growth will do this fiscal year based on the revised guidance? Dig Howitt: Yes. Yes, look, we think on the -- on developed markets, we'll be under 10% this year as part -- if we're pretty much sort of flat in the first half, 20% in the second half is beyond what we think we can do. Yes, even with Nexa in, so over the year, it is going to be a bit under 10%. Saul Hadassin: And I guess on that point, Dig, it sounds like from what you've been saying on the call that the opportunity in the seniors market is there, but you're having some degree of difficulty at least accessing that or tapping into that. Is that what we should be reading through? I mean in terms of a sustainable rate of growth for developed markets, when you factor in pediatrics being flat and the growth coming from adults and seniors, I mean I'm not sure you gave an actual percentage growth rate for the market. But should we be thinking that developed market growth at an industry level is more like upper single digit rather than 10% or 10% plus? Dig Howitt: No, we certainly still think 10% is well achievable. We -- the potential is there. We're working hard at getting. And if you look back over the last few years, we certainly saw stronger growth back in '23 and '24. That slowed into '25. We expect that we should be able to lift that up with the activity that we're undertaking. Saul Hadassin: Great. And last one, just on services and the idea that you should get some uplift based on expressions coming in from recipients noting the obsolescence. The feedback from clinics in the last few months out of the U.S. is that insurance companies continue to be problematic in allowance for processor upgrades, including wanting to see clinical notes to see whether there is, in fact, any issue with the processor. You've mentioned strong recovery or strong growth of processors in second half. How confident are you that you'll be able to deliver on that revenue line? Dig Howitt: Yes. Look, certainly, what we are seeing is that the insurance companies are pushing harder requiring more information. We've set up so that we're able to provide that information because clinical notes are normally there. It's just a matter of getting the access to them. And we have seen an uplift in interest and inquiries because of the N7 retirement, and that uplift's certainly in line with our expectations. So that gives us confidence in the outlook that we have set. And that's in the U.S. And then in Western Europe, too, we've seen stronger upgrade performance in that -- in the last half as well and expect that to continue into the second half. Saul Hadassin: And just on the, Dig, last point, in the context of the revised guidance, can you give us a sense of what strong growth means in a percentage terms in terms of that services revenue line in second half? Dig Howitt: No, we haven't broken -- gone into breakdown of the -- by line what we expect in the second half. But we are anticipating a strong -- a significant uplift in services. Operator: Your next question comes from Steve Wheen with Jarden. Steven Wheen: Dig, I just wanted to ask about the, I guess, the delay in the contracting process that you saw during first half. With that contracting, I mean, was the issue that was causing some of that frustration price? Or was there other factors to the contracting process? And now that you've got 80% of your target contracted, can you just give us an indication of have they all made the software upgrades as well? Dig Howitt: Yes. Okay. So on the software -- yes, yes. So the software installation issue early on, particularly in the U.K., a few places but that's -- there's just a logistics and time to do it, but that is done. And then in terms of the sort of the contracting more broadly, [ when it says ] price, yes. And it's just people push -- it's a range of things from the obvious if people push back on price and say and justify. And in hospitals, there's particularly more rigor around prices. So yes, we put a price increases, say, yes, okay, we've got a value committee and that value committee meets in 3 months' time. And we take all our price increases there. So there's nothing we can do apart from wait for the 3 months for -- to elapse and for those meetings to be held. In terms of it taking longer than estimated, look, we haven't done a price increase like this around a new implant in a very long time. So we put our best estimate of what it would take us and with some ambition in it as we should, and we've fallen a bit short of that. But we overall got the results that we were looking for. Steven Wheen: Yes. Okay. And so as part of the contracting process, do they -- are you asking those customers to commit to a certain volume? Or it's they're just agreeing on price only and then it remains to be seen what they order? Just to ask you that from the perspective of your confidence in the second half. Dig Howitt: Yes. Yes, there's a whole range. So certainly, in some places, there is price and volume lengthening. Others, it's just a price. Steven Wheen: Yes. Got it. Just one quick question on the accounting for Sarah. Last year, at the end of FY '25, you released the STI provision into the P&L because they weren't going to be triggered and indicated that you will be rebuilding that provision during FY '26. Just wondered where you got to with the rebuild and whether or not you would be rebuilding it to that sort of level given sort of the performance of first half. Sarah Thom: Yes. Look, we are continuing to rebuild that, so you see that coming through in the employee benefits provision. The rebuild happens like it normally does, which is over the year. So we've accrued for about half of that, but the rebuild will continue. It's -- I think [ if ] I'm answering your question. Steven Wheen: Yes. So you're saying $25 million of provision has been put into the P&L this half. Where does that sit? Is that in the SG&A line? Sarah Thom: So the employee benefits provision has increased. It's offset by what's paid in that discretionary where that came out this year. Dig Howitt: So from a P&L perspective, yes, it's through the SG&A -- well, it's actually through every line item, right? So there's people in COGS who you get the STI. So some of it goes through there, some through SG&A, some through R&D. Wherever we got people, there's a provision being held. Operator: Your next question comes from David Bailey with Morgan Stanley. David Bailey: You've given some commentary around the expectations for developed markets for the full year unit sales, I'm talking here, so maybe a bit less than 10%, good growth in the second half. Just on the emerging market side, I do note that there was some very strong growth coming through in the second half of '25, particularly in China, I'm guessing. Maybe just help us understand what you're expecting for unit sales growth in emerging markets in the second half and maybe an overall number for unit sales for the second half or full year considering. Both developed and emerging markets would be helpful. Dig Howitt: Okay. So we do expect strong growth in emerging markets across the board, so both CI and in acoustics into the second half. We've got a lot of the emerging market business works off sort of either tenders or orders, and those orders, we get reasonable visibility in advance. So we can see quite a strong forward order book. It's particularly into Q4, and so that sits in our outlook. And similarly, as we saw a strong second half, a number of those orders are sort of annual orders into some countries. So they come back at the same time of year. Be easy for us if they didn't occur in Q4, but that's -- they don't care about our financial year. Look, in terms of where do we expect overall CI growth for the year, we haven't given a guide on the number, but we do expect pretty strong unit growth overall. Part of that is driven by China, but we see, obviously, a pickup in the developed markets in the second half and pickup more broadly in emerging markets as well. So we haven't given a guidance on to the CI unit number. David Bailey: Okay. That's fine. Maybe just a more of a medium-term question. I've asked this before, so -- but I'll ask it again, just on the totally implantable. It looks like there's been a new pivotal study coming through on clinical trials for Cochlear. Can you maybe just talk a little bit about the potential timing for Cochlear? And maybe it looks like there is a competitor, could launch toward the end of calendar year '27. Just what are you sort of seeing in terms of that space and potential launches for others versus what Cochlear might be able to achieve? Dig Howitt: Yes. Look, exciting area. We have got pivotal studies up on clinicaltrials.gov and recruiting for totally implantable. The pivotal study is a step to regulatory approval, so with a new technology like that, do need to complete a pivotal study, meet certain end points around safety and around hearing performance that the regulators then take into account in review. So those studies are going to run probably 18 months or so. It sort of depends on recruiting speed. There's a 6-month and a 12-month follow-up, and then there's a regulatory process on top of that and being a new product is not necessarily on standard regulatory time lines. So still a few years away. Yes, we got the other competitors on the journey. I -- the thing I'd say, I think, is that the time lines are unpredictable, both around the study, around the results and then around the regulatory process. We are certainly confident or very confident of the performance of our TICI. And we first did a TICI 20 years ago. We've done a couple of feasibility studies with -- over the last 6 or 7 years with the technology to give us confidence in the technology. So -- and us going to a pivotal study, it's an indication we're confident of the performance of the product and the ability to meet the regulatory hurdles. But that doesn't give you a great guide as to exactly how long it's going to be, but it's still at least a few years away. Operator: Your next question comes from Craig Wong-Pan with RBC. Craig Wong-Pan: Just with services, you saw good improvement in developed markets but a decline in emerging. Do you have any ideas of why there was that decline in the emerging markets? Dig Howitt: Yes, we do. Certainly, part of that is just -- is timing. I said emerging markets, those orders can happen in a lumpy way. And part of it is that part of upgrades in China is caught up in the VBP process, so that's had some impact. Craig Wong-Pan: Okay. And then just a question on gross margins for Sarah. The drivers there, you talked about -- of that compression, so mix, Nexa and then Chengdu. Could you provide any color as to the splits between those? Like what we -- was there any kind of particular one that was bigger than others? Sarah Thom: Look, we don't provide a detailed breakdown of that. I mean the mix shift to lower margin in emerging markets and the Nexa higher COGS for right now, which will come down over time are reasonable share of that. Chengdu, as we've said previously, is kind of just under 0.5 point and will continue to be that working out for the next year or so. Craig Wong-Pan: Okay. And then just a question on the restructuring that was done. You're still guiding to 13% of sales for R&D. Is there any benefits kind of beyond the FY '26 where that comes down because of this restructuring or through the sort of SG&A lines as well? Dig Howitt: So the 13% in R&D wasn't from the restructuring. It was just with our lower sales last year, we chose to continue to invest at a rate -- at a sort of dollar rate in R&D and have the sales catch up, so that will get back to 12%. No, this restructuring is -- don't expect sort of changes in margin or the lines. It's about making sure that we've got the right resources in the right places with the right skills. So it's -- and some of it will give us efficiency for sure, but then we will use that to reinvest either in growth or in a new technology area. It's very much making sure that we've got the right capabilities for the future and the right structure and accountability for the future that enables us to get scale, but it's not done with the goal of it will just deliver efficiency in itself. Craig Wong-Pan: Okay. And then just last question on the drug-eluting electrode. There's 2 studies out there, I mean, that you're conducting. When could we expect some readouts from that? Dig Howitt: So those studies, one of them has closed. So we've seen the data, but we'll use that data -- that data is for the regulators, so that's our priority there. We go through -- over time, we'll probably disclose some of that data as much to our customers on what we see, but we haven't made decisions on when we do that at this stage. And as I said, the core purpose of that data is for the regulators. I think perhaps I would add to that. We're pleased with the results that we are seeing without showing the data. I can certainly say we are seeing what we had expected to see. Operator: Your next question comes from Sacha Krien with Evans & Partners. Sacha Krien: Look, first of all, on services, just on your second half expectation, just wondering if you can give us a sense to the extent to which payers are approving upgrades on service discontinuation since 1 Jan. I mean you talked about inquiries. I just want to get a sense of how much you're seeing approvals on that basis. Dig Howitt: Thanks, Sacha. So the -- once we retire a product, so we're no longer repairing it, then it does enable -- it does open up for the insurers to be able to cover it. And obviously, that -- they do that because they want to see that the processor has a proper life or it isn't repairable. So it does sort of open that path up. And obviously, we have to retire products because there's actually an ability for us to support the components. Those using electronic components, which have pretty short life cycles, there is a limited time that we can support the external products, and that's the reason for retirement. I think insurers recognize that. But something that's external can't run forever and can't be repaired for it because it just -- it's not technologically possible. Sacha Krien: Yes, that makes sense. I just -- we've had some feedback that some payers are saying it actually needs to be broken rather than not repairable. So I'm just -- I guess, I'm just wondering, are you saying that the majority of payers will basically approve on the basis of service discontinuation? Dig Howitt: If the -- so there's actually not really a difference between not repairable and broken because if it needs repair, there's something broken and if they can't be fixed, then the processor's broken. So there's not -- it's perhaps semantics rather than a real difference. Like the person can keep using the processor. The insurers might expect them to do that. If they can't and we're unable to repair it, then they will replace it. Sacha Krien: Okay. Then, FX, I know you're not giving guidance for '27, but I'm just wondering, roughly, if we're talking about a $30 million headwind in the second half, does that equate to about $60 million next year on the same currency levels as today? Dig Howitt: It depends, right? The amount that we put in that number has changed every day this week as the Australian dollar's risen to say, yes, that number's sort of... Sacha Krien: Yes. It's only got worse there, right? Dig Howitt: Yes. Yes, so who knows? But I said, look, there's hedging there and then we will work to adjust our cost base to track back to the margins that we're aiming for. Obviously, doing that at a sensible rate while we can keep investing in the business. And that's what we've done over time, and we'll continue to do that. Sacha Krien: Okay. And then last question. Just wondering if you can give us a sense of pediatric developed market growth during the period. I know it's been a bit soft. Does that come back at all? Dig Howitt: Yes, look, we did see it was flat through pretty much to the half, but we did see some declines in a few places, which has been unexpected. Certainly, the U.S. was one, and I think there's probably some local conditions around sort of some of the support and infrastructure there but broadly flat. Sacha Krien: Yes. I mean the repositioning or restructuring that you're talking about towards the medical channel, does that mean you could -- there's a little bit less confidence in being able to achieve that sort of market growth without these changes that you're making? The growth has slowed and -- with the focus that you had. Dig Howitt: Put it more as we have -- as we grow, we're able to expand the growth programs that we take on. And as we implement our growth programs, what we always said is we experiment and we learn. And from that, we then adapt the programs. So I'd say this is a natural extension of the work we're doing and what we've learned along the way and the application of more resource to driving growth, which is part of us growing and part of us reprioritizing our internal activity to make clearer choices on resource allocation and putting more into growth, which, again, is just part of the strategy process and as we develop as a company as an organization and get -- we get better visibility over what we're doing, better data on what we're doing and are better able to redirect resources to higher-value activities. Operator: Your next question comes from Elizabeth Davies with Bank of America. Lyanne Harrison: This is Lyanne Harrison. Can you hear me? Dig Howitt: Yes. Lyanne Harrison: So just coming back to the Nexa pricing. I understand you took a low single-digit pricing this time. But given that you hadn't taken price for a long time, also the efforts that went into the contracting. Why didn't you ask for higher prices, whether it's mid- or high single-digit increases? Was there any change to your -- sorry. Dig Howitt: Yes. No, good question for clarification. So low single digit is the outcome we achieved across the board. In some markets, we can get increases. In some, we can't. So where we went for increases, we went for more than that. The sort of weighted average of that gives us low single digits. So yes, you're quite right. If we're going to take the effort and the delay, we want to push for more of a high single digit, but we know we couldn't get that. It's not all the places we had that opportunity. Lyanne Harrison: Okay. And so then with that pricing strategy, where you were able -- or where you had taken smaller increases, are you likely to go back to those hospitals or customers a bit more frequently to try and get increases later down the track? Dig Howitt: Yes. Look, it varies by market. We certainly have -- again, depending on the circumstances in market. So in the U.S., we have been working for a while to get more regular price increases through. In other markets, we don't have that opportunity. And one of the things we have with Nexa and with the upgradability, which we've talked about in the past is in markets where you can't get an increase until you've got clinical evidence of a benefit with Nexa and its upgradability, as we explore that, as we demonstrate some of the benefit that we think's there, there is potential to go back to those markets to make the case for a price increase based on the evidence of improvement in outcomes or quality of life. So yes, we've got quite a comprehensive pricing strategy around Nexa, of which we've implemented some of it so far. And some of it will extend in and extends over several years into the future as we think about and bring about the potential. Lyanne Harrison: Okay. And then the next question for Sarah on gross margin. So understanding Nexa has higher costs or higher COGS currently, but you expect that to decrease over time. At what point do you expect, obviously, Nexa with increased prices, et cetera? When would that become sort of gross margin neutral or a gross margin tailwind? Sarah Thom: Look, on that one, I mean, I'd look back to prior products where we know that it takes a year or so for those COGS to kind of come. As we come up the experience curve, it does take time. But that's what helps us bring those COGS down over time. Lyanne Harrison: Okay. And then just one last question following up on what Sacha was asking about that medical channel. What proportion of your referrals come from that medical channel at the moment? Dig Howitt: Yes, it does vary by market. But in some of our markets, we're seeing half of -- there's a component of our referrals that we get through DTC. That can be sort of 30% to 40%. But depending on the -- 20% to 40% depending on the market. Then we have between 60% and 80% that is self-preferred, gets there in another way, and up to half of that can be medical channel referrals. So it's quite a significant part of the business and certainly, we have current referrals that we don't get involved in, and we can see the opportunity to expand that further when we look at the base of potential referrers against those who are referring. Operator: Your next question comes from Laura Sutcliffe with Citi. Laura Sutcliffe: I think you mentioned back in August that you were seeing some surgeries delayed by choice waiting for the Nexa. I was just wondering if considering your exit rates in November and December, whether you were starting to see some of those come through and if perhaps they've provided a boost at that point during the year or whether they're coming steadily or whether you're still waiting for them. Dig Howitt: Yes. I think to the extent surgeries were delayed and they're certainly worse, we think they were caught up through the half. Now what's hard to know, though, is because surgical slots can be tight, those that got caught up in the half but didn't push -- someone who was scheduled and maybe was scheduled in December is now scheduled into the middle of February because someone who was -- see, what I mean, it sort of pushes the pipeline down a bit. But I think, fortunately, we did see some deferrals but not a huge number through that early period. So the gains from -- the gains we get from here are going to be more around just market growth and picking up share. And rather than sort of backlog of -- certainly backlogs for surgery, they're more than normal than they are just deferred Nexa. Operator: Next question comes from Christine Trinh with Macquarie Capital. Christine Trinh: Just a quick one from me. It sounds like quite a lot of work is going on to kind of tap into that seniors market, medical channel, direct to consumer. I just want to know how we should be thinking about sales and marketing going forward over the next year or so. Dig Howitt: Yes. No. Thanks, Christine. No, we will manage that within the bounds of our normal G&A. So we're talking about reallocating resources internally, not expanding G&A to do it. Operator: Your next question comes from Siobhan Drury with EY. We'll move on to the next question from Elizabeth Davies with Bank of America. Lyanne Harrison: Sorry, it's Lyanne Harrison here again. I had one follow-up. Previous reporting calls, you talked about the cost of living challenges that was weighing on services revenue. Are you still seeing that as a headwind through this first half? Or has it alleviated somewhat? Dig Howitt: Look, I think it still sits there in the U.S. where there's a copay, and sort of macroeconomic conditions, it still sits there. But yes, look, we haven't called it out explicitly. I think we did that on the way down because it was definitely part of the services falling. It is still an underlying issue as is the insurance pressure that's been talked about. But with those things, we remain confident of the ability to grow services into the second half. Operator: There are no further questions at this time. I'll now hand back to Mr. Howitt for closing. Dig Howitt: Okay. Look, thanks, everyone, for joining the call. Appreciate your time. Thank you.
Operator: Welcome to Camurus' Q4 Report 2025. [Operator Instructions] Now I'll hand the conference over to CEO, Fred Tiberg. Please go ahead. Fredrik Tiberg: Thank you, Einar, and hello, everyone. Welcome to our fourth quarter earnings call and full year. As customary, please note our forward-looking statements, which I will assume that you have read. So moving over to the agenda, we will begin today's call with an introduction and business highlights, followed by financial, commercial, and R&D pipeline reviews before finishing off with the key takeaways and Q&A. With me in the call today is Anders Vadsholt, Chief Financial Officer; and Richard Jameson, Chief Commercial Officer. So a quick overview of Camurus. We are a rapidly growing commercial stage biopharmaceutical company focused on developing and delivering innovative long-acting treatments for people living with serious and chronic illnesses. We have become a global leader in opioid dependence therapy with our products, Buvidal and Brixadi. Our commercial reach covers Europe and Australia, and we are now expanding into the U.S. as we gear up for upcoming product launches. At the core of our offerings is the FluidCrystal technology, which supports advanced long-acting injectable treatments and has proven successful through both our commercial and clinical results and collaborations. Alongside our meaningful investments in the R&D pipeline, we have maintained sustainable profitability since 2022, placing us in a good position for ongoing growth. Now turning to full year highlights. In 2025, we achieved several significant milestones that further strengthened our leadership in opioid dependence treatment and our ongoing expansion. We continue to build momentum with Buvidal and Brixadi, expanding their reach and impact across key regions. Importantly, the first of our new wave products, Oczyesa, received regulatory approval for acromegaly in both EU and the U.K. Supporting our strategic expansion into the U.S., the commercial infrastructure is now firmly established, positioning the company for upcoming launches and long-term success in this critical market. During the year, we also entered a strategic license agreement with Lilly, opening new opportunities in the long-acting incretin therapy space. The year also marked substantial improvements in sustainability performance, evidenced by high external ratings and reinforcing our commitment to responsible and sustainable business practices. As a testament to the performance of our teams, full year revenues for 2025 continued their positive trajectory, reaching SEK 2.3 billion. At the same time, profit before tax increased to just above SEK 0.9 billion, accomplished while maintaining significant investments in R&D and expanding the U.S. operations. In the fourth quarter, results demonstrated a balanced performance with an overall positive conclusion for the year. Brixadi royalties in the U.S. showed strong year-on-year growth of 47% and increased 82% at constant exchange rate. Buvidal sales declined temporarily due to FX headwinds and the change in our U.K. distribution model. The launch of Oczyesa in Germany represented a notable milestone as it is the first European country to introduce this product to patients with acromegaly. Turning to R&D. We resubmitted the NDA for Oclaiz, which the FDA now has accepted with a PDUFA date in June. Additionally, we reported compelling Phase Ib results for CAM2056. [Technical Difficulty] Operator: [Foreign language] Yes, and now we seem to be back again. Yes, and we're back. You can continue now, Anders. Anders Vadsholt: Okay. Thank you. Camurus reported quarterly revenue of SEK 464 million, down from SEK 553 million, a 16% decline compared to the same period last year, while quarterly product sales reached SEK 342 million, reflecting a 27% decrease. This reduction is primarily due to a change in the U.K. distribution model. Consequently, we repurchased SEK 93 million worth of inventory from our U.K. wholesaler. Quarterly royalty income from Brixadi sales in the U.S. increased by 47% year-on-year, reaching SEK 122 million. A potential milestone payment from Braeburn relating to Brixadi sales is now expected in 2026. Full year revenue reached SEK 2.27 billion, up from SEK 1.87 billion, representing a 21% growth or 30% at constant exchange rates. Product sales increased by 6%, while the Brixadi royalty income increased by 87%. When reviewing operating costs, marketing and distribution expenses decreased by 12% during the quarter, but increased 7% over the year. The annual increase was mainly driven by the commercial rollout of Buvidal in Europe and Australia as well as company's expansion in the U.S. In R&D, we observed a 20% -- 25% reduction in cost during the quarter and a 24% reduction for the full year. This reduction results from the completion of clinical trials of CAM2029 and CAM2056 with new trials scheduled for 2026. Some costs related to the SORENTO study have been deferred to 2026. The increase in general and administrative expenses is primarily due to a change in Camurus' internal cost allocation model. And additionally, we have boosted our investment in digitalization throughout the organization. The operating result for the quarter decreased 32% to SEK 113 million, while the full year results increased with 86% to SEK 874 million. Buvidal sales and Brixadi royalty income mainly drove the increase. Looking at the quarter's cash flow. The cash position increased by SEK 211 million, mainly driven by the operating activities, which contributed SEK 111 million and a change in working capital, adding SEK 144 million. Investment reduced cash by SEK 46 million, resulting in a net cash position of SEK 3.7 billion, a 30% increase from previous year. Moving to 2026 financial guidance. The key considerations for the guidance are anticipated market dynamics and competitive developments, pricing conditions, and the reimbursement landscape, clinical progress and regulatory outcome, and not least the current macroeconomic uncertainties. We expect an increase in OpEx to be primarily caused by organizational expansion and increased R&D activities. An additional SEK 200 million will be allocated to expanding U.S. operations in preparation of the planned Oclaiz launch mid-2026. And R&D expenses are expected to increase by roughly SEK 150 million. We provide guidance on revenue and profit. We have shifted from reporting profit before tax to operating results. Revenues consist of product sales, including royalties and milestones. Potential license income from new and existing development partners are not included. Our full year 2026 outlook is as follows: Revenue guidance is SEK 2.6 billion to SEK 2.9 billion, an increase of approximately 21%, operating result in the range of SEK 0.9 billion to SEK 1.2 billion, an increase of approximately 20%. The numbers are reported or measured at constant exchange rate. With that, I would like to hand over to Richard. Richard Jameson: Thank you, Anders. So I'll start with Camurus markets. As already stated, invoice sales were impacted due to a onetime accounting adjustment associated with the change to the U.K. distribution model at the end of the period. Importantly, though, across markets, the underlying in-market growth remained solid, growing at 5% quarter-on-quarter with notable performances from Australia, which continues to grow from a high base and Buvidal is maintaining its leadership position in the long-acting buprenorphine segment. And in the Nordics, where Buvidal continues to gain market share, which has increased by the competitor withdrawal from the market. And the U.K. showed improved growth, mainly from the criminal justice system as NHS England funding is reaching those treatment centers. On a full year basis, overall growth was 17% at constant exchange rate versus 2024 with a growth spread across geographies. Those markets with high Buvidal penetration, such as Australia, the Nordics, grew at 15% from their high basis. A positive contribution was achieved from the larger European markets that have lower penetration due to access issues. These markets grew in the region of 21%. And at the end of '25, there are an estimated 7,000 patients currently in treatment with Buvidal, a net gain of 3,000 patients in the quarter. There remains a significant growth opportunity to Buvidal and notably in those larger European markets. As I already mentioned, in countries where funding and access hurdles have been addressed, penetration is high. In Australia, Nordics, Scotland and Wales, Buvidal share ranges from 26% to 70% with an average of 35% of all patients, and we expect continued growth in 2026. In the larger markets where access is currently limited to Buvidal, Buvidal has gained single-digit share of patients in treatment. So it represents a significant opportunity when the funding and infrastructure issues are addressed. In England and France, the main challenge remains the prioritization for funding in this area. In Spain and France, there are restrictions on Buvidal access, either which patients are approved for treatment or limitations on the treatment setting where Buvidal can be prescribed. We achieved a notable success in Q4 where we reached agreement in Spain with the Spanish Ministry of Health to remove restrictions on the patient populations for Buvidal, allowing access to the large methadone segment. And in Germany, physician remuneration remains the hurdle. Additionally, we continue to expand geographically in other markets where our focus is penetration to deliver double-digit growth in 2026. Now to address the challenge -- access challenges in these high potential markets, the teams are focused and delivering on critical policy affairs programs that call for and drive improved patient access. On the next slide, there are some examples of the outcomes already achieved from these programs and the growing support from across stakeholder groups for broader access to long-acting injectable buprenorphine, which we expect to drive growth in 2026. So take these in turn, in the U.K., the Home Office Select Committee, the Justice Committee, the Independent Review on Drugs and a recent report from the Experience in Wales have all called for improved access to long-acting injectable buprenorphine. We are already seeing good access in prisons, though challenges remain in the community setting, and we have ongoing discussions with the Department of Health to address this. In France, reports from both the senate and the assembly have similarly made calls for improved access and some progress has been made in funding for Buvidal at both the national and the regional level. In Germany, again, there's wide stakeholder support from physician societies, patient organizations, and policymakers such as the drug policy group in the Bavarian Parliament for change in the remuneration system to allow access to innovative treatments. The progress on this is slow. However, it is understood that there are ongoing discussions on this topic with the regional and federal associations of physicians and the health insurers. In Spain, as mentioned already, restrictions on patient access have now been removed. With this growing policy support for better access, we continue to work with payers to find ways to deliver on changes that will allow more patients to benefit from the advantages Buvidal brings. Now moving across to the U.S. Brixadi continued its strong performance in the year with Q4 royalties of SEK 122 million, up 10% from previous quarter and 40% -- 47% year-on-year. For the full year, Brixadi royalty grew 113% at constant exchange rate versus '24. According to our estimates, Brixadi has captured at least 30% of the long-acting buprenorphine segment. In the U.S., this segment, the long-acting buprenorphine segment is now above SEK 1 billion in annual sales. Looking ahead to '26, continued market penetration is expected. The key areas of focus remain conversion of patients from daily sublingual buprenorphine. Note there are an estimated 2 million patients that access treatment on sublingual buprenorphine in a year. Also improving access for patients outside of treatment or in the criminal justice setting. And we -- and Braeburn, our partner, continues to communicate the evidence base and the clear value proposition of Brixadi. So overall, we remain optimistic about the prospects of Brixadi in the U.S. and the potential for significant growth in the coming years. And in parallel to this, we are preparing for the launches of Oczyesa in Europe, the first monthly subcutaneous octreotide medication that enables convenient self-administration for patients and enhanced octreotide plasma exposure. The European launch has now been initiated in the Wave 1 countries that have an estimated 4,000 to 5,000 acromegaly patients currently treated with first-generation SRLs. The response to Oczyesa from physicians and patients has so far been encouraging with a positive view on the product profile and the clinical data and market research shows a high willingness to switch to Oczyesa from current SRLs. In our first launch market, Germany, we've seen a strong start with the uptake in the first month of launch an estimated 20 patients, which is about 1% share and high patient engagement with the advantages of the simple self-administration. In addition, initial feedback from other payers has been favorable and pricing is now approved in the U.K. and Norway, where we're now ready to launch. And with the resubmission of the NDA for Oclaiz, we're also gearing up, as Fredrik said, for the U.S. launch mid-2026. The team is launched ready with a clear understanding of the market, a developed go-to-market strategy that includes market access, advocacy, and distribution plans. During the review time of the NDA, we will take the opportunity to build the sales leadership, followed by the sales team's onboarding and look forward to the execution of the launch plan if approval is granted. And on this, I will hand back to Fredrik. Fredrik Tiberg: Thank you so much, Richard. I will continue with a brief summary of the R&D advancements in the fourth quarter. So starting out with the progress in the octreotide depot program for acromegaly, gastroenteropancreatic neuroendocrine tumors and polycystic liver disease. The overall clinical program for CAM2029 is nearing completion across indications. We have successfully wrapped up the ACROINNOVA program, which delivered strong results from 2 pivotal Phase III studies and an open-label extension. In gastroenteropancreatic neuroendocrine tumors, SORENTO study is making solid progress and remains on track for reaching the critical readout of primary efficacy results in the second half of the year. Additionally, the open-label extension of the POSITANO study continues to advance following the achievement of positive results for the primary endpoint during the core phase of the study. Now moving over to development update by indication. In acromegaly, we received significant milestones. Oczyesa, as we mentioned before, was approved both in the European Union and the U.K. in 2025, marking a major regulatory success in the year. Following this, we launched Oczyesa in Germany in the fourth quarter and broadening out our commercial presence in Europe. Turning to the U.S. We resubmitted the new drug application for Oclaiz to the FDA on the 10th of December after receiving green light from our contract manufacturer partner. And the FDA accepted this after the year as a Class 2 review, setting a PDUFA date target of 10th of June 2026 and positioning Oclaiz for potential U.S. approval and market entry shortly thereafter. Moving over to GEP-NET and the ongoing Phase III study. As you know, SORENTO is the largest clinical study to date for GEP-NET using a somatostatin analog, directly comparing CAM2029 with current standard of care. The study is progressing according to plan with a target of 194 progression-free events required to reach the primary endpoint readout in the second half of the present year. Importantly, compared with earlier trials with SSAs in this indication, SORENTO has enrolled patients with more advanced disease, including a majority of Grade 2 and Grade 3 neuroendocrine tumor patients. As we await the results, our teams remain focused on robust study conduct, rigorous data cleaning, and maintaining the highest study quality to enable rapid and reliable top line result announcement. The upcoming results will represent a major milestone for Camurus, marking the culmination of nearly 5 years of patient treatment and study efforts. Commercially, this represents a significant opportunity for the company with global peak sales estimated around USD 2 billion currently. Finishing off with the CAM2029 in polycystic liver disease, where we have in the process of completing the 30-month POSITANO extension phase, as mentioned before, our regulatory and clinical teams have prepared an end of Phase II meeting with the FDA scheduled for March to discuss the design of the pivotal Phase III study. In summary, we achieved significant progress with 2029 across the 3 indications, and we anticipate an eventful period ahead. Moving over to the early pipeline. A clear highlight of the fourth quarter was the positive top line results from our Phase Ib study of the monthly formulation of semaglutide CAM2056 in patients with overweight or obesity. This study featured a randomized comparison to the current weekly semaglutide formulation as well as dose escalations. The results exceeded our expectations and showed that CAM2056 achieved faster and greater reductions in body weight and blood glucose compared to Wegovy with a similar safety and tolerability profile up to the highest dose. This slide summarizes the Phase Ib study design for CAM2056 with the 5 dosing regimens across 80 patients using both randomized and dose escalation parts. The study allowed us to compare directly against weekly semaglutide and to define the optimal initiation and titration strategy for a monthly formulation. On the next slide here, as you can see, CAM2056 delivered substantially greater reductions of body weight and A1c compared to the weekly semaglutide over the treatment period. By day 85, that is after 3 months of treatment, Group 4 achieved a 9.3% weight reduction with CAM2056 versus 5.2% with weekly semaglutide dosed according to label. And A1c declined by 0.44% versus 0.12%, which is in the significant clinical domain. The data clearly demonstrates the potential of FluidCrystal based formulation of semaglutide. And going forward, our next steps will be to build on the promising Phase Ib results, we are actively preparing for a Phase IIb study planned to begin in the second half of the year. In parallel, our R&D teams are preparing the final product presentation, which will feature a new auto-injector pen device to enhance dosing convenience for patients. The positive outcomes from the study not only support continued development of CAM2056, but also provide strong validation for the FluidCrystal technology platform. As such, these results reinforce the potential of using FluidCrystal technology for additional long-acting incretins as well as other peptide-based therapeutics, including in our ongoing collaborations with Lilly and the partnership -- the new partnership with Gubra. So with this, it's time to wrap up with some final comments. And I think we can say that 2025 was a year where Camurus made significant progress with major R&D milestones, solid growth, and high profitability. This year we aim to -- this year with that, I mean, 2026, we aim to expand our market leadership in opioid dependence treatment, launch Oczyesa and Oclaiz for acromegaly in Europe and the U.S., pending, of course, FDA approval, and move SORENTO to positive data readouts. New clinical trials will also begin for promising candidates like CAM2056. For further growth and diversification of our business, we will invest in our partnerships, intensify business development to secure new collaborations and potential strategic acquisitions. Our solid financial, operational, and scientific base gives us a clear path to sustainable value creation, and we are well positioned to make 2026 a transformative year. And with that said, I will thank you all for listening, and let's move over to Q&A. Operator: The first question comes from the line of Romy O'Connor from Lanschot Kempen. Romy O'Connor: Two questions, if I can. The first, in the annual report, it says that the core component phase of the SORENTO trial is now set to be completed in H2 '26. Can you clarify what this core component is? And is the top line data still then estimated for mid to late 2026? And the comments on the new auto-injector pen device. Can you provide any more color on this? Is this just for the CAM2056 asset? Fredrik Tiberg: Thank you, Romy. Well, with the core phase, we mean the randomized part of the study. So to the point where we can start reading out the data. And as to the injector -- auto-injector for CAM2056 that we are working to develop, we have been working with this for quite some time, and it will be a new device adopted specifically for CAM2056. Does that answer your questions? Romy O'Connor: Clear. Thank you so much. Yes, it does. Operator: The next question is from Gonzalo Artiach from Danske Bank. Gonzalo Artiach Castanon: Gonzalo Artiach from Danske Bank. Thank you for taking my questions. I have a couple of them. The first one, I'm trying to understand the FX impact, especially in the U.S. Could you give us some color on this on FX impact that you see there in the U.S., to trough is 17% headwind, if I understand correctly, on USD to Swedish krona, so how did you end up with 35% headwind? And the second question is on your 2027 goals. Have they changed based on how 2025 closed? I see that you guys still target 100,000 patients with Buvidal, but do you have any words on margin development? Are you still targeting around 50% for 2027? And anything on top line goal for that year would be appreciated. Fredrik Tiberg: So I think I'll leave the first question over to Anders when it comes to the dollar rate and its impact on our FX rates. Anders Vadsholt: Yes. So we've had a lot of fluctuation in the currencies during the year, primarily in the Australian dollar and the U.S. dollar, as you state. So it all depends on when we book, it is more a technical thing, when you book the invoices and so on, that's where you see the effect. But we have seen a decrease over the year from January all the way to December. So yes. Fredrik Tiberg: Gonzalo, can you give me just -- is that -- can you repeat the second question? Gonzalo Artiach Castanon: Yes, it's on your 2027 goals or targets that you have disclosed in the past. And what do you have to say in terms of your margin approach? Are you still targeting around 50%, your EBIT margin? And on the top line, any words on that also? Fredrik Tiberg: Yes. So we established the vision for 2027 in 2022, and we are working concisely and with a high dedication to achieve that. Obviously, there is still ways to go, but we are -- we maintain our goals currently, including the margin goals of approximately 50%. I want to highlight that this is and remains a vision for the company. Operator: The next question comes from Pauline Hendrickson, from Van Lanschot Kempen. Pauline Hendrickson: My question has already been answered. Operator: The next question is from Christopher Uhde from SEB. Christopher Uhde: So my first question is just whether -- to what extent your guidance range might reflect any concern about ongoing FX headwinds because, obviously, it was a headwind for your '25 delivery and you cut the guidance partly as a result. And obviously, it's only going to get worse. So you're fighting with one hand tied behind your back. That's my first question. Fredrik Tiberg: Anders, do you want to comment on? Anders Vadsholt: Yes. So -- yes. So we have definitely taken the currency exchange risk into consideration when providing the guidance. So -- and then we've made a thorough analysis on several expectations for the development. And also, I would say, when we look into the U.S., this year, we predominantly have income. Next year, we're also beginning to have some expenses because of the buildup. So it's -- now it's a more natural hedge. But of course, we are very much exposed to the U.S. dollar. Christopher Uhde: Okay. That was the first one. Secondly, I noted that you had mentioned the milestone from Braeburn in 2026. So is it fair to assume that that's in guidance? And can you give us an indication of the size? Is it similar to the last one you got from them? Fredrik Tiberg: So yes, good question. Obviously, we did not realize the milestone in 2025. So that -- but there are good reasons to expect the first milestone. We haven't received any sales milestones yet from the collaboration, but it's good -- there are good reasons to expect it in 2026. The size, you could say, I don't think we have given any exact size. It's the smaller of the 3. So -- and the total amount is $75 million. Christopher Uhde: Okay. Great. Thanks. That's helpful. Then my next question is on -- so SORENTO, is it in the -- likely to be in the early or late second half at this point, do you think? Fredrik Tiberg: I think there is still some uncertainty about that. I mean it depends on the accrual rates month-by-month and quarter-by-quarter. And of course, it's very difficult because it's an event-driven trial, it's very difficult to give exact predictions and it may vary between how patients were enrolled. We have, of course, our models, but they do give quite a big wide interval still. So we will get some more updates here, of course, in the early part of the year. And the more data we get, the better we are able to give an idea about when exactly we can start to read out and -- close and start to read out data. Christopher Uhde: Okay. Those are my sort of housekeeping questions. Then I have a question on revenue per patient because last 9 months, you can see a dip for Buvidal of about 25%, it looks like. How much of that is actual price pressure versus FX? And I have other questions if it's okay. Fredrik Tiberg: I'll leave it over to Richard to explain. Richard Jameson: Yes. So I mean, there's -- the first answer is the price is pretty stable across our markets. We're maintaining that without a problem. So there is obviously a country mix depending on the volume there because there are different prices in different markets and then the rest will be down to FX. Christopher Uhde: Okay. And -- all right. So then, I guess, just if you could -- is there a little bit more you can give us in terms of what's going on in the U.K. and Germany in terms of the status, and France, I should say, you did comment a little bit, but do you have any hints on whether momentum is gathering, let's say, for Germany, for example, with remuneration reform? Richard Jameson: Yes, sure. And good questions. I'll start with Germany then, is the one you mentioned there. So yes, I mean, as I said, there's quite a lot of support for change in this remuneration system. It's something that we cannot be involved with as an organization, but we understand there is ongoing and advancing discussions between the both national and federal physicians associations and the health insurances to change that, so they can open up access. And we've seen the growth -- there was a report came out of the Bavarian -- the drug strategy group of the Bavarian Parliament calling for the same thing. So I think there's growing momentum there. It's a bit unsure how we can say when the outcome will come, but we know there's ongoing discussions. And for the U.K., to answer your question there, it's -- we know Wales and Scotland are going very well. They have high penetration. They have funding available. England is our challenge. But again, there, there's clear demand from across many groups, as I said, from criminal justice, from health care, from health care professionals, and patients to have funding. We've seen the NHS England who are responsible for treatment in prisons making a significant commitment to funding over -- that started mid this year, mid-'25 and is continuing. And hence, we're seeing the growth we're seeing in the U.K. coming mostly from prisons. We know the U.K. government have now announced a 3-year funding settlement for public health, including a ring-fenced proportion for opioid dependence treatment. So we're in dialogue with the Department of Health, NHSE and other stakeholders to identify ways that the funding can be allocated to long-acting buprenorphine to meet the demand that's there. Christopher Uhde: Okay. That's very helpful. Can you -- is it possible to kind of give us gating events that remain for these things to happen in both Germany and U.K. and France, like specific events that -- so we... Richard Jameson: I think that's very difficult. This is policy change. And with the remuneration, we're not involved in that. So it's very hard to be able to judge when the timing on those things are. Operator: The next question is from Viktor Sundberg, Nordea. Viktor Sundberg: Yes, continuing maybe on the U.K. I guess this is perhaps the main uncertainty going into 2026. Can you give a bit more insights into if there's any stocking left at distributors that could impact sales here in 2026? And just remind us maybe if -- yes, when funding is expected to trickle down to clinics to improve the sentiment in the U.K.? Richard Jameson: Yes, sure, sure. So there's no more stock in the channel to answer that one quickly. Then the answer -- I mean, the NHS year runs from April to March. So the latest announcement from the government will come from April. How long that would take for the funding to reach the clinics is a moot point. We know that this year, there was an announcement, and it's been very slow in reaching the clinics, which is one of the reasons that it's been a bit slower than we anticipated after the announcement. So we're obviously doing everything we can to encourage responsible people to make that available to patients as soon as possible because there is a clear unmet need and patients are waiting to go on to treatment with Buvidal. Viktor Sundberg: Okay. So maybe it's more towards the end of 2026 or second half. Is that fair? Richard Jameson: I don't think we can say that now. I think there is potentially it could come. We know there's been a delay in '25 and people are putting pressure on that, so it could come earlier. Viktor Sundberg: Okay. And just on guidance also, could you specify a bit more what you mean with pricing conditions and reimbursement as something that could impact guidance, both on the upside and downside? And what the most important points here is also on -- in the U.S. here to keep in mind when you talk about competitive development that you mentioned in your guidance? Markus Johnsson: Yes. When it comes to pricing, of course, it is our current understanding of the pricing landscape, both for, of course, most importantly, for Buvidal and Brixadi. And we don't see that there is a big differences from year-to-year, at least not from 2025. It's relatively stable landscape there. When it comes to Oczyesa, I mean, we don't have that many uncertainties either because we got the approval, of course, in Germany of the price, and we have proceeded now with Norway and other markets. So I think that's what we mean. We are relative -- we are building it on our current understanding of the pricing situation and the reimbursement willingness in our different markets. Viktor Sundberg: Okay. And I just had a final one also on FluidCrystal maybe in general. You have had a lot of data pointing to that FluidCrystal also enhances existing drugs bioavailability in your trials. And I guess we saw evidence of this again in your trial with semaglutide. But have you done any more analysis on that on your semaglutide data supporting that bioavailability is higher with FluidCrystal enhanced semaglutide versus Wegovy? And do you expect this efficacy advantage to be sustained in your next trial? Do you get both long-acting, but also increased efficacy here for this product? And also maybe related there, what would be the difference here in the Phase IIb trial? Is it just more patients or any other key changes that we could expect? Fredrik Tiberg: That's a really good question. I mean when it comes -- I don't think we have talked about bioavailability specifically. What we referred to was that we had the same Cmax concentration with -- at a much higher dose with -- well, at a 4x higher dose with CAM2056 as the now approved product. So that's -- we have obviously done a lot of analysis on the relationship between our different variables in the study and time and so forth. Going to the Phase IIb study, the main question will be to see how the weight reduction is developing over longer period of time. So it will be a significantly longer study. And we will also look at some details around the dosing mechanism, although we have now identified what we believe is the optimal dosing regimen. So we will definitely produce new data that will be presented in various different settings, on the PK/PD and relationships. But for the specific question about the study, it will be a longer study, and it will be a controlled study in the first case. And then in parallel with that, we will do the Phase III preparation development. Operator: Next question from Oscar Haffen Lamm from Stifel. Oscar Haffen Lamm: A couple of questions on my side. The first one, maybe on the guidance for 2026. Could you give us a bit more granularity on your expected contributions from Buvidal, Brixadi, and Oczyesa in this guidance? Fredrik Tiberg: Yes. I mean we are -- as we said in the report, we are expecting Buvidal to continue to grow in the region of what we saw in 2025. So I think that's clear. We also have a view that we're expecting good performance from the U.S. and Braeburn with Brixadi development. So that's, of course, a very important component of the development or the expected development for 2026. I think we have to say that Oczyesa, of course, is going to be launched in a few markets, but it's going to be early in the launch cycle compared to the developments that we have, of course, for -- in the opioid dependence area. So the contribution there will be low. And I think we should focus on the big components. And then, of course, we have excluded any potential revenues from ongoing development programs. And they are as always digital. So we thought it was better to leave them out. But there is, of course, the potential of some upside in that range. Oscar Haffen Lamm: Okay. Then another question. You maintain your objective of 100,000 patients on Buvidal by the end of '27. This will obviously mean a strong acceleration in the next 2 years, maybe higher than what you've shown in the past. So my question is, I mean, where will this growth come from? Are you already seeing some signs of acceleration in Europe, for example? Fredrik Tiberg: I'll leave that to Richard. Richard Jameson: Yes. I mean, as I said, we saw growth of 20% plus in the big European markets, so Germany, U.K., France, and Spain, and that's the big opportunity here. We're working very closely with a whole group of stakeholders to try and improve access here. Some of those could be quite material if successful, that will give access to many more patients. So that's why we believe the 100,000 is still possible in that time. But it is predicated on some -- solving some of those funding challenges that we're facing, which we're making good progress in doing. Oscar Haffen Lamm: Okay. Thank you. And just one last question. What is currently the proportion of Buvidal sales are coming from the U.K.? I don't know if you've already disclosed this or not. Fredrik Tiberg: I don't think we have disclosed it, and we're typically not giving the relationship between different markets. Operator: Next question is from Georg Tigalonov-Bjerke from ABG Sundal Collier. Georg Tigalonov-Bjerke: This is Georg from ABG. I have a couple of questions as well. So first, I'm wondering if you can give any insight to where the German patients adding roughly 20% year-over-year growth are coming from? And then secondly, regarding Oczyesa, when do you expect to launch in France, Spain, and Italy? Fredrik Tiberg: So when -- the first question you had, was that regarding Buvidal? Georg Tigalonov-Bjerke: Yes, regarding, I mean, what kind of German patients, I mean, are you getting or adding at the moment that were... Fredrik Tiberg: Okay. Yes. I'll leave it to Richard. Georg Tigalonov-Bjerke: The year-over-year growth, 20%. Yes. Fredrik Tiberg: I'll leave it to Richard. Richard Jameson: Yes. So it's a mix. There's patients in the criminal justice setting that are outside the remuneration challenge, which we see growing. There are other physicians who are more open to prescribing a long-acting and in the community setting, and that's coming from there. So it's a mix. I can't say there's one specific segment or other. Prisons is key, but also so is the community setting. Fredrik Tiberg: And when it comes to the other question, I mean, we are starting in the Wave 1 countries. In parallel, we are doing our market access work for the rest of Europe. And we will kind of announce -- as you have seen for Buvidal, we have added countries now for -- we are in our 7th year, and we are still adding new countries in the markets. But I wouldn't say that we are expecting to see France on board, for instance, until at the earliest next year. Operator: Next question from Dan Akschuti from Pareto Securities. Dan Akschuti: Just 2 more questions from my end. And one would be if you could share any comments with regards to your communication with Eli Lilly. Is that frequent on a monthly basis, for instance? And are they happy with the data? And the second question would be just on the inventory there that you got back for the U.K. How long is the shelf life for that? Or can you reallocate that to other geographies if the U.K. would take more time? Fredrik Tiberg: Yes. So on the first question, I have to say that we -- through our contractual relationship with Lilly, we have -- are not able to communicate too much about the progress on important things that are material to the company, we will progress and communicate. So I think the information that is available now is what we can say about the current state of that collaboration. So on the second question, Anders? Anders Vadsholt: Yes. So yes, we can definitely sell the product continuously. So it's -- yes, so there's no question about that. So that's very simple applied to that one. Fredrik Tiberg: We have 36 months shelf life on the product. So typically, that's not a problem for us. Operator: The next question from Mattias Haggblom from Handelsbanken. Mattias Häggblom: I have 2. So I'm coming back to this 100,000 patient target. So with the net additions of 30,000 required to get there, should we think of net patient wins as linear from here? Or should we think of them rather as back-end loaded as more and more reimbursement hurdles are removed? And then secondly, for the vision of revenues of SEK 4.5 billion for 2027 shared back at the CMD in 2022, at the time, the composition was SEK 3 billion from Buvidal and SEK 1.5 billion from pipeline. When I look at it from consensus, it's largely at the SEK 4.5 billion level, but the composition is different, SEK 2.6 billion from Buvidal and SEK 1.9 billion from pipeline. So I'm curious to hear if you have any feedback or thoughts on that composition, at least in light of some of the pipeline contribution being delayed due to CDMO inspections as well as slower accrual events in the SORENTO trial. Fredrik Tiberg: You can start. Anders Vadsholt: So I'll take the first one on the pickup of patients. I mean I don't think there's a clear answer on this one because it depends on when we achieve the funding. So yes, obviously, it's more likely to come later as we get there, but we're in quite advanced discussions with some areas that we could move more quickly. So that would depend on some changes that we need to make in discussions with the stakeholders involved in this. So I don't think there'll be a clear answer on that. Fredrik Tiberg: I mean we do see also that we have a contribution for the expansion into new markets. Some of them have responded relatively slowly, like Portugal, but we do see significant growth opportunities. So there is -- I mean, it's a mix there, and it's not easy to give you -- so far, we have been quite linear as was shown in the figure here earlier. So we need to pick up some more patients to reach the 100,000 in -- by the end of 2027, for sure. And the SEK 4.5 billion, yes, I mean, the mix, obviously, in 5 years, things happen in terms of the different programs advancing. We have maintaining our ambition. You see basically how Buvidal is evolving and the contribution can be closer to where we were expecting it. We have uncertainty to how quickly the Brixadi sales will continue growing. We are hopeful there, of course. So those would be 2 major contributions. The delay in SORENTO in the trial -- or not trial execution, but in the event rate may have an impact. And in that case, we will need to reach the goal, we will need to add additional revenues. On top of this, of course, we also have a number of milestones that can come in, in 2027. But I would say, overall, we are not that far from the distribution that we mentioned in the 2022 CMD. But obviously, we weren't exact and will not be exact. Operator: Next question is from Erik Hultgard from DNB Carnegie. Erik Hultgård: The first is what drove your decision to change distribution model in the U.K.? And what impacted the timing of the decision, i.e., why now? My second question relates to Oczyesa and the 20 patients that you have on therapy in Germany. Is this mainly switch patients? Or are you also getting naive patients? And where do the switches come from? Is it both Sandostatin and Somatuline or mainly Sandostatin switches? Fredrik Tiberg: Okay. I'll leave the first question to Anders. Anders Vadsholt: Yes. So it came out from the volatility in the U.K. market. So that caused us to more or less aligned with the U.K. model with the rest of our distribution strategy. That's why we went to a different model and also because we have the upcoming launch of Oczyesa. But then also when I look to the future accounting principles, how you report, especially IFRS 15 and 18, then this model is much more suited for us. So that was why we did it. And it made sense to do it by the end of the year. So it was very clear. Fredrik Tiberg: And on the Oczyesa patients, I would say that all of them were switches from both treatments. We should, of course, be aware that there was only basically a little, 1.5 months or so recruitment time since the launch and availability of product in the market. And I think we saw a good pickup in that time period. And I think we'll see continued -- I mean, the positive note is that most patients in Germany are on treatment. So I mean, there are many fewer coming in new patients per month or per time period. So this is a very good signal for us. And it seems to be progressing nicely also into the early part of this year. So we are happy with that. But I think you would -- you should assume that most of our patients will come from switches of current treatment. Erik Hultgård: All right. Great. Then just a follow-up on Brixadi. Do you expect a similar pattern in Q1 of this year as last year when the buprenorphine market declined by double digits in Q1 versus Q4? Fredrik Tiberg: I think there is a change now because, obviously, we had the whole situation with the change from the COVID times that was -- that we saw impacting the 2025 first part because there were still patients that didn't have to do or hadn't had to be exposed to getting new allowances for prescriptions. And I don't think that that dynamic is left there. So we expect to see less of a dip in Q1, if any. It's -- I don't have that information, but I think that's the situation. Operator: Gonzalo has a follow-up from Danske Bank. Gonzalo Artiach Castanon: Yes. It's one on PLD. Could we assume that you guys will start a Phase III this year if you have the end of Phase II meeting now in March, if I heard correctly? And if so, is this baked into guidance? Fredrik Tiberg: Yes. So the important thing here is we will, of course, we are seeking the agency's advice on the study design of the PLD study. And should we get perfect alignment with them in the first meeting, then there is definitely a probability. But even so, I wouldn't say that it would impact our R&D costs significantly, and they are baked into the current expectations or financial results expectations. Operator: Christopher SEB also has a follow-up. Christopher Uhde: Two, if I may. So the first, just one clarification on the U.K. funding. Is there any kind of claw back or rollover on the funding that was allocated for '25? Or -- and if there would be a rollover, how would that impact 2026's funding allocation? Richard Jameson: So I think there's unlikely to be a rollover, but there is new funding for '26 announced a couple of months ago now. So of which some of it -- the public health grant that goes to all sorts of -- is distributed amongst public health requirements and some of it has been ring-fenced specifically for treatment of drug and alcohol. Christopher Uhde: Okay. Great. That's helpful. And then the second question is on the runway remaining in the AMEA region. And I guess within that also, particularly Australia, how much more penetrated can long-acting injectables get in those markets? Richard Jameson: Yes. I think there's still a reasonable opportunity. There's still reasonable numbers of patients on sublingual that would -- many of whom will benefit from moving to a long-acting. And there's also the methadone segment. And we're seeing increasing demand from patients to move to a long-acting treatment from methadone. It's a harder transfer, but the experience that people are gaining and how to do that is growing all the time. And we're seeing, firstly, demand growing and also the numbers of patients moving away. In Australia, for example, we're seeing methadone gradually decline, but there's still -- we have 35% -- some in the region of 35% share for long-acting. So that means that 65% of people still available. Some of those will want long-acting. Fredrik Tiberg: Yes. I think we have said earlier that we believe that we could ideally or even potentially exceed that, that long-acting injectables could reach up to 50% share. And so there is significant growth opportunity left, in our view. We'll see how it -- it's continued developing very well in 2025, and we haven't seen any signs yet that that will be stopping. Operator: The next question is from Shan Hama from Jefferies. Shan Hama: I've got 3, if that's okay. Could I actually just press you on what the guide actually bakes in for Brixadi growth in 2026? I know it was asked before, but could you perhaps compare that to how Brixadi performed last year and what that would look like for the momentum in 2026? Fredrik Tiberg: I think what we said is we are believing that Buvidal will continue to grow in a steady fashion. And the remainder of the, what is baked in, should be essentially Brixadi growth according to our projections. Shan Hama: Okay. Understood. And then my next question, please, is with the end of Phase II conversation that you have with FDA in March for the PLD indication, where does that place potential Phase III start and therefore the timing of the costs for that study? Fredrik Tiberg: Well, yes, importantly, it depends, of course, on which response we get from the agency. And I mean, starting up a Phase III study and having the first patient treated, it typically takes at least 9 months and probably a little longer than that. Shan Hama: Understood. Make sense. And then just my final question, please. Could you just clarify the England funding situation? So there's funding that was meant to -- well, from last year that was meant to arise that never hit the clinics. When is that expected? And then you said, is there another round of funding that could come or be communicated by April that was then hit in 2H? Could you just clarify the timing of the funding? Richard Jameson: Yes. So there's 3 sources. Firstly, the NHS England funding for prison, so which is reasonably significant, is already in place in clinic and is driving growth in the U.K. The broader community-based funding, that's the bit that struggled to come through. We don't know really what's going to happen in Q1. But what we do know is from Q2 onwards, from April when the NHS year starts, there is this new committed funding by the government, of which, for public health, of which a large proportion is allocated specifically to drug and alcohol addiction. So we anticipate that coming in. We anticipate last year as well and it didn't reach it. So we have to wait and see. But I think the pool for access to long-acting buprenorphine is very clear from various sectors. And I think that we -- I think we're confident that it's going to come through in '26 at some time. Operator: The last one is from Romy a follow-up from Van Lanschot Kempen. Romy O'Connor: Just one follow-up from me. Can you please provide some more color on your M&A and BD priorities for 2026? And is there any specific criteria or areas that you are looking at? Fredrik Tiberg: Yes. Nothing has really changed from previous year. We are looking, as I said, for -- mainly our target is pre-commercial, commercial assets that are synergistic to our current business in Europe, U.S., or the more global setting. So that's the main target for us. So that would be in endocrinology, rare oncology, and potentially other rare disease indications, and CNS. And then we are working more exploratively, of course, also with early potential developments, including licensing transactions and early licensing just to fill the early pipeline. But I would say, I mean, our core focus is on late-stage opportunities, as mentioned earlier. Operator: No more questions. So I hand the word back to you, Fredrik. Fredrik Tiberg: So thank you, everybody. I think and hope you see that we have a solid foundation for the year to come. And I look forward to updating you all together with the team on our Q1 presentation and meet you in between. So thank you very much for listening in and asking very insightful questions. Thank you.
Jesper Hatletveit: Good morning, and welcome to the Fourth Quarter 2025 presentation for the Norwegian Group. My name is Jesper Hatletveit and I'm the VP of Investor Relations here at Norwegian. Today's presentation will be held by our CEO, Geir Karlsen; and our CFO, Hans-Joergen Wibstad. The presentation will be followed by Q&A from the audience and the web. Please go ahead, Geir. Geir Karlsen: Thank you, Jesper. Good morning. Good morning to all of you following this also online. It is a beautiful morning in Oslo. It's the winter holiday coming up. I heard on the news on the way in here that 80,000 people is leaving Oslo today. And I know that quite a few of them are flying with Norwegian. So, it's a good day. Going to the highlights for the quarter and also a little bit on the full year of 2025. EBIT of NOK 21 million. That is an improvement from last year. We have seen passenger growth in both airlines in the quarter. And we are continuing to do well on what we call operational excellence, where we are seeing an improved regularity and punctuality for both airlines compared to the same quarter last year. On unit costs, as many of you know and remember, we have been guiding a flat CASK for 2025 as a whole, and that's also where we ended up. That means that the Q4 CASK is slightly up, but for the year, we are sticking to what we have been guiding over the last couple of quarters. 2025 as a whole, a very good year with an EBIT of NOK 3 billion in combination between the 2 airlines, EBIT of NOK 3.159 billion in Norwegian and NOK 585 million in Widerøe. That converts into an EBIT margin of 9.9%, which is historically strong for this company. We are continuing to grow our network. In 2026, we will fly close to 500 routes between the 2 airlines. We are continuing to be among the best airlines in Europe when it comes to punctuality and we have very few cancellations, thereby the regularity is absolutely top notch regardless of who you compare us to. I'm going to share a little bit of information on the NPS score where we're also doing fine. And we are, after all, the airline with most direct routes from the Nordics to Europe. We are continuing to do well on the corporate side of the market. I will share some details on that as well. Spenn is starting to show results, and we are looking very much forward to bringing the Reitan Retail group into Spenn during the next weeks and a few months. Also nice to have taken delivery of the first of 80 aircraft that we have on direct order with Boeing. We took delivery of the first one in October. That means that we have 79 remaining deliveries that will take place from now until 2031. This is aircraft that is brand new. They burn quite less fuel than the 737 NGs, 14% to 15%. And we are seeing a huge appetite from the leasing and financing community in order to finance these aircraft at terms that we look upon as very attractive. We are, as mentioned many times, planning to own a significant share of this fleet ourselves because it reduces the ownership cost for the years to come. Dividend is had news I can see this morning. We started to pay dividend, as you know, in 2025. The liquidity position at the end of the year, NOK 10 billion. The liquidity position today is higher. We ended the year with an equity ratio of 18.2%. And we also spent quite a lot of time in 2025 to work on the balance sheet. As you remember, we acquired 13 aircraft that were currently leased to Norwegian. And by that, we booked the profit, and we also are looking forward to having a recurring reduced ownership costs on these aircraft as long as we keep them. We also repaid the corporate debt in 2025, and we distributed our first dividend. For 2025 with a payout in 2026, we would like to pay NOK 0.8 per share in dividend. That converts into a payout ratio of 31%. And this is, of course, subject to an approval by the upcoming AGM taking place in May. I'm sure Hans-Joergen will share a little bit more on that. A little bit statistics, 6.2 million passengers in the quarter, 0.4% up year-on-year. Very happy to see the load factor especially in Norwegian, 86%, 2% up. And also, very happy to see the punctuality and regularity in both airlines, I would say, massively up compared to the same quarter last year. And this shows that the efforts that we are putting in place on this area is starting really to have an effect. So now it's all about making sure that we can continue this strong performance in the quarters to come. Very happy about that. This is a chart that we have been showing you for quite a few quarters. This shows the seasonality that we are exposed to in Norwegian. It also shows that we are adjusting capacity between the seasons. And we did actually in the fourth quarter of 2025, reduce the capacity with 3%. That is because we thought that we were then more aligned with the demand, with the market as we saw it. And I think we did quite well. We saw a load factor, as mentioned, coming up to 86%, and we also saw the yield coming up with 4%. This trend has also continued into January, where we have seen a load up 4% and with a significant higher unit revenue. So, all in all, we are happy with the last months, including January. I'll come back to the period in front of us. Also, for Widerøe, again, very happy with the operational performance, a very strong quarter, more than 1 million passengers, up 2%. I'm very happy to see that Widerøe in the fourth quarter is definitely contributing to the result for the fourth quarter, delivering an EBIT of NOK 124 million. Also worth mentioning that Widerøe had a great, fantastic 2025 with the best results ever. Looking forward to the left, 7 days rolling sales figures on passengers. As you can see on the red line, we are ahead of the curve compared to 2024. That said, you know that we have reduced the capacity in the first quarter compared to the first quarter last year. And then we are going to ramp up into the second quarter, increasing the capacity with 6%. So have that in mind when you're looking at the curves, but we are very happy with the New Year's sales campaign and the bookings are continuing to look promising into the rest of the low season and into the second quarter. Looking at the revenue on the right-hand side, this is travel from February to June. And as you can see there as well, we are ahead on the red curve there, we are ahead compared to the previous years. And if you look at March and April as one because of the Easter effect, we could say that during the next months in total, we are up both on load and on yield. And that looks very promising also heading into the last portion of the low season and into the spring and the summer season. So as per today, we have sold 250,000 tickets more than the same period last year. Yes, I know that we have a 6% capacity increase in Q2, but the load is up more than 6% heading into the second quarter. So, it's looking promising for the months to come and into high season. A little bit on the NPS score. As you can see, the NPS score has moved from 38.5 to 50.1 in 2025. NPS of 50 is a really strong factor. NPS is really a tool we use to measure loyalty, customer loyalty. And this shows that we have a strong, loyal and engaged customer base. We are spending a lot of time communicating with our customers. We know exactly what matters the most for our customers. On top of the list is punctuality, as I have mentioned, we are doing well in both airlines, I would say. Another one that is extremely important is our ability to help our customers when things go wrong. And unfortunately, sometimes things go wrong, and we have done massively improvements on that area as well during the last couple of years. Now it starts to have an effect on the NPS score. And of course, helpful staff, service-minded, friendly. We have a fantastic staff in Norwegian that applies both to our great colleagues flying in the air and as well as our colleagues on ground. Customer initiatives, obviously, punctuality, where we are doing great. And we have, as mentioned many, many times, very high regularity. We had close to 0 cancellations. On the rewards side, we are also performing well. Spenn is starting to show results. And I think you should anticipate that we will come with news on the rewards side during the next weeks and months that I think will be attractive to our dear customers. And as well on customer care, we are doing quite much better today than last year and the year before, and that is also starting to show results, not at least into the NPS. Corporate. Corporate is actually a little bit interesting because it shows, if you look at the Avinor figures, it shows that the corporate market is definitely not back compared to the pre-pandemic levels, 60% below still. And a little bit interesting as well is that 2025 is actually showing a reduction in corporate travels according to Avinor by 2%. However, if we look at the Norwegian figures, we are up in 2025, both on number of passengers and the revenue. That shows that we are continuing to take market share. The chart on the right-hand side shows that we are up 8% on revenue, and that includes both an increase in yield towards these passengers as well as an increase in number of passengers, so it includes both. When we are talking to the big corporates, more and more of these corporates are now saying that they are flying more than 50% of their travels with Norwegian. And they're also mentioning the importance of, as mentioned many times today, punctuality and regularity. We are also doing a bet in Sweden. The Swedish market is moving, I would say, in the right direction. Also happy to share that we signed a 4-year contract with Swedish government through Kammarkollegiet that started up in September 2025. And looking at the performance on that contract as per today, it looks promising. Initiatives ahead that we haven't taken out any effects of yet is the new -- the so-called new distribution platform that we are launching these days. This will also give us the ability to do interlining, proper interlining. And the first airline coming up is obviously Widerøe, but it gives us also the ability to interline with others if we should wish so. So hopefully, we can get live with that as soon as absolutely possible. So, the corporate market is showing progress. We are continuing to take market share, and this is a focus area for this -- for both airlines in the months and quarters ahead because we think it is an attractive part of the market. It's high yielding, and it can also take down the variations between the different seasons. Hans-Joergen Wibstad: Thank you, Geir. Good morning, everyone. Nice to see you here and also the ones on the web. So, I will go through the financial results for the fourth quarter '25 in some more detail as well as addressing some of the full year results. As mentioned, revenues came in at NOK 8.5 billion for the quarter, which is up 4% compared with the same period last year and Widerøe contributing a nice NOK 2 billion to that number. What's driving that is really a robust traffic figures across the group. We're seeing that the unit revenue is up 6% year-over-year, both on the back of higher loads as well as higher yields and then also Widerøe having a good quarter. So, meaning that the quarterly operating result for the group ended at NOK 21 million plus, which is up from a negative figure last year. And with -- of course, as mentioned by Geir, Widerøe contributing very nicely and with Norwegian just marginally negative with NOK 91 million and then with Widerøe with NOK 124 million. Full year result, a great result for Norwegian earnings before tax of NOK 3.016 billion. Very happy to see that figure, EBIT margin of 9.9%. And then going back to Widerøe, a great result from Widerøe, significant improvement from last year. Last year, 2024, that is, was a good year, 2025, even better. And there actually bottom-line result is NOK 528 million before tax, so it's a good combination between the 2 airlines. Unit revenue, full year unit revenue as guided previously at NOK 0.5. Happy to see that figure. I think we've been quite predictable in our guidance. We've taken down the guidance through the year, and we're ending up exactly where we had hoped to be. I think it's good to see also that the cost control in the business during 2025 has been good. We have had very few surprises. And I think that really is encouraging for a strong organization to continue to deliver predictable cost levels. Needless to say, the unit or the CASK is impacted by the transactions on the aircraft where we purchased 13 aircraft during the year. And then we -- as a consequence of that, we reversed some of the maintenance reserves related to these leases. So that obviously impacts the CASK, but a good level and as guided. So happy to see that. I think very important for 2025 was the cleanup of the balance sheet. We're now coming out of the -- of 2025, we really have a balance sheet which is well-positioned for the activities ahead of us. We did repay the corporate debt, the legacy debt. We got rid of the convertible bond. We got cleared with what -- on the government ownership that held a portion of the convertible bond. So there now they sold out. We did the aircraft transactions, which is a very good use of the balance sheet, bringing down the cost as we move forward. We came into the year with owning 4 aircraft, now we own 17 aircraft, which is a really good -- on the way to -- on our ambition to own a much higher portion of the fleet. And finally, of course, that enabled us to pay a dividend last year, which we have worked very hard to do. So, and then with all these transactions, we're still coming out with a very robust balance sheet with a liquidity position of NOK 10.1 billion. That includes some short-term investment and also deposit for the outstanding bond. Equity ratio, a solid 18.2%. And then very happy to announce the NOK 0.8 dividend equal to a payout ratio of 31%. It's actually an increase of 33% from last year, a total of NOK 844 million. So happy to see that. And then we're sort of setting the stage for being a business that gives priority to dividend as we move forward, balancing the dividend amount with the investment requirements, so of course, very happy to have that and being our second dividend for the company. All right. So that's kind of the broader summary. Revenues. Obviously, we see from quarter-to-quarter last year coming from NOK 6.4 billion for Norwegian to NOK 6.6 billion, obviously driven by lower CASK, but we see the benefit of the lower capacity on the yields as well as the load factor coming up. Then just a small other factor, bringing the total revenue to NOK 6.6 billion, adding a very nice contribution from Widerøe and then ending up with a group revenue of NOK 8.5 billion. A little bit of a deep dive into the P&L. On the top line, we can clearly see operating revenues going up by 4%. We're seeing that the cost lines are as expected. We have the personnel cost expenses, which are up as expected due to the salary increases, both particularly among the flying crew. So, no unexpected events there. We see the aviation fuel at a pretty stable level. We have the benefit of the weaker U.S. dollar and also lower fuel price, but we also have additional costs relating to the ETS allowance -- reduced ETS allowance and increased SAF mandate. The increase in the airport and ATC charges as well known. We talked about that for several quarters. Up 16% compared with the same period last year, bringing us down to an EBIT of NOK 21 million that we just mentioned compared with minus NOK 93 million last year and then with a bottom line result of minus NOK 16 million versus minus NOK 233 million last year. So, a good improvement, of course, seasonally impacted by -- particularly on the Norwegian side with Widerøe being kind of the stabilizing factor, having a more stable quarterly variation. So overall, we're happy. It's a good fourth quarter for Norwegian. Looking at the full year, obviously, very happy to see the earnings before tax of NOK 3.016 billion, just about NOK 3 billion, nice improvement on operating revenues, 7%. Personnel expenses, we talked about that several times. Same on the aviation fuel, some headwind, some tailwind on that. And then the airport charges, as we've talked about so many times, coming up -- going up by 21%, so a good result. Obviously, aircraft lease depreciation and amortization, quite a bit down, impacted by these 13 aircraft purchases where we reversed previous maintenance reserves relating to the leases, having kind of obviously a very positive impact on the depreciation line. Then we have the EBIT of NOK 3.7 billion and the profit before tax of NOK 3.016 million, a significant improvement from 2024. Balance sheet. This is between the quarters, not a big difference between each of the quarters. Really, total assets is literally the same. We did take delivery of 2 aircrafts in the quarter, impacting tangible assets slightly. But otherwise, other than that, no big differences. Seasonally down on the cash balance. I'll come back to that in a minute, but in a very strong position. And as Geir mentioned earlier, since the end of the quarter, since the end of the year, it's seasonally up as we always expected. So we are in a good position. Final comment on the balance sheet. We're happy to see that the group on the aircraft -- air traffic settlement liabilities, it's up by 6%. That's kind of proof that our -- the sales is better than last year. And we're happy to see that number, and that matches very well with the load curve and the load figures that Geir just mentioned. And then with an equity ratio of 18.2%, pretty much the same as at the end of the previous quarter. Net interest-bearing debt, slightly up by NOK 1.1 billion, driven by a seasonal reduction in cash and also the aircraft financing related to the delivery of the 2 aircraft. So total control of net interest-bearing debt in a very good position. And we are, as a business, literally debt-free with the exception of the aircraft financing. There is a little bit of small debt in Widerøe. But with that exception, all these transactions that we actually undertook during 2025 has left Norwegian without corporate debt. And that's a really good position to be in as we move into 2026 and the years beyond, where we have a lot of deliveries and great financing deals ahead of us for the financing of the aircraft fleet growth. Again, going back to the dividend, happy to see that we can announce subject to AGM approval, of course, NOK 0.8 equal to a payout ratio of 31%, an increase of 33% compared with 2024 and kind of signaling a strong commitment from the Norwegian to shareholders that we would like to continue to have a dividend-friendly mindset on that. Having a responsible level of dividend as we move forward. Final comments on the cash. I think we talked through that a lot, not very big variations, largely driven by normal seasonal variations with the cash going from -- that is -- this is the cash excluding the short-term interest investments as well as the money placed on deposit for the retained claim bonds with the cash going from NOK 7.8 billion or NOK 7.9 billion to NOK 7.4 billion, reduction in prepayment seasonal. Good operational cash flow, normal level of investments and then also a normal level of financing activities in the quarter. It's also worth noting that we have prepaid to date NOK 3.6 billion of the order book that we have with Boeing, and we have very, very limited remaining prepayments before 2028 of less than NOK 0.5 billion. So overall, we are in a robust financial situation. And I think 2025, also from a balance sheet point of view and how we've been driving the debt levels down and getting rid of the corporate that has been a good outcome, enabling us also to pay dividend. Thank you. Geir Karlsen: Okay. The way forward. To the left, you can see a beautiful picture from when we took delivery of the first of the 80 aircrafts in Seattle in October. We are very cost conscious. We're not planning to do deliveries as glossy as that on all the aircrafts. So, this is -- this was a special occasion. It's the first aircraft. And this aircraft also delivered with a new logo, the new Norwegian logo, which looks fantastic, I have to say. But on the aircraft side, these new 737 MAX 8s are burning less fuel, which is extremely important. It also delivers a better experience for the customers and for the employees in Norwegian with less noise. So, it's just a better product on many areas. We are also very comfortable on the fleet that we need for the upcoming summer. We are having one delivery prior to the summer, which we expect to happen within the next few weeks. And then we are all set on the fleet side for what looks like a good summer coming up. I like the optionality that we have also on the fleet side. As you can see on the chart, we still have quite a few 737 NGs. Most of them are leased. And looking at the growth for the coming years, building the fleet from 95 aircraft in the upcoming summer to 104, we have the flexibility of potentially extending the leased aircraft if we should wish so. And if the market allows, we could grow more aggressively. That's an optionality we like, and we like to play that in the next coming years. We have also done quite a few acquisitions during 2025 of the leased aircraft. And if opportunities comes up on similar basis, we are more than welcoming that and time will show whether that will materialize. But that is the fleet side. I'm also going to share a little bit more on Program X this time. In 2025, Program X delivered NOK 1.3 billion, NOK 900 million of that is what we call nonrecurring. The majority of that includes the profit that we booked on the acquisitions of the 13 aircraft. And the portion of that also is included in the NOK 400 million, which is recurring, and which will take down the ownership costs on these aircraft going forward. In 2026, we do expect to materialize NOK 600 million in effect from Program X. So, in total, in 2026, you will have NOK 1 billion recurring effects coming out of Program X. If you take that NOK 1 billion and look at the pie chart on the right-hand side there, that is how it divides. So, 22% is applicable to the fleet side, acquisitions of the aircraft. 32% is coming from the new distribution platform and the revenue opportunities that gives us. That also includes the interlining capabilities that, that will bring. And we will start interlining with Widerøe as soon as absolutely possible. Group synergies is synergies between the 2 airlines that includes facilities. It includes organizational synergies and not at least the procurement synergies that we are seeing on the basis of the fact that we are a bigger company with more power towards our vendors. Also on the cost control, it includes the huge areas in the airline. It includes the whole fuel value chain. It includes the ground ops operation that is quite significant. It also includes another big area, which is crew efficiency and how we utilize our crew. And it also includes, as mentioned, the whole value chain around fuel, not talking about the fuel price, but everything else related to fuel, including the handling of fuel, et cetera. We have, during the last quarters, been guiding more than NOK 1 billion in effect in what you call profitability improvement. We are increasing that to more than NOK 1.25 billion as per today, and then we will see during the next quarters how that delivers. So I would say that Program X is delivering in accordance to plan and happy to kind of increase the guiding slightly this time. Finally, outlook. On capacity, 3% up for the year as a whole. We are -- we have reduced capacity in the first quarter, but then we are going into a ramp-up period for the remaining 3 quarters in 2026. On unit costs, we are saying low single-digit percentage increase versus prior year. But have in mind, comparing to prior year, we are adjusting for the nonrecurring effect in CASK in 2025. So, the basis for the low single-digit increase is a CASK of NOK 0.52. We have been writing it at the bottom of the page. So have that in mind. All in all, 2025 was a good year. 2026 is also looking to be a quite good year for actually both airlines. Hopefully, we can beat 2025. That ends the presentation. Jesper? Jesper Hatletveit: Thank you. Hans-Joergen as well, if you can come up. We'll then start with some questions. We'll start with the audience. Any questions here? We'll start with Hans Jørgen. Hans Jørgen Elnæs: A few questions for me. Happy to note that you did the best year ever in '25. Congratulations for that. Also very happy to learn that the new distribution platform is now soon in place. That's something we have been waiting for quite some time. And that will open up for able to sell into Widerøe. Can you explain a bit about that? Does that only apply on your own booking engine? Or will it go on the GDS travel agent and so on use? And will this also open up for interlining that other airlines like long-haul airlines, Sai, Singapore Airlines, British Airways or Finnair that you can do agreement with them so you can fly passengers to their points in and out of Europe and how are your plans with that? Also, Wizz Air has recently tested what they call WIZZ Class, which is a kind of copy pass past of SIS, new Europe business class product where you block the middle seats. This was a success and Wizz Air this week informed that they will roll this out on all their routes in Europe. What is the Norwegian plans for this segment as you are so keen on improving your corporate and premium leisure sales? And then the last one is on Starlink. Starlink is Southwest just will fit Starlink on all the 810 aircraft. Norwegian has a Wi-Fi system today, which is aircraft ground based. Do you have any plans to migrate to Starlink because it seems like Starlink is going to be like a standard for the aviation, for the airlines going forward? Geir Karlsen: Let's start with the first one. Yes, the new distribution platform is delayed. No doubt about that. But we are now currently, as we speak, running a so-called AB testing where 50% of our customers is going to the new platform and 50%, and then we will test the conversion. Hopefully, that shows good results, and then we can go live in all the 3, let's say, important markets, meaning Norway, Sweden and Denmark. That will give us the ability to do interlining with Widerøe. That means that we will also be able to sell Widerøe on Norwegian's platform. We think that that will definitely have an effect, so do Widerøe. When it comes to interlining with -- when it comes to kind of the SAS portion of that, what we are seeing is that the transfer passengers between Widerøe and Norwegian or Wider or SAS is developing in the right direction for us, meaning that passengers going to assess aircraft is going down, it's going up for us. And that is, I would say, as expected. We are not planning to go the risk direction by blocking the middle seat. As you saw today, we had in the fourth quarter, 86% load, which is very promising. That said, what you -- I think you could say that what you are seeing in the, let's call it, the ultra-low-cost market or low-cost market, if you include the U.S., is the fact that the low-cost carriers are actually moving towards the legacy players offering a more premium product, not all the way, but partly moving in that direction. And that is actually the position that we have today in Norwegian. So, we are very happy with the position that we are currently having, where we feel that we are -- where we think we are actually having a better product than the ultra-low-cost guys. So that is -- so we are very happy about that. What was the last one? Hans Jørgen Elnæs: It was about Starlink. Geir Karlsen: Starlink. Yes, we are seeing that a few players are making a lot of media attention on Starlink. I mean we are upgrading our Wi-Fi system on board our aircraft. As per today, Starlink is not even certified for a 737 MAX. And then we will see down the road how we -- what we decide to do. But right now, we are staying with what we have, but on an upgraded version. Hans Jørgen Elnæs: And just one comment before we get the next one, you didn't answer my question on Norwegian's plans of interlining with other airlines outside the group. Is there anything in that we can see in the near future to happen? Geir Karlsen: Yes. First of all, we would like to come into a position where we can actually do interlining, and we are now very close of being in that position. I've said earlier that we are in dialogue with a few of the airlines that are currently flying into Scandinavia. And then we'll see. It depends on a few things, not at least a commercial agreement and whether that makes sense for us. It brings complexity into our operation, and we need to get paid for that complexity. So that is the status. Jesper Hatletveit: Move to the next question, Tomas? Tomas Helgo: Tomas Helgo from Danske. On airport and ATC costs, now that some airports have put out their price increases for this year compared to last. How much of an increase can we expect this year compared to 2025? And then I have a follow-up question after that. Geir Karlsen: This is a constant, I would say, dialogue that we have, first of all, here in Norway with Avinor. And they have had over the last couple of years, quite aggressive cost increases, fee increases. For 2026, it looked quite bad during the period. But how we ended up was in a much better place meaning it's a single-digit increases on the fees. It's, I have said many times that I think we need to be careful when we are looking at the cost level at, for example, Avinor and the fee increases they are bringing on to us and other airlines in a way that we have to be careful. So, we're not kind of pricing us out of the market. And the fact is that neither us or SAS, which is our main competitor is actually growing in Norway these days. And Avinor fees is a factor in that picture. And we are free to move aircraft where we want, and we have also been moving aircraft around in 2026 compared to 2025. So this is a constant. I'm calling it the dialogue. It's a tough dialogue. Tomas Helgo: And then on the follow-up question regarding carbon quotes for prices, are actually regarding the need to acquire these quotes for 2026. Have you hedged a portion of that? Or is it, do you pay kind of spot prices when needed? Geir Karlsen: The policy that we have is to stay current. So meaning that when you have been flying a month, you buy the quotes for that month and then by that, you are staying current. Right as we speak, we are more or less covered for 2025 because we have been expecting that the prices for those quotes to come down. And as we discussed with you this morning, what you have seen just during the last couple of weeks is that the price has come down from, let's say, mid-90s down to mid-70s. Why has that happened? Yes, because it is a speculation that that EU will postpone or even keep the free quotas, not for the airline industry but for other industries. And that's why you are seeing a selling off of these quotas over the last weeks. That is an opportunity for us. Should we take the benefit of that opportunity and buy more? Maybe. So I think both on that area also within -- on the currency side, we have seen, as many of you have seen, the dollar weakening. I think we have some -- there is some tailwind both on ETS and on the development of the strengthening of the Norwegian kroner weakening of the U.S. dollar, which at the moment is, has a positive impact for Norwegian. Jesper Hatletveit: I then think we move on to some questions from the web. Start with Ole Martin Vasa from DNB Carnegie. Can you comment on the current competitive landscape? And adding to that, how do you see industry capacity growth in 2026? Is there a risk that the capacity growth represents potentially any negative yield impact? Geir Karlsen: I think the short answer on that, Jesper, is that the competitive landscape is, I would say, relatively stable in the markets where we are flying. Jesper Hatletveit: We move over to -- I think actually, we move over to a question from Andrew Lobbenberg there. Competitive pressure from SAS specifically, okay, growing quite a bit in Copenhagen. Do you see any pressure from that? Geir Karlsen: I mean SAS is our main competitor, and it's a constant fight between the 2 airlines. And yes, they are moving. They are focusing very much on Copenhagen. So what we need to do in Copenhagen is just to make sure that we are treated fair in kind of as a main hub. But the fact that they are moving towards Copenhagen as a hub also gives Norwegian an opportunity. And that's why we are coming up with a slogan, Why Connect When You Can Fly Direct. And that is, it's a slogan but it's an opportunity, a big time. Jesper Hatletveit: Another question from Andrew. The outlook for Widerøe and Widerøe margins into 2026 coming out of a strong 2025. How big of, call it, an impact or how big of a factor is the PSO subsidies to PSO Widerøe to this? Geir Karlsen: Well, I mean the PSO routes is performing well also due to the fact that the ticket prices has been reduced by 50%. That continues into 2026. And then the opportunity that we have between the airlines is to make sure that the commercial part of Widerøe can be even better aligned with the Norwegian network going forward. So we can actually increase the performance from the commercial part of Widerøe. But looking into 2026, as mentioned here on Norwegian and the bookings and how the market is developing, it looks equally as promising for Widerøe in 2026 as 2025 turned out to deliver. Jesper Hatletveit: Final question from Andrew. Outlook for cost of revenues given the current or the recent strengthening of the NOK. Geir Karlsen: Yes. I think, obviously, we -- the fact, as I mentioned, the quite significant weakening of the U.S. dollar has a big impact on our cost base. We're hedged just above 20%, 25% at the moment at good levels. They've come further down. So, I think that is something which has to go into the spreadsheets of the analysts to factor in a, should we believe in a continued weaker dollar, which a lot of analysts believe and also the consensus is, that should impact our CASK and also our cost level positively during 2026. Hans-Joergen Wibstad: And have in mind that 40%, 45% of our cost is in U.S. dollars and that converts into the fact that NOK 0.10 on the NOK is more than NOK 100 million on the bottom line. And it's not only obviously on the CASK, it's also the fuel CASK, including fuel. Jesper Hatletveit: Then we move on to a question from Petter Nyström, ABG. Interest costs, it was a bit up in the fourth quarter. Is this a representative level for the coming quarters? And how is the interest cost impacted by new aircraft entering? Geir Karlsen: I mean that is the answer to the question. We're adding aircraft, and that is really the reason for why interest costs are up. And so the net interest is coming, is developing not negatively, but as expected on the cost side. So it's really only the impact of the additional aircraft that is impacting that. There may be some also currency fluctuations, particularly in Widerøe on the net financial cost. But overall, it's purely impacted at the moment on the increase or changes in the aircraft fleet. Jesper Hatletveit: That's the final question we have from the web. I'll ask again if there are any questions from the audience. There are none. So that means that we conclude the session. Thank you very much. Geir Karlsen: Thank you.
Isaac Lima: Good afternoon, everyone. Welcome to Adyen's H2 2025 Earnings Call. My name is Isaac, and I'll be facilitating a short discussion on our business progress and financial results with our Co-CEO, Ingo; and our CFO, Ethan. After that, my colleague, Maggie, will host the Q&A section. [Operator Instructions] With that, let's get started. Now Ingo, what are some of the highlights of the second half of the year? And how would you reflect on our execution and the momentum in the business right now? Ingo Uytdehaage: Yes. Thanks, Isaac. I look back at a very solid second half of the year. And if I look where we are in the execution of our long-term plans, I'm very pleased. And I would like to highlight a few things. So first of all, the continued growth with our existing merchants. Take Uber as an example that we also highlighted in our shareholder letter. They continue to grow with us and also launch new products like kiosk. At the same time, we also launched with new customers like Starbucks, a company that we would love to work with for a long, long time, and we finally got on our platform. And I'm really pleased to see how they've rolled out very quickly with us in Europe. At the same time, we continue to invest also in new markets. If you think about the fact that we launched in Japan a few years ago, we're now seeing a lot of traction also with the domestic merchants in Japan. That's a very important next phase of our growth there because we always start with international merchants going into a country and then the domestic phase is the next phase of our journey. And we are now there, and that's very, very promising. Very similar to India, also a country where we've been active for a couple of years. And there, we see now a lot of interest from the big international customers that we have on our platform to also launch with us in India. So that's all very exciting, and that gives me also a lot of strong view on how we're going to grow in the next couple of years. So I'm also very looking forward to that next phase of our growth as a company. Isaac Lima: Clear. Thanks, Ingo. Ethan, could you maybe help us connect all of that to our financial performance in this period? Ethan Tandowsky: Yes, absolutely. Let's start with net revenue. So net revenue in the second half on a constant currency basis grew 21%, very consistent growth with what we saw in the first half of the year. On a reported basis, growth was a bit lower given the headwinds that we're seeing with the U.S. dollar. If you look at where that growth comes from, it's again driven by our building blocks. And the biggest part of our growth in any given year comes from the growth with our existing customers. We continue to gain share of wallet with those customers, whether that's broadening markets or products or sales channels, and we grow alongside them as well. We also saw that the cohort of new customers we added to the platform in 2025 was a very strong one. We're seeing strong demand from new customers across each of our pillars. And I think that shows the strength of the growth that we're seeing to date. If you then look at EBITDA, EBITDA grew 23% in the second half and EBITDA margin was 55% for the second half. We're continuing to make investments in our team as we grow the team to go after the opportunity that we see on the revenue side over multiple years. But we're also being smart about where we invest and how we automate, and we're very focused on making sure that we scale our process, whether that's leveraging AI or growing processes and scaling them along the way as we've always done to make sure that the operating leverage inherent to our business model continues to show through. On the CapEx side, we also had around 5% of CapEx as a percentage of net revenue in the second half, very consistent with what we've seen over the course of the year. Isaac Lima: Great. That's clear. Thank you. And in addition to that, could you help us understand what financial performance look like across our pillars? And maybe if you have some stories to share with us of what's going on in the pillars? Ethan Tandowsky: Yes, sure. Let's start with Digital, our largest pillar. So Digital continues to have consistent strong growth coming from a range of verticals, right? It's our largest pillar. So there's a number of verticals we serve within the Digital pillar, but we're continuing to see real strength, especially in delivery and mobility and also content and subscription. We're also seeing that we're able to employ our expand -- land and expand model within our Digital customers. And sometimes, again, like I said, that's to new markets, but sometimes it's also new sales channels. And as we add in-person payments with some of our customers, we also see some of our customers move into the Unified Commerce pillar, something that's just a reflection of the execution of the strategy we're employing. If you think about Unified Commerce then, we're also seeing real strength within our Unified Commerce pillar. And that's across a number of verticals, right? It's retail, it's food and beverage, it's hospitality. If you talk food and beverage, then one of the biggest food and beverage companies in the world, Starbucks that Ingo mentioned, is one we're very proud of and that we talked about in this letter. We started working with a licensee of theirs, Alsea in Mexico. And through that relationship, really built a relationship directly with Starbucks as well and now have rolled out a lot of stores in Europe where we service them directly. If you connect that then to why we win in Platforms, which is our third pillar, you see that a lot of the benefit and value we can provide to customers is again because we have that in-person offering and online, right? And a number of our platforms are providing services both in person and online. And because we can help them unify that, we're able to deliver a significant value to them and help them grow their businesses. They're also able to come to us beyond payments, right? And the offering on the embedded financial product side is a reason that they're future-proofing their business and able to scale into more revenue streams over time. So Platforms continues to be our fastest-growing pillar, and we're seeing very, very strong traction there. Isaac Lima: Clear. Clearly, there's a lot going on across all 3 pillars. Thanks, Ethan. Now back to you, Ingo. Back in November, we had our Investor Day here in Amsterdam. And then you introduced the third layer of our foundation, Dynamic Identification. Could you give us a short update on what's been going on with Dynamic Identification since then? Ingo Uytdehaage: Yes, sure. So Dynamic Identification is our way of applying AI to the large data set that we have. So we have trillions of interactions on our platform that we see, and it helps us to build better products on top of this foundational layer, and that's why it's so important to us. Two products that I'd like to highlight that we've been working on in the past couple of months to make our offering, our value offering to customers even more important. The first one is Personalize and Personalize is part of Uplift, so the product suite that helps to increase conversion for our merchants, and Personalize helps to select a better payment method relevant for the consumer that is at the checkout. It is better because it helps to increase conversion, but it also is lowering the cost of a merchant. And that combination, of course, is the thing that merchants are looking for. The pilot results demonstrate that we can get to 6% higher conversion, at the same time, lowering cost by 3%. And I think that is, of course, very important to our customers. The second thing I'd like to highlight, and that's another area where we help our merchants is to reduce the policy abuse fraud. And policy abuse is sometimes very hard to spot for merchants because it's hard to spot in the data. And this is again where Dynamic Identification helps. We are able to spot that type of behavior by consumers earlier, and that helps merchants to stop that behavior also at an earlier stage, improving their margins on the long term. So yes, I'm very excited that we can use this foundational layer to improve these products and help ultimately to improve the margins of our customers. Isaac Lima: Thanks, Ingo. All of that sounds great. And I suppose it's also directly connected to another really big topic in the industry now, agentic commerce. So using AI agents as a sales channel. Could you give us some concrete examples of where Adyen stands today on agentic commerce? Ingo Uytdehaage: Absolutely. So we're working very closely with our merchants to understand what is important to them. And together with our partners, OpenAI, Google, Mastercard, Visa, we work on the protocols that are relevant for our customers. And if you define what is relevant to our customers based on the interviews that we've had with them, it's about making sure that they still keep this unique connection with the consumer behind the agent and at the same time that they build trust in the ecosystem. And trust in the ecosystem is very important because ultimately, it helps to keep the fraud levels at an acceptable level. And of course, if you think about what's important for our customers is that combination, building a trusted relationship with a consumer and at the same time, keep as a result, the fraud levels low. At the moment, the number of transactions is still immaterial on our platform. We started with it. I think that's very important. So we started with agentic commerce as an additional sales channel. And the beauty of having a single platform globally is that we basically have all the building blocks to cater it and to start growing this sales channel with our customers. Isaac Lima: Great. Thank you very much, Ingo. Now back to you, Ethan. Changing gears a bit now towards our outlook for 2026, especially in the context of us transitioning to the yearly guidance cycle now. Could you walk us through some of the key considerations? So what informed the outlook that we published this morning for the year to go? Ethan Tandowsky: Yes, sure. So you referenced that we now give a view on the next year. So this morning, indeed, we've shared our view on 2026. That comes off of discussions with our customers because, of course, our growth is very much driven by the growth of our customers and their priorities. And you often see that they make their road maps, they set their goals for the next year towards the end of any given year. And therefore, we are in continuous discussions with them, but more relevant discussions with them at the end of the year to understand what their priorities are. We've taken that view. So we've been in discussions with our customers. And ultimately, we look at how we can grow together to understand what our growth trajectory looks like for 2026. If you look at what we see in 2026, again, I referenced earlier the new business wins that we had last year that were strong on the platform and that will ramp up in a strong way. They'll provide support to our growth this year. If you look at the existing customer discussions, they're also very positive. There's lots of opportunity for us to continue to grow with our customers and add share of wallet, not only just add share of wallet, but also help them with new initiatives, new initiatives like agentic commerce that Ingo highlighted. We do have market volume growth as part of our growth in any given year. And there, we have the expectation that, that growth stays at the same level as in 2025. And ultimately, when you bring that all together, we've given the view that we expect our growth to be between 20% and 22% on a constant currency basis in 2026. If you then look at EBITDA margins, we continue to have the expectation that our EBITDA margin level will rise to above 55% by 2028. And in 2026, specifically, we're going to continue to make investments into the team to drive our long-term growth path. At the same time, of course, we'll focus on automation and optimization. And we roughly think that EBITDA margin will be at a similar level in '26 as it was in 2025 as we progress to that 55%-plus level in 2028. Our CapEx investment will also stay at the same level, so at 5% or less of net revenues is our expectation. And if I step back from 2026 specifically, I'm really excited about the growth potential that we have together with our customers. 2026 will be another year in that step of becoming one of the largest financial technology platforms in the world, and there's so much exciting things we'll build together with our customers this year. Isaac Lima: Thank you very much, Ethan. Thank you both for sharing your insights with us so far. We have now reached the Q&A session of today's call. For that, I'll hand it over to Maggie, who will moderate the session. Maggie, over to you. Maggie O'Donnell: Thanks, Isaac. My name is Maggie, and I'm going to be moderating today's Q&A portion of the call. [Operator Instructions] The first question we have today comes from Hannes from Jefferies. Hannes Leitner: I'm Hannes Leitner from Jefferies. I got 2 questions. The first one is maybe you can help us with the confidence on maintaining 20% net revenue growth going forward, if you already include 20% in your 2026 guidance at the bottom end. And maybe you can just like square that because like you talked about 2025 being a strong cohort, the APAC-based retailers channel checks suggest that they are rebounding in the U.S. And then maybe lastly, just like EMEA slowed to 17% growth. So like that's the first question on just getting this growth algo for the medium term. Maggie O'Donnell: Okay. Ethan, do you want to take both of those? Ethan Tandowsky: Yes, sure. Maybe let me start on 2026 specifically, and then I can get to the longer-term growth. If you think about where our growth comes from at this point, it comes from a large number of customers given the diversification we now have, right? We're diversified again across markets. We're diversified across verticals. So ultimately, we look at our growth in any given year from this diversified set of customers. Now what we see is that we are connected to their top priorities. So what they're focused on is typically where we have the opportunity to grow. If you look at 2026, there's a lot of exciting things that we're excited to work on with them, right? If you see how we can build in core markets like, of course, our expansion in North America, for instance, on one hand, that gives us a lot of excitement as do other things, like there's a lot of macroeconomic uncertainty right now. For instance, some of our international customers, they're looking at Latin America more, and that we can certainly help with them. Others are prioritizing agentic commerce and see us as a partner to help them with that. And we're very much then focused on how can we help them in this new age of commerce, right? And so depending on the priority and depending on the given year, you see that there are different priorities for our customers. What's important for us is that we are the partner they look to, to help them with those priorities. And each of them have different short-term or longer-term revenue ramifications, right? So take agentic commerce as one example. It's not going to drive short-term revenues, right? So it's not a big part of our 2026 revenue expectations. But if it's a top priority for your customer, you want to be there and you want to support them with it, and that's where we're well positioned to do it. And it will help us drive growth over a longer period of time, right? And that's just one example. So if you then connect it to beyond '26, I come back to the signals that I have, right, which are, how is new business developing. Well, new business is developing well. I think we've seen that in the new cohort of 2025 being the strongest we've seen. We continue to see strong traction with new customers. On the existing side, we continue to be the partner that our customers look to on their top priorities. I really like the Uber example we gave today in the shareholder letter and that we had a press release earlier this week on because it's an example of a customer we've had for well over a decade that again says, "Hey, these are my priorities. This is how we're looking to expand. Can you help us?" And we're there to support them, right, whether that's new markets or now the kiosks that they're setting up in airports, for instance. So it's really about for us being there to support our customers because that will drive our growth over a longer period of time, over a multiyear growth path. And that's -- those are the types of signals that I look to, to understand our growth trajectory. In terms of your last piece on EMEA, we manage our revenues, again, based on a customer lens, right? So we will see different levels of ramp-ups in different markets at different times. At the end of last year, at the end of 2024, we saw that there were some significant ramp-ups in EMEA, so we saw a stronger growth. Again, looking at EMEA, the signals that I see are also very strong. If I look at new pipeline, we're winning across all 3 of our pillars, right, Digital, Unified Commerce and Platforms. Our customers turn to us to support them in this market. I think Starbucks is a great example of that, which we referenced as well today, opening up in the U.K. and a few other markets in Europe. So we're absolutely well positioned to continue to grow there. But on a regional basis, we'll continue to see different growth rates at different times depending on how our set of customers prioritize that year. Maggie O'Donnell: Okay. Thanks for your question, Hannes. The next question comes from Mo Moawalla from Goldman Sachs. Mohammed Moawalla: Two for me. Firstly, I noticed you talked a lot about customer priorities, Ethan. We know that you sort of gained share within customers. Is that sort of a variable around priority mean that perhaps if your customers are prioritizing certain business that's kind of you're more beneficial to get versus more run-of-the-mill business that perhaps is more price competitive, adds a bit more kind of variability around your visibility? And then secondly, I wanted to just touch upon the long-term guide you gave at the Investor Day, you sort of committed to this 20% growth and then giving a kind of annual guidance to that. Does that still very much stand where we sit today? Ethan Tandowsky: Yes. Let me talk to the priorities first. I think what's important is that we're working together with our customers on what's most important to them. Now what's different across priorities is when they will generate revenues, right? And so we're very much focused again on building a much larger business by helping our customers succeed and growing with them over multiple years. I used a few examples, right, in the last answer, but I'll go back to it. So our large international customers want to go to LatAm, we have a fantastic product in LatAm, we can help them in LatAm. That's a great place to support them. Or they want to focus on agentic commerce. Of course, we also have a solution which can really support them with their needs for agentic commerce as they develop. But the size of those revenues is different in 2026 than it may be in 2028. What's important for us is to be there to support and to grow with them and to support them and build together. And I think the reality is that they look to us to support them on these priorities. And I think that's what's really important. So it's not about what's priced differently. It's about what is driving revenues on which time horizon, and that's what I mean by priorities. In terms of what we shared at Investor Day, absolutely. I think everything that we've shared at Investor Day holds. What we wanted to share was a multiyear framework to help understand where our growth will come from. That's why we laid out the building blocks like we laid them out. We also wanted to share that the best way to understand our growth path in any given year is based on the discussions we have with our customer base. And that is why we want to share basically each February, our view on the next year as we get it. Ultimately, that's why we've shared the guidance that we've shared today. So everything holds that we shared in November. We continue to have high expectations for our ability to grow with our customers. And genuinely, I'm really excited by everything that I see on the path for us to become one of the largest financial technology platforms in the world truly. Maggie O'Donnell: Okay. Thanks for your questions, Mo. The next question comes from Alex Faure from BNP Paribas. Alexandre Faure: A couple of questions from me. I mean just elaborating on what you just explained, Ethan, around those priorities and some of them, you mentioned LatAm, agentic commerce may be yielding more results in 2027, 2028. Should we think then of 2026 as a year of preparatory work for some of your customers to get ready for some of that expansion and maybe a bit of a pause in the budget they were traditionally allocating to payment? And then my second question has nothing to do with that. It's kind of if you could update us on how you think of capital allocation. I know you touched on it at the CMD, but just curious if you have some updated thoughts there. Maggie O'Donnell: Okay. Thanks. Ingo, do you want to take the first one and then Ethan take the second one? Ingo Uytdehaage: Yes, sure, absolutely. So I certainly see 2026 not as a prep year. I think we have a continued dialogue with our customers about what is next. I think what -- the point that we want to make is that we see also going forward, also multiyears out sufficient projects in the pipeline that we can continue the growth that we see. And also what we said during the Investor Day that we expect to grow around 20% for the next upcoming years. That's powered basically by all the projects that we're working. And indeed, new sales channels like agentic are a good opportunity for us. But it's also the other countries like the things that we're doing with Japan, India, it's with other products like the investments that we're making in the financial products at the moment. These are the priorities for our merchants, and this is basically the fuel for our growth going forward. And that's also why we have this multiyear view on sustained growth at these levels. Ethan Tandowsky: And on capital allocation, no, I think we outlined it again in our Investor Day in November. I think we're very much focused on the growth opportunity, right? So having the flexibility to be able to continue to invest in the business, to invest in the business as we scale revenues over the coming years is what's most important to us, but also as we scale products, right? And as we get into broader financial products, it's especially relevant how we're positioned from a financial -- from a balance sheet perspective. And so we'll continue to have this approach that we shared in November. Maggie O'Donnell: Great. Thanks for your question. The next question comes from Nooshin from Deutsche Bank. Nooshin Nejati: Maybe 3 on my side. First, on the Chinese platforms impacted by U.S. tariffs. Could you update us on where those relationships stand today? There have been some market expectation that you might offset part of that pressure through increased share of wallet in other regions. How should we think about that today? Is that something you're actively pursuing? Or has your approach evolved? And then on the outlook, and I'm sorry if that's, again, sort of repetition, but have you observed any incremental budget constraint on the client side, particularly relating to international expansion or new market entries that could moderate your outlook? If so, could you share a few examples of where you're seeing caution emerge and whether this is more cyclical in nature or something structural in client planning maybe? And then finally, could you help us quantify the sensitivity of your volumes and net revenue growth to any single large client? How should we think about the contribution or potential volatility from your largest customer when modeling growth for the remainder of the year? Maggie O'Donnell: Thanks, Nooshin. Ethan, do you want to take the first question and the third one and then Ingo maybe take the second one? Ethan Tandowsky: Sure. So on the APAC-based retailers, I think they've remained very strong relationships. They see us as a core partner. They're very international businesses, right? Maybe just to clarify on the point around LatAm, right? LatAm is actually our fastest-growing region in this half on a constant currency basis. So it's not necessarily future revenues. We're seeing that there's traction there today, right? And we've talked about a focus of some of these retailers more on LatAm, for instance, as one example. I think the important piece with them and with any of our large customers is maintaining strong relationship where they feel like as their focus shifts, if it shifts, if it stays the same, that they look to Adyen to support them with those priorities. And I think that's where we, again, feel very well positioned. So I'd say we're in a strong spot with those customers. Ingo Uytdehaage: Yes. And the second question around budget constraints. I don't see any budget constraints when we talk to our customers. I think in times of more uncertainty, merchants are looking for innovation ways to reduce cost. And these are typically topics that we're really good at to work with them to, for instance, lower total payments cost. The example that I gave around Personalized, that's typically a project that you like to run because it increases conversion, lowers costs. So far, I haven't seen any budget constraints in talking to our customers. It's more always about what is the right timing business-wise because you can't do all projects at the same time. That's also why it's so important to work closely with our customers to see what their priorities are and make sure that we work on those priorities with them. But indeed, no constraints from a budget perspective so far. Ethan Tandowsky: And I think you talked about volume and revenue contribution of any single customers. Of course, given our pricing model where we have tiered pricing, we'll see more impact from individual customers on volumes in any given year than we'll see on revenue growth. I think that's been quite clear also, for instance, over the last year, where we highlighted a couple of large volume customers and the impact they had on our volume growth, but we saw much less impact on our revenues. And I think that's a great development that we've seen over the past years is that we have become quite diversified from a revenue basis across many, many customers, across many markets, across many verticals. And I think that's what shows up in the consistency of our revenue growth over the last few years. Maggie O'Donnell: Okay. Thanks for your questions. The next question comes from Fred at Bank of America. Frederic Boulan: Fred Boulan from Bank of America. Two questions. Firstly, if I can follow up on the balance sheet point. The stock is down about 34% since the CMD. Would you consider buybacks as a signal to the market that you're focused on shareholder value whilst maintaining adequate capital to support your ambitions, especially on embedded finance? And then secondly, if you can spend a bit more time on the margin guidance for 2026. Any specific areas of investment that are driving this kind of slightly accelerated pace of hiring for '26? Maggie O'Donnell: Thanks, Fred. Ethan Tandowsky: Sure. Let me start on capital allocation. I think what we've tried to share is our perspective, but we should always be open to what options are available. And of course, you need to assess what your current situation is, what your current facts and circumstances are, what's right for the business at each moment. So we're certainly not dogmatic here. We constantly assess what's the right decision for the business, but we're very much focused on driving the growth of the organization that we expect of growing with our customers. And so we'll focus there, but continue to evaluate what the right approach is. In terms of EBITDA margins, the areas of investment. So we will grow the team slightly more than we grew this year, at least that's our expectation for 2026. If you think about where we invest, a lot of the same things you've heard from us, right? We're investing more in the U.S. We're investing a lot in our tech teams, in our tech hubs. So that's partially in the U.S., but that's also in other markets, think about Madrid or Bengaluru in India, where we have tech hubs as well amongst other locations throughout the world. So that's where we'll continue to make investments. We are investing in specialized skills, right? We're building out financial products. We're seeing nice inflection moment in issuing. We're seeing stronger traction in capital and in bank accounts. So we need to continue to invest there to make sure that we can continue to grow those products like we feel the opportunity exists for. And so that's where we'll make investments. I think if you come back to the overarching story on EBITDA margins, right, we're on this path already over the last couple of years, but also if we look ahead to the next few, where we think EBITDA margins will expand because we'll continue to make investments in the team. But we'll do that at a pace which allows the operating leverage inherent to our business model to still show through. And so our expectation is that we'll grow up to the 55% and above level by 2028. And each year is just a timing exercise about when and how we make those investments, given that those new investments aren't typically linked to short-term revenues. Maggie O'Donnell: Thanks for your questions. The next question comes from Adam Wood at Morgan Stanley. Adam Wood: It's Adam Wood from Morgan Stanley. Maybe just to dig in a little bit deeper on that EBITDA margin question for this year. It looks like you're planning to add maybe around 10% to headcount. Obviously, expecting the business to grow north of 20%. Could you just help us understand, is that the cost of people you're bringing in is more U.S. weighted than it's salaries? Is there a lot more marketing going on? If you could just square that circle of headcount growth versus top line growth, there seems to be a gap there. And maybe secondly, some of the stats you gave around Dynamic ID and some of the new products you've added to that seem really impressive. I guess a lot of your very big e-commerce merchants route pretty dynamically. You would have thought that as soon as they see those types of results coming through, the impact on volume shifting to you would be pretty rapid. Could you maybe just talk about what the barriers are to get that to happen and maybe how long it takes you to put this product in front of a customer and then actually seeing the volume start to shift more dynamically onto the platform? What's the time frame we should be thinking about for that? Maggie O'Donnell: Okay. Ethan, do you want to take the EBITDA one, Ingo take the Dynamic Identification one? Ethan Tandowsky: Yes, sure. So on EBITDA margin, it's driven by the team. So there's nothing else in the expense base that leads to this expectation. It's driven by the team. I think we will grow the team a bit more than the 10% you referenced, but just a few percentage points faster given the numbers that we've shared. But we're also indeed hiring more in the U.S. We're hiring specialized roles, right? If you think about what we're building out, again, in financial products. So this is really investment in the team more than investments in other areas. Ingo Uytdehaage: Yes. And on Dynamic Identification, of course, we work very closely with our customers to see how we can help them ultimately to improve conversion because I think that's -- Dynamic Identification is in itself not a product. So one of the product suites that is built upon Dynamic Identification is Uplift. And depending on the needs of specific merchants, we discuss with them which module they like to have. So for instance, not all of our big enterprise merchants use our risk module yet. That's, of course, a conversation that we have then with them to demonstrate what we can do, how it will help them to use our risk module. But also, of course, we have a discussion around the monetization of it. So that's why it typically takes time before people just switch volumes. But we see very promising results. And also with winning the new merchants, about 2/3 of our new merchants, they turn parts of Uplift on from the start. So that's a very important KPI, and that gives us also the support that for existing merchants, it is a matter of time to explain them where they benefit and basically that we continue to expand the gap with competition on the ultimate goal of merchants, which is highest conversion at the lowest cost. Maggie O'Donnell: Thanks for your questions. The next question comes from Justin at UBS. Justin Forsythe: Justin Forsythe from UBS here. A couple of questions from me. Just very simply on the '26 revenue guide. Three months ago about we had a preliminary guide of low to mid-20s. Why didn't you guide for low 20s when initiating that guide in October for conservatism? Secondarily, North America growth ex de minimis for 2H seemed to be above 30% ex FX as well. Could you talk about what is driving the strength there and how we expect that to filter through in 2026? Ethan Tandowsky: I'll take the first. Maggie O'Donnell: Okay. Yes. Ethan Tandowsky: Yes. Let me take the first question on the net revenue guide. What we intended to share at our Investor Day was our new approach to sharing guidance, right, which is that we go through these conversations with our customer base at the end of each year to understand what is it that's on their road map? What's in their priorities for the next year. And as we go through that process, we wanted to share the latest information that we get from them. That's why we thought if we share it in February, that will give the best insight to our -- to stakeholders, to shareholders about what to expect in that given year, given that those road maps are typically built out for, say, 12 months. So ultimately, that was -- we were in a transitionary period of going from a 3-year guide to this 1-year view. And we wanted to give the best view that we had along the way. So ultimately, now we've had those conversations, we want to give a more narrow view or better expectation of what we should expect for this year. It is ultimately what we expect for 2026, and that's why we've shared it this way. Maggie O'Donnell: Do you want to take the North America question? Ingo Uytdehaage: Yes, sure, absolutely. The strength in North America is the result of investing in North America for over a decade in combination with the fact that the North American market is only getting more complicated. So you see more differentiation in payment methods compared to 5 or 6 years ago, the importance of Unified Commerce. So combining off-line or in-store volumes with online volumes is very important. And it's very clear also to domestic retailers that we have a unique position in the market to help them out. So that's why the North America market is performing very strong, and we continue to invest in that market. It's our biggest investment market right now, and we also expect that to continue in this year. Maggie O'Donnell: Okay. Thanks for your questions. The next question comes from Adam at Evercore. Adam Frisch: Two questions. I'd like to focus specifically on the share of wallet verbiage in the release since that is obviously the center of the growth algorithm. Ethan, you talked about it a bit, but it needs to be -- I just want to refine it a little bit. Is it slower because you aren't winning as much versus the competition or their value prop is catching up to yours or they're lowballing pricing? Or is it none of that and something else? Because I think the differentiation is really important to say, is it a negative or just business as usual and things are going to ebb and flow as they go. And then the second question is on M&A. And the narrative today feels -- feeds a bit into the bear thesis of modestly slower organic growth, which to us raises a question about M&A, which you said you're open to, but you haven't pulled the trigger yet. So I think this is now a little bit more important of a go-forward story. So appreciate if you can give an update on your current thinking there around M&A. Ethan Tandowsky: Yes. So let me start with the first. I think we haven't seen any shifts in the competitive dynamics, which have changed our ability to win share of wallet, right? The reason that we've always historically talked about the long term and why we still believe in building for the long term is because you need to follow your -- the priorities of your customers. And the priorities of your customers, they may change from year-to-year, right? You may have an opportunity to win share with them in one market 1 year and another market the next year. You should focus on what's important to them and how you can best help them over multiple years because that will ultimately get you to the largest size relationship and the most value you can provide to them. And so that's always been our plan. Now if you look at share of wallet opportunities that we're focused on this year, they'll have a range of revenue-driving time lines, right? Some of them will be more short-term revenue driving and some of them may be longer term. That's why I tried to share a couple of examples, right? We're seeing stronger traction right now in LatAm as an example. We're also focusing on agentic commerce, something that won't drive strong revenue growth this year, but over time, may, right? And as long as we're there focused on the priorities of our customers, then we know we'll be able to gain further and further share with them over time. That's the focus. So there is no change here at all. I think we're in a really good position. When we talk to our customers, they come to us to help them with their top priorities. And I think that's the key thing that we're focused on. Now each year, that may look slightly different. That's just part of building a business and building it together with them based on their priorities. As far as the second question on M&A, yes, I think nothing has shifted from November, right? The same discussion that we had back then. I think we've gotten a lot of benefit from building out a single global payments solution. We've branched out into more and more products. And so, of course, you consistently look at what's available in the market and what you can build yourself. That doesn't change. We continue to focus on building the best solution for our customers. And if an inorganic approach is what makes sense for us, we will consider it. There's nothing that we have to share. I think this is not different than our view has been over the past years, but we'll continue to evaluate what makes most sense for us. Maggie O'Donnell: Okay. Thanks for your questions. The next question comes from Jason at Wells Fargo. Jason Kupferberg: Jason Kupferberg from Wells Fargo. So I think you're making an important point. This is the first year where you're utilizing the new formal annual guidance approach. So can you just talk more about how you built the revenue forecast? I'm sure there's a pretty robust bottoms up here. You've referenced the client conversations. But does the revenue guide include any material amount of cushion or conservatism with respect to any of the building blocks from the Investor Day or the macro? It just seems like there's no reason growth shouldn't accelerate modestly a little bit off the 21% in 2025 in a base case because you had the strength of the cohorts in '25, you're lapping some of the headwinds around tariffs, de minimis. So I'm just curious if there's any holes in that thought process and any more insight into the actual development of the revenue guide under this annual model. Ethan Tandowsky: Yes, sure. So if you use the building blocks as the framework, which is, I think, a good one, on the existing business side, we basically model out our relationship with every customer. We understand where the opportunities are through discussions with them, of course, and we try to get a sense of how they expect their own business to grow. Now some of them have a clear sense, also a sense they're willing to share, and others are less open to sharing their perspective, and we take an assumption on how they will grow their business. So on the existing side, we look really account by account. We look at that in detail, and we see where can we best help our customers, what are their priorities and how does that ultimately lead to our own growth in this year. That's a continuous conversation, but that gets more concrete to the end of the year, like I mentioned earlier, because that's often when the planning cycles happen for our customer base. In terms of how we think about it, we're trying to share our expectation, right? So that 20% to 22% constant currency guide that we shared for 2026, that's our expectation for this year. It's, again, off of the back of these conversations. It's the latest information we have, and we want to share that proactively as we get it, which is why we've moved to this model and plan to share basically our view at the beginning of each year. It's absolutely our expectation for '26. Maggie O'Donnell: Thanks for your questions. The next question comes from Darrin at Wolf. Darrin Peller: All right. So I mean, it does sound like the change in the -- to lowering the range is really just fine-tuning what you're seeing your customers prioritizing right now versus what maybe you thought a few months ago. So maybe just shifting the topic a little bit more to 2 things. One is cadence. And then the second is just overall what you're seeing in the consumer and macro. I mean, first on cadence. I mean, I would imagine just given that we're lapping APAC retailer headwinds early in the year, then it would imply second half should show a better growth profile than first. Just want to verify that first, Ethan. But then also, when we think about overall market growth, it sounded like you're saying that should be the same. Give us a little more color of what you're seeing in terms of notable outperformers or underperformers and areas in the market in terms of consumer and what you're seeing in spending in different markets you're seeing, please? Ethan Tandowsky: Sure. Let me start with the cadence. Between halves, we actually expect pretty similar growth rates. I think the only thing that I'd -- I'd call out maybe 2 things. One is that we've seen headwinds from USD. We expect that, that will continue, especially through Q1. That will still be there in the second quarter, but at current rates, at least, that will start to ease into Q2 and then Q3 and Q4 as well. The other thing I'd highlight is that between H1, I would expect that Q1 is a bit lower growth than Q2 given your call out on the APAC retailers. Having said that, if you take it over the year or over the halves, it will be less visible. But I think it is maybe helpful to understand the difference between the first and the second quarter. In terms of the consumer and macro, in general, right, what you get a sense for is some level of uncertainty, right? And people are thinking differently about how -- yes, where their priorities should focus in a time of geopolitical uncertainty. That's where it's best for us to listen, us to be in open ear and connected to our customer. I think the benefit of what we've built is we've built a very global platform. So depending on where priorities shift again, we can support them in that, and it's important that we just deeply understand what's important to them so that we can best solve for them. The reality is that we haven't seen major shifts in our data that we've processed to date. There's nothing specific that I'd call out, right, again, because the macro is also blended with the share of wallet gains that we have, and that's a big component of our growth. So there's nothing specific that I would highlight here. Maggie O'Donnell: Okay. Thanks for your questions. The next question comes from Harshita at Bernstein. Harshita Rawat: So 2 questions. One, Ethan, I want to follow up on the guidance philosophy. And I know you talked about the formulaic approach to guidance, for better or of worse, the market rewards beats and positive revisions, which I know is not the game you play, and I also know you don't solve for the short term. But my question is, given the volatility in the stock, is there an update to kind of how you're thinking about guiding going forward on a level of conservatism embedded? Are your internal targets the same as your external guidance? And then, Ingo, a question on agentic. There is this concern amongst investors that you may be behind some of your peers here, which I know is not the case. And I know it's super early days. There's a lot of experimentation and your enterprise customers move at a different pace versus start-ups. You talked about this in your shareholder letter and your remarks, but maybe expand upon why Dynamic Identification is a big asset in agentic, what problems it's solving with regards to trust and identity and intent? And also, how important is it for you to shape the standards being developed, for example, UCP by Google or others? Ethan Tandowsky: I'll start on the guidance question. So I think in general, yes, our stance is changing because that's why we want to share our annual view. We want to give the latest information we have through our customer conversations and to be honest, those are typically on a 12-month view, right, because that's how they build out their priorities. That's how they build out their road maps. So we wanted to align basically the types of conversations that our customers have with us about their priorities against what we share with the market. And that's why we've made this transition now to getting to this one -- this annual view we'll give each February. We plan to do this again next year. The idea is share the latest information that we have from our customer base. That's also why we share what our expectations are specifically for 2026. So in some sense, it's shifted, but this is just getting us to this new model we plan to go forward with. Ingo Uytdehaage: Yes. On the second question, we are at the forefront of agentic commerce, and we will certainly show more in the next couple of months because we're working closely with our merchants to implement it. And indeed, Dynamic Identification is key here. And the reason why it's key is because it's ultimately a trust game. So in this new world, we need to know who is the consumer behind the agent and how do we know that we can trust the agent that is indeed acting on behalf of the consumer. And that's where Dynamic Identification really helps. So it helps to look at the signals that we get and compare that to the signals that we have in our system and then come up with the right outcome or decision whether this can be trusted or not. In that sense, it's also very important to shape the protocols with OpenAI, with Google to make sure that, that information is not get lost, and making sure that also our merchants do not lose the connection with the consumer behind the agent because that's one of the key elements that our merchants find important, and we want to make sure that, that connection is not lost. So more to come in the next couple of months. We are very pleased to see what's happening in this space. Maggie O'Donnell: Thanks for your questions. The next question comes from Bryan at TD Cowen. Bryan Bergin: So 2 for me, one on Digital and one on market volume growth. First on Digital, just understanding the increased shift to Unified Commerce and the real strong growth there has driven the Digital pillar a bit lower. Just trying to get a sense of what the underlying Digital pillar growth rate really is. So can you give us a sense of perhaps what the level of headwind it presents to digital when recategorizing do you see? And then as you operate this low double-digit level in Digital, is that a sustainable rate? And as it relates to the second question, market volume growth, what's the level of market volume growth that you saw in 2025? I'm curious if it's fair to assume it was at the lower end of the high single to low double-digit range that you previously framed in the framework or perhaps a bit below that? Ethan Tandowsky: Sure. So let's start with Digital. So indeed, I think 2025 saw a number of factors that you would kind of need to normalize growth against, right? One is currency. We saw that across each pillar, but no different in the Digital pillar that we saw headwinds from -- on the currency side. We also talked about a large Digital customer. So one customer that had more impact, of course, on volumes, but had some impacts on revenues, especially if you cut it down to the pillar level. And then lastly, we saw that we had more customers moving into Unified Commerce in the second half than we had previously seen in other halves. To me, that's a positive, right? That's the execution of a broader expansion strategy, being able to support our customers in more sales channels means that they put more trust, we're able to win more of their share of wallet. So in general, actually, the Digital pillar has been growing pretty consistently over the last few periods, and it feels like a very sustainable level for us going forward. In terms of market volume growth in 2025, the biggest impact that we had on the market volume growth side, and we talked about that in H1, that was the thing that was different than our expectations back then is that we saw this impact from this handful of APAC online retailers. So that brought us indeed towards the low end of our expectations around market volume growth. Maggie O'Donnell: Thanks for your questions. The next question comes from Pavan at Citibank. Pavan Daswani: Pavan Daswani from Citi. I've also got a couple. Firstly, following up on the 2026 growth guidance. Could you expand on the customer priorities that you're seeing shift maybe by segment or region? And should we think about this as the new normal as budgets and priorities shift to areas like AI? Or do you expect to see some catch-up effect in 2027 and 2028? And then secondly, you've talked about the large cohort of new wins in 2025. Could you touch on what the sales pipeline looks like for 2026, please? Maggie O'Donnell: Great. Ethan, do you want to take both? Ethan Tandowsky: Yes. I want to make this point clearly because it's not that customers' priorities shifted in some way in the last couple of months. It's that priorities look different each year, right? And that's just based on the mix of merchants that we have and what they're focused on in any given year and of course, how the world is developing, how technology is developing, how we can best support them. So each year in terms of where your opportunity is to grow share of wallet just looks a bit different than the last or then the next one will. And that's why we want to share each year our view on the growth for that year because it's ultimately a reflection of what are customers prioritizing in that year and how will we help them with that. We haven't seen that there's been a big shift in priorities. That's not been the case at all nor a willingness to partner with us on those priorities. They're absolutely looking to us to help them with their most important priorities. And I think that's what's key for us. It's key for us to be able to support them with whatever is most important to them in any given year. You did call out AI. Of course, we've talked a lot about agentic commerce, both in the letter and on this call. That is something, for instance, that you see is a priority often for many of our customers. It may not be the first priority, but it's somewhere in the top few priorities that they're looking at how can they best set themselves up in this world, even knowing that revenues may not come from it in 2026 nor maybe even in 2027. That's much more a long-term play. In terms of sales pipeline for 2026, I mean, we continue to see really good traction on the new business side. We talked a lot about the 2025 cohort. Of course, the 2026 cohort is very early days, but everything that we see in the pipeline across pillars looks like a continuation of what we've been able to build through 2025. So we're well positioned to win across each of them. Maggie O'Donnell: Thanks for your questions. We have time for one more question, and it's going to come from Josh at Autonomous. Josh Levin: Josh from Autonomous Research. I just really want to clarify what you mean by shifting priorities. It would be really helpful if you could give a specific example of -- 1 or 2 examples where a merchant has said we are going to now prioritize X versus Y, and therefore, you decide to -- you need to sort of lower your growth forecast a little bit. If you could really define X and Y, that would be really helpful. And then secondly, putting aside just this quarter, I mean, there's been a lot of weakness in the stock price. What is the single biggest disconnect you see between how Adyen is performing internally and how investors might be interpreting the story externally? And what could help close that gap? Ethan Tandowsky: Thanks for giving me the chance to clarify because, again, I find this important. It's not that we've lowered our view of our growth for 2026. It's that we understand where the priorities of our customers will be in a deeper way and can share that, right? And it's not about shifting priorities. It's about understanding where the focus of our customers will be in the following year, right, in any given year. I can give a couple of examples where things change from year-to-year, right? One of the reasons that we're seeing strong growth in Latin America, for instance, is not only that we've been investing a lot in the product over the past years, and we've built up a great team there, and we have a strong offering, but also because as there was some geopolitical tensions, some of our international, especially retailers, shifted some of their focus more towards that market. right? That's one example of where you might see a bit of a shifting priority. But it's not that priorities have shifted in a big way, and that's what's led to a lowering of our view. It's just we have a good reflection, a refined reflection of our expectations for 2026, and that's what we share. Now those opportunities have a balance of when they drive revenues. Some of them drive revenues more short term, some of them drive revenues more long term. But you need to be there with your customers again, working on what their priorities are. Ingo Uytdehaage: On your second question, like we're building the company for the long term. And I think that's very important because if you ask me, do I have confidence in how we're building for the long term and do we have a long-term growth trajectory, my answer is a full yes. And I think what I find sometimes difficult to understand is why on the short term, the reaction is so intense, because the long-term perspective for us does not change. And I think that's what we try to be helpful to be transparent, and I understand that a lot of short terms ultimately end up to the long term. But we think that too much focus on the short term is not helping us in that long-term execution. And I think that is potentially something that we can explain better. But in all the decisions that we make as a Management Board, we only take the 3 to 5 years perspective and not this year's perspective. And I think that's something that I always like to highlight talking to investors. Maggie O'Donnell: It's a great place to end. Thanks, everyone, for joining us today, and we'll see you next time.
Daniel Sundahl: Good morning from Asker, ladies and gentlemen, and welcome to TOMRA's Fourth Quarter Results Presentation for 2025. My name is Daniel Sundahl, and I'm Head of Investor Relations. As is usual, Tove Andersen, our CEO, will start today's presentation by giving you the highlights. And afterwards, CFO, Eva Sagemo, will dive deeper into the numbers and give you the updated outlook. And after the presentation, we will open up for Q&A for participants in the team's webinar. [Operator Instructions] We aim to conclude the presentation around 8:40 today. But without further ado, I give the word to Tove Andersen. Tove Andersen: Thank you, Daniel, and also welcome from me to our quarter Q4 2025 presentation. And we present today a strong final quarter in a year that has been characterized by volatility and market uncertainties. In Collection, we report a record quarter, record revenue and record EBITDA, and we have seen that the rollout in Poland and Portugal is stepping up. Recycling, we are presenting a good quarter in a year that has been a weak year due to the challenging market sentiment. And in Food, we are seeing the results of the improvement initiatives and an improving market sentiment, and we delivered a strong quarter, which also then makes 2025 a record year regarding profitability in the Food segment. Let me then give you an update on the different divisions and our Horizon portfolio. I'll start with Collection. In Collection, we have had very good sales in existing markets in the quarter. As many of you know, we have a strategic ambition that we should grow our existing markets with 5% annually. And in 2025, existing market represented 87% of our sales. In this quarter, we saw particularly good growth in Continental Europe, partly then driven by our new innovations. And one of those are our multi-feed machines, the ones where you don't need to put one and one bottle into the RVMs, but you can just drop a whole bag of bottles into the machines. And we did increase our installations of multi-feed machines with 50% in 2025, and we have roughly now 1,100 multi-feed machines installed. Also in the quarter, we saw then installations in Poland and Portugal slowly picking up. We delivered 1,000 or installed 1,000 reverse vending machines in Poland in Q4. And if you look at the picture top right here, that is a picture from Poland. This is our S2 machine that we developed then specifically for Poland. It's an outdoor machine. And as you can see from the picture, it can endure cold weather, snow, rain and also warm weather. And a significant portion of what we are installing in Poland is this machine. But also as this picture illustrates, it's been quite a challenging period to install outdoor machines in Poland, and I'm very impressed by our service technicians and installation people that they have been able to install so many machines despite snowstorm and really bad weather. End of last year, we had roughly 2,600 machines then installed in Poland, and we are currently installing 100 machines per week. So we have roughly now 3,000 reverse vending machines in Poland. Also in Portugal, we are then stepping up installation. We installed around 300 machines in Q4, making the end of the year an installation base of 500 machines in Portugal. And today, we have roughly 700 machines in Portugal. But there is still much left to install. In Poland, as we communicated before, the first phase with the large retailers represent 10,000 to 12,000 reverse vending machines, and then we expect a significant tail, which could be 5,000 machines or even more. So we do expect that we will see a similar tail as we have seen in, for example, Romania, where we have been continuing installing machines still now so late after they go live. So actually, our installed base in Romania in last year grew with 20%. Also, we have seen similar things in Hungary where our installed base in Hungary last year, 2025, increased with 30%. Another highlight is that we have been appointed as a return point network operator in Singapore as 103 with a minimum installation of 350 RVMs. And we are very excited and looking forward to work with BCRS, which is the system operator there to make this successful launch of the first deposit system in Asia. And then, of course, this year, an exciting thing is U.K. U.K. will go live with a deposit scheme in November next year, November 2027. And we are seeing significant commercial activities there. We believe -- so many of the large retailers have already published an RFP, and we expect others to do it shortly. So we believe a lot of the contracts will be signed this year, but we expect most of the installations then to happen in 2027. Also in the U.K., there has been questions about if it's the whole U.K. that will go live next year or if Wales will not be part of it, and there were some positive news that came out yesterday. So it was a press release that the deposit return scheme for drinks containers in Wales, the regulation had been laid to the parliament. And it was then stating that they have now an agreement with U.K. where the debate has been around glass and that they now are planning to go live also then on 1st of October. Still need Senate approval, but it looks like everything is set up now for that the whole of U.K. will go live late next year. In addition to that, as always, we have included on the slide here the different countries. I'll give a short update on the ones that I haven't commented upon. Greece was supposed to go live late last year. It has been delayed, and there is not communicated yet a new start date. Moldova has announced that they are going ahead with the deposit scheme with the latest start-up in January 2027. And in Spain, we are waiting for the scheme operator to be appointed. There was an expectation that, that will happen late last year. It hasn't happened. And we are now seeing when it's going to happen. If it doesn't happen before May this year, there might be 1 year further delay. And you can expect that after a scheme operator is appointed, it takes 1 to 2 years before the scheme goes live. But overall, no question about if it's really about when. And of course, the underlying picture here is the targets that are part of the single-use plastic directive and the packaging waste regulation that all EU countries needs to meet the collection targets in 2029, which means that they will need to implement a deposit system. Then over to recycling. I want to start with that we really believe in the long -- mid- to long-term picture within recycling. The way that we are utilizing our resources today is not sustainable. If you look at all resources we use annually, less than 8% is circular. So this needs to change. And most waste streams comes as a mixed waste stream, which means that you need to have automated sorting to enable this at scale. However, currently, we do see a weak market sentiment, especially within plastics and waste in Europe, but also in the Americas. This is driven by low plastic prices. It's driven by that the new targets are not really kicking in before 2030 because in Europe, we have the packaging and the packaging waste regulation with the targets for 2030, which then to be met, you need to at least double the infrastructure in Europe. And it's also in Europe, the reason for weak market sentiment is import -- cheap import from Asia. And it's positive to see that the EU recognize the challenges that the plastic recycling industry in Europe has and are facing. And last week, they passed what they call a winter package, a circularity winter package, which is about how to implement the single-use plastic directive, especially then how to calculate for the recycled content saying that if you are going to include recycled material to meet the recycled content targets until late next year, November next year, it needs to be sourced from the EU. And after that, there needs to be a mirror process, which means that the imported material needs to meet the same strict regulations on environmental health and waste management as in the EU. So it's good to see that there are some movements there to secure that recycling industry in Europe. However, we don't expect then a short-term recovery. We don't expect a recovery in this market this year, and we'll see then what will happen next year. So that's why we had to take measures to ensure that we are regaining our profitability at the levels we wanted to be. Our revenue for 2025 is 18% down versus the year before, and we really need now to adjust and rightsize our organization to meet the current market sentiment. So that's why on Wednesday, we informed our employees in recycling about the cost reduction initiative. The objective of that initiative is to take us back to an EBITA percentage above 20% as soon as possible. We will take out EUR 16 million of cost. This will then have a full effect from next year 2027, and it represents approximately 175 positions. And also, we will work on optimizing our global footprint and the supply chain. And the objective there is really to use this opportunity also to look at our organizational setup so that we have a more scalable global operations going forward. Then to Food, very good year for Food last year. We really now see the impact and the effects of the improvement programs that we have put in place to cut costs but also to drive customer-facing commercial activities. At the same time, we see now a positive market sentiment in many categories. But we're also now much more well positioned to take a significant part of that improved market sentiment. So we are then also ending last year with a very strong order backlog with large orders to be delivered this year. Also good to see how the profitability has improved significantly. And as I said in my introduction, we have the highest profitability, both in absolute and percentage terms ever in our Food segment. But also as part of our improvement initiative in Food, we have worked a lot on our innovation agenda and our innovation road map, and we believe that it is crucial to maintain our good margins and to gain market share in the core categories that we are focusing on. So we have a pipeline of initiatives where we will then gradually launch new products. And last week, we launched our new Blueberry machine. So this is 5S Spectrim with LUCAi, which means it has built in our deep learning AI algorithms. Blueberries is a very important segment for us. It's a segment that is growing because of increased consumption. So it's increased planting areas coming. And when you have that, you also need the infrastructure to pack and sort those blueberries. And this machine, which I think looks amazing, and it's a very cool machine and is very well received in the market. It's about really increasing the throughput. Speed is always important. It's making sure that we spread the blueberries well, that we have less material staying in what we sorted out and the opposite. And actually, this machine per second, you can take 385 blueberries through it. So it's -- speed is very important. Very well received in the market, and we have already received orders for it, but it's a good illustration on also how we are constantly working now to keep our technology leadership to generate value going forward. Then to Horizon. Horizon is then our portfolio of business building ventures as we call them, where we are leveraging our competence and technology to build new businesses to create value going forward. c-trace is the company that we acquired a bit more than a year ago, which is then within smart waste management. Very happy with the performance of c-trace last year. They delivered according to our expectations with double-digit growth and an EBITA above 20%. Reuse is our venture for solving the problems with takeaway packaging and single-use packaging at events and festivals. Last quarter, we had the 2 pilots of our event solution, both the one in Oslo at the Intility Arena and then at the Fairground Festival in Hannover. And you see the picture bottom left here from Hannover, very cool solution where we are providing a technology solution where you have a barplate. So when you buy the beer in a reusable cup, it's automatically match with your payment method. After the drinking, you just throw it through a hole. You can even take all your friends' cups together with it and throw all of them, and they will automatically be identified with your payment cards, so you get the money back for the deposit. Very good feedback on this solution, and we are working now really hard on then a scaling plan for that. Feedstock is the venture where we are focusing on solving how to divert plastic from ending in landfill or incineration. We have invested in one plant in Norway there, Omra, and we had a very good start of operations in last quarter, and we ended then 2025 with a positive EBITDA run rate. Ramping up now to 2 shifts. We also have had a German plant in construction, and we have decided that we are putting the remaining investments of the German plant on hold due to the current market situation. And we rather want to utilize the flexibility we have to find an optimal setup of our assets in order to deliver the value in our offtake agreements, which has previously been announced. For feedstock, we are planning to have a positive EBITDA contribution in 2027. So that concludes my update. And as I said in the beginning, we end the year with a strong quarter, showing that even in a year marked by volatility and market uncertainty, TOMRA's strategic foundations are strong, and we are exceptionally well positioned for the growth cycles ahead. With that, I hand over to Eva. Eva Sagemo: Thank you, Tove. And let's start with the group P&L for the fourth quarter. The fourth quarter ended at EUR 382 million, down 4% compared to a very strong Q4 last year. Collection ended up 2% compared to then a strong Q4 last year. Recycling down 27%, but in line with the conversion ratio that we estimated for the quarter and Food down 3%, however, strong, delivering above the estimated conversion ratio. If we look at the full year revenues, the revenues came in, in line with last year adjusted for currency effects. Gross margins ended at 46% in the quarter, in line with Q4 last year. Looking at the OpEx, we have a strong cost control across our divisions in the quarter with OpEx of EUR 105 million. That is slightly up compared to Q4 last year, where most of the increase is explained by high activity, adding in CLYNK and also inflation in the year. When we look at the EBITA, that results in an EBITA adjusted of EUR 71 million and an adjusted EBITA margin of 19%. And then looking into Collection. Revenues came in at EUR 207 million. That is 2% up compared to a very strong Q4 last year. In Q4 last year, we had strong sales from Austria preparing for its DRS, while this quarter, sales has come in from new markets such as Poland and Portugal. In 2025, existing markets have delivered well in line with our target of 5% annual growth, resulting of then 87% of total revenues. This year is stemming then from our existing markets. And when we look at the contribution from new market, that includes Poland, Portugal, Romania and Austria. And for gross margins in Collection, they have delivered a strong gross margin of 42% in the quarter, but also in the year compared to last year 41%. And the gross margin in the quarter has been positively impacted by business mix, but also release of warranty accruals. As I said, good cost control in our divisions also for collection with OpEx of EUR 47 million in the quarter, down compared to Q4 last year. That gives us an EBITA in the quarter of EUR 39 million and an EBITA percent of 19%. And for -- we talk always about the ramp-up cost in Collection for the year. And then for full year 2025, the ramp-up cost has been north of EUR 20 million in Collection. And then looking at the recycling results. The top line came in at EUR 75 million. That is down compared to a very strong Q4 last year, but in line with the conversion ratio that we estimated for the quarter. And as you can see from the overview, the weak performance continues in our biggest markets being Europe and North America, explained by the challenging market sentiment, both in the Plastics segment in Europe, but also in the waste segment in the U.S. Gross margin ending at 52% in the quarter, that is reduced compared to Q4 last year, however, improved compared to previous quarters this year, explained by the product mix and the segment mix in the quarter being more waste orders and that we have sold AUTOSORT machines in the quarter. And we are taking measures on cost in recycling. And with that, we have had EUR 1.2 million as restructuring costs in the quarter. If we look at the OpEx, it ended at EUR 19 million, which is slightly up compared to Q4 last year, but it's down compared to previous quarters this year. That results in an adjusted EBITA of EUR 21 million in the quarter for recycling and an EBITA margin of 27%. And as always, we look into the order intake, and that has continued weak also this quarter, explained by the market sentiment. And the order intake was down 20% compared to Q4 last year, resulting in an order intake of EUR 61 million. And that results in a declining order backlog, declining 12% compared to end of last year. And when we look at the trailing 12 months, recycling is down 25% on the order intake. Moving over to Food. Food came in strong at EUR 88 million on top line. That is down compared to last year, 3%, but higher than what we estimated on the conversion ratio. We have seen especially a strong quarter in the Rest of the World and a decline in Americas. But if you look at the full year, all markets have delivered a solid performance in 2025. Gross margin ending strong at 52%. It's significantly up compared to Q4 last year and historically, the strongest that we have had in Food. And the strong margin is a result of a combination of the full year cost savings effect, but also positive product mix and release of warranties and tariff accruals. If we look at the OpEx, it ended at EUR 29 million, which is then flat compared to Q4 last year. And as a result of the strong gross margin in the quarter, EBITA ended at 18% in Q4, resulting then in a record EBITA margin for the year of 13%, which is then an overachievement of our target of 10% to 11% EBITA for the year. And also here, looking into the order intake and for Food, we have seen a continued positive momentum in the order intake throughout the year. We are up 2% compared to Q4 last year, ending then at EUR 86 million. And as I said, all regions have delivered a solid performance, and we see especially an uptick in the citrus category this year. The order backlog was up then 26% compared to Q4 last year, ending then in a backlog of EUR 136 million. And also here, when we look at the trailing 12 months of order intake, it's up 12%. Still a solid balance sheet for TOMRA end of the year. And if we look into the cash flow for the quarter, it ended at EUR 24 million. It's down compared to a very strong cash flow from operations in Q4 last year. And that is explained by timing effects of customer payments and release of contract liabilities. And that's also something that you can see in the cash conversion cycle for the year. Equity ended at 35% and the gearing at 2.3 and our ROCE ended at 15.2% ending 2025. Looking at the financial position, it's a nice spread of our debt maturity ending the year at 4.2 years and in average. And then we had undrawn facilities of EUR 54 million ending 2025. And moving over to the outlook. And starting with Collection. As always, we mentioned that it's a high activity related to deposit return systems in new markets, but also growth in existing markets. And the short and midterm performance will, of course, depending on the timing in the new markets, but also the activities happening in the existing markets. And when we look at 2026, we need to separate the growth expectations into what is coming from existing markets and what is coming from new markets in Collection. And starting with existing markets, we expect revenue growth at mid-single digit annually on average, which aligns with our strategic ambition for this division and also what we have delivered in 2025. And then for new markets, we expect Poland, Portugal and Singapore to contribute with approximately EUR 100 million from current orders. And on top, as Tove said, there is an attractive tail in Poland, similar to what we have experienced in Romania with independent stores, representing then a total market opportunity of approximately 5,000 machines or more where we already have a dozen preferred supplier agreements at hand. However, the timing of sales into this segment can follow a trend as what we have seen in Romania, meaning that they take -- that the revenue will come over a period of time after the market has gone live. Another new market activity worth mentioning is the ramp-up of volume in Tasmania as well as continued contribution from Romania and Austria. And in addition, we will have the full year effect from CLYNK, the company that we acquired in September in 2025, expected to come in at around EUR 25 million in revenues for 2026. And then for gross margins in Collection, it should continue to stay above 40%, but the quarterly variations may occur depending on the sales mix between the quarters, meaning in quarters when we sell more equipment, the gross margin will be normally lower. We expect a continued good cost control in Collection. However, we might have OpEx variations between the quarters depending on investments into new markets. And when it comes to investments into new markets, this is where the ramp-up for OpEx run rate comes in, and we estimate that to be at around EUR 20 million for the full year, so the same level as we have had in 2025. And then over to the outlook for Recycling. And as Tove mentioned, despite the belief in the strong long-term drivers like regulation and the demand for recycled materials, the market is currently facing challenges. And as a result of that, timing of orders in recycling is uncertain. And this challenging environment is expected to continue throughout this year and then possibly into 2027. And we have taken measures to restore our profitability already announced this week, where the target is to come back to an EBITA margin above 20% as soon as possible. And with the cost savings program that we have announced, we target to save a gross EUR 16 million as an annual run rate, and that will have a full effect in 2027. And the cost of that will be approximately EUR 15 million. And the cost saving will be approximately 1/3 in COGS and 2/3 in OpEx. And we expect the savings to be gradually implemented in the year, so more towards the end of 2026 as it takes 3 to 6 months to execute on the program. And that means that we will have approximately 50% of the savings as an effect in 2026. And then looking into the coming quarter, we estimate a conversion ratio of 40% of the backlog as revenue in Q1. And with the market uncertainty, it's important to mention that there is a risk that orders may be postponed over quarters for recycling. And as we know, volumes and product mix impact the gross margin in recycling. And in 2025, we have had lower volumes than previous years and in combination with a higher share of metal orders being delivered, these 2 factors impact the overall margin in 2025. And then looking into Q1 and the conversion ratio that we now have indicated of 40%, the volumes are estimated to be on the lower end. And in the combination with product mix in the order backlog, this will have an impact on the margin for Recycling. And for Food, the outlook in Food, here, the drivers are the automation and higher standard for food quality and safety, and that creates new opportunities for our business division, Food. And although the market has now normalized, macroeconomic uncertainty may still influence customers' willingness to invest. Food growth -- revenue growth for 2026 is projected to reach mid- to high single digits. And looking into Q1, we estimate a conversion ratio of 55% based on the order backlog ending the year. And then the restructuring and cost reduction program has improved the gross margins in Food. And in 2025, the product mix that we have sold less third-party equipment in addition to release of accruals have impacted the gross margin positively. And for 2026, we expect the gross margin to remain in the mid-40s based on project and product in the order backlog. However, we might see quarterly variations dependent then on volume, business and product mix. And we have delivered a robust EBITA margin of 13% in 2025, which is ahead of our ambition to reach a mid-teen target by 2030. And for 2026, we expect maintaining strong performance in Food with an EBITA margin of approximately 12%. And why 12%? The outlook builds on the positive momentum from 2025, but we anticipate changes in the product mix and an increase of third-party equipment sales, especially given the large orders that we are -- that we have in the order backlog that is going to be delivered into 2026. And then over to Horizon and the outlook, that is where we have the venture activities, feedstock and reuse and also c-trace. And c-trace have delivered a strong year in 2025 with double-digit growth in EBITA above 20%, and which is then projected to continue into 2026. And for feedstock, it's all about ramping up the capacity at Omra, where we plan to increase it to now 2/3 of full capacity. And we expect a positive EBITDA contribution in 2026 from the Omra plant, given the successful capacity ramp-up and also current market prices. And then as Tove said, a positive EBITDA in 2027 already. And then with the underlying OpEx for feedstock and reuse for business building, that is expected to remain in line with 2025 levels, but we will have an increase in costs related to Omra with ramping up Omra and also c-trace due to higher activity levels. So the OpEx run rate estimated for Horizon as a total is estimated to be around EUR 40 million for the full year 2026. And then lastly, on CapEx, the total CapEx for the year is estimated at approximately EUR 100 million, and that will be primarily directed towards our core divisions, meaning collection, food and recycling. And we do not expect large CapEx investments into Horizon, explained also by the remaining investments in the German plant, the feedstock plant is now put on hold. So with that, I think we end on the financial side, Daniel, and can move into Q&A. Daniel Sundahl: Thank you, Eva, and thank you, Tove. We will then take questions. [Operator Instructions] And I see that we have a few questions coming in. The first one coming in from Elliott Jones at Danske Bank. Elliott Geoffrey Jones: Congrats on the results this morning. Just a couple of things for me. On Collection, yes, you mentioned this in the outlook that kind of orders equate to EUR 100 million in sales for 2026. And like you said, it's just current orders that you've received and maybe obviously more to come from Poland alone and the others. But can you just help us understand kind of in general, what the time lag is between you receiving orders and then being able to kind of deliver them just on a general basis? Eva Sagemo: Yes. On a general basis, it's -- I think it's -- I think we need to discuss more specific for Poland, right? Because as Tove said in her note on collection is that we have an installation plant for Poland with 100 machines per week, and that's kind of like the phase that we are now working according to. And as you know, we announced contracts during the fall, and that's what we are now delivering according to, and it's included in the EUR 100 million revenues on the current order base. So that includes Poland, Portugal and Singapore. Tove Andersen: And if I can add to also what we said is that in Poland, we expect deliveries on the existing contracts first half of this year. And as Eva said, we have a dozen of frame agreements with the smaller retailers, which means that the frame agreement is there. So it's just a call off and that could be very quick. So a retailer can just order a machine and it could be delivered a few weeks later. So on those, we have a very quick turnaround. Elliott Geoffrey Jones: Got it. And then also just a question on operational leverage in Collection. Yes, if you kind of look back all the way to kind of Germany, I know that TOMRA kind of had an OpEx base that was able to be stable as revenue started to take off. And obviously, you just made comments on ramp-up costs this year being north of EUR 20 million in 2025. You said EUR 20 million in 2026. So I just want to kind of kind of test like beyond 2026 when there's more new markets coming, how do you stand with regards to that, do you expect any kind of big jumps in OpEx? Or would you say that along the way, you have been investing in regions such as France and Italy and the like already? Tove Andersen: Yes. So the way -- first of all, we're doing quite a bit now on structuring Europe in a good way. In collection, we just reorganized the whole region to make sure that we are really set up to run that efficiently as new markets are coming along. On the kind of backbone, the operational backbone, the supply chain, procurement, production, et cetera, is well set up to handle then the growth. But what you have to expect that each time a new market comes, we need salespeople on the ground, we need service people on the ground. So of course, there will be some OpEx coming in every market, while at the same time, we are working on ensuring that we have as much operating leverage as we can. Daniel Sundahl: And the next question is coming from Adela Dashian at Jefferies. Adela Dashian: Yes, if we first could start on Collection. I appreciate the guidance of EUR 100 million revenue contribution in 2026 from the newer markets. But when I plug that into my model, I still have a difficult time getting up to a double-digit growth rate for the full year for Collection, given that existing markets are growing by mid-single digits. So could you just explain if you -- and I guess also with U.K. now not coming live until late 2027, could you explain like what's the -- how you will achieve double-digit growth, which is what consensus is assuming right now? Tove Andersen: So as Eva explained, so we are from the existing contracts. So in Poland, that is the large retailers with existing contracts, the contracts we have in Portugal and Singapore that represent EUR 100 million to be delivered and most of that in first half of this year. Where we land the year will then depend on additional sales into these markets and additional sales into Romania and Austria. Adela Dashian: I see. Okay. So it's just based on those confirmed orders. Okay. Makes sense. On recycling, I'm assuming that there was no -- it was a quite nice beat versus expectations, but I'm assuming that the restructuring effects, I mean, it's very, very subdued. These were now so no effect of that in Q4. So could you explain, was it a sequential better mix as well that drove the results in the quarter? And also on the restructuring costs, what should the phasing be in the quarters? Eva Sagemo: Yes. I'm not sure if I got the first question, Adela, but I can answer the other one, and then maybe Tove can fill in if she got the first one. So on the restructuring cost, it will be -- it's estimated to come in, in Q2 and Q3 at large, of course, depending on how this restructuring program will go into effect in the year. Tove Andersen: Yes. And we had EUR 1 million in restructuring costs in Q4. So that was the only effect in Q4 from the restructuring. Adela Dashian: Sure. And maybe... Daniel Sundahl: Yes, sorry, Adela. On recycling, the mix that we delivered was more normalized into waste. But however, the order backlog still has a higher share of metals in it to be delivered going forward. Adela Dashian: Okay. I see. Daniel Sundahl: Good. Thank you, Adela. The next question will come from Fabian J�rgensen at Pareto. Fabian Jørgensen: All right. If we talk Spain and U.K. phasing, Spain is obviously a bit more uncertain. We say that the RFPs for U.K. have already started. Spain is a much more consolidated market than, for example, Poland, Romania, where you have the long tail end. When do you expect the capacity to be all rolled out in the U.K.? Is this a play where you expect most to be in place by October, meaning that sales could start in late 2026? And how should we think about that? Tove Andersen: So we expect that the U.K. start will be a hard launch. That's the current expectation. You know that in Poland, we had a soft launch. They had a 3-month grace period. We don't expect that to happen in the U.K. It can change, but at least that's what is communicated, which means that you should expect a significant portion of the installation to happen before the go-live date. Fabian Jørgensen: Exactly. Okay. And so I think one of the most important things to note in the report is the margins here. Food was obviously very great again, similarly to Q2. But also on Collection, you state that the added cost for 2026 is very limited. And if you look at consensus estimates now, what they basically assume for 2027 is that OpEx in Collection expand 30% to 40% relative to 2025. Is that way too high? Eva Sagemo: So on the OpEx for 2027, that's down the line, and we need to come back to that at a later point, Fabian. What we have said is... Fabian Jørgensen: Does it make sense that it's up 30%? Eva Sagemo: It depends on... Fabian Jørgensen: To your business model. Do you think so? Eva Sagemo: I think. Yes, I think the level of the OpEx depends on the activity in the markets, right? So what we are working according to is to have good cost control in Collection and across the divisions that we have. And then, of course, a large part of TOMRA Collection is related to existing markets. And then for new markets, we manage the activity going into new markets in a very prudent way. So cost will, of course, occur with going into new markets, but the levels we need to come back to. Daniel Sundahl: And the next question is coming in from Morayo Adesina at Barclays. Morayo Adesina: Just one for me, just a follow-up on the product mix in recycling. So I know that there was some softness in the waste recovery segment of recycling in 2025. Are you now saying that we're seeing that coming back, especially in the U.S.? I know that there was some sort of effects from the geopolitical backdrop yes, just wondering where we're at on that. Eva Sagemo: Yes. Not necessarily. So what we see in the quarter is a result of what we had in the order backlog for the year. And in Q4, we had more waste projects into the -- to be delivered to the P&L. So that's the reason we don't necessarily see a recovery in the waste segment because of that. Daniel Sundahl: And we will take 2 final questions, one from Markus Heiberg at SEB. Markus Heiberg: So a 2-parted question on the competitive position in recycling. So the first one is how do you see the competition there now as the market is softer in plastics, are you seeing higher competition? And also maybe in metals, are you seeing any changes there? And the second part of that question is now as you are downscaling your cost base, are you seeing that impacting your own product road maps? And I imagine there are some opportunities there in AI and what's happening there. So some discussions on that will be interesting. Tove Andersen: Yes. So first of all, it's clear that our competitors are experiencing exactly the same as us. So we are not losing market share. It is the market that is down. But that also means, of course, it becomes very competitive on the orders that are out there. So in a situation like this, yes, there are pressure on margins, but we are still, I feel in a very good competitive situation versus the others. When we are -- what we are doing is rightsizing the organization. We have reduced turnover with 18%. We are not 100% sure when it will come back. It will come back, but when it will come back. So we need to take down our organization to meet the current market sentiment, which means that we are reducing all over in recycling, including that we are reducing on some of our innovation activities because also we see that the market will not be there to take those innovations and we can get real value of it short term. At the same time, we have been very focused on making sure that we don't take out things that will make us less competitive when the market comes back. So this is, of course, a balance. So we believe that we have the balance right, which means that we are still investing into our innovation portfolio, including AI with the new organization or the new manning that we will have then as of -- yes, mid this year. Daniel Sundahl: Thank you, Markus. We have one last, but no longer in the queue. So I think with that, we have reached the end of today's presentation. Thank you very much for tuning in. The next time we will be here is on the 24th of April for our Q1 results the day after AGM. Looking forward to seeing you then. Until then, have a nice day, and goodbye.
Baard Haugen: Good morning, and welcome to Hydro's Fourth Quarter 2025 Presentation and Q&A. We will shortly begin with a presentation by President and CEO, Eivind Kallevik, followed by a financial update from CFO, Trond Olaf Christophersen. At the end, we will finish with a Q&A session. Please note that if you have questions you would like to ask in the Q&A, you can do so at any time by typing them in the box on your screen. When we get to the Q&A, I will then ask your questions on your behalf to Ivan and Trond. And with that, I turn the word over to you, Ivan. Eivind Kallevik: Thank you, Erik, and good morning, and welcome from me as well. As always, I will start with safety. Our top priority is to ensure the health and well-being of our employees. Now the positive development that we've seen over time continued into the fourth quarter. In fact, total recordable injuries and high-risk incidents are lower compared to last quarter, which was also a record low for Hydro. It is also worth mentioning that when looking at 2025 as a whole, we also had no fatalities or no life-changing injuries. On the other hand, we do know that this situation can change quickly. So to sustain these low numbers, that requires continuous attention and strong commitment from all employees across all our locations. And by ensuring a safe work environment, we can maintain a stable operation, which in turn enable us to deliver on our strategic ambitions. Now let's continue with the highlights of the quarter. EBITDA came in at roughly NOK 5.6 billion, with free cash flow of NOK 4.6 billion, yielding an adjusted RoaCE for the year at 10.2%. And that is above our target of 10% over the cycle. In short, the fourth quarter saw strong metal prices, high upstream production volumes and very healthy cash generation. Looking closer at the highlights listed here. First of all, alumina production are above nameplate capacity for the fourth quarter and the smelter production was also up 2.5%. On the Energy side, we can report an increased power production of some 13.6% year-over-year. We are continuously working to secure more long-term power contracts, and we are pleased to report 2 new long-term power contracts as well as the power plant investment in Norway during the quarter. Due to increased volatility driven by the global uncertainty, we have also made several difficult but also necessary restructuring decisions in the recent months during Q4. We've completed the strategic workforce reduction as planned, and we also proposed the closure of 5 European extrusion plants. And finally, the Board of Directors decided to propose a dividend of NOK 3 per share, and this is 60% of adjusted net income above the minimum threshold of 50% as decided by our distribution policy. Now we've made good progress on the strategy this quarter with several key milestones achieved. On the upstream side, both Bauxite & Alumina and Aluminum Metal have delivered good production numbers. In B&A, the Alunorte refinery experienced improved flow through the plant and high equipment availability, resulting in production above nameplate capacity. In addition, we also saw one of the highest commercial sales volumes ever in Bauxite & Alumina in the fourth quarter. As a result, in the 2025, B&A delivered its second best EBITDA ever. In Aluminum Metal, our smelter system also delivered stable performance and primary aluminum production increased some 2.5% year-over-year in the fourth quarter. As previously communicated, the Norwegian capacity that was curtailed back in 2022 is now being ramped up, and we expect to increase production by some 50,000 to 60,000 tonnes during 2026 and then comparing to '25. We expect to reach the production speed during the summer of '26. Now moving to power sourcing. For our Norwegian smelters, one of our key priorities is to secure long-term and competitive renewable power to support competitiveness as well as our low carbon position. In Q4, we have made good progress in this regard, signing 2 power purchase agreements with Hafslund, one in November and one in December. Putting these agreements together cover the period between 2031 and 2040 with a total volume of 5.25 terawatt hours. The contracts are in the price area NO3, covering the Sundal and Hojangar assets that we have. In addition to working actively on third-party sourcing, we are continuing to invest in our own hydropower system. And in Q4, we took the final investment decision on the Illvatn pumped storage power plant. And this is Hydro's biggest investment in the Norwegian hydropower system since 2004, with a gross investment of NOK 2.5 billion and net investment after tax of some NOK 1.2 billion. The Illvatn pumped storage plant will also contribute with increased power production, reservoir capacity as well as installed power capacity from our facilities in Fortun. And then lastly, cost control. One of the things we talked a lot about in 2025 was uncertainty and the need to take proactive measures. So in Q3, we announced the strategic workforce reduction for white-collar employees on a global scale. This program concluded in fourth quarter with around 850 white-collar employees having either left or will leave the company within the first half of 2026. The FTE reduction, together with reduced spending on consultants and travel, will yield savings of roughly NOK 1 billion per year starting now in 2026. Likewise, just before our Investor Day late in November, we did announce the proposed closure of 5 European extrusion plants. We have now confirmed the closure of 2 of the plants, Bedwas and Cheltenham in the U.K., and the process around the remaining 3 plants is still ongoing. As we all know, Extrusions has faced market headwinds also during 2025, which has negatively impacted their results. On the other side, the Extrusion organization has worked hard on cost control and mitigating actions, which enabled them to deliver a good and positive cash flow from the business area in 2025. Now turning to Bauxite & Alumina. In the fourth quarter, oversupply in the alumina market put a continued downward pressure on PAX. And according to CRU, 2025 ended with a small surplus of around 700,000 tonnes. This is expected to narrow somewhat to about 500,000 tonnes in 2026 in the roughly 145 million global market for alumina. As a result, the market remains sensitive to any production disruptions or delays in ramp-up of new facilities. During the quarter, new refineries in Indonesia continued to ramp up production, while alumina prices in China declined. This pushed the PAX index down to $306 per tonne at the quarter end from $321 in the third quarter. In China, bauxite import prices remained stable at around $70 per tonne on a CIF basis. Import volumes, on the other hand, increased by some 10% year-on-year, to 43.5 million tonnes imports from Guinea, increasing with 20%, while shipments from Australia declined by some 9%. Then moving on to LME. Now looking at the global primary aluminum balance in 2025, external sources estimated a global deficit of primary aluminum at around 0.3 million tonnes. The 3-month aluminum price increased throughout the fourth quarter of 2025, starting the quarter at $2,688 per tonne and ending at $2,995 per metric ton. This rally was likely supported by a weaker dollar, news of a potential shutdown of the Mozal smelter in Mozambique and a broadly bullish sentiment across base and precious metals. The U.S. Midwest premium continued to surge in the fourth quarter, moving from around $1,675 per tonne at the start of the quarter to just above $2,000 by quarter end. And this increase reflects the market fully pricing in the 50% import duty under the Section 232 tariffs, highlighting both the underlying structural aluminum deficit in the U.S. as well as the continued need to attract metal into the domestic market. In Europe, duty paid standard ingot premiums ended the fourth quarter at $335 per tonne, up from $223 per tonne at the end of the third quarter. This is due to the tightening supply situation that we have and certainly some CBAM front-loading also going into 2026. As in previous quarters, Hydro's primary concern remains the risk of a broader global economic slowdown driven by tariffs and trade tensions, which could weaken demand and put pressure on the current price levels that we see today. Now moving downstream. We see Extrusion demand ended in 2025 with a modest increase in Europe and a modest decrease in North America compared to the last year. In Europe, Extrusion demand is estimated to have been flat in the fourth quarter of 2025 compared to the same quarter last year but increasing 3% compared to the third quarter. Demand from building and construction and industrial segments have stabilized at historically low levels with some improvements in order bookings. Automotive demand has been negatively impacted by lower European light vehicle production but has been partly offset by increased production of electric vehicles. And CRU estimates that the European demand for extruded products will increase 1% in the first quarter of 2026 compared to the same quarter last year. Overall, Extrusion demand is estimated to have increased by 1% in 2025 compared to '24, with current estimates for '26 as compared to 2025 coming in at 3%. In North America, Extrusion demand is estimated to have been flat in the fourth quarter of '25 compared to the same quarter last year, but it did decrease 8% compared to the third quarter, which is partly driven by seasonality. Extrusion demand has continued to be very weak in the commercial transport segment, driven by lower trailer builds. Automotive demand in the U.S. has also been weak. Demand within building and construction has been positive as well as within certain industrial segments. At the same time, Extrusion demand across segments is being subdued due to higher product prices resulting from tariffs and duties on aluminum in the U.S. CRU estimates that North American demand for extruded products will decrease some 1% in the first quarter of 2026 compared to the same quarter last year. Overall, Extrusion demand is estimated to have decreased by 2% in 2025 compared to 2024, but there is an expectation of a growth of 1% in 2026 compared to '25. And let me then give the word to Trond Olaf for the financial update. Trond Christophersen: Thank you, Ivan, and good morning, and welcome from me as well. We'll start my part with the financial highlights for the quarter. Comparing year-over-year, revenues fell by around 14% to NOK 47 billion for Q4, driven by lower alumina prices. For Q4, we have an adjusted EBITDA of NOK 5.6 billion and a reported EBITDA of almost NOK 2 billion, meaning that we have adjusting items of around NOK 3.6 billion. The main adjusting item is unrealized derivative loss, mainly on LME-related contracts of NOK 2.3 billion. We also have rationalization charges and closure costs of NOK 1.3 billion, mainly related to the restructuring of Extrusion Europe. There were also smaller positive adjusting items from FX and divestments. The adjusted EBIT for Q4 was NOK 2.9 billion, with a reported EBIT of negative NOK 1.5 billion. In addition to the EBITDA adjusting items, there were NOK 700 million in adjusting items impacting EBIT related to impairments. The difference between the adjusted and the reported EBIT was therefore negative NOK 4.3 billion. Net financial expense for Q4 was around negative NOK 600 million. Interest and other financial income was NOK 430 million, offset by interest and finance expense of NOK 470 million and foreign exchange losses of NOK 575 million, mainly reflecting a weaker BRL versus U.S. dollar. The income tax expense was NOK 57 million in Q4, impacted by negative earnings before tax, offset by higher power surtax. Overall, this results in an adjusted net income of NOK 1.7 billion with reported net income of negative NOK 2.2 billion. The total adjusting items to net income was NOK 3.8 billion, which is the sum of the EBIT adjusting items plus a net foreign exchange loss of NOK 575 million and an income tax effect of negative NOK 1 billion. Adjusted net income is down from NOK 2.6 billion in the same quarter last year and down from NOK 1.9 billion in Q3. Consequently, adjusted EPS was NOK 0.7 per share. When looking at results Q4 versus Q3, adjusted EBITDA decreased by NOK 400 million from NOK 6 billion to NOK 5.6 billion. The main driver was lower Extrusion results -- realized results. Realized all-in aluminum prices contributed positively by NOK 800 million, and alumina price contributed negatively by NOK 300 million, for a net effect of around positive NOK 500 million. Upstream volumes contributed positively by NOK 300 million, driven by alumina production above nameplate capacity and high commercial alumina trading volumes. Lower raw material costs in Bauxite & Alumina and lower alumina costs in Aluminum Metal contributed positively by NOK 400 million. Extrusions and recycling margins and volumes had a negative impact of around NOK 1 billion, driven by seasonally lower volumes and lower margins in extrusion. In Energy, higher production and prices were partly offset by lower gains on price area differences, with a net positive impact of around NOK 300 million for the quarter. Fixed costs were around NOK 400 million, higher compared to the Q3, mainly in Aluminum Metal and Extrusions and mainly driven by seasonal effects. Currency effects positively impacted results by around NOK 100 million. The final negative effect of NOK 500 million is mainly related to other and eliminations. The eliminations this quarter amounted to approximately NOK 300 million on the profits on the increased volume in B&A. And this concludes the adjusted EBITDA development from NOK 6 billion in Q3 to NOK 5.6 billion in Q4. When looking at the full year EBITDA development from 2024 to 2025, adjusted EBITDA increased by NOK 2.6 billion, from NOK 26.3 billion to NOK 28.9 billion. The main drivers were higher aluminum price and normalizing eliminations, offset by stronger NOK versus U.S. dollar. Realized all-in aluminum and alumina price contributed positively with around NOK 2.3 billion, where higher aluminum price was partly offset by lower alumina price. Upstream volume development had a net positive impact of NOK 500 million, with higher sales volumes in both B&A and Aluminum Metal. Raw material costs improved with NOK 500 million. B&A saw an improvement of NOK 1.1 billion, where the fuel switch savings were partly offset by higher costs for other raw materials. Raw material costs in aluminum metal increased by NOK 600 million on higher alumina costs. The downstream segments contributed to -- continued to face headwinds in 2025, leading to a total negative effect of around NOK 400 million. Extrusions experienced headwinds of around NOK 700 million from reduced volumes and margins, while the recycling results in Metal Markets improved by NOK 300 million. Furthermore, we saw a net positive impact of NOK 800 million due to higher energy prices, production and gain on price area differences compared to 2024. Fixed costs increased in 2025 with an impact of NOK 800 million, where increased fixed cost upstream, mainly related to inflation and salary adjustments, were partly offset by reduced fixed cost in Extrusions. We also saw a negative NOK 2.7 billion in currency effects, mainly driven by the stronger NOK versus U.S. dollar. The final contribution of NOK 2.4 billion was driven by NOK 2.6 billion in realization of previously eliminated internal margins. And this was partly offset by NOK 200 million in net other effects. Then moving on to debt. And when looking at the debt development through the quarter, net debt decreased by NOK 3.9 billion since Q3. Based on the starting point of NOK 13.6 billion in net debt in Q3, we had a positive contribution in adjusted EBITDA of NOK 5.6 billion. During Q4, we saw a net operating capital release of NOK 1.4 billion, mainly driven by a release in net accounts receivable and accounts payable, partly offset by increased inventories and receivables related to CO2 compensation. Under other operating cash flow, we had a positive NOK 1.6 billion impact, mainly driven by dividend contributions from equity accounted investments and adjustment for noncash effective bonus accruals, partly offset by interest payments. On the investment side, we had a net cash effective investments of NOK 4 billion, reflecting the typical high maintenance investment activity level at the end of the year. As a result, we had positive free cash flow of NOK 4.6 billion in Q4. We also had negative other effects of NOK 700 million, and this was mainly driven by negative FX effects on debt and new leases. As we move on to the adjustment related to adjusted net debt, hedging collateral has increased by NOK 600 million since the end of Q3. Furthermore, during Q4, the net positive pension position increased by NOK 300 million. And finally, we had an increase of NOK 700 million in other liabilities during Q4, mainly explained by increased provisions related to restructuring in Extrusion Europe. And with those effects taken into account, we end up with an adjusted net debt position at the end of Q4 of NOK 18.2 billion. Moving then to the business areas and starting with Bauxite & Alumina. Adjusted EBITDA for Bauxite & Alumina decreased from NOK 5 billion in Q4 '24 to NOK 1.4 billion in Q4 '25. This was mainly driven by lower alumina prices and negative currency effects caused by a weaker U.S. dollar against the Norwegian kroner. This was partly offset by higher sales volumes and strong trading results in B&A. Compared to Q3 '25, the adjusted EBITDA increased from NOK 1.3 billion to NOK 1.4 billion in Q4 '25, mainly driven by higher sales volumes and strong commercial results. Production volumes ended the quarter above nameplate capacity following high equipment availability and improved refinery flow. Alumina realized prices declined during the quarter but remained above market prices indications, supported by intra-group pricing mechanisms. Raw material costs were lower compared with the Q3, driven by lower caustic soda and coal prices, and fixed costs remained roughly stable. Moving then to the Q1 outlook. For Q1, we expect fixed and raw material costs to remain stable. Production volumes are expected to decline seasonally, reflecting fewer operating days in Q1 and scheduled maintenance activities. Realized alumina prices are anticipated to continue correcting in line with market trends, while trading results are expected to return to more normalized lower levels. Moving then to Aluminum Metal. Adjusted EBITDA increased from NOK 1.9 billion in Q4 '24 to NOK 3.7 billion this quarter. The main drivers year-on-year were higher all-in metal prices and reduced alumina costs, partly offset by negative currency effects. Compared to Q3 '25, adjusted EBITDA for aluminum metal, increased from NOK 2.7 billion, and this was driven by higher all-in metal prices and lower alumina costs, partly offset by seasonally higher fixed costs. The alumina cost reduction of approximately NOK 200 million drove raw material cost savings above our Q3 guidance of a flat impact. The guided seasonal increase in fixed costs ended slightly above our guidance of around NOK 220 million. And this brings me over to the Q1 outlook. For Q1, AM has booked 70% of the primary production at USD 2,803 per tonne. This includes the effect of our strategic hedging program. We have also booked 40% of the premiums affecting Q1 at USD 478 per tonne. We expect the realized premium to end up in the range of USD 380 to USD 430 per tonne. On the cost side, raw material expenses are expected to increase by NOK 100 million to NOK 200 million, primarily driven by LME-linked energy costs in our joint venture portfolio. Fixed costs are expected to increase by NOK 50 million to NOK 150 million, driven by seasonality, and sales volumes are also expected to increase. For Metal Markets, the adjusted EBITDA decreased in Q4 from NOK 319 million in Q4 '24 to negative NOK 56 million due to lower results from sourcing and trading activities and negative currency and inventory valuation effects. Those were partly offset by increased results from recyclers. Excluding the currency and inventory valuation effects, the result for Q4 was NOK 39 million, down from NOK 115 million in Q4 '24. Compared to Q3, adjusted EBITDA for Metal Markets decreased from NOK 154 million due to lower results from recyclers and from sourcing and trading activities. Recycling results ended lower at NOK 48 million, down from NOK 93 million last quarter. Decrease was primarily driven by challenging market conditions for the European recycling operations. For Q1, we expect stable recycling results. In our commercial segment, we also anticipate higher contribution from sourcing and trading activities in Q1. As always, we emphasize the inherent volatility of trading and currency fluctuations. And for 2026, we expect the commercial adjusted EBITDA, excluding currency and inventory valuation effects, to be in the range of NOK 200 million to NOK 400 million. Moving then to Extrusions. For Extrusions, the adjusted EBITDA decreased year-over-year from NOK 371 million to a negative NOK 62 million, driven by lower margins and sales volumes. Still strong focus on cost control and portfolio optimizations have contributed to a full year 2025 positive cash flow. We saw 1% decline in sales volumes as well as strong pressure on sales margins across the portfolio. Similar to the previous quarter, transport volume developments were negative, but headwinds are moderating compared to previous quarters. Shipments to the transport market were down 4%, negatively impacted by North America. Automotive sales in Q4 were still negative in both Europe and North America, driven by continued moderate production at some car manufacturers. Sales volumes growth in the industrial segment ended 8% higher in Q4, while sales in the distribution segment increased by 6% in Q4, mainly driven by increased shipments in the U.S. After a significant increase in volumes in the HVAC&R segment previously in 2025, the trend turned negative in Q4 '25, mainly caused by tighter consumer spending and inventory offloading at customers. The metal effect for the quarter ended at NOK 160 million. Compared to Q3 '25, adjusted EBITDA for Extrusions decreased from NOK 1.1 billion in Q3 to negative NOK 62 million in Q4 due to seasonally lower sales volumes, partly offset by lower costs. When looking at Q1, we always compare it to the same quarter last year, and this helps to capture the typical seasonal patterns we see in Extrusions. Looking at external market data, volumes in Europe are expected to increase moderately by 1%, while North America shows a slight decline of about 1%. We expect our European sales to be largely stable, while our North American sales are expected to decrease slightly more than the external market estimate due to our high exposure to commercial transport and distribution. Margins are expected to remain more or less stable with some improvements expected in North America due to favorable scrap prices. On the metal side, we expect flat metal effect development compared with the same quarter last year. It is, however, important to note that the metal effect are highly dependent on movements in the Midwest premium. Moving then to the final business area, Energy. The adjusted EBITDA for Q4 decreased to NOK 1.1 billion compared to NOK 1.2 billion in Q4 '24. The decrease was mainly due to lower gain on price area differences, offset by higher production and higher prices compared to Q3. Compared to Q3, adjusted EBITDA increased from NOK 828 million, mainly due to high seasonal production. Some of this increase is also due to planned maintenance that will be done during Q1. The price area gain was NOK 37 million in Q4, at significantly lower level than in Q3, following a seasonal convergence between the area prices. Looking into Q1, as always, we should be aware of the inherent price and volume uncertainty in Energy. For the next quarter, production is expected to decrease due to power plant maintenance and to be below the normal seasonal levels. While price area while prices are expected to increase with the seasonality, price area gains are expected to decline further. And then moving to the dividends. This year, the Board of Directors has proposed a distribution to shareholders of NOK 5.9 billion. This will be distributed as an ordinary cash dividend of NOK 3 per share. The dividend proposal represents a cash distribution of 60% of adjusted net income, a year-end yield of around 3.8% and a 5-year average payout ratio of 65%. Hydro's capital structure policy to maintain an adjusted net debt target over the cycle of around NOK 25 billion at the year-end, including proposed shareholder distribution to be paid year after remains unchanged. As always, the final distribution for 2025 is subject to approval by the Annual General Meeting in May 2026. And with this, I end the financial update and give the word back to Ivan. Eivind Kallevik: So let me conclude today's session by outlining our priorities going forward. First and foremost, it's health and safety. This remains a nonnegotiable for Hydro. We see that building a strong safety culture has a positive impact on our performance metrics. And we need to continue learning and improving to keep these numbers low also going forward. Secondly, through uncertain times, we are taking measures to improve our robustness. Cost control measures such as the strategic workforce reduction and restructuring in extrusions are helping us to grow with the right structure going forward. Our strategic growth areas remain recycling, extrusions and renewable energy. While we do recognize the current market challenges, we also see meaningful progress, including the new long-term power contracts secured in Q4 in addition to the upgrade of our own power plants. Lastly, we continue to deliver on our decarbonization and technology road map while seizing opportunities in greener aluminum. One concrete example from Q4 is our new partnership with the University of Michigan, which is aimed at translating innovation rapidly from lab to production. This positions Hydro to support customers in reducing emissions and to future-proof their own supply chains. So to sum up, we remain fully committed to our 2030 strategy, and the fourth quarter of 2025 demonstrated important steps in the right direction. With that, I want to thank you all for your attention, and then over to you, Erik. Baard Haugen: Thank you, Ivan, and thank you, Trond Olaf. We will then commence the Q&A. And just a remind, If you do have questions, please type them in the box on the screen, and I will then read your questions to Ivan and Trond Olaf. And I think we have a few questions already. So let's get started. First one is from Marina from RBC. Based on the order book, how confident are you in a volume recovery in Extrusions in the second half of 2026? Eivind Kallevik: So when we look at the extrusion order book, that is typically pretty close in time. Very seldom do you have extrusion companies booking into the second half. So we'll still need to see the economic growth coming in into the second half from orders as we get later on in the year. What's important, I think, for us, at least when we look at the automotive sales, for instance, several of the new contracts that we have talked about that we have booked in the last couple of years, they are now coming into production. But seen from an internal viewpoint in the company, it's too early to sort of conclude where we see the second half on the extrusion side. Baard Haugen: Okay. Next one is from Liam from Deutsche, also on Extrusions. Can you clarify the guidance for Q1 '26 versus Q1 '25? Are you expecting broadly flat EBITDA year-on-year? What have been the cumulative one-off gains in Extrusions in 2025 from the high Midwest premiums? Trond Christophersen: Liam, so to comment on your question. So first, the last question. So in total, we had around NOK 700 million in positive metal effects in Extrusions in 2025. If you then look at the different parts of the extrusion guiding, you see that we guide on roughly flat metal effect, some pressure on volumes, but flattish development on the margin side. Baard Haugen: Then we have another question from Marina. You are guiding for higher fixed and raw material costs in your Aluminum Metal division. Can you elaborate on the key drivers? Eivind Kallevik: So let me comment on 2 things. So when you look at fixed cost, typically in Q4, you have the reversal of vacation accruals, which is done and then you don't have that into Q1. So that will drive fixed costs up somewhat. And then we have some of the power contracts within our joint venture portfolio that also has an LME link into it. So that will lift the Energy costs somewhat coming into first quarter and into 2026. Baard Haugen: Okay. And then we have another one from Liam. Does the cost guidance for Q1 factor in a stronger NOK? Trond Christophersen: Yes. So the cost guidance is based on the currency assumption some weeks back. So then you need to factor in any development after that. Baard Haugen: And then we have a question from Alain, Morgan Stanley. Q4 B&A beat expectations. Can you quantify the trading contribution in the quarter and indicate how much of this is sustainable into Q1 '26? Trond Christophersen: Yes. So we have around NOK 300 million in very strong commercial results in B&A in Q4. Baard Haugen: And then another question from Alain on B&A. Alunorte ran above nameplate in Q4. Is this operationally sustainable? Or should we expect normalization in 2026 due to maintenance or any bottlenecks? Eivind Kallevik: So I think when you look overall for the year, we still have a target to produce at nameplate capacity, which we showed also in the fourth quarter. Now when we look at first quarter of '26, you should expect volumes to come down somewhat, driven by 2 things. One is that there are fewer production days in Q1. And secondly, also that we will have some planned maintenance in the first quarter. So a little bit lower production speed in Q1. But over the year, we should be still targeting nameplate capacity. Baard Haugen: And then there doesn't seem to be any other further questions. So if nothing else comes in, I think we will say thank you all for joining us here today. And if you do have any further questions, please don't hesitate to reach out to Investor Relations. Thank you.
Operator: So hello, everybody, and thank you very much today for attending Terumo's financial results for the third quarter of the fiscal year ending March 31, 2026. Today, before proceeding, I would just like to give an overview. And Mr. Hagimoto-san, CFO of Terumo will give an explanation followed by time for question and answer, making a total of 45 minutes for today. For this webinar, there is simultaneous interpreting available via the Zoom where you may listen to English or Japanese in either direction. Please do use the globe button at the bottom to choose English or Japanese. The materials displayed on screen will be English only. If you require English disclosure materials, please refer to Terumo's web page. If there are any problems during the -- we will let you know by e-mail if there are any problems with connection throughout. Also, there is just one disclaimer before beginning. All of the explanation that we are about to give is based on current results. And all of these -- they are based on assumptions using information available to us at the time. Accordingly, it should be noted that actual results may differ from those forecasts or projections due to various factors. So with that, I would like to hand over to CFO, Mr. Hagimoto, for an overview of the financial results. Thank you. Jin Hagimoto: Hello. This is Hagimoto, CFO of Terumo. Let me walk you through the highlights of our financial results. Thank you very much for your participation today. So this is the highlights of our financial results for the third quarter of the fiscal year ending March '26. First of all, the highlights, strong earnings results exceeding guidance. So for revenue with the highest ever results, both for the quarter and the third quarter year-to-date. We had strong sales led by North America with 9% growth excluding the FX impact. In particular -- revenue reached record highs, both for the quarter, in particular, demand growth in North America remained strong, resulting in a year-on-year increase of 9%, excluding FX impact. With regard to profits, operating profit -- adjusted operating profit and profit for the year all reached record highs on a Q3 year-to-year basis. Although we recorded certain onetime expenses from the first half of the fiscal year, our globally implemented pricing measures and appropriate cost control enabled us to deliver results that exceeded the pace assumed in our '25 guidance -- fiscal '25 guidance. Please note that the start from -- started from this quarter, the consolidated results with the Leverkusen plant and OrganOx, both of which were acquisitions announced earlier this fiscal year. Next slide, please. So moving on to our P&L performance. Revenue reached a record high of JPY 831.6 billion on a Q3 year-to-date basis. The expansion of global demand continued with the Cardiac and Vascular Company and the Blood and Cell Technologies company serving as the main drivers. Operating profit and adjusted operating profit also achieved growth exceeding that of revenue, reaching record highs of JPY 144.9 billion and JPY 173.5 billion, respectively. While the tariff impact began to materialize partway through the second quarter and continued to affect results in the third quarter as anticipated, we were able to offset these impacts through ongoing pricing measures and disciplined cost control, resulting in progress that exceeded our performance forecast. On a stand-alone Q3 basis, the operating profit margin declined. This was mainly due to the recognition of onetime expenses in the second half of the year, as explained during our second quarter earnings announcement. Next slide, please. So this is the year-on-year OP variance analysis for quarter 3. I will explain the Q3 year-to-date results on the next page. However, there are 2 major movements to highlight for Q3. The first is the impact of tariffs. In this chart, the tariff impact is included within gross margin and pricing. And as a breakdown of the gross margin effect, the tariff impact amounted to a negative JPY 4.2 billion. At the same time, pricing measures contributed a positive JPY 3.5 billion, partially offsetting the negative impact from tariffs. The second point is the recognition of profit and loss from newly acquired businesses. The Leverkusen plant recorded a loss of JPY 1.6 billion, while OrganOx contributed a profit of JPY 0.5 billion. Regarding the Leverkusen plant, we will take a disciplined and cautious approach to capital expenditures for production line preparations and proceed step-by-step as the certainty of customer contracts increases. Next, this slide shows the quarter 3 year-to-date OP variance analysis. Overall revenue growth driven by the continued expansion of demand made a significant contribution. The GP increment by sales increase was driven primarily by overseas TIS, mainly in North America as well as Global Blood Solutions, particularly in the plasma business. With regard to the gross margin pricing measures in the Cardiac and Vascular Company made a significant positive contribution to profit. However, as the impact of tariffs became more pronounced, this positive effect was partially offset. So while the negative effect from tariffs increased in quarter 3, on a year-to-date basis, the positive effect from pricing more than offset the tariff impact. SG&A has increased due to business expansion and remained largely in line with our assumptions. R&D expenses decreased slightly year-on-year. This was due not only to the impact of impairment losses on capitalized R&D recorded last year, but also to a review of R&D priorities and a disciplined focus on selective themes. Going forward, we will continue to invest in priority areas. As for foreign exchange, the impact was negative both on a flow and stock basis compared with the previous year. Next slide, please. I will now explain the performance by company. First, let me start with C&V, the Cardiac and Vascular Company. Revenue increased 8% on a local currency basis with strong performance continuing globally, particularly in North America. By business segment, growth was driven by TIS and Terumo Neuro contributing to revenue growth for the company overall. TIS was primarily driven by North America with solid performance continuing across all product categories. Volume growth contributed more significantly than pricing measures. In Terumo Neuro, strong growth continued in both China and Japan. The profit margin improved to 26%, supported by various initiatives, including pricing measures, profitability improvement and a review of unprofitable regions. However, due to negative impact from foreign exchange on a stock basis, the profit margin for Q3 on a 3-month basis declined year-on-year. Next slide. Pharmaceutical Solutions drove both revenue and profit growth for the company overall. This was led by domestic CDMO business as well as the strong performance of projects overseas. On the other hand, revenue declined in the Hospital Care Solutions and Life Care Solutions businesses. In Hospital Care, revenue decreased due to the impact of the business transfer in Q1 of the previous year as well as supply issue affecting the product. This supply issue has now been resolved, and the business is on the recovery trend. In addition, pricing measures implemented since April are progressing steadily. With regards to profit, earnings increased supported by the efficiencies of pricing measure and disciplined cost control. Regarding the acquisition of the Leverkusen plant announcement in May last year, this has been included in our consolidated results starting from Q3. On this page, figures and presented -- figures are presented excluding the acquisition impact to illustrate trends in the existing businesses. Performance, including the Leverkusen plant is shown in the bottom right of the slide. As mentioned briefly in the profit variance analysis section, the P&L impact related to this acquisition in Q3 has no impact on revenue, while the impact on profit was negative JPY 1.6 billion. We are currently working on production line start-up and production transfer. Since the acquisition was announced, we have received a significant number of inquiries from pharmaceutical companies overseas, particularly in Europe and the United States and are actually promoting the business to secure new projects. Next slide, please. Revenue increased significantly driven by strong growth in plasma innovations within Global Blood Solution. As the rollout of the Rika to existing consumers has already been completed, our focus in the plasma businesses will shift toward acquiring new customers going forward. In addition, our core business constituted to perform well, supported by the successful award of a tender for the [indiscernible] for whole blood collection system in Asia during Q3. The Global Therapy Innovations revenue increased as demand for cell collection -- associated with cell and gene therapy expanded, particularly in North America. Profit increased driven by improved profitability resulting from expanded sales of Rika as well as ongoing disciplined cost control. We have implemented production at -- adjustment related to Rika from Q3. However, due to efficient operation in production lines, the impact has been smaller than initially anticipated and profit margin has improved. Looking ahead to the next year, production adjustment may be implemented as needed, but we expect the impact in our P&L to be limited. Next slide. Following the completion of its acquisition as a wholly owned subsidiary on October 29, 2025, OrganOx has been included in our consolidated results starting from this Q3 earnings announcement. Results from November and December are consolidated with Q3 revenue of JPY 2.9 billion and adjusted operating profit of JPY 0.5 billion. This illustrates the growth trend, we are also disclosing Q3 year-to-date performance on a year-on-year basis. Revenue increased by 50% year-on-year and the profit margin improved significantly from 13% to 21%. This was driven by increase in number of liver transplant procedures as well as expansion of OrganOx consumer base. Looking ahead, the market for organ preservation using normothermic medicine perfusion (sic) [ normothermic machine perfusion ] or NMP is expected to continue expanding. Next slide, please. In the Americas, demand continued to expand, and we achieved double-digit growth on local currency basis. All companies delivered strong growth with TIS, Pharmaceutical Solutions and Global Blood Solutions serving as key drivers to leading global revenue growth. In Europe, TIS and Terumo Neuro continued to deliver stable growth. In addition, strong performance of projects that drove a significant increase in revenue in the Pharmaceutical Solutions business. In Japan, the CDMO business performed well with Pharmaceutical Solutions contributing to revenue growth. With C&V, Terumo Neuro continued to achieve double-digit growth. In China, revenue increased as Terumo Neuro continued to grow, supported by expanded market access resulting from VBP in Asia strong performance of TIS revenue growth and C&V. Next slide. With less than 2 months remaining until March, the full year outlook for the fiscal year is now coming into view. What I would like to reiterate is that our business based on our existing operation is steadily progressing towards the achievement of GS26 in the next fiscal year, supported by strength of our underlying fundamentals. In the current fiscal year, we are -- we recorded acquisition-related costs and other onetime expenses. The main item of onetime expenses that can be reasonably anticipated at this point are outlined on the Page 18 of this presentation. These initiatives reflect our commitment to improving profitability as we work toward achieving GS26. And the structural reform, we believe are necessary. These measures include initiatives to optimize our workforce overseas, which are expected to result in annualized cost savings of approximately JPY 3 billion from the next fiscal year. We position all of these costs as strategic investment aimed at supporting future growth. We continuously review our business portfolio and conduct strategy reviews to drive growth. While the business environment is constantly evolving, we will actively manage these changes to achieve final year of '26. That concludes my presentation. Thank you very much for your attention. Operator: [Operator Instructions] Otaka-san will be joining from the head of the management as a part of the management team joined with Hagimoto. Kohtani-san from Mizuho, you will be the first person to ask. Motoya Kohtani: So this is from Mizuho. Can you hear me okay? Yes. So on 18 -- Page 18, you were talking about the amortization. This is JPY 2.6 billion. And I think at the beginning of the period, it was JPY 4 billion. And if I look at the related costs in quarter 3, I think you said these were supposed to amortize in the first part of the fiscal year. So that amount seems to have -- has been brought ahead to the fourth quarter for the amortization fees. And so it looks to me for next year, I think the goodwill for next year also taken into consideration. So I'm just looking has the evaluation of inventories changed and the goodwill costs seem to be -- over the long period, seem to be slightly down from what was originally planned. But it seems to me that those costs seem to have swelled slightly. Unknown Executive: Kohtani-san, thank you very much for your question. So as your understanding is correct, this is pre-PPA, and we -- these were -- these amortization costs for the current fiscal year are JPY 4 billion, and they had been shared provisionally tentatively. But for the final amortization and depreciation expenses, we used an external organization to reevaluate these and the result of that external evaluation was that the -- we had previously expected them, so they are below our initial expectations. And it says at the bottom of here, the inventory step-up of inventories. This was when we made the purchase, these were reevaluated. The costs were reevaluated under the IFRS rules. So the inventory period had -- they've been distributed across the inventory period. So there's no impact on cash flow. But on the PL, they have to be recorded on the -- so they are JPY 4 billion and JPY 7 billion for next year. But for -- they will not, however, be from... Motoya Kohtani: Okay. So for these -- in these 2 years, these fees will occur. But after that, there will be very lower good rent -- goodwill fees. So it will be in the black in terms -- we will be getting closer to being in the black in terms of amortization? Unknown Executive: Yes. We had expected it to be JPY 9 billion, but it was actually JPY 65 billion in terms of those amortization fees that came with the purchase of OrganOx, but we expect that to be lower than previously predicted. Motoya Kohtani: And secondly, a final question. The -- I just wanted to ask about the -- at the Rika -- share of Rika, I think, probably will be about JPY 50 billion of total revenues. And I think there are some supply chain issues. But if we look at this now, I think it will be about JPY 30 billion, JPY 40 billion in terms of the portion of revenue. So is this the effect of deploying Rika later has had some effect, I think. So could you give me this JPY 50 billion that you had previously predicted for Rika? Why is that late? Why is that late to come online? So also I think MAYUMI a [ completer ] product is also late in deployment. So could you just let me know on that front? Unknown Executive: So for Rika, the revenues for Rika we haven't disclosed those at present. But when it comes to the -- there was some late deployment -- there wasn't any late deployment of Rika. So as I explained last time, it has been extremely efficiently utilized. And so the -- is lower than our initial assumption for the portion of net sales. But there is no particular -- no, there is no delay in the deployment of Rika. And we are currently improving the product and deploying promotions to increase customer inquiries -- acquire customer take-up. So there's nothing particular to add regarding Rika, but it is proceeding on plan steadily. So the -- and comparatively, it is not a particularly large-scale customer in question where we are expanding our promotions. And so we are looking forward to further development. And so this is one pillar of our growth pillars -- one of our main growth pillars and the development is proceeding as planned. Thank you very much. Operator: The next question will be Tokumoto-san from SMBC Nikko Securities. Shinnosuke Tokumoto: Yes. This is Toto speaking. I hope you can hear me. Unknown Executive: Yes, we do. Shinnosuke Tokumoto: Okay. My first question goes back to Slide 12 about your projection beyond -- on and beyond next financial year. And there are some -- you are also reducing some costs, also saving some labor cost, personnel costs. But can you just once again share any projects that you are planning to implement for the next financial year? I mean, passing the prices over to customers, you talked about that will be implemented, but inflation is not going away. I think -- can you talk about is this becoming more difficult. You also talked about profit improvements overseas. But can you share any other projects locally or in any regions that you can share? Kojiro Otaka: Well, thank you very much for your question. Let me pick up your question about price point and our programs overseas. And my colleague, Hagimoto-san,CFO, may jump in if necessary, but let me just start off. First on pricing point. We are just passing the prices based on the inflation based on our terms in agreements. And we will continue to do that as we've been doing already and go beyond next financial year. We are also getting some impact from customs and we are actually putting surcharge as the -- to absorb the impact of the tariffs. So we will continue to work on those price initiatives beyond next financial year. And you also asked me about the restructuring in overseas. We have in Q4, P18, Slide 18, as it shows on the QA, we are planning to have JPY 1 billion in onetime costs for project reduction severance of the people. This is onetime cost in FY '26, and we are expecting the positive impact to continue beyond FY '26. Jin Hagimoto: Let me just add one comment. We -- within FY '25, we are running several different projects, and we will also have some positive impacts from pricing initiatives. We, of course, are managing that. But the price programs, I cannot share -- disclose any specific numbers, but market is going inflation and we are increasing prices based on, if not higher than inflation. So we will be passing the prices because we are delivering added values. And as a company, we are just looking at having more values added so that we can increase the prices faster than the inflation. We'll continue to do that. And on the other hand, there are kind of reduction negatives like restructuring projects. These are the initiatives that we are running for this year as well as last year as onetime costs. And but our programs in FY '26, the very final year of GS26, we are making sure there's not going to be negative ripple effect at the end of the year in FY '25 and '26. So all those negatives that we need to deal with, we need to consume, including the onetime negative cost, we wanted to have them just done it and done it all at once. Shinnosuke Tokumoto: Okay. I just want to clarify about restructuring, JPY 5 billion in overseas. And this is some number that we didn't see in Q4, but you just added as you have made the decision to implement. Unknown Executive: Well, I've been -- we've been talking all through about necessity to go through the restructuring, but we have more precise numbers. So we decided to post it here. Shinnosuke Tokumoto: Okay. Understood. So I think Germany, Leverkusen, you also mentioned about that. But can you just share about what kind of approaches you are getting? There's going to be some time before the production lines go up running. But after negotiation, what will be the timing in which you will be starting to recognize revenue from that plan? I think that's one of the assessment points for assessing value for your stock. So can you talk a little more about the recognition of Leverkusen plant? Unknown Executive: Well, we do have signed an NDA with them. We are being discussing with multiple different potential customers. For PS business, as you can see on this slide, in this financial year, we are just a mid-digit growth. This growth is substantially very good. And we are getting good reputation for stable supply reliability. And for revenue, is that going to be profitable? We would like to share those perspective and deliver those targets in the next midterm plans. Operator: Next, Citigroup, Yamaguchi-san from Citigroup Securities. Hidemaru Yamaguchi: Yes. Can you hear me? This is Yamaguchi from Citigroup. Well, for quarter 3, if we look at quarter 3 alone, the gross profit ratio seems slightly down. But the product mix, is the tariffs the biggest impact on this on the product mix or... Unknown Executive: Yes. So on the right-hand side, are you referring to gross profit? Well, OrganOx, the purchase of OrganOx has also had an impact. But the weakening yen in quarter 3 has also had an impact as well -- so the -- it's one -- this has affected the gross profit rate by 1 point, I believe. But the tariffs, I think these 3 impacts have been impacting the gross profit ratio. Hidemaru Yamaguchi: Also -- sorry, the CFO was just talking about these one-off costs. So the next he says OrganOx. You've already explained that. But apart from other for these one-off costs, these -- in next year, do you think there will be any other significant one-off costs or one-off losses? Unknown Executive: Yes, I think your understanding is largely correct. Of course, in the -- included the balance sheet, we -- having made all the necessary investments, we believe that this is what we can expect to harvest. But we do want to improve profitability. Initiatives for improving profitability will be implemented in this period. So for '26 financial '26 as the final year of GS26, we hope to end in a clean manner. That's all from me. Thank you. Operator: Next question is Yoshihara-san from UBS Securities. Tomoko Yoshihara: It's Yoshihara from UBS Securities. I do want to ask a question about Rika. And in the second half, you are planning to do production adjustment, but the impact was not that big, if I understood correctly. But your customers, if we are hearing your customers' comment, market was soft, market share also shifted quite a bit. It seems like you are also getting some headwinds and production also, you mentioned about production may be adjusted next year. But I know this will be very difficult for you to make a comment about your customer, but can you share a little more details about this Rika business and how you see it's going to go? And also, you talked about the acquisition of new customers and when this business has just started. You were looking into potentially a very big customers who are not your customer back then. But you also talked about having approach -- approaching to small to midsized customers. Has something that changed in terms of the target customer base? Can you talk about that, please? Unknown Executive: Well, thank you very much for your question. So CSL or any other competitors may make some comments, but we will refrain from making any comments about what's represented by the competitors. But we are just competing -- making some progress so we can compete with CSL. And in next financial year, we are expecting to see -- we are not expecting a shrinking revenue from innovation. So we are expecting very stable revenue source. And your question about expansion of customer base, I'm sorry, maybe this was not clear in our explanations. But our approach to big potential customers, nothing has changed. So it will be incremental on top of it to expand our opportunities working with small to medium-sized customers as well on top. Tomoko Yoshihara: My second question is not directly related maybe to your financial performances, but your fundamental, I think, is quite doing well. But you are also having some challenging time over the last 1 year. Can you share examples of contentious discussions you may be having within that top management team. If there's none, that's also fine. But are you also looking into -- because there could be an option for you to buy back some of your shares back. Can you just talk about that as an option? Unknown Executive: Well, thank you for your question. I will refrain from any comment about share buyback in this meeting. But we are not happy with the stock price of today. That's how we see it also. And how we, including OrganOx, right, or -- so we want to send the message that people will hopefully be understanding that we are making investment for the better future. So we will continue to run those programs in the future as well. And we -- the share prices are decided with many different factors. There is no single answer, no solution, one bullet to increase the share prices. But I think we can maybe send our message more clearly, loudly so that we get to have a chance to explain why and what we are doing. And so this is actually a big topic within our top management meeting because we are -- we will be performing well. We will be hitting the target in GS26, but we also need a good job communicating with the people in the marketplace. Operator: Next, Morgan Stanley MUFG Securities, Hayashi-san, please. Ryotaro Hayashi: This is Morgan Stanley, Hayashi. Can you hear me okay? Unknown Executive: Yes, we can hear you fine. Ryotaro Hayashi: So my first question is regarding TBCT. And I believe that from your data, I have calculated that in the third quarter, the net sales apart from FX impact are about 20% up in terms of revenues. And I think with the Rika production adjustment with that in mind, in quarter 3 that has been taken into account. But your production lines is what I'm talking about are able to absorb that negative impact or able to manage that negative impact you were saying. So I just would like to hear some more details about what kind of response, what kind of effect that's had on how are you going to absorb that drop in. I think that you have already taken into account the production adjustments. But the Leverkusen plant I think revenues could go up possibly. Could you give me some color on that, please? Unknown Executive: First of all -- so thanks. In terms of net sales versus revenues, first of all. The Rika has contributed significantly to the increase in revenues. But for the other elements, for other products, those are also having favorable sales. Particularly in Asia, we have secured a tender in Asia, which has contributed greatly to increased profits, increased revenues. And the effect of those increased revenues and the production adjustment in terms of yield and improving production -- yield and production, I think, will bear out positively in our operating profit from now. Ryotaro Hayashi: But I think in November, in your explanation in November, you were saying that the quality was too high and there were -- on the business side, you were talking more about the business side -- it's -- I feel it's slightly different -- there's a bit of a disparity with what you explained in November. What in November, what were you predicting? And this time now, why is the minus lower? Is it to do with Rika? Unknown Executive: Yes. So let me add into that. So regarding the -- you're referring to the consumables for the Rika business. Well, the net sales and the forecasts, those come down, then the inventory level, I think, will -- we don't need to create that beyond need. So we would do some production adjustment. However, of course, for the actual distribution of the accumulation of inventories, that does bring down profits. But in terms of activities to increase productivity, then the production cost, if we're able to bring that down. So that's why we didn't have such a big minus in our revenues this time, that would be... Ryotaro Hayashi: Right. So the net sales for Rika has gone to plan, but the margin has the -- any negative impact on the margin has been brought down to a minimum. Is that correct? Unknown Executive: Yes. Well, what fluctuates is the -- if we look at the PSI, then these -- to keep the stock at a certain level, we have adjusted production. So overall, the structural impact is -- has been absorbed as offset by our higher production efficiency and production adjustment. Ryotaro Hayashi: Understood. Okay. My second question is to do with OrganOx. And I think there are 3 companies involved in OrganOx. In the third quarter, then the JPY 2.9 billion sales, that is -- is that in line with your initial predictions, forecast? I think for the full year, JPY 9 billion a year is what you were predicting. And in quarter 4, I think that has I think -- are you on target in terms of the pace for OrganOx's results? Unknown Executive: Yes. Well, thank you. In November and December, those 2 months have passed. Compared to the previous year, it is a very high level of growth on a year-on-year basis. But in the -- what we were initially expecting in quarter 3, we have gone perhaps beyond that slightly. But sorry, it's gone down compared to our prediction due to a slowdown in donors, available donors. But the demand remains extremely strong for OrganOx. So I think it is -- the growth trend is on target, and it was a slight depression in quarter 3 due to a lack of donors. Ryotaro Hayashi: So in quarter 4, it will go back to the original trajectory. Is that what you're expecting? Unknown Executive: Yes, that is our prediction. It will return to the expected trajectory for quarter 4. Operator: The next question is Tony Ren from Macquarie. Tony Ren: Can you guys hear me? Unknown Executive: Yes, we can hear you well. Tony Ren: Okay. Perfect. So my question is also about OrganOx on Slide #10. So based on the data on this slide, I calculated that the revenue increased about 46%, but the adjusted operating profit increased about 136%, so more than doubled. Did you do any cost improvement over there? Did you try to reduce any cost in manufacturing, SG&A or R&D-related expenses there? Unknown Executive: So thank you very much for your question. So this is a result of the sort of OrganOx organic growth. So we did not do any specific approaches at this point in time. This was all activities that was already planned by OrganOx prior to our acquisition. So what we do believe is that, as we mentioned earlier, OrganOx's business structure is a very highly profitable structure. And as the revenue grows, there is room for profit improvement. What we want to also materialize is that the overall capabilities that Terumo as a group has by combining those kind of skill sets or the manufacturing capabilities of OrganOx, some of the technologies that we have with Terumo, we do hope that we can also accelerate this kind of growth in the profitability. Tony Ren: Okay. So it is a matter of growing the revenue base and therefore, able to cover the fixed cost. Unknown Executive: Yes, exactly. Tony Ren: Okay. Perfect. Yes. My second one, very quickly, I just want to go back to the CSL, your customer CSL situation, right? I mean, obviously, we know that they had a lot of changes this week. Are you foreseeing any future impact because of the changes at your largest blood plasma customer in the U.S.? Unknown Executive: So obviously, we cannot comment on CSL's specific situation. But from our point of view, we do believe that the demand for Rika and the disposables that sort of our revenue stream is not significantly impacted. So our understanding is that we will continue to provide the Rika disposables to CSL. There may be some discussions about the volume in the future. But at this point in time, we do not see significant changes in our projections. Operator: Nomura Securities, Mori-san, please. Takahiro Mori: This is Mori from Nomura Securities. Can you hear me? Well, there are 2 questions I'd like to confirm. First is regarding the Rika. So the profitability of this compared and the growth trajectory, I would like to know whether that will change or not. But -- so this is regarding the -- there is no change to our projections and our initial projections have not been changed for Rika's growth trajectory. Secondly, in your explanation, you talked about achieving GS26. You made several references to that. But what items need to be achieved for GS26 to be achieved? What are the criteria for achievement in order to fulfill GS26? Unknown Executive: Thank you very much for the question. So we have our financial objectives, 3 financial objectives. These are since these were announced in December 2021, which would get double-digit growth for revenues in the late double digits. Secondly, would be the profitability rate, 20% of operating profit ratio of which. And the third is ROIC, 10% ROIC. That is the -- excluding the impact of M&A. But I think for ROIC of 10%, we want to achieve that as another key pillar. And so it's not that if one of those is okay. All 3 of these financial objectives needs to be achieved for us to deem that GS26 has been achieved. Takahiro Mori: Right. So within segments and the profits within each separate segment, if you want to -- GS26 needs to be achieved across segments. Is that correct? Unknown Executive: Yes. Depending on the business segment, then there are some variations, but we have all company financial targets as overall, which need to be achieved for us to declare GS26 to be achieved. Operator: Next question goes to Saito-san from JPMorgan Securities. Naoko Saito: I am sorry about that. My name is Saito from JPMorgan Securities. I hope you can hear me. Unknown Executive: Yes, I do. Naoko Saito: Sorry about that. So just wanted to talk about the slide, you analyze the operating profit ups and downs. I wanted to ask some detailed questions on the price and the expected price revenue. You talked about custom tariffs and prices in details. But the other things -- the other include the impact from inflation that you discussed back in Q2. You talked about some COGS impact, negative impact because of inflation. So I would say majority of the impact was coming from M&A transaction. Just wanted to see if there are all those details included in this analysis. Unknown Executive: Well, thank you for the question. Depreciation -- COGS from depreciation and M&A is adjusted values. So that's JPY 591 million and JPY 439 million actually includes M&A adjustments. So that's not counted in that JPY 103 million, which is about the impact from revenue increase. Revenue increase is also getting impact on tariffs, inflation, product mix are all encompassed within that JPY 103 million. Naoko Saito: Okay. You also mentioned about product mix. Is there any specific business that you saw quite a big change in product mix, especially for Life Care and Pharmaceutical Solutions, the factories are using -- you are using Japanese factories. Are the margin structures changed or not changed? Can you just add a little more comment about those? Unknown Executive: On your question about Life Care, there is not much of a big change on profitability structure. For Pharmaceutical, the revenue is growing. And as it goes up, we can just absorb fixed cost as a leverage. And so that would be the part in which we are seeing the positive impact. Well, the other -- this might be way too much in details. But on -- the plasma business is expected to grow. Then the revenue, if you look at JPY 103 million, the impact will count on driving that JPY 103 million up higher. So if you look at the business structure as a whole, that mix impact will be negative. So there's that kind of structural details. Operator: So we will end Q&A there as that is the end of the allotted time. That marks the end of today's presentation. Thank you very much for your participation. Here, we close the event. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good afternoon, and thank you for waiting. We would like to welcome everyone to Ambev's 2025 Fourth Quarter and Full Year Results Conference Call. Today with us, we have Mr. Carlos Lisboa, Ambev's CEO; and Mr. Guilherme Fleury, CFO and Investor Relations Officer. As a reminder, this conference presentation is available for download on our website, ir.ambev.com.br as well as through the webcast link. We would like to inform you that this event is being recorded. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ambev's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depends on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward-looking statements. I would also like to remind everyone that, as usual, the percentage changes that will be discussed during today's call are both organic and normalized in nature. And unless otherwise stated, percentage changes refer to comparison with 2024 fourth quarter and full year results. Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of Ambev's normal activities. As normalized figures are non-GAAP measures, the company disclosed the consolidated profit, EPS, operating profit and EBITDA on a fully reported basis in the earnings release. Now I'll turn the conference over to Mr. Carlos Lisboa. Mr. Lisboa, you may begin your conference. Carlos Eduardo Lisboa: Good afternoon, everyone, and thank you for joining our fourth quarter and full year 2025 earnings call. As we close the year, here is the message I hope you take away today. We made meaningful progress on the mission we set from day 1, even in a dynamic context that stress tested our strategy. Here is how we progressed. First, avoiding disruptions. We built on a strong foundation and maintained execution consistency across the company. Through active listening, we protected what was working and implemented improvements without destabilizing the organization. Second, keeping momentum. Over the course of the year, we advanced quarter-by-quarter on different fronts, finishing the year with a better performance for 2026. Third, building a stronger company. We avoided changing directions with the context. We advanced simultaneously on the 3 pillars of our strategy because that is where our differentiation comes from. This is what we mean by being ambidextrous. And it is building a flywheel that strengthens each year and sustain our performance over time. As a result, we ended 2025 stronger than we started. We strengthened our portfolio, got closer to our customers and consumers and advanced profitability. Volumes, however, were pressured by the environment, and that matters because it frames our ambition for what comes next. To use a simple analogy, 2025 was a tough season to play with a wet beach, cold weather and a game that kept changing. It forced us to build muscle, resilience and adaptability, and it strengthened our collective ownership as a team. And just as important, that strengthening showed up in our people. In a demanding year, employees' confidence in our future increased, driving engagement indicators to all-time highs, back to post-pandemic peak levels and reinforcing that our culture truly stands out in challenging moments. All that means we are coming out better prepared for the next season, which in 2026 happens to be the FIFA World Cup, a big passion point in our markets. So let me touch on another passion, beer. What we saw in 2025 reinforces our view that the headwinds were primarily cyclical and occasion driven, not a sudden change in beer fundamentals. A strong proof point is this. The most engaged consumers, our beer lovers, got closer to the category and the category equity strengthened over the year. In other words, beer continues to be loved, culturally relevant and deeply connected to socialization across our markets, where it holds a high share of alcoholic beverages. And we continue to see meaningful runway ahead. The category has headroom to expand, supported by favorable demographics in Latin America and growth through occasions development, both out-of-home and at home and through a broader portfolio that addresses trends and needs, recruiting new consumers. Simply put, what changed in 2025 was not whether consumers want beer, but how often the right moments happen. Now let me connect that to our strategy. Under Pillar 1, as the category captain, our job is to bridge the gap between beer potential and actual consumption, fostering category growth. In 2025, we led where the category expanded the most, premium, balanced choices and nonalcohol. We elevated the core segment through innovation and investments while building adjacencies like flavored beers. And that leads us to our Pillar 2, where we are using data and technology to shape our own future and stay ahead of the curve, strengthening the core business while building new growth engines. On the B2B side, our priority is to go deep with BEES as an enabler to make the core business stronger, helping us win through better execution at the point of sale. Our ecosystem is built on the idea that the better our customers perform, the better we perform. That is why we are embedding digital sellout activation tools powered by our data and insights, benchmarking what works across points of sale and translating it into sharper activation and portfolio recommendations. Also, BEES marketplace continues to scale with full year GMV growing 70%, driven by 3P expansion and gross margin up 3.5 percentage points versus last year, reinforcing both relevance and improving economics. On the consumer side, Z� Delivery closed 2025 with all-time high performance, delivering BRL 4.7 billion in GMV, up 13% versus last year. 67 million orders and 27 million yearly active users, up 11% versus last year, consolidating its position as one of the major convenience platforms in Brazil. Strategically, Z� put us close to young adult consumers with nearly 80% of buyers either Gen Z or millennials, and it accelerates both execution and our test and learn innovation loop. It is our food in the future. And this brings us to our third pillar, the muscle that makes the other 2 pillars scalable. In 2025, we set a clear ambition to expand Ambev's consolidated EBITDA margin again, EBM. Despite industry softness and FX and commodity headwinds, we delivered a meaningful evolution from top to bottom line that came from thoughtful choices on resource allocation, revenue management, productivity and expenses governance while sustaining brand investment. That discipline translated into delivery. At the consolidated level, we expanded organic EBITDA margin by 50 basis points, marking our third consecutive year of margin expansion and by 110 basis points in Brazil Beer. And that reinforced our confidence in capital allocation. Consistent with our commitment to return excess cash to shareholders over time, we announced approximately BRL 20 billion in shareholder returns in 2025, the highest in our history through BRL 13.2 billion in dividends, BRL 4.2 billion in interest on capital and a new BRL 2.5 billion in share buyback program. And we are starting the year paying the first BRL 1.2 billion tranche of the IOC declared by year-end. Now let me give a quick overview across our footprint. In 2025, we grew EBITDA across all our business units, and we expanded EBITDA margin in 4 out of 5. In Brazil Beer, full year volumes were in line with the soft industry, and our performance reflected 2 different halves. Our revenue management initiatives weighted on share in the first half. As conditions improved in the second half, market share expanded meaningfully. In Q4, as weather sequentially recovered, so did our volumes. October was the main drag, and we returned to growth in December. For the quarter, we delivered a low single-digit market share gain in Nielsen sell-out. We continue to lead where the category is expanding the most. premium and super premium volumes increased high teens, and we closed the year as leaders in the segment, reflecting stronger portfolio brand equity. Our balanced choices brands grew high 60s and nonalcohol grew around 30% as we continue to expand leadership and unlock incremental occasions. In the quarter, we delivered 100% of the Brazilian beer industry's growth in premium and nonalcohol according to our estimates and Nielsen sell-out data. In the core segment, softness was more pronounced given its higher reliance on out-of-home socialization. We are sustaining its recovery through stronger trade activation, marketing campaigns and continued innovation, and we started to see progress with market share gains in Q4. In Brazil NAB, during 2025, the disciplined execution of our strategy and resource allocation supported EBITDA growth with margin expansion. At the same time, Guaran� Antartica's equity improved, showcasing the strength of the brand. In the first half, volume momentum and commercial execution supported market share gains despite margin pressure given higher costs. In the second half, the CSD industry decelerated amid the same cyclical drivers that impacted beer. and price relativity became less favorable following our revenue management decisions, resulting in market share pressure while delivering a better profitability profile. In Argentina, the macro environment continued to improve with lower inflation and less FX volatility. The consumption recovery, however, is taking longer than we expected and continued to weigh on results in 2025. Still, performance improved sequentially throughout the year with a more balanced dynamic between top line and bottom line in the fourth quarter, supported by tighter execution and revenue management. Looking ahead, we remain constructive on a gradual recovery as the consumption environment improves. In the Dominican Republic, the consumption environment also improved sequentially through the year despite a weather-related disruption in Q4. In this context, beer gained share of alcoholic beverage in full year, supported by healthier dynamic between categories, while Presidente's brand health reached all-time highs. In Canada, we outperformed both beer and beyond beer industries, supported by our beer mega brands and continued beyond beer momentum while maintaining disciplined cost execution and delivering EBITDA margin expansion. With that, I will now turn it over to Fleury. Guilherme Fleury de Figueiredo Parolari: Thank you, Lisboa, and hello, everyone. As we enter 2025, we made it clear that this would be another year focused on long-term value creation through disciplined execution of our capital allocation framework. In a dynamic operating environment, we focus on what we can control and delivered another year of normalized EBITDA growth with margin expansion, EPS growth, resilient cash generation and a higher capital return to our shareholders. Let me walk you through our financial performance for the year, starting with the margin improvement dynamics. We closed 2025 delivering consolidated normalized EBITDA margin expansion of 50 bps reaching 33.4%, mainly driven by 3 factors: First, net revenue per hectoliter growth of 7.5%, supported by stronger brands, revenue management strategy and continued premiumization across our portfolio, leading to net revenue per hectoliter growth across all of our business units. Second, financial discipline. Consolidated cash COGS per hectoliter performance benefited from productivity initiatives and operational efficiencies across our industrial and logistics operations. Brazil Beer is a clear proof point. Despite the cost headwinds anticipated at the beginning of the year and the operational deleveraging associated with lower volumes, our cash COGS per hectoliter, excluding non-Ambev marketplace products increased by 6.1% in 2025 at the lowest quartile of our guidance. And third, efficient resource allocation. In SG&A, we continued to invest behind our brands while keeping total cash SG&A growth under control. Now moving to below EBITDA lines. We closed the year with almost BRL 4 billion in net financial expenses mainly explained by FX variation losses related to foreign currency-denominated assets and the BRL appreciation, coupled with expenses related to sourcing U.S. dollars in Bolivia. In terms of income taxes, our effective tax rate for the year was 17.7%, reflecting some one-off effects mainly from Q3, such as the Barbados divestment, the partial reversal of tax liabilities associated with the 2017 Brazilian tax amnesty program and certain effects related to tax credits. Absent such one-offs, our consolidated effective tax rate would have been approximately 20% for the year. As a result, stated net income reached almost BRL 16 billion with stated EPS increasing 8.2% year-on-year, while normalized EPS increased by 2% in the year. Now turning to cash flow. Cash flow from operating activities remained solid and totaled BRL 24.5 billion, BRL 1.6 billion lower than last year, mainly due to softer volumes that impacted working capital. Cash flow consumed in investing activities totaled approximately BRL 5 billion, mainly driven by CapEx investment broadly in line with last year. Cash flow consumed in financing activities amounted to BRL 26.8 billion, driven by shareholder payouts and the completion of our 2024 share buyback program. In total, we returned BRL 21.7 billion to shareholders on a cash basis, meaning that approximately 90% of our operating cash flow was returned to shareholders in 2025 and reinforcing our commitment to sustainable long-term value creation, our return on invested capital continued to be meaningfully above our weighted average cost of capital and improved in 2025, driven by NOPAT margin. For 2026, we remain consistent towards our capital allocation priorities of: one, reinvesting in our organic growth to keep supporting the development of Pillar 1 and Pillar 2 of our strategy; two, maintaining a disciplined approach towards M&A opportunities; and three, consistently return excess cash to shareholders over time. In terms of costs, in 2026, we expect Brazil Beer cash COGS per hectoliter, excluding non-Ambev marketplace products to increase between 4.5% and 7.5%, driven primarily by commodity prices, aluminum, in particular, and portfolio mix with higher cost pressures anticipated in the first half of the year. At the same time, we remain focused on identifying opportunities and enhancing efficiency as we continue to pursue our ambition of expanding consolidated margin over time. And before handing it back to Lisboa, I would like to share a team update. Patrick Conrad, a seasoned finance professional, is joining our Investor Relations team, succeeding Guilherme Yokaichiya. Yoka, in turn, will transition to a fully dedicated position leading Ambev's treasury team. I would like to take this opportunity to thank Yoka for the outstanding work he has done leading Ambev's Investor Relations team over the past 5 years and to wish both continued success in their new roles. Now back to you, Lisboa. Carlos Eduardo Lisboa: Thank you, Fleury. As I reflect about 2025, it was another year marked by a very dynamic operating environment, and that strengthened our ability to read and adapt to market changes. 2026 will certainly bring its own dynamics, but it is also shaping up to be a promising year for socialization, and those moments have already started. Carnival is underway, not only in Brazil, but across several of our Latin American markets. From there, we begin to warm up for the FIFA World Cup, the biggest additional record in favorable time zones for our footprint, creating another interesting backdrop for people to come together. On top of that, in Brazil, a holiday-rich calendar adds several long weekends throughout the year, creating additional occasions for socialization. In this context, I want to leave you with 3 reminders. First, beer is a loved category in Latin America with strong fundamentals, and that strength comes with headroom for growth, given its versatility to address consumers' trends and needs. Second, we, as a company, are advancing simultaneously on our 3 strategic pillars, strengthening a flywheel we can compound year after year. And third, we entered 2026 as a stronger company with momentum carryover and how we navigated 2025 was another proof point that our culture stands out in times like this. And none of this happens without our people. I want to close by thanking our teams across all markets for their ownership, adaptability and execution through a very demanding year and for the energy they are bringing into 2026. With that, let me hand it over to the operator. Operator: [Operator Instructions] Our first question comes from Nadine Sarwat from Bernstein. Nadine Sarwat: I'd like to double-click on Brazil. So firstly, great seeing that commentary about December beer volumes being in growth. Can you unpack that a little bit, the magnitude factors behind that? Was it all weather? Or were there any other favorable shifts? And are you able to comment any trends in January? And following up to that, secondly, Brazil NAB, I know you guys called out your revenue management strategy as a reason behind the volume decline. Can you add some color as to what the exact decisions were that resulted in that decline? And then what can we expect for volumes in '26? Carlos Eduardo Lisboa: Nadine, nice to talk to you again. Lisboa here. Look, I'm going to follow the protocol. I'm going to get the first answer. Regarding Brazil Beer, to your point about what are the drivers. So quickly reminder, what happened last year made 2025 like an outlier year for the beer industry in Brazil. Prior to that, 10 years' time, 5 years' time, 3 years' time, there was consistent growth and pretty much driven by favorable demographics and disposable income increase. Last year, and we mentioned that during the result announcement, what we saw was unseasonable weather impacting mostly the wintertime and boosted by the La Nina phenomenon that somehow made the winter go deeper and longer in the second half. And that created unfavorable type of situation for beer because it impacted the most an occasion and out-of-home occasions that are where the beer category volume resides. So that's the reason why we saw the impact. Obviously, it was not an easy situation for us to manage. As I said before, it was the first time that we saw such a strong impact in our industry, but I think the team put all the emphasis behind things that we could control. And by doing so, we kept evolving quarter-by-quarter. And when the weather changed during the last quarter of last year, we were ready to ride together with the more favorable weather impacting the demand again. And this is exactly how the situation went through. In October, pretty much the month represented the vast majority of our decline in the quarter view year-over-year. We got to a better position in November. And then in December, when you combine the better weather with the market share gain that we got in the final round, the final quarter of the year, which represents around a low single-digit in sell-out data growth, that explains the positive territory that we landed. I won't go into the details about the first quarter of this year. But what I can say, Nadine, is the following. Actually, that weather pretty much came into the first round of this year, the first month of this year, what puts in a year-over-year comparison, the weather impact is neutral, which is important for us. Henrique Brustolin: Sustaining and even improving profitability in 2025. You ended up doing that. There was an impressive performance on the SG&A, especially distribution costs. I would just like to get your thoughts about how you're thinking about this going into 2026, when you think about the hedging that you have for Brazil Beer as well as the room for additional efficiencies, how you see all of that shaping up for the year? Guilherme Fleury de Figueiredo Parolari: Thank you, Henrique, Fleury here. Can you hear me well? Just checking the mic here on my end. Henrique Brustolin: Yes, I can. Guilherme Fleury de Figueiredo Parolari: Great. So let me start with how we put your question. I think 2025, just to recap, was really a year that when we started, we saw important cash COGS pressure. I'm talking about Brazil Beer. That's why we have given a guidance last year of 5.5% to 8.5%. And we have done here a series of, I would say, projects looking to different lines of our P&L. As I said in my speech, we focus on the industrial side, we focus on the distribution, always privileging the investment behind our brands because that is what we need to continue to focus to make Pillar 1 and Pillar 2 work better. By a series of implementation of these strategies, we are happy that we landed on the 6.1%, which was the first quartile of our guidance, okay? Now when we look into '26, I think there are 2 things that remain the same. One is we need to continue to work very hard on the initiatives. We need to continue to make it very focused on our side to -- with our ambition of coming with another year of margin expansion, and we are already doing that as we started the year. And when we do our analysis, when we look into the costs, our hedging, which is nonspeculative, when we look at the commodities, so on and so forth, we are giving the guidance to the market of 4.5% to 7.5% for the full year of '26, which is midpoint broadly in line with what we have done in '25. And that is pressured, as I said in my speech, from commodities, aluminum in particular, and portfolio mix. But be in mind that we will continue to work very hard. It's our job here to do the work and probably throughout the year, come narrowing or come with news on here. So far, that is the guidance that we have. Carlos Eduardo Lisboa: Henrique, Lisboa here. Just to complement Fleury. You can imagine that nobody here, we are not expecting such a challenging context in terms of volume drop for the industry, especially here in Brazil. So that put a lot of stress on our ambition to protect margins for Ambev again. And I think last year was -- that's the reason why we said it was a stress test for us. Because if we could somehow overcome the FX, overcome commodities, and on top of that, overcome the lack of capacity to dilute costs without having the volumes that give us confidence. Somehow, I think the obstacle made us develop internally the right muscles to be prepared for another ground, but in a way better shape in my point of view. So again, was not a training season for us, it was already a hard game last year, and I think it was good, you're right, to test and be prepared for what's coming. Operator: Our next question comes from Gustavo Troyano from Itau BBA. Gustavo Troyano: My question relates to capital allocation. And how should we think about your approach towards dividends throughout the year? Last year, you paid interim dividends on a quarterly basis, but I just wanted to touch base on how you're thinking about the policy for this year, not only in terms of the final payout target, but also on the timing of the distributions throughout the year. So it would be nice to understand if we should expect dividends being concentrated towards the end of the year as we were used to see until 2024 or if there is something new towards this discussion? Guilherme Fleury de Figueiredo Parolari: Thank you for the question. Let me just start highlighting again what we have done in '25. I think you have seen a very proactive discussion that we have had with Lisboa and our Board here to make sure that we are able to change the payout or return to shareholders on a consistently basis quarter after quarter on last year. On this quarter or beginning of this quarter, Lisboa just mentioned on his beginning introduction that we're also paying part of the IOC that we've approved with the Board at the end of 2025. I cannot -- this is not a guidance. I cannot tell you how that will come over the year. But what I can say as a CFO that we continue to have every quarter discussions. We continue to look into our cash position, the cash generation on our side, taking into consideration always the 3 points of our capital allocation, invest in organic growth, look into selective M&A and deliver sustainable shareholder return over time. Operator: Our next question comes from Thiago Duarte from BTG Pactual. Thiago Duarte: Yes, in my question, I wanted to circle back to some of the topics I think we discussed a year ago, right after the return of both of you to Ambev and things that are related to the strategic vision that you shared with us at the time, and I wanted to comment, if possible, in light of not only the quarter, but I think 2025 results as a whole. The first one is to you, Lisboa, when you referred to make, I remember a year ago, bigger investments in the core brands as part of your analogy of making the company more ambidextrous and fostering the category growth. You mentioned briefly about elevating the core in your initial remarks. But when we look at the portfolio and the way it performed throughout the year, it appears that was premium, not the core that really stood out. So I wanted to hear how you think core stands a year later in terms of potential or whether you think it will continue to be gradually eclipsed by the premium brands and the portfolio will be somewhat transitioning more into premium and core losing relevance. So that would be the first of the topics we discussed a year ago. And the second one is related to the portfolio itself. In the past, I don't know, 5 or 6 years, Ambev made lots of investments in innovation, introduced many new brands, you repositioned the pricing. And obviously, I think this led to higher costs and expenses to support that expansion. And I remember a year ago, you mentioning that you believe the portfolio was stronger and it was time to reap the benefits of these investments. So on the question of the SG&A dilution, whether you think what we saw this year is really related to that and obviously, the sustainability of that going forward, which you mentioned a little bit before in the previous question. So those will be the points. Carlos Eduardo Lisboa: Thiago, nice to connect to you again. Look, one of the feedbacks we got from you all was about following the protocol, one answer only. So I'm going to get the first one. Okay, the first question. So based on the core question, what is the core role here for us? And I understand your point is more related to Brazil, given the fast growth rate we are delivering with the premium. I continue with my point of view, Thiago, regarding us being a company capable of managing ends not only one side of the portfolio partition especially because the part that you are alluding to the core, it is the stronger part of the industry. And if -- when you take in consideration the majority of the population in Brazil still rely pretty much on one minimum salary. The core has a meaningful play to gain in the game because it promotes accessibility to the category. On top of that Brazil is composed by different regions. Those regions is very interesting. I think I never told you that, but one of the things that caught my attention is how cyclical the portfolio is per region. So some places in Brazil that used to be a Brahma place today is an Antarctica place. Another one is a Skol place. And at a point in time, I told you guys, Skol is still a very relevant brand in several states of Brazil, here in Sao Paulo, for instance. So it's critical for us to protect that strength that our company has, the category has because somehow these brands, they represent the category. And there's plenty of room for us to make these brands very relevant in the future. How? Take as an example, what we are doing as we speak with Skol. We just brought to the game a new brand variant, which is Skol Zero Zero. We are not just following the zero trend. We are doing so with novelty because this brand extension brings something different from the others, zero alcohol, zero sugar. And this is the way, one of the ways we keep these brands relevant for our consumers in the future. And it's interesting because when you do so, when you find a way to be really ambidextrous is when you see the full potential coming to life. I'm going to give one example, which is the last quarter of last year this is when we saw the full potential of our portfolio coming to [indiscernible] because the share gain not only came from the new partitions being premium, being nonalcohol or being balanced, it came from the core as well. And coincidentally or not, this was the time when we started to see Skol also stabilizing, gaining momentum, especially in those states where we put more emphasis behind the brand. So -- and as a consequence, our share improved not only through the segments, but also through the channels and also through regions in Brazil. And this is what we want because we believe that our strength relies on the portfolio strength, and this is the game we want to play. And the core side of the business plays a very meaningful role there. Guilherme Fleury de Figueiredo Parolari: And Lisboa, if I can just add like one thing here, Thiago, quickly. I think connected with the strength of our portfolio, core was more impacted by, I would say, weather-impacted occasions, which were not fundamentally impacting the category. And with the other side of the portfolio, we led where the category expanded. And that's where we came with the bulk of the growth in premium and zero in Brazil. Operator: Our next question comes from Renata Cabral from Citi. Renata Fonseca Cabral Sturani: My question is related to GLP-1 drugs and the potential impact on company's portfolio. We are seeing the discussion a lot developed in the U.S. Of course, the penetration of the drug has been much higher than in Brazil. So my question for you is the weakness of the portfolio this year somehow can be attributed to that. And more than that, since in March, one of the patents will expire in Brazil. So the usage can expand in 2026 or maybe '27. What is the expectations of impact in the portfolio and what the company is working to mitigate that and offer other options to consumers, not only in beer but also in the portfolio? Carlos Eduardo Lisboa: Renata, thank you for the question. I think it's always important to go back to '25 in order to really understand what happened. There are 2 different kinds of impact. One is attitudinal change. The other one is behavioral change. What happened last year was a change on the behavioral side due to the weather, mostly, okay? When you have bad weather when you have colder and longer winter time, the most important drinking occasion in Brazil, which is the out-of-home among friends sharing beer is the one mostly impacted. And this is what explains the majority of the drop that we saw last year. And by the way, as explained by Fleury, the brands that depend the most on this occasion are core brands. And that's the reason why you saw the core brands somehow following what happened with the industry, okay? So what is good about that is the fact that even with such a challenging circumstance context we measure the attitudinal side of our consumers regarding the category constantly. And we see not only protection of the relationship between consumers and the category, but with those that are more -- that are closer to the category, we saw a strength, which doesn't mean that those that are more unfrequent consumers, sporadic consumers do not fluctuate. And for those consumers, we are working with a very versatile category to attend more needs and trends. That's the reason why you see us developing zero alcohol beer. We are developing functional beers like gluten-free, lower calories. And we are also attending those consumers with more sweet flavor beers like Flying Fish that we introduced last year. So regarding the point about the GLP-1, we haven't observed any meaningful impact on our business. But like any other emerging trend, it requires time, more evidence, and as a consequence, I just want to say that we're going to keep monitoring and acting accordingly. Operator: Our next question comes from Isabella Simonato from Bank of America. Isabella Simonato: I mean my question is about 2026 beer Brazil. I mean, as you mentioned, last year was quite challenging in terms of weather and occasions, and you highlighted several tailwinds this year, especially regarding that the World Cup and et cetera, more holidays as you mentioned in the past. But at the same time, you're coming -- your guidance probably shows that costs will grow above general inflation. And you're coming off from a base of SG&A that seems tough in the sense that, that was a very good performance in the last year. So when you balance things between maybe a more favorable backdrop and what you're facing internally, I wanted to hear your thoughts on your pricing strategy for 2026. And also if you could give us a little bit of a color on how should we think about mix, especially during the World Cup? And among those variables, across those variables, what do you think should be more relevant when we're thinking about volume growth for the year? Carlos Eduardo Lisboa: Isabella, it's a long question. So let me take the point about pricing, which is very sensitive. So I'm going to try to answer without going to any -- a territory that we don't want. So our pricing has a mission composed by twofold. One side of the pricing story is keep our industry accessible. And the reason why for that is what I mentioned before. A good -- the majority of the population in Brazil still depend a lot on accessibility to be close to the category. So we must keep an eye on it. That's the reason why core has a role to play. That's the reason why packaging assortment has a role to play because we want to give them accessibility alternatives. If we rely only on premium, we're going to make their lives even harder. On the other side of the story, pricing has the role to protect our profitability moving forward. And as you know, we have an ambition to continue expanding margin in the -- ambition. The same way we anticipated to you in the beginning of last year. We keep this ambition alive and Fleury mentioned that in the beginning of the session. So we're going to -- we need to be always balancing the 2 sides of the story. So it's not an or, but it's an and game. The beauty about our situation today is when you look to our flywheel, first and foremost, our portfolio is more complete today. And it is complete regionally speaking. So it gives us alternatives to move forward with our revenue management strategy for the year. On the second side of the story, the second pillar of our strategy, you find the digital ecosystem. And I already mentioned to you all BEES is enabling us to strengthen our core business while creating new growth engines. On the first side of the story, go deeper on the core business. We are using technology to go more granular, to execute our revenue management strategy in a different way than we used to do before. We are more effective today than before in terms of dollar invested in promotions and so on and so forth. Our algorithms help us to recommend the right portfolio of brands for each type of point of sale and so on and so forth. By doing so, we not only improve our capacity to execute the pricing per se, but we also bring together a very interesting mix impact for the game. And the 2 together should be enough to offset what kind of impact we see on the COGS side as we did last year. That's pretty much the balance we have to keep in place every single day. And I must confess that the more we do it, the better we get. So again, similar to what I said before, I feel like last year was a very good acid test, stress test for us to be ready for the year to come. Guilherme Fleury de Figueiredo Parolari: And Lisboa, Fleury here, just to add one thing here, Isabella, when you look into our costs, another way of thinking about that cost and expenses, you look at that in a holistic way. You always do the resource allocation over and over, as Lisboa was mentioning, measuring returns from market promotions from everything that we do. And it's also fair to say that, as Lisboa mentioned, over time, we want to increase -- we have the ambition of increasing our margin. But most likely, we're not going to be able to do that every quarter because when you look into Pillars 1, 2 and 3, those will be maximized over time, but that's our long-term ambition. Looking to our costs, taking out of the equation what didn't make sense and refuel and reinvesting behind our brands. And that's what Lisboa mentioned as a flywheel. So that's what we want to continue to gain momentum over and over. Operator: This does conclude the Q&A section. I will now hand the floor back to Lisboa for any closing remarks. Please go ahead, sir. Carlos Eduardo Lisboa: Thank you for joining our call today. I would like to close reinforcing some messages. Our mission is to always strive for our better version. And we will do that by leading and shaping a loved category with clear headroom for growth. Advancing simultaneously on the 3 pillars of our strategy is what set us apart. 2025 stress tested our strategy, and we closed the year stronger and better prepared for what comes next. Thank you, and hope to see you soon. Enjoy carnival. Operator: This does conclude today's presentation. You may now disconnect, and have a wonderful day.
Operator: Ladies and gentlemen, thank you for holding, and welcome to the BWP Half-Year Results Investor Briefing. [Operator Instructions] However, you will have an opportunity to ask questions immediately afterwards, and instructions will be provided on how to do this at that time. I would now like to hand the call over to the Managing Director of BWP, Mr. Mark Scatena. Mark Scatena: Thank you, and good morning, everyone, and thanks for joining us. My name is Mark Scatena, Managing Director of BWP, and I'm joining you from Perth. With me today is Andrew Ross, Head of Property; and David Hawkins, our Chief Financial Officer. Today we're pleased to present BWP Group's results for the half-year ending 31 December 2025. BWP has released to the ASX this morning its half-year results announcement, half-year report incorporating the 4D, and investor briefing presentation. I'll now take you through the key aspects of the presentation before we take questions. Turning to Slide 3. To commence today, we acknowledge the traditional owners of country throughout Australia and their continuing connection to lands and waterways upon which we depend. We pay our respects to their elders, past and present. Turning to Slide 6 and portfolio highlights. The half-year result reflects continued progress across BWP's strategic pillars of portfolio optimization, profitable growth, and portfolio renewal. Portfolio optimization outcomes were underpinned by the completion of management internalization and progress on the Bunnings lease reset, resulting in an extension of the portfolio weighted average lease expiry to 7.5 years, an increase of 3.1 years on the prior corresponding period. Like-for-like rental growth for the 12 months to 31 December 2025 was 2.6%, supported by strong leasing outcomes in the large format retail portfolio, where leasing spreads increased by an average of 7.6%. The portfolio recorded a valuation uplift of $155.9 million, reflecting improved rental income and a firming of the weighted average cap rate of 13 basis points to 5.27%. Developments and repurposing activities, namely at Fountain Gate and Broadmeadows in Victoria and Noarlunga in South Australia, were advanced during the period. Supporting profitable growth, the group completed the acquisition of HomeCentre Morayfield in Queensland for $48 million at a market capitalization rate of 5.75%. The fully leased large format retail center was acquired off-market, funded from existing debt facilities, and was earnings accretive from settlement, further increasing BWP's exposure to large format retail. Reflecting the group's operating performance, an interim distribution of $0.0958 per security has been declared and will be paid on the 27th of February 2026 to security holders on BWP's register at 5:00 p.m. Western Standard Time on 31 December 2025. BWP today reaffirms full-year distribution guidance, subject to no major disruption of the Australian economy or material change in market conditions, expecting total distributions for the year ending 30 June 2026 of $0.1941 per security, representing a 4.1% increase on the prior year's distribution of $0.1865. Portfolio renewal and capital management activity also progressed during the half, including the divestment of a non-core asset at Morley in Western Australia. Post the balance date, the divestment of Port Kennedy in Western Australia was completed, and the group also entered into an unconditional contract for the sale of Chadstone in Victoria for $86 million, with settlement expected in June 2026. In October 2025, the group completed a successful debt refinancing, issuing a $300 million 5-year Australian medium-term note, which was strongly supported by both domestic and offshore investors, further diversifying our funding base and enhancing balance sheet flexibility. Moody's revision of our credit rating upwards to A3 stable further underscores the strength and resilience of the balance sheet, positioning the group well to support future growth opportunities. Turning to Slide 7 and key portfolio metrics. Statutory profit after fair value movements and income tax was $221.8 million, compared with $157.1 million in the prior period, an increase of 41.2%. Profit before fair value movements and tax of $66.4 million was largely in line with the prior corresponding period, with increased rental income offset by one-off transaction costs associated with the internalization and lease reset. The underlying net tangible asset backing of BWP's securities increased during the period to $4 per security at 31 December 2025, reflecting the unrealized gains on revaluation of investment properties and the increased number of securities on issue post the internalization. Turning to Slide 9 and financial performance. While I won't spend time on Slides 9 and 10, they do provide an overview of financial performance for the half, with key metrics focused on income, expenses, portfolio valuation, distributions, investments, and cash generation and our capital structure. Turning to Slide 11 and funds from operations. Funds from operations increased to $70.4 million, up 6% on the prior corresponding period, with a distribution reflecting 98.6% of FFO. Distributions for the half were fully supported by cash generation, despite increased repurposing activity providing a headwind to rental income. BWP continues to target a distribution payout ratio of 90% to 110% of FFO, providing flexibility to accommodate the impacts of activities such as development and repurposing. Turning to Slide 13 and portfolio evolution. This Slide summarizes the evolution of the BWP portfolio and reflects the contribution of site repurposing, Bunnings upgrades and expansions, and increasing participation in the large format retail or LFR sector to the composition of BWP's portfolio. Whilst investment in Bunnings Warehouses remains BWP's primary focus, large format retail has become an increasingly important component of our portfolio. Since 2020, BWP's LFR portfolio has grown to approximately $1.2 billion, driven by rental growth, acquisitions, and asset repurposing, placing BWP as Australia's fourth-largest owner of LFR assets. Importantly, leveraging the post-internalization reduction in the cost of capital provides BWP with increased capacity to continue growing all aspects of the portfolio, including LFR, and supported by a tenant-led expansion and site repurposing pipeline of approximately $100 million. Turning to Slide 14 and large format retail dynamics. Continued tenant strength, together with an undersupply of lettable area, is driving an attractive rental growth outlook for large format retail. And population growth, rising residential property values, and low unemployment have underpinned strong retailer performance, with listed large format retailers continuing to demonstrate resilient sales growth. Given this context, with cumulative lease expiries within the LFR portfolio to the end of financial year 2029 representing some 10% of annual portfolio income, opportunities exist to drive positive leasing spreads through effective portfolio optimization and tenant curation. Turning to Slide 15 and portfolio composition. The large format retail market is material in size, with an estimated value of $25 billion, and importantly exhibits strong ongoing transaction activity or asset churn that supports portfolio growth through asset recycling and acquisitions accretive to BWP's cost of capital. And whilst BWP's market share of the LFR market is significantly less than its share in Bunnings Warehouse ownership, the addressable market size and the higher rates of churn present an opportunity for BWP to grow its portfolio over time, leveraging the group's asset management and development capability, supported by its balance sheet strength and post-internalization cost of capital reduction. Turning to Slide 16 and an update on the transition to an internalized model. Upon completion of the internalization transaction on the 1st of August 2025, BWP has prioritized systems enablement, team employment arrangements and resourcing to support growth and improve the delivery of investor relations and sustainability initiatives. Collaboration with Wesfarmers to support the transition to an internalized model has been effective, with expansion planning and upgrade principle development advanced with Bunnings during the half. The internalized model remains a key enabler of BWP's strategy, supporting a lower cost of capital, improved alignment with security holder interests and greater operational flexibility to pursue value-accretive growth opportunities. Turning to Slide 18. Activity across the portfolio continued to be underpinned by strong tenant covenant quality, extended lease duration and disciplined asset management. The reset and extension of 62 Bunnings leases materially increased portfolio WALE to 7.5 years as at 31 December 2025, while leasing activity within the large format retail portfolio continued to support income growth. Occupancy of 96.7% reflects the impact of stores vacated for repurposing at sites including Fountain Gate in Victoria and Noarlunga in South Australia. And BWP's rental income continues to be supported by a high-quality covenant mix, with approximately 97% of income derived from Wesfarmers Group and other national retailers. And turning to Slide 19. Rental income growth for the portfolio reflects the benefits of a balanced lease structure and the increasing contribution from large format retail assets. For the 12 months to 31 December 2025, like-for-like rental growth was 2.6%. Growth was driven by fixed and CPI-linked rent reviews across the portfolio and strong leasing spreads in large format retail lease renewals, partially offset by market rent reviews on 2 Bunnings leases, being Chadstone and Hawthorn in Victoria. Turning to Slide 20. Leasing activity within the large format retail portfolio delivered positive outcomes, with leasing spreads across 8 large format retail tenancies averaging 7.6%, reflecting strong rental reversion. Also, incentives remain low during the half, reflecting both tenant demand and the quality of BWP's portfolio. These outcomes continue to support income growth, despite increased repurposing activity during the half. Moving to Slide 21 and cap rates and valuations. The entire portfolio was revalued during the period, resulting in a weighted average capitalization rate of 5.27%, representing compression of 13 basis points over the half. Net fair value gains for the period totaled $155.9 million, with this valuation uplift driven by both improved rental income and cap rate compression. Market transaction activity increased during the period, reflecting improved alignment of buyer and seller expectations and continued investor appetite for assets underpinned by strong covenant quality. Turning to Slide 22 and repurposing. During the half, BWP's repurposing activity gained momentum, with construction commenced at both Fountain Gate in Victoria and Noarlunga in South Australia, and progress also made on the Broadmeadows HomemakerCentre expansion in Victoria. These projects reflect BWP's capability to execute across feasibility, planning, construction and leasing, with a strong focus on preleasing outcomes and disciplined capital deployment. Repurposing activity remains a driver of future income growth and portfolio renewal, enabling the group to reposition assets to higher and better use while maintaining balance sheet flexibility. Moving to Slide 24 and tenant expansion activity. As a key driver of profitable growth, BWP continued to progress agreed tenant-led expansion projects comprising total commitments of $81 million across a number of sites. Key projects include the $14 million expansion at Bunnings Pakenham in Victoria and the $11 million Carco redevelopment and expansion at Midland in Western Australia, both expected to commence prior to 30 June 2026. These projects are characterized by long lease terms, attractive rentalization rates, and strong tenant alignment, and reflect BWP's strategy of deploying capital into lower-risk, income-accretive opportunities within the existing portfolio. Pleasingly, planning has advanced regarding the five Bunnings store expansion projects agreed as part of the internalization and Bunnings lease reset and capital investment transaction. Turning to Slide 25 and acquisition activity. During the half, the group acquired HomeCentre Morayfield in Queensland for $48 million at a 5.75% market cap rate from an unrelated third party. The fully leased retail center offers approximately 12,100 square meters of lettable area, with tenants such as Amart Furniture, Nick Scali, Super Cheap Auto, and Sydney Tools. The off-market acquisition was funded from existing debt facilities and was earnings accretive from settlement, further increasing BWP's exposure to the large format retail sector, which continues to benefit from favorable supply and demand dynamics. Turning to Slide 27 and portfolio renewal. Portfolio renewal activity during the half focused on actively recycling capital through the divestment of noncore assets and redeploying capital into opportunities and projects that enhance portfolio quality and growth. The sale of the ex-Bunnings Morley property in Western Australia for $19.5 million and the ex-Bunnings Port Kennedy property, also in Western Australia, for $14.3 million were both completed at premiums to book value. Subsequent to period end, the group also executed an unconditional contract for the sale of the Chadstone Homeplus Homemaker Centre in Victoria for $86.0 million, with settlement expected in June 2026. The divestment followed the negotiation of a lease extension with Bunnings to July 2030 and an extensive public sales campaign, achieving a realized internal rate of return of 15.2% since its introduction to the BWP portfolio via the NPR transaction. The proceeds of the Chadstone sale will initially be applied to reduce drawn debt. These transactions demonstrate BWP's disciplined approach to capital recycling and the ability to capture value through active asset management. Moving to Slide 28. BWP's capital position remains strong, supported by diversified funding sources, extended debt maturities and investment-grade credit ratings from both S&P and Moody's. During the half, the group further diversified its funding sources and extended debt maturities, supporting increased balance sheet flexibility. Gearing at 31 December 2025 was 24.7%, which remains well within the Board's preferred range of 20% to 30%, while the weighted average cost of debt remains stable at 4.4%. And on to Slide 29. The group completed a new $300 million 5-year bond issuance, further diversifying funding sources and extending the weighted average maturity of debt. The group has sufficient available liquidity to address upcoming debt maturities, including the $150 million bond maturing in April 2026. BWP's diversified mix of domestic and international bank facilities and capital market funding positions the group well to support ongoing repurposing and tenant-led expansion activity and future portfolio growth opportunities. Turning to Slide 31 and governance. As disclosed in November 2025, our Chair, Tony Howarth AO, has retired from our Board, with the current chair of the Audit and Risk Committee, Ms. Fiona Harris AM, to succeed Tony as Chair. Fiona's appointment as Chair reflects strong Board support and alignment and will provide valuable continuity as BWP transitions to its new role as an internally managed business. On behalf of the management team and investors, I'd like to acknowledge and thank Tony for his significant contribution, strong stewardship, wise and commercial counsel and effective leadership of the Board. Tony is leaving BWP well-positioned following the recent internalization and lease reset and extension transaction. Turning to Slides 33 and 34 and our outlook. For the balance of the 2026 financial year, BWP will continue to deliver on its strategic agenda of portfolio optimization, profitable growth, and portfolio renewal. The group will remain focused on embedding the internalized model, with initiatives centered on systems enablement, remuneration alignment with security holder interests, and also additional resourcing, particularly in areas supporting growth, being investor relations and sustainability. The second half of the 2026 financial year will see the progression of material capital expenditure commitments, reflecting significant site repurposing activity and tenant-led expansion projects, with capital expenditure of between $60 million and $70 million expected for the 2026 financial year, subject to construction progress and project timing. BWP will continue to assess and pursue accretive growth opportunities, leveraging the reduction in the cost of capital achieved post-internalization and the group's diversified funding positions. Large format retail remains a key focus area, with favorable market conditions, including low rates of new supply and strong tenant performance, expected to support portfolio optimization through tenant mix curation and leasing spread opportunities. BWP's largest tenant, Bunnings, remains well-positioned, supported by external operating environment and its continued focus on expanding and innovating its addressable market. Rent reviews are expected to contribute incrementally to property income in the second half, with 93 leases scheduled for CPI-linked or fixed percentage increases, incremental to the 73 completed in the first half. In addition, three market rent reviews of Bunnings Warehouses are in the process of being finalized and are expected to be completed during the second half. Finally, and subject to no major disruption of the Australian economy or material change in market conditions, BWP affirms total distribution per security guidance for the 2026 financial year of $0.1941, or 4.1% above last year. And that concludes our prepared remarks, and I'll now hand back to the moderator to facilitate any questions, where myself; Andrew Ross, BWP's Head of Property; and David Hawkins, BWP's Chief Financial Officer, are available. Thank you. Operator: [Operator Instructions] Your first question today comes from Cody Shield from UBS. Cody Shield: So you've got the expansion and repositioning CapEx here. You're talking about more LFR acquisitions potentially. I mean, where do you guys see gearing landing over the next 12 to 18 months, and where would you like that to sit? Mark Scatena: Thanks, Cody. Look, we have guided clearly to CapEx in terms of the outlook, so we have that CapEx profile to deploy this year, which we're very pleased to deploy into some very strongly performing incremental investments through repurposing and expansions. So we're very pleased with that. There's some more capital to deploy to complete some of that activity into FY '27. So if you think about the headroom and availability we have, we expect gearing probably to approximate kind of what it currently is, perhaps trend a little bit lower over time. But that's, of course, absent any inorganic activity that might play out. But I think if we deploy into the existing pipeline of asset repurposing, I think you'd probably expect gearing to broadly remain consistent. Cody Shield: Okay. That's clear. And then just on the CPI escalations, I mean, they look a touch light for the period. What kind of lag do you have on the CPI that goes into that? Mark Scatena: Can you just repeat that question, Cody? Sorry, we just missed that. Cody Shield: So just on the CPI-linked escalations 2.6%. I mean, what kind of lag have you got on the mechanisms? Just thinking, because the CPI over the last, let's say 6 months to December '25? Mark Scatena: It's about 3months lag. Cody Shield: Okay. But that 2.6% then, I mean, it's a touch light, isn't it? Mark Scatena: I think the one thing we'd probably point to on that and we call this out, I think on Slide 21. And that is if you just look at the composition of that lease outcome mix for the year, you can see we disaggregated that -- sorry, I should say, Slide 22 -- no, sorry, Slide 19, apologies. Slide 19. No, we disaggregated that. So we did that to give a little bit more flavor to the composition of that leasehold mix and the outcomes for the half. So you can see the composition there in regards to both CPI and the fixed movements, and we've split that across the Bunnings leases, and then we've had the LFR as a separate component there, and then we've given the aggregate in that fourth column. And we've also pointed to market rent reviews, and we have a footnote there that refers to 2 market rent reviews in the Bunnings market rent reviews, which had a cumulative outcome of 4.4% down for those assets. So I think one of those was Chadstone, which is a disposal asset. If you add back essentially those market rent reviews, again, one of those is now, or will subject to completion not be within the portfolio, that the overall growth in terms of income for an all-lease portfolio for the half was 3%. So again, essentially that some strong leasing spread outcomes in LFR offset by 2 market rent reviews in Bunnings, knowing that we've got 62 leases that we reset through the lease reset at the start of the half. Operator: Your next question comes from Tom Bodor from Jarden. Tom Bodor: Just picking up on that CPI question and the difference between the Bunnings CPI indexation at 2.5% and the LFR at 2.9$. Were there some caps on some of those Bunnings leases that had CPI escalations? Mark Scatena: Yes. Yes, Tom, there were. There's a few leases in the portfolio that have got that cap in there. And just so everyone knows, these are actual actioned CPIs during the period. So yes. Tom Bodor: Were those ones that were capped though, they were just 2.5% because the cap's 2.5%? Mark Scatena: Correct. Right, Tom. Tom Bodor: That's clear. Just on the guidance, you at the full year you said $5.6 million of capital profits released as an assumption sitting behind your guidance on DPU. Has your expectations changed around this $5.6 million number? Mark Scatena: Tom, I think it's a good question in the sense that we guided to that headwind which was the repurposing shortfall in comparable rental income given, as I said, that repurposing activity, so we wanted to be very clear on that. Clearly, we have some transaction costs as well, which we bore in the half. I think if you look at essentially the FFO uplift at 6% and the distribution and the payout being slightly less than that, I think again we're providing for some flexibility in the second half. I think that guides to that. So we're pleased with that FFO growth. We're pleased with broadly that underlying set of earnings. But at this point, Tom, there's a lot to play for in the second half, as there always is. So we're hopeful that that level of capital profit release isn't required, but I think there's some flexibility in that guidance. Tom Bodor: Bodor: So you're tracking ahead of the $5.6 million where we sit today compared to what you thought 6 months ago? Mark Scatena: Yes, well we are, but again, a fair bit of activity, Tom, so we just want to make sure we're holding that. Tom Bodor: Okay. Clear. And then just the final one, I guess maybe be interesting how the relationship with Wesfarmers has evolved post-internalization. Is it sort of obviously you've said they've been constructive in terms of internalizing and the process there, but what about just sort of broader discussions around their needs and wants as a tenant? Mark Scatena: Yes, I suppose there are 2 components there, Tom. There's the Wesfarmers shared service agreement, and that is going very well, and that's entirely to expectation. They've been very supportive and enabling as it relates to continued strong technology support, continued strong insurance program support as we run off into our own program. So again, very pleased with that as it relates to Bunnings. I think as we called out during much of the lease reset and internalization discussion, our topics of interest and our topics of mutual discussion have moved into upgrades and expansions, and we're spending a lot more time discussing those prospects as part of that transaction element. So I would say that relationship's positive, still commercial and robust, as it always is, but I think it's pleasing that we have more of a focus on expanding our tenant's portfolio, which is incredibly important as a good landlord. And we've diverted some of that activity away that we were spending on market rent review. And there's also a very positive impact to that as well outside the Wesfarmers relationship, and that is that the asset management team, our leasing team, have more time to spend on perhaps the non-Bunnings part of the portfolio, and we're very hopeful that we are deploying that released effort into good activity. We talked a lot about leasing spreads, et cetera., in the LFR portfolio, so that is a key focus of the team. Operator: Your next question comes from Lauren Berry from Morgan Stanley. Lauren Berry: I just wanted to pick up on the payout ratio guidance that you've given as a range of 90% to 110% of FFO. Like if you look at the top and bottom end of that range, it's about like a $25 million to $30 million swing factor between those bookends. So just wondering why you've given yourself such a large range to play in there. And if there's any, I guess, read through to how you're seeing the next couple of years downtime from redevelopments? Mark Scatena: Thanks, Lauren. I wouldn't read too much through that. I think you've seen for the half, we've paid out just shy of 99%. I think historically that has broadly approximated 100%. That's our intent going forward. But I think we just wanted to have some flexibility, Lauren, on the basis that we've been a little bit more active, there are some timing differences coming through the FFO line, for example, given some transaction activity. So I think it's more the flexibility and agility to meet, I suppose, some of that activity, Lauren. But yes, our intention most certainly is to pay out as fully as we can in terms of FFO. So I think it just gives us some flexibility, Lauren, that given the lumpy activity, we just wanted to give some allowance for that. Lauren Berry: Yes. Sure, sure. Do you foresee more of these timing differences occurring in FY '27, or will '26 kind of be the bulk of them? Mark Scatena: No. Most of the repurposing activity is happening essentially this half. That will carry forward into the first half of '27. So I think we've guided to Fountain Gate's completion in September, and then Noarlunga a little after that, and then our Broadmeadows Homemaker Centre a little after that into the first half of the calendar year. So yes, we'd expect most of that repurposing timing difference to be completed in the first half of the next financial year. Lauren Berry: Okay. And just on the developments, are you able to give us a little bit more color on what kind of yield on cost you're looking at for the LFR opportunities? Mark Scatena: Yes, I suppose there are a couple of things there. And if the yield on cost you're talking about the repurposing, Lauren, I think the deployment of that $60 million to $70 million we guided to. I think we've always said that there's a hierarchy, and the hierarchy that we really like to deploy capital into that repurposing activity, and our expectation there is that yield on cost is 10% and above. So that's our expectation. And then you can see clearly we then deploy into existing tenant expansion and upgrade activity, and that has a typically a lower yield, and then of course we've got the inorganic M&A activity. So that's the hierarchy. So in terms of that repurposing, we'd expect kind of double-digit yield on costs. Lauren Berry: Double-digit, are you talking about just on your -- so when you've got like the development cost, say Fountain Gate, $32 million, you're saying like the yield on cost on that would be double digits? Mark Scatena: Yes. On the CapEx. Lauren Berry: Yes. Okay. And then just final one from me. I mean, you've given a lot more on LFR as it relates to your portfolio. Do you see a certain portfolio split evolving over time, say exposure to LFR versus stand-alone Bunnings? Mark Scatena: No, no, we don't have a pie diagram expectation, a pro forma that we, for example, tried to showcase on Slide 13. I think it's more we'll deploy capital, Lauren, into activity that we think is very good for security holders and supports our objective, of course, of improving income and the portfolio over time. So that's the premise. What we've called out is that we are a relatively decent player in that segment and in that sector. And so we think we have some skill, we understand the lease structures, the tenant mix, and how we put capital into those assets. And the important thing is that the market is larger than the Bunnings Warehouse consolidated market, and it churns at a faster rate. So that means opportunities perhaps become more available in that portfolio. So that growth we expect to be more attainable over time, and we wanted to point the market to that. So we really like the sector. We absolutely love Bunnings Warehouses. We'd love to participate in both, of course. It's more just the addressable market and the churn of opportunity, and we wanted to explain that. Operator: Your next question comes from Andrew Dodds from Jefferies. Andrew Dodds: I'd just be interested to hear your comments around the 3 assets that were excluded from the Bunnings lease reset. I think from memory these were Rocklea, Wagga Wagga, and Geraldton. I think 1 or 2 of them might have had expiries coming up. So just any color you can provide on those three would be great. Andrew Ross: Yes, sure. And it's Andrew Ross here. Geraldton, Bunnings has indicated to us that it's a property that they don't want to remain at, and in fact, they are in the process of relocating to a new site, not far away from the existing store. It's a much bigger store, newer store. So we've known about that for almost 2 years now, and we've disclosed that to the market. Wagga is another property that Bunnings had indicated to us some time ago -- years ago actually, that they were going to build a bigger store in Wagga and relocate to that one. That hasn't eventuated at the moment. So just recently, Bunnings actually exercised the next 5-year option, which is from the 31st of March 2021 -- 2026, for 5 years. And the third property that you mentioned is Rocklea. Bunnings also indicated to us, I think it was either earlier this year or late last year, that it was a store that they were going to close, and they were closing it as a result of rebuilding the Oxley store, which is about 3 kilometers away. It was flooded in the 2022 floods, and they've rebuilt it and doubled the size of that Oxley store. So their business decided that Rocklea was a closure. Andrew Dodds: Okay. So then your sort of view around FY '26 being I guess the peak sort of vacancy period, just combining your comments now with the pre-commitments you've got on Fountain Gate, Broadmeadows, and the other development site, I mean, all else equal, it means FY '27 is shaping up to be a pretty good year in terms of occupancy across the portfolio, I'd imagine. Mark Scatena: That -- it will absolutely improve, and we're looking forward to having some new assets as well, well some repurposed assets in the portfolio and some new tenants. So -- but again, most of that will happen in the second half. Andrew Dodds: Okay. And then just finally, on the sale of Chadstone, I noted in your release that it's a 6-month settlement period, so not until kind of 30 June. Is this sale subject to capital raising by the acquirer? Mark Scatena: No, no. That's not our understanding. Andrew Ross: It's an unconditional contract. Sorry, did you hear that? That was an unconditional contract to sell Chadstone. Andrew Dodds: Yes. No, got it. Operator: Your next question comes from Howard Penny from Citi. Howard Penny: Just my first question on transaction volumes and interest in your asset space and subsector at the moment. You give us a chart showing that cap rates have, at a market level, started to compress a bit over the last 12 months. But are you seeing a lot more interest and activity in large format retail and Bunnings centers at the moment? And just looking forward, maybe over the next 18 months, do you expect a higher level of activity in the subsector? Andrew Ross: Yes, Howard, look, as you can see on Slide 21, there's a lot more dots on that page in 2025 than in the 4 years prior to that. We are seeing a lot more activity in Bunnings Warehouse transactions. There's been a number that have actually transacted off-market. And we're also seeing a lot more interest in large format retail. I mean, BWP's talking to a number of agents about off-market opportunities for LFR, and BWP might be successful in some of those. Some of those might not even come to the market. So I guess what I'm trying to say to you is we're being proactive in terms of talking to the market and potentially trying to buy some assets off-market. We're seeing some strong interest, some strong competition from other players in the LFR sector, and we think that that's only going to get more competitive. Mark Scatena: I think, Howard, we're just -- sorry, just Mark here as well. We called out that asset churn is higher in that segment, and I think by implication there'll be more transactions in LFR. And I think if you couple that with the undersupply of lettable area and strong demand drivers like population, I think you would expect perhaps that some of those dots in LFR perhaps will happen at a higher rate than some Bunnings dots. Andrew Dodds: And you make a point just on the undersupply. And I just thought, do you have a sense of the difference between the decision to sort of build new assets versus buying existing assets and the profitability of those two decisions at the moment across the sector? Mark Scatena: Not from a sector perspective. I think if you put yourself, Howard, in our shoes, again, taking an asset -- a brownfield asset, repurposing that, that is very accretive deployment of capital with strong yields on that investment. So I think as we called out earlier, that sits at the top of our hierarchy of capital deployment. So that's something we're very attracted to. And Morayfield as an example, if those transactions can be configured in the right way, we can acquire good, again, existing assets at yields that are accretive to the cost of capital. So they're the things we are very keen on looking at. Andrew Dodds: And just a final question just on leasing risk. Post the MPR transaction, the WALE has increased and the leasing risk seems to have been reduced. But just thinking of the leases coming up over the next 24 months, have you had any success in getting some decreasing that leasing risk to some degree already? Andrew Ross: Howard, we're in discussions with a number of the non-Bunnings tenants in our portfolio, some 18 months from now, their lease expiries. So we're having a lot of discussions with them about trying to renew those leases at the moment. And I guess at the annual results, I'm hoping that we'll be able to report a lot of leasing deals to derisk that leasing income risk in future years. Yes. Andrew Dodds: Well, that's all from me. Congratulations on the results. Mark Scatena: Thanks, Howard. Operator: Your next question comes from Murray Connellan from Moelis Australia. Murray Connellan: Was wondering whether I could get you to comment on the average lending margins across your book at the moment, please. And I guess just taking a look at some of the expiries that you've got coming up, looks like the majority of them are still a couple of years away, but I guess just curious to hear about where you feel your average lending margins are relative to market and what the opportunities may be to compress those over time as far as you can tell. David Hawkins: It's David Hawkins speaking. We've always been kind of really well supported by our debt providers. So we don't -- as most of our bank debt is on bilaterals, we don't really disclose our individual margins on those banks. But the best thing I can guide towards is our recent MTN transaction where we had margins of 105 basis points, which is pretty relatively close to what our margins are across the board. And in refinancing, we've got $150 million MTN maturing in April, which we refinanced or raised the money early late last year to cover that maturity. Most of the bank debt maturity, we can roll just going back to the banks to discuss extensions as required. Murray Connellan: Would you be able to comment at all on I guess just what -- I guess, directionally, what you might be expecting over the course of the next few years? David Hawkins: Subject to any market dislocation, I think we're pretty close to where our margins are. We probably won't get much more savings because we're relatively tightly priced as we are at the moment. Operator: Your next question comes from [ C.K. Tan ], a private investor. Unknown Shareholder: Yes, from me, I think one of the questions got answered, directions of the interest rates. I think this morning, basically what I'm seeing is that you guys are actually going into large format. So I trust that you guys have actually done quite some research in it. And I actually admire your ability to actually buy things off market. Question here is this. Obviously, when you look at cap rates, right, it's got to be accretive before you actually buy something. But on a replacement cost basis, do you guys actually look at it from a replacement cost basis? Because right now, I think one of the biggest concerns across Australia, not just large format, but any construction activities, obviously, it's very, very difficult to get things done. Cost of materials, labor availability and maybe even reliable construction team just to actually get projects executed. I mean, you guys can tell me how difficult it is, but would you actually comment on that? And also by lifting your exposure in large format, what sort of like risk profile, do you think is a compromise on the risk profile they're actually taking on? Mark Scatena: C.K., I'll start. Maybe I'll just start with the LFR question and come back to replacement cost. So yes, what we wanted to characterize in the portfolio composition slides we presented is that we're a large-scale investor in large format retail. And that portfolio is something that has transpired over many years, and some of that is a function of interest in the sector, some of that is a function of Bunnings vacating and us deploying some capital into some highest and best use, and that highest and best use has been large format retail for some of those sectors. So we wanted to characterize our portfolio, C.K., just to demonstrate that we're a competent investor and operator of large format retail freeholds, and we have developed and invested capital into that sector. Now in regards to your comment on risk, I suppose we look at where the opportunities to grow accretively are, C.K., and that's why again we've quantified the addressable market and the churn. And perhaps the growth is more attainable in large format retail than Bunnings Warehouses, just because again those assets, those Bunnings covenants are incredibly tightly held, the churn is not as much, and the pricing is tighter. So I suppose when we look at an LFR asset like Morayfield, there's some recognition that we are up -- a little bit up the risk curve, reflected somewhat in the cap rate. But we like that addressable market. We understand the lease structures, the tenants we're comfortable with. We think the tenants have a strong outlook, or historically have had strong trading outlooks. And the fundamentals of the large format retail sector and those tailwinds of population growth and undersupply, we think they are good settings for investment into that sector. So that I suppose why we are happy to acquire. As it relates to replacement cost, I think you're absolutely right. Part of that undersupply factor has been that replacement cost is quite high. And that's a function, as you've articulated, a function of construction cost and prevailing costs. So we buying existing assets at the moment that is good deployment, investing into existing brownfield assets and improving those assets like we've done is good deployment of capital. We don't typically absolutely represent that versus replacement cost, but I suspect if we did, they would again look favorable relative to the replacement cost. Unknown Shareholder: Yes, I mean, I would like to guess as much, but obviously I think, over the years, you guys haven't been very active in terms of like going out there to acquire. And I do agree through our historical conversation, the Bunnings Warehouse market is very, very tight. So unless you decide to actually take on more leverage like the other competitors that can potentially buy, but adhering to your conservative strategy, probably you may have to look into large format to actually do acquisitions accretively. Yes, that's what I mean. I'm in total agreement. Yes. Andrew Ross: C.K., Andrew Ross here. What I would like add on what Mark has talked about is it's not our intent to go out and buy vacant blocks of land and build LFR centers and have a drag on our earnings. The 3 repositionings or repurposings that we've talked about in our slide deck, being Fountain Gate, Noarlunga, and Broadmeadows. They're -- well, Fountain Gate and Noarlunga is a result of Bunnings vacating those stores. Broadmeadows is not a Bunnings site and never was a Bunnings site. It adjoins the Bunnings that we own in Broadmeadows, but this is a property that we bought a couple of years ago, and we're developing on the surplus land there. Now all these development costs, we've tendered those costs and we know what they are. And so we also know pretty much what the rents are, being 3-quarters leased for Fountain Gate and Noarlunga, and we've got strong interest for the balance there. So we're pretty confident that we're going to achieve return on capitals above 10%, and Mark alluded to that earlier from one of the other questions. So with buying other LFR, we're focused really on existing centers. So it's not so much going and buying them and developing them. That's what I'm kind of trying to say to you. Operator: Your next question comes from [ Claire McHugh ] from [ Green Street ]. Unknown Analyst: Just a quick one from me, just coming back to Lauren's points around the payout ratio. So I know that AFFO isn't a metric you disclose per se, but if we just look at sort of recent history, I think you spent around $6 million to $8 million a year on recurring maintenance capital. So is this a consideration as you're thinking about your FFO payout target? I mean, would it not be a little bit more prudent to have it to run it lower just on that basis, essentially given that maintenance capital is unfunded? David Hawkins: I mean, that's why we give kind of a range of 90% to 110% on the FFO. Our stay-in-business CapEx or recurring CapEx hasn't been material over the years. We expect, as part of the lease reset, we've agreed about $5 million a year with Bunnings on that, so we expect our stay-in-business CapEx to kind of be around the $10 million to $15 million dollars going forward. Unknown Analyst: Okay. So is it fair to say whilst you've given that range that it'll err on the lower end of that spectrum? Mark Scatena: Again, lots of clear movements in, as we bridge into FFO and then into AFFO. So I think we would hope that on average we're in the mid part of that range. I think that's why that range is like it is. So we would hope that again the median is somewhere around that number 100, and that's our aim. But again, some flexibility to allow us to address some topics. Operator: [Operator Instructions] Your next question is a follow-up from Andrew Dodds from Jefferies. Andrew Dodds: Just quickly on the development funding mechanism you agreed on with Wesfarmers, which was 200 basis points above the 5-year swap rate. I'm just interested as to when this kind of rentalization gets struck, just given the movement in the 5-year swap rate, and if this is kind of factored into the guidance for this year. Andrew Ross: Yes. The rate gets struck once both parties have got Board approval and are moving forward with the development. So there's a number of developments there that are in different stages of planning approval and Board approval. So at this point in time, we haven't agreed, or Bunnings hasn't notified us that they want to proceed on any one of those developments, although we're getting very close to one or two of them. David Hawkins: None of those developments have been included in the guidance for FY '26. Mark Scatena: So Andrew, I think in the presentation, Andrew, I think we said those projects would commence towards the back end of the calendar year '26. So if you think there about a construction time frame and then assume that, that rentalization commences when that payment is made at the completion, I think that gives you some guide to perhaps when those that income is realized. Andrew Dodds: Okay. And do you realize a coupon on that CapEx as it's drawn, or just upon completion? David Hawkins: So with all the Bunnings redevelopments, it only occurs on payment at the end. So Bunnings takes on all the construction risk, and we receive the rent the moment we make the payment at the end. Operator: Your next question comes from Richard Jones from JPMorgan. Richard Jones: Just the MER you called out at 50 basis points. Just how is that tracking, and where do you think that will trend over the next 12, 18 months? David Hawkins: Richard, David here again. That MER of 50 basis points includes 7 months of the old management fee structure. So we expect that to trend down to around 40 basis points going forward, subject to no changes. Richard Jones: Excellent. And just a follow-up just on Rocklea. I think you called out it was vacated in October last year. What's happening at Rocklea? Mark Scatena: Richard, I'll let Andrew, but we're in the process of tenanted that, and so we're hopeful that that tenancy will commence relatively soon, which I'll let Andrew give some color on that. But that's been a bit of a projected. Andrew Ross: Yes, so we've been talking with a potential tenant to lease the whole building there, Richard, and I'm -- we're close to doing a deal there, but we haven't finalized a deal yet. So hopefully we can have that leased before the 30th of June. Richard Jones: Okay. Is anything incorporated in the $60 million, $70 million CapEx in repurposing for Rocklea? Andrew Ross: No, because my current negotiations are they take the building as is. Operator: That's all the time we have for questions today. I'll now hand back to Mr. Mark Scatena for any closing remarks. Mark Scatena: Thank you, everybody, for attending today's results briefing, and we really look forward to seeing many of you, well, speaking to many of you over the coming days and seeing again a lot of you in March in Melbourne and Sydney. Thanks so much for joining in today, and have a lovely day. Operator: That concludes our conference for today. Thank you for participating. You may now disconnect.
Juha Rouhiainen: Good afternoon, good morning, everyone. This is Juha from Metso's Investor Relations, and I want to welcome you all to this conference call where we discuss our fourth quarter '25 and full year results, which were published earlier this morning. Results will be presented by our President and CEO, Sami Takaluoma; and CFO, Pasi Kyckling. And after the presentation, we'll have normally Q&A. And please note that we have reserved 1 hour for this call. And also a reminder of the forward-looking statements that will be used in this presentation. With these words, we are ready to start, and I'll hand over to Sami. Please go ahead. Sami Takaluoma: Thank you, Juha, and good afternoon also from my behalf. Happy to talk through the highlights of the last quarter of the 2025. We saw the market activity to be very much in line with our expectations that also resulted then for our orders to grow on a healthy way. including also then at the end of the year, being able to finalize the 2 larger orders from the Minerals capital side. Sales growth was good, and that also drove then the increase in our adjusted EBITA euros. And worthwhile mentioning here in this page definitely is the strong cash generation that the businesses did in the Q4. Looking from the figures point of view, orders received EUR 1.5 billion for the quarter, growth by 2% compared to the comparison and worthwhile also here mentioning that the currencies did have an impact, so organic growth higher. And sales was EUR 1.4 billion growth from the period, 11% and exactly same growth percent for our adjusted EBITA euros. And from the relative EBITA perspective, same delivery as year before, so EUR 16.1 million. Earnings per share was EUR 0.14 improvement from the year before. And then as mentioned, the cash was strong compared to the comparison period. Looking at our segments. Aggregates have been performing throughout the year. And in the last quarter, strong orders and performance was recorded. Orders received growth was to EUR 307 million from the EUR 294 million. This is double-digit growth in the constant currencies. Growth was driven mainly by the European market, which has been showing the pickup throughout the whole year already. Equipment orders growth was 7% and the aftermarket was 1%. Sales side, also growth, so EUR 330 million for the period. Year before, it was EUR 290 million. Equipment growth in the sales was significant, and the aftermarket was reflecting the previous period, so that declined by 3%. Aftermarket share now from the sales perspective is 30% compared to the 35% a year before. And then the adjusted EBITA for the Aggregates segment, EUR 53 million growth from the EUR 46 million year before, and the margin also improved from 16.0% to 16.2%. Strong sales growth was supported both adjusted EBITA and the profitability development. On the Minerals side, orders, EUR 1.194 billion growth from the year before, and that's reflecting 5% growth in the constant currencies. Aftermarket orders grew by 5%. And if taken the currency into account, that was a strong single-digit growth in the aftermarket for the quarter. And as mentioned and as published, there was 2 major equipment orders, copper smelter and also then the gold processing plant. ales for the period, EUR 1.13 billion million, and that was also growth from the previous period. Aftermarket in this was flat and the equipment had a very good period, finishing the projects and creating also from our perspective, the capacity for the new orders and deliveries. Aftermarket share of the sales, 57% for the period. Adjusted EBITA EUR 190 million growth from the EUR 173 million year before and margin point of view, same 17.1% as year before. Adjusted EBITA was driven by the higher sales and equipment heavy mix kept margin still flat for the comparison period year before. And looking then the dividend part as the year is in that point. So the Board proposes an increase in the dividend paid by Metso. Proposed dividend is now 69% of the EPS from the continuing operations calculation standard way as we have been doing that in the past year. So 2 payments, one in May and one in October. Total payout will be with this proposal, EUR 331 million. Then I'll let Pasi to walk through the numbers a little bit more into detail. Pasi Kyckling: Thank you, Sami, and good day, everyone, also on my behalf. Let's start with our profit and loss statement, where the Q4 sales increased 11% to EUR 1.443 billion, and this was driven by successful progression of several mineral equipment projects as well as good equipment delivery in our Aggregates segment during Q4. Equipment share was exceptionally high in the revenue mix and represented 49% of turnover, while aftermarket was 51%. On a full year basis, we increased the sales by 4% to EUR 5.24 billion. And then there aftermarket represented 54% and equipment 46% of sales. Adjusted EBITDA was up EUR 22 million in the quarter to EUR 232 million, and the margin was flat at 16.1%. On a full year basis, our EBITDA margin was 15.8%. In Q4, the equipment business profitability was at good level, both in Aggregates and Minerals supported by high volumes, whereas aftermarket profitability was at normal level. In Q4, we also recorded EUR 27 million of adjustment items and the makeup is basically 3 main components. First, we accounted provisions related to our Minerals restructuring that was announced earlier in 2025. Then we incurred Haggblom divestment-related losses during the quarter. And additionally, we had costs regarding one legacy project that we have still in our pipeline and which we are looking to complete during the year 2026. Additionally, in the discontinued operations, where we presented our Ferrous business, we accounted the final losses from that divestiture. And it's worth noting that early 2026, both the Ferrous divestment as well as the Haggblom divestment have been completed. Income tax rate for the quarter -- for the year was 24%, quite normal for our profit mix. In Q4, the tax rate was low at 21% due to the country result mix that we had during this quarter. EPS from continued operations was EUR 0.14, which is EUR 0.01 up from comparison period. Let's then look at our financial position and balance sheet where the overall position remains very healthy. Net debt end of the period was 1.1 billion and net debt-to-EBITDA KPI at 1.2x, well below our 1.5x target. And the evidence of the healthy situation is that Moody's in December changed our outlook from stable to positive while maintaining the Baa2 long-term credit rating that we have. Let me then close my part by a brief look at our cash flow and cash flow, like Sami already said, was certainly one of the highlights of our quarter. During Q4, we delivered strong cash flow from operations of EUR 365 million, and this was supported by working capital release of EUR 130 million during the quarter. Looking at the full year 2025, we delivered EUR 974 million cash flow from operations. And if I think this from the free cash flow basis, deducting CapEx and acquisitions from the operating cash flow and comparing that to revenue, we delivered 13% free cash flow margin, which is something we are happy with. With that, I would like to hand over back to Sami to talk about our strategy execution and outlook. Sami Takaluoma: Thank you, Pasi. From the strategy point of view, we go Beyond strategy was launched in the Q4 and happy to report that the execution has started well. And one good indication is also that we measure our own employee satisfaction. And one question there is about the strategy, and we did see very high engagement level overall and also very high improvement in the strategy question, meaning that we have a full energized organization to deliver. And certain things are already moving according to the strategy. From the acquisition point of view, it happened after the Q4 closing of MRA Automation, it's Multiskilled Resources Australia company. This was a very good addition to the strategy road map that we have built. Company is a leading provider of automation and software solution for the ports and terminals worldwide. And now proudly the employees are Metsonites, and we are working for the synergies and growth through this acquisition. And then as mentioned, the divestment side, making the portfolio ready for the future. So we have completed the Ferrous business divestment and also the Loading and Hauling business, meaning Haggblom. Investment side, one thing to report here is that we are building a new rubber products plant in China to be a relevant player for this very fastly growing business inside China. And then also good to report the new sustainability targets that we got in the very early days of the year approved by the SBTi. And they are good ambitious targets and the most ambitious ones in the industry. So we continue in that sense as well as promised in our strategy. Then looking at the market outlook, we are expecting that the market activity in both Minerals and Aggregates will remain at the current level for the next 2 quarters. Reminder that tariff-related turbulences could potentially affect the global economic growth and especially the certainty level of that one and can have an impact on the market activity. And in our previously published outlook, the expectation was that it also remains at the same level. So we are expecting to see similar kind of activity from the market as we did see for the Q4. Juha Rouhiainen: Thank you, Sami. Thank you, Pasi, for the presentation. And operator, we can now open lines for questions and answers. Operator: [Operator Instructions] The next question comes from Chitrita Sinha from JPMorgan. The next question comes from Christian Hinderaker from Goldman Sachs. Christian Hinderaker: I want to start with the Minerals OE development. I appreciate those the 2 big orders in the books for the quarter, which is nice to see. But if we strip those out, I get to EUR 220 million of OE in terms of order intake. That's down 22% Q-on-Q and 30% year-on-year. And I got to go back quite some quarters to get to at that low level. I'm just curious what's behind that? Is there a specific commodity weakness? Is it a timing effect as maybe you've alluded to on Page 7 of the release. It seems a little bit at odds with the strong commodity price unlock in permitting process and broader confidence in the turn you've had in recent months. I'll start there. Sami Takaluoma: Thank you. Relevant question, and there is no real link for the commodity prices as such throughout the 2025 when it comes to the Minerals capital side. So we have been receiving a good amount of small replacement orders and smaller projects as well. And this is -- no change in that. They do fluctuate based on the month and also the quarter in question had the lower amount of these ones coming in. But there is no real change in the actual demand of that and looking at the pipeline and also looking at the start of the year, they are having the normal volume, but there were less of these in the Q4, as you also pointed out. Pasi Kyckling: And Christian, just complementing when we look more in detail where the delta comes from, it comes from the sort of medium-sized orders in our order intake, the sort of base business, smaller orders that is at a very normal level. But in the sort of medium size of orders, we see this decline that you pointed out. Christian Hinderaker: Maybe turning to the working capital dynamic. I think customer advances have been about 10% of revenue, at least in the first 3 quarters. How do we think that working capital item evolves? You've seen a step-up in large orders. Do you require a larger level of advanced payments on those large orders versus the midsized ones? Pasi Kyckling: Thanks for that one. And indeed, on those 2 large orders that we have announced, we have also, during the quarter, received the prepayments and the prepayment size is sort of similar to other orders. So it's not larger than in other orders. And yes, it has a positive impact of some tens of millions in our fourth quarter cash flow, but not more than that. Christian Hinderaker: And then maybe just finally, in the service business again within Minerals, were there any revenue gaps in the year as a whole, either as a result of customers moving to carry maintenance, say, in the nickel market or perhaps due to site-specific issues? We know there's been a lot of productivity challenges. So I just wonder if there's any gaps during the year. Sami Takaluoma: Nothing significant that would have affected Metso service numbers as such. Of course, these are never good ones when there has been a lot of challenges in certain customers, but we have not had that kind of stake of service business that would have been creating any real impact for our situation. Pasi Kyckling: The 2 main incidents at customer side, [indiscernible], those are there, but they are nothing new. They have been there already for some time. Operator: The next question comes from Edward Hussey from UBS. Edward Hussey: So just the first one, the drop-through of 17% in the Minerals business, which given only equipment revenues grew, it imply that this is the drop-through on equipment revenues. Is this the sort of normalized drop-through we should think about going forward? Or maybe put it another way, is 17% roughly what the equipment gross margins are? Pasi Kyckling: Yes. Maybe I can take that, Edward. Thanks. And when we look at the numbers, we see the higher revenue impacting positively the capital margins. And if you think about our margins in Minerals capital overall at drop-through level, they are higher than 17%. So sales margins are greater than that. Edward Hussey: Okay. That's helpful. And then just maybe just one further question. Just on the -- within the release, you talk about mining FIDs being slow. I mean, is the implication that the pipeline remains very strong? And is there any sense that these FIDs might accelerate into 2026? Sami Takaluoma: Yes. We have seen already the change like coming to the end of the '25 that there is more activity remains high, but there's more closer to the final kind of situation in the negotiation and also from the customer side readiness to start to move and place the orders. And we see no change in this when looking now Q1 and then the rest of the '26 at this moment. Operator: The next question comes from Chitrita Sinha from JPMorgan. Chitrita Sinha: Sir, can you hear me? Sami Takaluoma: Yes, we can. Chitrita Sinha: I have 2, please. Maybe if I could just follow up on the Minerals margin. I mean here, clearly, the equipment mix was negative in the quarter. But I mean, going forward, how should we think about the path towards your 20% margin target should mix continue to be a negative? Pasi Kyckling: Yes. I mean thanks for the question, and great that you got also through the line. We have, obviously, in our strategy to target to grow this share of aftermarket. And I think you can appreciate based on the numbers and looking at the history that we were extremely successful in Q4 in terms of recognizing revenue from those OE projects, which resulted to unusual profit mix. What I take as encouragement is that despite that mix, we were able to deliver okay numbers in Minerals, and that's a proof point that the system works. But of course, going forward, we are not looking to have, over time, this kind of mix, but rather higher share of aftermarket in line with strategy and then with that also, turning towards the 20% Minerals margin by 2028. Chitrita Sinha: Very clear. And then maybe if I could just ask on the Aggregates margin. I mean here, the margin improved quite nicely in the quarter, and you were saying that you were bringing back temporary workers, I think, back into Q2. Do you think you'll need more people capacity if demand continues to be strong in H1? How should we think about this? Sami Takaluoma: I think that is a very positive problem if that comes because that means that the main markets are active and the orders are coming in. And definitely, we have capability for that, and that's not going to be a challenge for us in that sense. Right now, we are in a good situation. We have a good capacity in the factories, and the work is happening, and people are working for the current level of business. But as I said, we, of course, have all the readiness for also increasing the product production. Pasi Kyckling: If you look at what happened in Aggregates during 2025, a lot of equipment was delivered from inventory. So the finished goods inventory during the year went quite a bit down in Aggregates, which was, of course, a positive news. But then the consequence is that to deliver, for example, the same amount of equipment in 2026, we need to manufacture significantly more, which is positive. We need our people to do that. And the teams are now back in work since the spring time. Operator: The next question comes from Klas Bergelind from Citi. Klas Bergelind: Sami and Pasi, Klas from Citi. So first, I want to come back to large orders versus underlying. I think you said before, Sami, that we can't have both larger orders and underlying orders improving at the same time. One of the reasons why underlying orders were solid from mid-'24 was because of a relatively slow decision making on the larger side. Now we see the large orders coming through in a big way, but small- and medium-sized are down year-over-year. So should we then assume that the current level of underlying of some EUR 200 million, around EUR 800 million annualized is the right level right now and then add new larger orders on top? I was just interested in your thoughts on the dynamic there. Sami Takaluoma: Klas, I don't fully recall that what quote you are referring to because these two are not really fully aligned in that sense that, let's say, underlying small-, medium-sized projects, they live their own life and they have their own drivers. And then these larger ones, they have different dynamics and approval process and so on. So they are not connected in that sense. And what I was now in this call saying is that there is a fluctuation. It's not constant month-by-month when it comes to these smaller ones, which are very important for us. And in Q4, we had 2 months with a lower amount. That's not so much to do with the large orders coming in it. It was more about those 2 months had less orders coming in and already reflected at the beginning of the year seems to have a normal level, if I call something normal. Klas Bergelind: Got it. We had the discussion in November when we met. But yes, all good. Then my second question, coming back to the mix in Minerals. If I add back the warranty cost of EUR 5 million from last year, the margin in Minerals is down from 16.5% to 16.1%. And during the CMD, I think the message was that mix shouldn't be an issue for you to get to at least 20% margin. So obviously, as you said, Pasi, it's a pretty extreme quarter. But when you look at other peers, particularly upstream, think about Sandvik here; they have very strong equipment deliveries, no mix issue. So two questions on this topic. Do you expect the equipment margin to improve already in next couple of quarters? And when do you look to see your modernization orders with higher margin sort of going through the backlog and then boosting the mix? Just to understand the dynamic, when this mix can sort of start to improve? Pasi Kyckling: Maybe, Klas -- and thanks for that. Starting from the upgrades and modernizations, which are aftermarket business for us, so there, the dynamic changed during 2025 when we started to receive those orders and have a good amount of those in the pipeline to be delivered now during 2026. And the expectation is that we continue to see some of those orders coming in during '26, and that is based on -- simply based on the customer fleet that is out there and from a timing point of view, requires those activities. Then when it comes to the drop-through, my take on Q4 is that it's encouragement that the capital business is healthy and can deliver. And like I already said, and you also reported or said as part of your question, it's not the normal mix. And we should not expect that we have this kind of a mix on a rolling basis going forward. We will continue to see the steady growth in our aftermarket business, and then that will be complemented by healthy capital business. Klas Bergelind: Okay. My final question is on free cash flow. You're now at an all-in free cash margin, not operating, but all-in free cash margin around 12% for the year. So I just want to assume the underlying working capital ex the prepayments, receivables are up 2 percentage points to sales. Inventories are down by around the same amount. But payables and other liabilities are going up and creating -- it looks like they're creating a boost. I'm trying to understand if this is sustainable, i.e. better payment terms with your suppliers and what's going on, they're looking at other liabilities? I appreciate that, that was a very low level last year. But just to understand the dynamic on working capital, Pasi, would be very, very good. Pasi Kyckling: Yes. Thank you. And if I quickly talk through all the three or four main components, starting from the prepayments, which we already discussed here. So yes, the prepayments from those 2 larger orders had an impact on our fourth quarter cash flow, and the impact was some tens of millions. So of course, significant, but I mean that's not sort of on its own behind the strong cash flow that we created. And on those projects, we continue to operate so that we run them on a cash positive basis throughout the project execution. Then if you look at inventories, that has been a focus area for us for some time. Now when you look at Q4 inventory numbers, I just want to highlight that the MCP business back to continuing operations has impact on inventories as well. We talk about some EUR 50 million worth of inventory. And if you do the comparison, for example, to the balance sheet, end of 2024, so that is just something to be noted. When it comes to payables, you are indeed right that we have gained some traction there. I wouldn't think that this is one-off activity. It's rather thanks to the work that our procurement people are doing to work with our suppliers and bring the payment times up in the discussions, agreements that we have with our supplier partners. And then finally, receivables, I mean nothing extraordinary, ordinary there. Continues to be a focus area to sort of make sure that our customers pay on time and in line with the terms that we have agreed with them. No material issues there to report, which is, of course, a good position to be. Operator: The next question comes from Antti Kansanen from SEB. Antti Kansanen: It's Antti from SEB. A couple of questions from me as well. And coming back to the Minerals sales mix discussion, I mean if we look at kind of the equipment orders in Minerals in the past couple of years, have been EUR 1.5 billion, EUR 1.6 billion, and that's the level of sales that you also delivered in '21. And the service book-to-bill is obviously better. So I just wanted to maybe understand better, how do you expect that equipment backlog to convert into sales during this year '26? Is the backlog longer, shorter than what it has been? And is there still kind of a contribution from early orders that could drive that top line into growth in latter parts of this year on equipment specifically in Minerals? Pasi Kyckling: Thanks, Antti, for that. And from -- if we start from the backlog number point of view, the backlog in equipment is in substance the same as it was when we started year 2025 where the backlog improvement is coming from -- is from our aftermarket business, which is good because now we have significantly more, so it's starting point '26 compared to the starting point we had for 2025. Then if we think about the projects that in Minerals capital side that we will recognize during 2026, it's, of course, first to sort of bread and butter business, the small ones, which turn as they come. And then I mean, none of the bigger projects that we announced in late 2024 are fully complete. Yes, we have started to recognize the revenue, but they will contribute to '26 still. In some cases, it will go up to 2027. And if we think then about the new ones, I mean the smelter project and then the modern [indiscernible] gold plant, so there, the revenue recognition will start potentially something H1 this year, but then towards end of the year when we get the underlying works with our teams, with suppliers, with customer moving. So that's a little bit the dynamics. And I think it's quite typical with these larger ones that it takes 6, 8, 10 quarters to deliver those. They are big projects. And when we do POC accounting on them, this is the outcome from a revenue point of view. Antti Kansanen: And I guess you're seeing fairly stable outlook for, let's say, the smaller ones. So the ones that you would book this year and would still contribute in a meaningful manner on revenues, so one would assume that the sales mix improves actually year-over-year, driven by kind of service growth and flattish equipment. Or is that a bit of a stretch? Sami Takaluoma: That's good thinking, Antti. As stated, so we see good amount in our pipeline of those small and medium-sized ones. And 2025 showed that we are winning also a lot of those opportunities. Antti Kansanen: Okay. And then the second one was on the Aggregate side. And I mean, it's a good order growth end of '25, I guess, positive indication now that we are heading into the summer season. Do you want to talk anything about how you're seeing kind of the European demand trending early this year? I mean you talked about that kind of there's a sentiment improvement throughout '25, but maybe not much happening on the utilization rates or the work situation for your end customers. So are you seeing kind of an improvement on that front? And are you seeing kind of volume pickup that would, let's say, compensate or more than compensate on the increased cost base that you have on the European production setup? Sami Takaluoma: Yes, from the European market first, so yes, 2025 was already the year of the pickup. And it came from, let's say, Eastern European countries, if I put it this way. At the same time, we also had low hours coming to the machines located in other countries. So kind of like not creating the aftermarket potential. But from the new equipment point of view, there was a clear pickup and we see that the pickup is to stay. So there is a continuous request for quotes and also then winning the orders from the European countries. Pasi Kyckling: If you look at the distributor inventories, that continues to be an encouraging data for us. The decline started spring 2025 and continues to be at sort of a level where we expect it to be supportive for our business in the short-term outlook. Antti Kansanen: Is it too early to comment anything on the potential summer season or the bigger Central European regions that have been historically big markets for you, the Germany and the France, countries like that? Sami Takaluoma: Yes. I think that Germany, which was somehow may be impacting also the pickup of the Europe last year, the Germany stimulus package, which maybe have not creating so much of business coming from the actual Germany yet, so that is a little bit positive upside potential that when that governmental money actually is flowing down for the provinces and for the actual infrastructure projects. So that could be creating that normal seasonality in that sense, but no real signs of that yet. Operator: The next question comes from Vlad Sergievskii from Barclays. Vladimir Sergievskiy: I'll start with commodity mix, please. Could you talk about the difference in demand levels between gold customers and industrial metal customers? Is there a notable difference in urgency to take investment decisions for those group of customers? Also, could you provide an update of what your exposure to gold customers was in 2025 and whether it could grow in 2026? Sami Takaluoma: Vlad, good to hear you. Yes, the gold customers have had much faster decision-making process than the so-called traditional commodity metal customers. And of course, it has been driven by the very high record high prices of the gold and not waiting to get orders in and also the execution of the delivery projects moving forward. So that has been one area that we did see already '25 and seems to continue at the moment. Vladimir Sergievskiy: Excellent. Sami, if I can ask you about one specific project as well. It's the Reko Diq project, which obviously, you won some nice orders previously. What's the security situation over there right now? Because as you probably have seen, Barrick has put this project under review, given the security concerns, I think, it was last week. Would you give us some idea of what your backlog exposed to this project? And what's your view actually from a Metso perspective on what's going on? Sami Takaluoma: So let's start for the very important one, which is the security of the people, and that has been on a very high security level from the beginning, and that was also something that we worked on together with Barrick to ensure that their people and our people have the maximum security all the time. So there has been no real issues that -- or incidents or anything like that. And then from the perspective of Barrick making the moves, we have, of course, taken a lot of these things into account between the contract between Barrick and Metso. And in that sense, there is no real issues for Metso at this point. Backlog situation, I don't remember the numbers myself. Pasi Kyckling: So if we start from the orders that we have reported, so second half of 2024, we recorded roughly EUR 150 million worth of recorded orders. And certainly, back to earlier discussion that we have here, some of those have been delivered or are in delivery as we speak. But I guess we will not go to sort of exactly there, how much has been delivered and how much is still in the backlog. But as a starting point, from H2 '24, we have that EUR 150 million-ish order intake from Reko Diq. Vladimir Sergievskiy: Excellent. And just to clarify, you continue to work on this project as normal? There is no like schedule adjustments or anything like that? Sami Takaluoma: As per today, we act normally together with Barrick. Operator: The next question comes from [ Alex Jones ] from BofA. Unknown Analyst: Just one following up on the question earlier about Aggregates demand in Europe. Could you expand a little bit what you're seeing in other regions of the world and whether you've seen any changes in any of those into 2026? Sami Takaluoma: Let's start by three baskets we normally talk about, so U.S., Europe and then the rest of the world. And maybe this time, I can start from the rest of the world. And there we have seen quite a good activity level last few months. Obviously, this third basket is the smallest of these three. But nevertheless, we are happy that our truly global exposure also for the Aggregate business is yielding results. So we have a good growth numbers coming from many countries in that basket. And Europe, we discussed. And then U.S., which normalized quite well during 2025 to the normal levels, so there, we have also this positive signal to our direction, what Pasi was saying that we do see that the distributor inventories have been developing positively from our perspective, that distributors have been able to move the machines to the customers, and that gives a good normal situation for us for the beginning of 2026 situation. Operator: The next question comes from Andreas Koski from BNP Paribas. Andreas Koski: First, if I can come back to the order intake in Minerals, it's been a lot of discussions about large orders versus small and midsized orders. And in Q4, as you pointed out, you have had 2 large orders. And on top of that, you had the Almalyk order as well. I understand that the pipeline remains strong, but to repeat this kind of order level, EUR 1.1 billion, EUR 1.2 billion in the Minerals segment, do you think that we need to see large orders coming through also in the coming quarters? Or is it possible that we could expect a bounce in the small- and mid-sized orders? Sami Takaluoma: Yes. Thanks, Andreas. As said, we do see that the activity for the small- and mid-sized stays in a good level. And then it's about the timing, timing question that when they actually come as a PO. But for your question, so obviously, it helps when we get the larger ones. And as our market outlook statement also says, we expect to remain on the same level as in the Q4 when we did see that these larger ones started to come, and we do know that we are having discussions with the customers with the so-called final stage. So the expectation is about the same that we had during the Q4 that expecting the larger ones to come Q1, H1. So there is nothing at the moment saying that, that wouldn't happen. And to get those quarterly order intake numbers together, it is the mix of the larger ones, the mid ones, and then good strongly single-digit development in the aftermarket. Andreas Koski: Understood. Very clear. And then secondly, on Aggregates, maybe a bit short term. But in Q4, you had very strong deliveries. Usually, we see somewhat stronger deliveries in Q1 than in Q4. Is that what we sort of should expect also going into 2026? Sami Takaluoma: Yes, I think you spot it nicely, that one. So we did have a good amount of deliveries in the Q4, and that is making us to think that then the normal situation, as you were referring that stronger in Q1 than Q4, maybe it's not the case in this quarter now. So it's going to be good delivery, but not maybe stronger than Q4. Andreas Koski: Yes. Understood. And then lastly, if I look at the P&L, the admin cost line increased a lot. Is that more or less only related to the one-offs or capacity adjustment charges that you took in the quarter? Or is it something else? Pasi Kyckling: Yes. Thank you, Andreas. It's primarily those items impacting there. We have also some other variations, typical year-end stuff, but nothing material there. The bigger change is those one-off type items. Operator: The next question comes from William Mackie from Kepler Cheuvreux. William Mackie: A couple, please. First of all, with regard to the Americas or North America, could you comment a little on any impact potentially from your customers on Section 232 and how the situation sits between your Canadian operations and sell-in into the U.S.A.? And then on a regional basis, the question is more around Minerals. When I look at the regional sales, I know there's a lot of FX effects in there. But South America seems to have come down a little and North America flat. I wonder if you'd comment on how the order versus revenue development has been in the Americas, South and North, and what your outlook is, particularly in South America? Pasi Kyckling: Yes. Maybe, William, I'll start from the Section 232. So when it comes to Minerals, this has been in place since it was introduced. I don't remember the exact month, but during the autumn -- August 2025 or if I was wrong, apologies for that, but that time frame anyway. And our approach, like with other tariffs, has been that we price this into our customer deliveries. And then, that has been successful. It looks that this is the approach the industry has also taken. Then when it comes to Aggregate, the situation is a bit different. So you may, William, remember that this steel and aluminum derivatives discussion has been ongoing for some time. And when it comes to crushers and screens, the primary aggregate equipment, they are still excluded from Section 232. And there was speculation that this would change already late last year. We haven't seen that. And let's see if they continue to be excluded for good or if there is a change in this regard. Sami Takaluoma: And then for your second question, of course, we can maybe comment about the FX. But that's, of course, living its own life. But when it comes to the Americas, both North and South, so for obvious reasons, they are the 2 largest regions that we do business in. And looking at the pipeline, so that is strong in both. So we are truly a global company, and so it's especially the Minerals business. But obviously, we have quite a lot of current opportunities in both of these continents. And that then has the impact for the FX later on or not, it depends on how the world is at that moment. Pasi Kyckling: And then William, when it comes to currencies. So I think we have seen throughout 2025 sort of appreciation of euro against most currencies that are relevant for us, and that impact is then similar in the orders and revenue. So that shouldn't -- the FX, of course, impacts the sort of total levels, pushing euro level slightly down, but the impact is similar to orders and revenue. William Mackie: A short follow-up, if I might. With regard to your strategy execution, great cash inflow, strengthened balance sheet recognized by the agencies. You clearly have more flexibility on capital allocation. You've made a couple of disposals. Are there more? But more importantly, what is the environment like for M&A additions? And what should we expect with regard to your acquisition-based strategy this year? Sami Takaluoma: Yes. Thank you for that question. As we stated in the Capital Market Day, this is a growth strategy. And we know that by focusing, we are able to grow organically. But in the growth part of the success of the strategy is also the inorganic part. And we are having quite a good amount of interesting targets, if we put it this way. How is the environment? Environment is quite normal in many sentences. Obviously, we are looking for those kind of targets that are clearly supporting our strategy and filling in either the technology gaps that we have or creating us synergies to really accelerate our growth initiatives. So we are active in that front as well, as you saw that we just closed one in Australia. Pasi Kyckling: And then when it comes to the other side of the portfolio, divestitures. So the Ferrous, Heat Transfer business and [ Loading, Hauling ] just completed. We don't have anything else ongoing in that side. So looking for growth for now. Operator: The next question comes from Edward Hussey from UBS. Edward Hussey: One more question for me. I just wanted to ask about -- so I mean, clearly, a strong Minerals equipment sales growth in the quarter. I'm just trying to sort of work out how this is going to translate to aftermarket in the coming quarters. I mean do you mind just to give me a sense of what the usual lag is between equipment installation and when it comes to an aftermarket? And also sort of what kind of level of aftermarket sort of take up can we expect? I mean what's the sort of aftermarket intensity on these sort of large projects that you're installing? Sami Takaluoma: Thank you very much. That is always good when we get the new installed base out there in operation. The business that starts immediately is the consumables business and then also the expert services in the field. When it comes to the spare part business, that typically takes a few years before there starts to be significant amount of that type of business coming out of the newly installed base. But all in all, it starts immediately with the consumables side. And then the big kind of like upgrade potentials typically then come some equipment at the year 5 and most of them at the year 10. So this is like a long-term game in that sense to create a large installed base for the future aftermarket growth. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Juha Rouhiainen: All right. Thanks very much for your participation and for questions and discussions. We conclude this conference call here. We will be back on April 22 for first quarter results. And before that, we are looking ahead for quite an active conference and road showing season. So looking forward to see many of you in the next coming weeks face to face. But this concludes this call. Thanks again, and goodbye. Sami Takaluoma: Thank you. Pasi Kyckling: Thank you.
Isaac Lima: Good afternoon, everyone. Welcome to Adyen's H2 2025 Earnings Call. My name is Isaac, and I'll be facilitating a short discussion on our business progress and financial results with our Co-CEO, Ingo; and our CFO, Ethan. After that, my colleague, Maggie, will host the Q&A section. [Operator Instructions] With that, let's get started. Now Ingo, what are some of the highlights of the second half of the year? And how would you reflect on our execution and the momentum in the business right now? Ingo Uytdehaage: Yes. Thanks, Isaac. I look back at a very solid second half of the year. And if I look where we are in the execution of our long-term plans, I'm very pleased. And I would like to highlight a few things. So first of all, the continued growth with our existing merchants. Take Uber as an example that we also highlighted in our shareholder letter. They continue to grow with us and also launch new products like kiosk. At the same time, we also launched with new customers like Starbucks, a company that we would love to work with for a long, long time, and we finally got on our platform. And I'm really pleased to see how they've rolled out very quickly with us in Europe. At the same time, we continue to invest also in new markets. If you think about the fact that we launched in Japan a few years ago, we're now seeing a lot of traction also with the domestic merchants in Japan. That's a very important next phase of our growth there because we always start with international merchants going into a country and then the domestic phase is the next phase of our journey. And we are now there, and that's very, very promising. Very similar to India, also a country where we've been active for a couple of years. And there, we see now a lot of interest from the big international customers that we have on our platform to also launch with us in India. So that's all very exciting, and that gives me also a lot of strong view on how we're going to grow in the next couple of years. So I'm also very looking forward to that next phase of our growth as a company. Isaac Lima: Clear. Thanks, Ingo. Ethan, could you maybe help us connect all of that to our financial performance in this period? Ethan Tandowsky: Yes, absolutely. Let's start with net revenue. So net revenue in the second half on a constant currency basis grew 21%, very consistent growth with what we saw in the first half of the year. On a reported basis, growth was a bit lower given the headwinds that we're seeing with the U.S. dollar. If you look at where that growth comes from, it's again driven by our building blocks. And the biggest part of our growth in any given year comes from the growth with our existing customers. We continue to gain share of wallet with those customers, whether that's broadening markets or products or sales channels, and we grow alongside them as well. We also saw that the cohort of new customers we added to the platform in 2025 was a very strong one. We're seeing strong demand from new customers across each of our pillars. And I think that shows the strength of the growth that we're seeing to date. If you then look at EBITDA, EBITDA grew 23% in the second half and EBITDA margin was 55% for the second half. We're continuing to make investments in our team as we grow the team to go after the opportunity that we see on the revenue side over multiple years. But we're also being smart about where we invest and how we automate, and we're very focused on making sure that we scale our process, whether that's leveraging AI or growing processes and scaling them along the way as we've always done to make sure that the operating leverage inherent to our business model continues to show through. On the CapEx side, we also had around 5% of CapEx as a percentage of net revenue in the second half, very consistent with what we've seen over the course of the year. Isaac Lima: Great. That's clear. Thank you. And in addition to that, could you help us understand what financial performance look like across our pillars? And maybe if you have some stories to share with us of what's going on in the pillars? Ethan Tandowsky: Yes, sure. Let's start with Digital, our largest pillar. So Digital continues to have consistent strong growth coming from a range of verticals, right? It's our largest pillar. So there's a number of verticals we serve within the Digital pillar, but we're continuing to see real strength, especially in delivery and mobility and also content and subscription. We're also seeing that we're able to employ our expand -- land and expand model within our Digital customers. And sometimes, again, like I said, that's to new markets, but sometimes it's also new sales channels. And as we add in-person payments with some of our customers, we also see some of our customers move into the Unified Commerce pillar, something that's just a reflection of the execution of the strategy we're employing. If you think about Unified Commerce then, we're also seeing real strength within our Unified Commerce pillar. And that's across a number of verticals, right? It's retail, it's food and beverage, it's hospitality. If you talk food and beverage, then one of the biggest food and beverage companies in the world, Starbucks that Ingo mentioned, is one we're very proud of and that we talked about in this letter. We started working with a licensee of theirs, Alsea in Mexico. And through that relationship, really built a relationship directly with Starbucks as well and now have rolled out a lot of stores in Europe where we service them directly. If you connect that then to why we win in Platforms, which is our third pillar, you see that a lot of the benefit and value we can provide to customers is again because we have that in-person offering and online, right? And a number of our platforms are providing services both in person and online. And because we can help them unify that, we're able to deliver a significant value to them and help them grow their businesses. They're also able to come to us beyond payments, right? And the offering on the embedded financial product side is a reason that they're future-proofing their business and able to scale into more revenue streams over time. So Platforms continues to be our fastest-growing pillar, and we're seeing very, very strong traction there. Isaac Lima: Clear. Clearly, there's a lot going on across all 3 pillars. Thanks, Ethan. Now back to you, Ingo. Back in November, we had our Investor Day here in Amsterdam. And then you introduced the third layer of our foundation, Dynamic Identification. Could you give us a short update on what's been going on with Dynamic Identification since then? Ingo Uytdehaage: Yes, sure. So Dynamic Identification is our way of applying AI to the large data set that we have. So we have trillions of interactions on our platform that we see, and it helps us to build better products on top of this foundational layer, and that's why it's so important to us. Two products that I'd like to highlight that we've been working on in the past couple of months to make our offering, our value offering to customers even more important. The first one is Personalize and Personalize is part of Uplift, so the product suite that helps to increase conversion for our merchants, and Personalize helps to select a better payment method relevant for the consumer that is at the checkout. It is better because it helps to increase conversion, but it also is lowering the cost of a merchant. And that combination, of course, is the thing that merchants are looking for. The pilot results demonstrate that we can get to 6% higher conversion, at the same time, lowering cost by 3%. And I think that is, of course, very important to our customers. The second thing I'd like to highlight, and that's another area where we help our merchants is to reduce the policy abuse fraud. And policy abuse is sometimes very hard to spot for merchants because it's hard to spot in the data. And this is again where Dynamic Identification helps. We are able to spot that type of behavior by consumers earlier, and that helps merchants to stop that behavior also at an earlier stage, improving their margins on the long term. So yes, I'm very excited that we can use this foundational layer to improve these products and help ultimately to improve the margins of our customers. Isaac Lima: Thanks, Ingo. All of that sounds great. And I suppose it's also directly connected to another really big topic in the industry now, agentic commerce. So using AI agents as a sales channel. Could you give us some concrete examples of where Adyen stands today on agentic commerce? Ingo Uytdehaage: Absolutely. So we're working very closely with our merchants to understand what is important to them. And together with our partners, OpenAI, Google, Mastercard, Visa, we work on the protocols that are relevant for our customers. And if you define what is relevant to our customers based on the interviews that we've had with them, it's about making sure that they still keep this unique connection with the consumer behind the agent and at the same time that they build trust in the ecosystem. And trust in the ecosystem is very important because ultimately, it helps to keep the fraud levels at an acceptable level. And of course, if you think about what's important for our customers is that combination, building a trusted relationship with a consumer and at the same time, keep as a result, the fraud levels low. At the moment, the number of transactions is still immaterial on our platform. We started with it. I think that's very important. So we started with agentic commerce as an additional sales channel. And the beauty of having a single platform globally is that we basically have all the building blocks to cater it and to start growing this sales channel with our customers. Isaac Lima: Great. Thank you very much, Ingo. Now back to you, Ethan. Changing gears a bit now towards our outlook for 2026, especially in the context of us transitioning to the yearly guidance cycle now. Could you walk us through some of the key considerations? So what informed the outlook that we published this morning for the year to go? Ethan Tandowsky: Yes, sure. So you referenced that we now give a view on the next year. So this morning, indeed, we've shared our view on 2026. That comes off of discussions with our customers because, of course, our growth is very much driven by the growth of our customers and their priorities. And you often see that they make their road maps, they set their goals for the next year towards the end of any given year. And therefore, we are in continuous discussions with them, but more relevant discussions with them at the end of the year to understand what their priorities are. We've taken that view. So we've been in discussions with our customers. And ultimately, we look at how we can grow together to understand what our growth trajectory looks like for 2026. If you look at what we see in 2026, again, I referenced earlier the new business wins that we had last year that were strong on the platform and that will ramp up in a strong way. They'll provide support to our growth this year. If you look at the existing customer discussions, they're also very positive. There's lots of opportunity for us to continue to grow with our customers and add share of wallet, not only just add share of wallet, but also help them with new initiatives, new initiatives like agentic commerce that Ingo highlighted. We do have market volume growth as part of our growth in any given year. And there, we have the expectation that, that growth stays at the same level as in 2025. And ultimately, when you bring that all together, we've given the view that we expect our growth to be between 20% and 22% on a constant currency basis in 2026. If you then look at EBITDA margins, we continue to have the expectation that our EBITDA margin level will rise to above 55% by 2028. And in 2026, specifically, we're going to continue to make investments into the team to drive our long-term growth path. At the same time, of course, we'll focus on automation and optimization. And we roughly think that EBITDA margin will be at a similar level in '26 as it was in 2025 as we progress to that 55%-plus level in 2028. Our CapEx investment will also stay at the same level, so at 5% or less of net revenues is our expectation. And if I step back from 2026 specifically, I'm really excited about the growth potential that we have together with our customers. 2026 will be another year in that step of becoming one of the largest financial technology platforms in the world, and there's so much exciting things we'll build together with our customers this year. Isaac Lima: Thank you very much, Ethan. Thank you both for sharing your insights with us so far. We have now reached the Q&A session of today's call. For that, I'll hand it over to Maggie, who will moderate the session. Maggie, over to you. Maggie O'Donnell: Thanks, Isaac. My name is Maggie, and I'm going to be moderating today's Q&A portion of the call. [Operator Instructions] The first question we have today comes from Hannes from Jefferies. Hannes Leitner: I'm Hannes Leitner from Jefferies. I got 2 questions. The first one is maybe you can help us with the confidence on maintaining 20% net revenue growth going forward, if you already include 20% in your 2026 guidance at the bottom end. And maybe you can just like square that because like you talked about 2025 being a strong cohort, the APAC-based retailers channel checks suggest that they are rebounding in the U.S. And then maybe lastly, just like EMEA slowed to 17% growth. So like that's the first question on just getting this growth algo for the medium term. Maggie O'Donnell: Okay. Ethan, do you want to take both of those? Ethan Tandowsky: Yes, sure. Maybe let me start on 2026 specifically, and then I can get to the longer-term growth. If you think about where our growth comes from at this point, it comes from a large number of customers given the diversification we now have, right? We're diversified again across markets. We're diversified across verticals. So ultimately, we look at our growth in any given year from this diversified set of customers. Now what we see is that we are connected to their top priorities. So what they're focused on is typically where we have the opportunity to grow. If you look at 2026, there's a lot of exciting things that we're excited to work on with them, right? If you see how we can build in core markets like, of course, our expansion in North America, for instance, on one hand, that gives us a lot of excitement as do other things, like there's a lot of macroeconomic uncertainty right now. For instance, some of our international customers, they're looking at Latin America more, and that we can certainly help with them. Others are prioritizing agentic commerce and see us as a partner to help them with that. And we're very much then focused on how can we help them in this new age of commerce, right? And so depending on the priority and depending on the given year, you see that there are different priorities for our customers. What's important for us is that we are the partner they look to, to help them with those priorities. And each of them have different short-term or longer-term revenue ramifications, right? So take agentic commerce as one example. It's not going to drive short-term revenues, right? So it's not a big part of our 2026 revenue expectations. But if it's a top priority for your customer, you want to be there and you want to support them with it, and that's where we're well positioned to do it. And it will help us drive growth over a longer period of time, right? And that's just one example. So if you then connect it to beyond '26, I come back to the signals that I have, right, which are, how is new business developing. Well, new business is developing well. I think we've seen that in the new cohort of 2025 being the strongest we've seen. We continue to see strong traction with new customers. On the existing side, we continue to be the partner that our customers look to on their top priorities. I really like the Uber example we gave today in the shareholder letter and that we had a press release earlier this week on because it's an example of a customer we've had for well over a decade that again says, "Hey, these are my priorities. This is how we're looking to expand. Can you help us?" And we're there to support them, right, whether that's new markets or now the kiosks that they're setting up in airports, for instance. So it's really about for us being there to support our customers because that will drive our growth over a longer period of time, over a multiyear growth path. And that's -- those are the types of signals that I look to, to understand our growth trajectory. In terms of your last piece on EMEA, we manage our revenues, again, based on a customer lens, right? So we will see different levels of ramp-ups in different markets at different times. At the end of last year, at the end of 2024, we saw that there were some significant ramp-ups in EMEA, so we saw a stronger growth. Again, looking at EMEA, the signals that I see are also very strong. If I look at new pipeline, we're winning across all 3 of our pillars, right, Digital, Unified Commerce and Platforms. Our customers turn to us to support them in this market. I think Starbucks is a great example of that, which we referenced as well today, opening up in the U.K. and a few other markets in Europe. So we're absolutely well positioned to continue to grow there. But on a regional basis, we'll continue to see different growth rates at different times depending on how our set of customers prioritize that year. Maggie O'Donnell: Okay. Thanks for your question, Hannes. The next question comes from Mo Moawalla from Goldman Sachs. Mohammed Moawalla: Two for me. Firstly, I noticed you talked a lot about customer priorities, Ethan. We know that you sort of gained share within customers. Is that sort of a variable around priority mean that perhaps if your customers are prioritizing certain business that's kind of you're more beneficial to get versus more run-of-the-mill business that perhaps is more price competitive, adds a bit more kind of variability around your visibility? And then secondly, I wanted to just touch upon the long-term guide you gave at the Investor Day, you sort of committed to this 20% growth and then giving a kind of annual guidance to that. Does that still very much stand where we sit today? Ethan Tandowsky: Yes. Let me talk to the priorities first. I think what's important is that we're working together with our customers on what's most important to them. Now what's different across priorities is when they will generate revenues, right? And so we're very much focused again on building a much larger business by helping our customers succeed and growing with them over multiple years. I used a few examples, right, in the last answer, but I'll go back to it. So our large international customers want to go to LatAm, we have a fantastic product in LatAm, we can help them in LatAm. That's a great place to support them. Or they want to focus on agentic commerce. Of course, we also have a solution which can really support them with their needs for agentic commerce as they develop. But the size of those revenues is different in 2026 than it may be in 2028. What's important for us is to be there to support and to grow with them and to support them and build together. And I think the reality is that they look to us to support them on these priorities. And I think that's what's really important. So it's not about what's priced differently. It's about what is driving revenues on which time horizon, and that's what I mean by priorities. In terms of what we shared at Investor Day, absolutely. I think everything that we've shared at Investor Day holds. What we wanted to share was a multiyear framework to help understand where our growth will come from. That's why we laid out the building blocks like we laid them out. We also wanted to share that the best way to understand our growth path in any given year is based on the discussions we have with our customer base. And that is why we want to share basically each February, our view on the next year as we get it. Ultimately, that's why we've shared the guidance that we've shared today. So everything holds that we shared in November. We continue to have high expectations for our ability to grow with our customers. And genuinely, I'm really excited by everything that I see on the path for us to become one of the largest financial technology platforms in the world truly. Maggie O'Donnell: Okay. Thanks for your questions, Mo. The next question comes from Alex Faure from BNP Paribas. Alexandre Faure: A couple of questions from me. I mean just elaborating on what you just explained, Ethan, around those priorities and some of them, you mentioned LatAm, agentic commerce may be yielding more results in 2027, 2028. Should we think then of 2026 as a year of preparatory work for some of your customers to get ready for some of that expansion and maybe a bit of a pause in the budget they were traditionally allocating to payment? And then my second question has nothing to do with that. It's kind of if you could update us on how you think of capital allocation. I know you touched on it at the CMD, but just curious if you have some updated thoughts there. Maggie O'Donnell: Okay. Thanks. Ingo, do you want to take the first one and then Ethan take the second one? Ingo Uytdehaage: Yes, sure, absolutely. So I certainly see 2026 not as a prep year. I think we have a continued dialogue with our customers about what is next. I think what -- the point that we want to make is that we see also going forward, also multiyears out sufficient projects in the pipeline that we can continue the growth that we see. And also what we said during the Investor Day that we expect to grow around 20% for the next upcoming years. That's powered basically by all the projects that we're working. And indeed, new sales channels like agentic are a good opportunity for us. But it's also the other countries like the things that we're doing with Japan, India, it's with other products like the investments that we're making in the financial products at the moment. These are the priorities for our merchants, and this is basically the fuel for our growth going forward. And that's also why we have this multiyear view on sustained growth at these levels. Ethan Tandowsky: And on capital allocation, no, I think we outlined it again in our Investor Day in November. I think we're very much focused on the growth opportunity, right? So having the flexibility to be able to continue to invest in the business, to invest in the business as we scale revenues over the coming years is what's most important to us, but also as we scale products, right? And as we get into broader financial products, it's especially relevant how we're positioned from a financial -- from a balance sheet perspective. And so we'll continue to have this approach that we shared in November. Maggie O'Donnell: Great. Thanks for your question. The next question comes from Nooshin from Deutsche Bank. Nooshin Nejati: Maybe 3 on my side. First, on the Chinese platforms impacted by U.S. tariffs. Could you update us on where those relationships stand today? There have been some market expectation that you might offset part of that pressure through increased share of wallet in other regions. How should we think about that today? Is that something you're actively pursuing? Or has your approach evolved? And then on the outlook, and I'm sorry if that's, again, sort of repetition, but have you observed any incremental budget constraint on the client side, particularly relating to international expansion or new market entries that could moderate your outlook? If so, could you share a few examples of where you're seeing caution emerge and whether this is more cyclical in nature or something structural in client planning maybe? And then finally, could you help us quantify the sensitivity of your volumes and net revenue growth to any single large client? How should we think about the contribution or potential volatility from your largest customer when modeling growth for the remainder of the year? Maggie O'Donnell: Thanks, Nooshin. Ethan, do you want to take the first question and the third one and then Ingo maybe take the second one? Ethan Tandowsky: Sure. So on the APAC-based retailers, I think they've remained very strong relationships. They see us as a core partner. They're very international businesses, right? Maybe just to clarify on the point around LatAm, right? LatAm is actually our fastest-growing region in this half on a constant currency basis. So it's not necessarily future revenues. We're seeing that there's traction there today, right? And we've talked about a focus of some of these retailers more on LatAm, for instance, as one example. I think the important piece with them and with any of our large customers is maintaining strong relationship where they feel like as their focus shifts, if it shifts, if it stays the same, that they look to Adyen to support them with those priorities. And I think that's where we, again, feel very well positioned. So I'd say we're in a strong spot with those customers. Ingo Uytdehaage: Yes. And the second question around budget constraints. I don't see any budget constraints when we talk to our customers. I think in times of more uncertainty, merchants are looking for innovation ways to reduce cost. And these are typically topics that we're really good at to work with them to, for instance, lower total payments cost. The example that I gave around Personalized, that's typically a project that you like to run because it increases conversion, lowers costs. So far, I haven't seen any budget constraints in talking to our customers. It's more always about what is the right timing business-wise because you can't do all projects at the same time. That's also why it's so important to work closely with our customers to see what their priorities are and make sure that we work on those priorities with them. But indeed, no constraints from a budget perspective so far. Ethan Tandowsky: And I think you talked about volume and revenue contribution of any single customers. Of course, given our pricing model where we have tiered pricing, we'll see more impact from individual customers on volumes in any given year than we'll see on revenue growth. I think that's been quite clear also, for instance, over the last year, where we highlighted a couple of large volume customers and the impact they had on our volume growth, but we saw much less impact on our revenues. And I think that's a great development that we've seen over the past years is that we have become quite diversified from a revenue basis across many, many customers, across many markets, across many verticals. And I think that's what shows up in the consistency of our revenue growth over the last few years. Maggie O'Donnell: Okay. Thanks for your questions. The next question comes from Fred at Bank of America. Frederic Boulan: Fred Boulan from Bank of America. Two questions. Firstly, if I can follow up on the balance sheet point. The stock is down about 34% since the CMD. Would you consider buybacks as a signal to the market that you're focused on shareholder value whilst maintaining adequate capital to support your ambitions, especially on embedded finance? And then secondly, if you can spend a bit more time on the margin guidance for 2026. Any specific areas of investment that are driving this kind of slightly accelerated pace of hiring for '26? Maggie O'Donnell: Thanks, Fred. Ethan Tandowsky: Sure. Let me start on capital allocation. I think what we've tried to share is our perspective, but we should always be open to what options are available. And of course, you need to assess what your current situation is, what your current facts and circumstances are, what's right for the business at each moment. So we're certainly not dogmatic here. We constantly assess what's the right decision for the business, but we're very much focused on driving the growth of the organization that we expect of growing with our customers. And so we'll focus there, but continue to evaluate what the right approach is. In terms of EBITDA margins, the areas of investment. So we will grow the team slightly more than we grew this year, at least that's our expectation for 2026. If you think about where we invest, a lot of the same things you've heard from us, right? We're investing more in the U.S. We're investing a lot in our tech teams, in our tech hubs. So that's partially in the U.S., but that's also in other markets, think about Madrid or Bengaluru in India, where we have tech hubs as well amongst other locations throughout the world. So that's where we'll continue to make investments. We are investing in specialized skills, right? We're building out financial products. We're seeing nice inflection moment in issuing. We're seeing stronger traction in capital and in bank accounts. So we need to continue to invest there to make sure that we can continue to grow those products like we feel the opportunity exists for. And so that's where we'll make investments. I think if you come back to the overarching story on EBITDA margins, right, we're on this path already over the last couple of years, but also if we look ahead to the next few, where we think EBITDA margins will expand because we'll continue to make investments in the team. But we'll do that at a pace which allows the operating leverage inherent to our business model to still show through. And so our expectation is that we'll grow up to the 55% and above level by 2028. And each year is just a timing exercise about when and how we make those investments, given that those new investments aren't typically linked to short-term revenues. Maggie O'Donnell: Thanks for your questions. The next question comes from Adam Wood at Morgan Stanley. Adam Wood: It's Adam Wood from Morgan Stanley. Maybe just to dig in a little bit deeper on that EBITDA margin question for this year. It looks like you're planning to add maybe around 10% to headcount. Obviously, expecting the business to grow north of 20%. Could you just help us understand, is that the cost of people you're bringing in is more U.S. weighted than it's salaries? Is there a lot more marketing going on? If you could just square that circle of headcount growth versus top line growth, there seems to be a gap there. And maybe secondly, some of the stats you gave around Dynamic ID and some of the new products you've added to that seem really impressive. I guess a lot of your very big e-commerce merchants route pretty dynamically. You would have thought that as soon as they see those types of results coming through, the impact on volume shifting to you would be pretty rapid. Could you maybe just talk about what the barriers are to get that to happen and maybe how long it takes you to put this product in front of a customer and then actually seeing the volume start to shift more dynamically onto the platform? What's the time frame we should be thinking about for that? Maggie O'Donnell: Okay. Ethan, do you want to take the EBITDA one, Ingo take the Dynamic Identification one? Ethan Tandowsky: Yes, sure. So on EBITDA margin, it's driven by the team. So there's nothing else in the expense base that leads to this expectation. It's driven by the team. I think we will grow the team a bit more than the 10% you referenced, but just a few percentage points faster given the numbers that we've shared. But we're also indeed hiring more in the U.S. We're hiring specialized roles, right? If you think about what we're building out, again, in financial products. So this is really investment in the team more than investments in other areas. Ingo Uytdehaage: Yes. And on Dynamic Identification, of course, we work very closely with our customers to see how we can help them ultimately to improve conversion because I think that's -- Dynamic Identification is in itself not a product. So one of the product suites that is built upon Dynamic Identification is Uplift. And depending on the needs of specific merchants, we discuss with them which module they like to have. So for instance, not all of our big enterprise merchants use our risk module yet. That's, of course, a conversation that we have then with them to demonstrate what we can do, how it will help them to use our risk module. But also, of course, we have a discussion around the monetization of it. So that's why it typically takes time before people just switch volumes. But we see very promising results. And also with winning the new merchants, about 2/3 of our new merchants, they turn parts of Uplift on from the start. So that's a very important KPI, and that gives us also the support that for existing merchants, it is a matter of time to explain them where they benefit and basically that we continue to expand the gap with competition on the ultimate goal of merchants, which is highest conversion at the lowest cost. Maggie O'Donnell: Thanks for your questions. The next question comes from Justin at UBS. Justin Forsythe: Justin Forsythe from UBS here. A couple of questions from me. Just very simply on the '26 revenue guide. Three months ago about we had a preliminary guide of low to mid-20s. Why didn't you guide for low 20s when initiating that guide in October for conservatism? Secondarily, North America growth ex de minimis for 2H seemed to be above 30% ex FX as well. Could you talk about what is driving the strength there and how we expect that to filter through in 2026? Ethan Tandowsky: I'll take the first. Maggie O'Donnell: Okay. Yes. Ethan Tandowsky: Yes. Let me take the first question on the net revenue guide. What we intended to share at our Investor Day was our new approach to sharing guidance, right, which is that we go through these conversations with our customer base at the end of each year to understand what is it that's on their road map? What's in their priorities for the next year. And as we go through that process, we wanted to share the latest information that we get from them. That's why we thought if we share it in February, that will give the best insight to our -- to stakeholders, to shareholders about what to expect in that given year, given that those road maps are typically built out for, say, 12 months. So ultimately, that was -- we were in a transitionary period of going from a 3-year guide to this 1-year view. And we wanted to give the best view that we had along the way. So ultimately, now we've had those conversations, we want to give a more narrow view or better expectation of what we should expect for this year. It is ultimately what we expect for 2026, and that's why we've shared it this way. Maggie O'Donnell: Do you want to take the North America question? Ingo Uytdehaage: Yes, sure, absolutely. The strength in North America is the result of investing in North America for over a decade in combination with the fact that the North American market is only getting more complicated. So you see more differentiation in payment methods compared to 5 or 6 years ago, the importance of Unified Commerce. So combining off-line or in-store volumes with online volumes is very important. And it's very clear also to domestic retailers that we have a unique position in the market to help them out. So that's why the North America market is performing very strong, and we continue to invest in that market. It's our biggest investment market right now, and we also expect that to continue in this year. Maggie O'Donnell: Okay. Thanks for your questions. The next question comes from Adam at Evercore. Adam Frisch: Two questions. I'd like to focus specifically on the share of wallet verbiage in the release since that is obviously the center of the growth algorithm. Ethan, you talked about it a bit, but it needs to be -- I just want to refine it a little bit. Is it slower because you aren't winning as much versus the competition or their value prop is catching up to yours or they're lowballing pricing? Or is it none of that and something else? Because I think the differentiation is really important to say, is it a negative or just business as usual and things are going to ebb and flow as they go. And then the second question is on M&A. And the narrative today feels -- feeds a bit into the bear thesis of modestly slower organic growth, which to us raises a question about M&A, which you said you're open to, but you haven't pulled the trigger yet. So I think this is now a little bit more important of a go-forward story. So appreciate if you can give an update on your current thinking there around M&A. Ethan Tandowsky: Yes. So let me start with the first. I think we haven't seen any shifts in the competitive dynamics, which have changed our ability to win share of wallet, right? The reason that we've always historically talked about the long term and why we still believe in building for the long term is because you need to follow your -- the priorities of your customers. And the priorities of your customers, they may change from year-to-year, right? You may have an opportunity to win share with them in one market 1 year and another market the next year. You should focus on what's important to them and how you can best help them over multiple years because that will ultimately get you to the largest size relationship and the most value you can provide to them. And so that's always been our plan. Now if you look at share of wallet opportunities that we're focused on this year, they'll have a range of revenue-driving time lines, right? Some of them will be more short-term revenue driving and some of them may be longer term. That's why I tried to share a couple of examples, right? We're seeing stronger traction right now in LatAm as an example. We're also focusing on agentic commerce, something that won't drive strong revenue growth this year, but over time, may, right? And as long as we're there focused on the priorities of our customers, then we know we'll be able to gain further and further share with them over time. That's the focus. So there is no change here at all. I think we're in a really good position. When we talk to our customers, they come to us to help them with their top priorities. And I think that's the key thing that we're focused on. Now each year, that may look slightly different. That's just part of building a business and building it together with them based on their priorities. As far as the second question on M&A, yes, I think nothing has shifted from November, right? The same discussion that we had back then. I think we've gotten a lot of benefit from building out a single global payments solution. We've branched out into more and more products. And so, of course, you consistently look at what's available in the market and what you can build yourself. That doesn't change. We continue to focus on building the best solution for our customers. And if an inorganic approach is what makes sense for us, we will consider it. There's nothing that we have to share. I think this is not different than our view has been over the past years, but we'll continue to evaluate what makes most sense for us. Maggie O'Donnell: Okay. Thanks for your questions. The next question comes from Jason at Wells Fargo. Jason Kupferberg: Jason Kupferberg from Wells Fargo. So I think you're making an important point. This is the first year where you're utilizing the new formal annual guidance approach. So can you just talk more about how you built the revenue forecast? I'm sure there's a pretty robust bottoms up here. You've referenced the client conversations. But does the revenue guide include any material amount of cushion or conservatism with respect to any of the building blocks from the Investor Day or the macro? It just seems like there's no reason growth shouldn't accelerate modestly a little bit off the 21% in 2025 in a base case because you had the strength of the cohorts in '25, you're lapping some of the headwinds around tariffs, de minimis. So I'm just curious if there's any holes in that thought process and any more insight into the actual development of the revenue guide under this annual model. Ethan Tandowsky: Yes, sure. So if you use the building blocks as the framework, which is, I think, a good one, on the existing business side, we basically model out our relationship with every customer. We understand where the opportunities are through discussions with them, of course, and we try to get a sense of how they expect their own business to grow. Now some of them have a clear sense, also a sense they're willing to share, and others are less open to sharing their perspective, and we take an assumption on how they will grow their business. So on the existing side, we look really account by account. We look at that in detail, and we see where can we best help our customers, what are their priorities and how does that ultimately lead to our own growth in this year. That's a continuous conversation, but that gets more concrete to the end of the year, like I mentioned earlier, because that's often when the planning cycles happen for our customer base. In terms of how we think about it, we're trying to share our expectation, right? So that 20% to 22% constant currency guide that we shared for 2026, that's our expectation for this year. It's, again, off of the back of these conversations. It's the latest information we have, and we want to share that proactively as we get it, which is why we've moved to this model and plan to share basically our view at the beginning of each year. It's absolutely our expectation for '26. Maggie O'Donnell: Thanks for your questions. The next question comes from Darrin at Wolf. Darrin Peller: All right. So I mean, it does sound like the change in the -- to lowering the range is really just fine-tuning what you're seeing your customers prioritizing right now versus what maybe you thought a few months ago. So maybe just shifting the topic a little bit more to 2 things. One is cadence. And then the second is just overall what you're seeing in the consumer and macro. I mean, first on cadence. I mean, I would imagine just given that we're lapping APAC retailer headwinds early in the year, then it would imply second half should show a better growth profile than first. Just want to verify that first, Ethan. But then also, when we think about overall market growth, it sounded like you're saying that should be the same. Give us a little more color of what you're seeing in terms of notable outperformers or underperformers and areas in the market in terms of consumer and what you're seeing in spending in different markets you're seeing, please? Ethan Tandowsky: Sure. Let me start with the cadence. Between halves, we actually expect pretty similar growth rates. I think the only thing that I'd -- I'd call out maybe 2 things. One is that we've seen headwinds from USD. We expect that, that will continue, especially through Q1. That will still be there in the second quarter, but at current rates, at least, that will start to ease into Q2 and then Q3 and Q4 as well. The other thing I'd highlight is that between H1, I would expect that Q1 is a bit lower growth than Q2 given your call out on the APAC retailers. Having said that, if you take it over the year or over the halves, it will be less visible. But I think it is maybe helpful to understand the difference between the first and the second quarter. In terms of the consumer and macro, in general, right, what you get a sense for is some level of uncertainty, right? And people are thinking differently about how -- yes, where their priorities should focus in a time of geopolitical uncertainty. That's where it's best for us to listen, us to be in open ear and connected to our customer. I think the benefit of what we've built is we've built a very global platform. So depending on where priorities shift again, we can support them in that, and it's important that we just deeply understand what's important to them so that we can best solve for them. The reality is that we haven't seen major shifts in our data that we've processed to date. There's nothing specific that I'd call out, right, again, because the macro is also blended with the share of wallet gains that we have, and that's a big component of our growth. So there's nothing specific that I would highlight here. Maggie O'Donnell: Okay. Thanks for your questions. The next question comes from Harshita at Bernstein. Harshita Rawat: So 2 questions. One, Ethan, I want to follow up on the guidance philosophy. And I know you talked about the formulaic approach to guidance, for better or of worse, the market rewards beats and positive revisions, which I know is not the game you play, and I also know you don't solve for the short term. But my question is, given the volatility in the stock, is there an update to kind of how you're thinking about guiding going forward on a level of conservatism embedded? Are your internal targets the same as your external guidance? And then, Ingo, a question on agentic. There is this concern amongst investors that you may be behind some of your peers here, which I know is not the case. And I know it's super early days. There's a lot of experimentation and your enterprise customers move at a different pace versus start-ups. You talked about this in your shareholder letter and your remarks, but maybe expand upon why Dynamic Identification is a big asset in agentic, what problems it's solving with regards to trust and identity and intent? And also, how important is it for you to shape the standards being developed, for example, UCP by Google or others? Ethan Tandowsky: I'll start on the guidance question. So I think in general, yes, our stance is changing because that's why we want to share our annual view. We want to give the latest information we have through our customer conversations and to be honest, those are typically on a 12-month view, right, because that's how they build out their priorities. That's how they build out their road maps. So we wanted to align basically the types of conversations that our customers have with us about their priorities against what we share with the market. And that's why we've made this transition now to getting to this one -- this annual view we'll give each February. We plan to do this again next year. The idea is share the latest information that we have from our customer base. That's also why we share what our expectations are specifically for 2026. So in some sense, it's shifted, but this is just getting us to this new model we plan to go forward with. Ingo Uytdehaage: Yes. On the second question, we are at the forefront of agentic commerce, and we will certainly show more in the next couple of months because we're working closely with our merchants to implement it. And indeed, Dynamic Identification is key here. And the reason why it's key is because it's ultimately a trust game. So in this new world, we need to know who is the consumer behind the agent and how do we know that we can trust the agent that is indeed acting on behalf of the consumer. And that's where Dynamic Identification really helps. So it helps to look at the signals that we get and compare that to the signals that we have in our system and then come up with the right outcome or decision whether this can be trusted or not. In that sense, it's also very important to shape the protocols with OpenAI, with Google to make sure that, that information is not get lost, and making sure that also our merchants do not lose the connection with the consumer behind the agent because that's one of the key elements that our merchants find important, and we want to make sure that, that connection is not lost. So more to come in the next couple of months. We are very pleased to see what's happening in this space. Maggie O'Donnell: Thanks for your questions. The next question comes from Bryan at TD Cowen. Bryan Bergin: So 2 for me, one on Digital and one on market volume growth. First on Digital, just understanding the increased shift to Unified Commerce and the real strong growth there has driven the Digital pillar a bit lower. Just trying to get a sense of what the underlying Digital pillar growth rate really is. So can you give us a sense of perhaps what the level of headwind it presents to digital when recategorizing do you see? And then as you operate this low double-digit level in Digital, is that a sustainable rate? And as it relates to the second question, market volume growth, what's the level of market volume growth that you saw in 2025? I'm curious if it's fair to assume it was at the lower end of the high single to low double-digit range that you previously framed in the framework or perhaps a bit below that? Ethan Tandowsky: Sure. So let's start with Digital. So indeed, I think 2025 saw a number of factors that you would kind of need to normalize growth against, right? One is currency. We saw that across each pillar, but no different in the Digital pillar that we saw headwinds from -- on the currency side. We also talked about a large Digital customer. So one customer that had more impact, of course, on volumes, but had some impacts on revenues, especially if you cut it down to the pillar level. And then lastly, we saw that we had more customers moving into Unified Commerce in the second half than we had previously seen in other halves. To me, that's a positive, right? That's the execution of a broader expansion strategy, being able to support our customers in more sales channels means that they put more trust, we're able to win more of their share of wallet. So in general, actually, the Digital pillar has been growing pretty consistently over the last few periods, and it feels like a very sustainable level for us going forward. In terms of market volume growth in 2025, the biggest impact that we had on the market volume growth side, and we talked about that in H1, that was the thing that was different than our expectations back then is that we saw this impact from this handful of APAC online retailers. So that brought us indeed towards the low end of our expectations around market volume growth. Maggie O'Donnell: Thanks for your questions. The next question comes from Pavan at Citibank. Pavan Daswani: Pavan Daswani from Citi. I've also got a couple. Firstly, following up on the 2026 growth guidance. Could you expand on the customer priorities that you're seeing shift maybe by segment or region? And should we think about this as the new normal as budgets and priorities shift to areas like AI? Or do you expect to see some catch-up effect in 2027 and 2028? And then secondly, you've talked about the large cohort of new wins in 2025. Could you touch on what the sales pipeline looks like for 2026, please? Maggie O'Donnell: Great. Ethan, do you want to take both? Ethan Tandowsky: Yes. I want to make this point clearly because it's not that customers' priorities shifted in some way in the last couple of months. It's that priorities look different each year, right? And that's just based on the mix of merchants that we have and what they're focused on in any given year and of course, how the world is developing, how technology is developing, how we can best support them. So each year in terms of where your opportunity is to grow share of wallet just looks a bit different than the last or then the next one will. And that's why we want to share each year our view on the growth for that year because it's ultimately a reflection of what are customers prioritizing in that year and how will we help them with that. We haven't seen that there's been a big shift in priorities. That's not been the case at all nor a willingness to partner with us on those priorities. They're absolutely looking to us to help them with their most important priorities. And I think that's what's key for us. It's key for us to be able to support them with whatever is most important to them in any given year. You did call out AI. Of course, we've talked a lot about agentic commerce, both in the letter and on this call. That is something, for instance, that you see is a priority often for many of our customers. It may not be the first priority, but it's somewhere in the top few priorities that they're looking at how can they best set themselves up in this world, even knowing that revenues may not come from it in 2026 nor maybe even in 2027. That's much more a long-term play. In terms of sales pipeline for 2026, I mean, we continue to see really good traction on the new business side. We talked a lot about the 2025 cohort. Of course, the 2026 cohort is very early days, but everything that we see in the pipeline across pillars looks like a continuation of what we've been able to build through 2025. So we're well positioned to win across each of them. Maggie O'Donnell: Thanks for your questions. We have time for one more question, and it's going to come from Josh at Autonomous. Josh Levin: Josh from Autonomous Research. I just really want to clarify what you mean by shifting priorities. It would be really helpful if you could give a specific example of -- 1 or 2 examples where a merchant has said we are going to now prioritize X versus Y, and therefore, you decide to -- you need to sort of lower your growth forecast a little bit. If you could really define X and Y, that would be really helpful. And then secondly, putting aside just this quarter, I mean, there's been a lot of weakness in the stock price. What is the single biggest disconnect you see between how Adyen is performing internally and how investors might be interpreting the story externally? And what could help close that gap? Ethan Tandowsky: Thanks for giving me the chance to clarify because, again, I find this important. It's not that we've lowered our view of our growth for 2026. It's that we understand where the priorities of our customers will be in a deeper way and can share that, right? And it's not about shifting priorities. It's about understanding where the focus of our customers will be in the following year, right, in any given year. I can give a couple of examples where things change from year-to-year, right? One of the reasons that we're seeing strong growth in Latin America, for instance, is not only that we've been investing a lot in the product over the past years, and we've built up a great team there, and we have a strong offering, but also because as there was some geopolitical tensions, some of our international, especially retailers, shifted some of their focus more towards that market. right? That's one example of where you might see a bit of a shifting priority. But it's not that priorities have shifted in a big way, and that's what's led to a lowering of our view. It's just we have a good reflection, a refined reflection of our expectations for 2026, and that's what we share. Now those opportunities have a balance of when they drive revenues. Some of them drive revenues more short term, some of them drive revenues more long term. But you need to be there with your customers again, working on what their priorities are. Ingo Uytdehaage: On your second question, like we're building the company for the long term. And I think that's very important because if you ask me, do I have confidence in how we're building for the long term and do we have a long-term growth trajectory, my answer is a full yes. And I think what I find sometimes difficult to understand is why on the short term, the reaction is so intense, because the long-term perspective for us does not change. And I think that's what we try to be helpful to be transparent, and I understand that a lot of short terms ultimately end up to the long term. But we think that too much focus on the short term is not helping us in that long-term execution. And I think that is potentially something that we can explain better. But in all the decisions that we make as a Management Board, we only take the 3 to 5 years perspective and not this year's perspective. And I think that's something that I always like to highlight talking to investors. Maggie O'Donnell: It's a great place to end. Thanks, everyone, for joining us today, and we'll see you next time.
Sven Kristensson: Good morning, and welcome to this conference call regarding Nederman Group Q4 2025. It's been an interesting year. And what we can conclude in Q4 is that we had higher orders received and a stronger business. We have, during this challenging period, continued to strengthen our leading position and we are working with market leadership, technical leadership, commercial leadership and operational leadership. That's our focus during this period. If you look at Q4, we had good organic growth if you consider it on a currency-neutral basis. We also had a currency-neutral growth in sales and we believe that is very positive given the market conditions. We have delivered good cash flow and we have continued invest in operations and also in R&D. And these investments have provided a very solid basis for the future. We will have higher margins and better efficiency when we regain some momentum in the market. Matthew Cusick: If I look at some of the key financials now, orders received grew currency-neutral in both Q4 and the full year. It's very hard -- some of you who've listened to a number of these hearings already in this year-end season might be tired of hearing about currency-neutral and currency effects, but it's really very important to take this into account when analyzing the numbers. Sales as orders received for Q4, SEK 1.38 billion versus SEK 1.4 -- slightly over SEK 1.4 billion last year. So on the face of it, that looks like a decrease. However, organic growth was 4.7% in the quarter, currency-neutral, including some of the couple of acquisitions from Euro-Equip that we acquired back in March of 2025 and some from Duroair last year. That leaves us at 7.3%. Unfortunately, currency effect on orders received and actually on sales in the quarter was over 9%. For the full year, SEK 5.55 billion was the full order intake. That's growth, currency-neutral of 1.5%, slightly negative organically, minus 1.3% and still, obviously, for the full year, a clear currency impact. On the sales side, again, currency-neutral growth for both Q4 and the full year, just over SEK 1.4 billion in sales in the fourth quarter versus a very strong Q4 of 2024. It must be pointed out, SEK 1.62 billion was very high for the Nederman Group. Currency-neutral, that's 1.3% up in the year -- in the quarter -- sorry. For the full year, SEK 5.78 billion versus SEK 5.9 billion last year -- 2024. 3.5% up currency-neutral. So we see in these -- with these market conditions and the current investment appetite that 3.5% currency-neutral growth is rather strong. Profit-wise, like Sven mentioned, these investments that we've done in our operations have improved underlying profitability. The releases of new products has boosted sales in, for example, Process Technology's aftermarket. Adjusted EBITA for the quarter SEK 459 million versus SEK 185 million for quarter 4 2024. That's a drop of SEK 26 million, SEK 22 million currency effect in the quarter. Please take that into account when analyzing this. The SEK 159 million leaves a margin of 10.6%. Earnings per share is SEK 1.86, therefore, versus SEK 2.49 in Q4 last year. Full year adjusted EBITA SEK 627 million versus SEK 708 million. EBITA margin, 10.8% versus 12% and earnings per share SEK 7.8 versus SEK 9.83. When looking at the full year results, we had a currency impact on EBITA of approximately slightly under SEK 70 million. U.S. tariffs were approaching SEK 15 million for the group as a whole. And then we did have a couple of one-offs, you remember in 2024 related to a property sale and the company sale in China. The sum of those is just under SEK 100 million. So when comparing SEK 708 million to SEK 627 million for the full year, please take that into account. Cash flow, good cash flow in the fourth quarter, very good cash flow actually in Q4 of 2025, not quite as good as the cash flow in the -- I think that was an all-time high for 1 quarter cash flow in the Nederman Group in Q4 2024. For the full year, SEK 382 million, again, rather strong. This is important that we maintain a good cash flow. This has funded a lot of the investments that we've been making in our operations. We can see that on the second -- on the right-hand side of this slide, the net debt has decreased over the past 2 quarters, although it is higher than it was 12 months ago. We've made significant investments in our operations. We've also acquired a new company and paid out a dividend during the year, of course. If we go right through and break things down on how the business is going division by division, then Sven, and start with Extraction & Filtration Technology. Sven Kristensson: Yes. Extraction & Filtration Technology Q4, we had more large orders, both Americas and EMEA and that gave an increased order intake versus last year. We grew sales in Q4, currency-neutral. We definitely improved operational efficiency and that was driving profitability. And the full year EBITA was up SEK 10 million. And if you would consider it currency-neutral close to SEK 50 million, which is a strong performance in a very challenging market. For the regions, EMEA, we had increased order received. We had major solutions orders and we are growing our aftermarket business, which has been on the strategic agenda for several years. We had 2 very big orders in Belgium for welding and one in Sweden operating nuclear industry. In Americas, we had actually double digit growth in order and sales. There were several larger orders. Several of them came from defense and aerospace industry, where we have good solutions and our concept of clean air optimized with energy savings, logarithm, et cetera, has given us some success here. Then we have the orphan APAC. One major order was secured to aerospace, a strategic and prestige order. But overall, we are not doing a very strong performance in Asia. Both orders and sales dropped. Key activities during period has been preparation to modernize the facility in Charlotte. It will further strengthen U.S. supply chain and operational capacity. It will shorten lead times, which is one of the biggest advantage, but it will also take away over time, some tariffs and other challenges. Continued investment in the new innovation center in Helsingborg is ongoing and we have a fully booked innovation center for the full year 2026. And we will also see order -- new products and solutions coming out of that. Testing and validation of current and next-generation products in the innovation center is ahead of new launches in that. Matthew Cusick: When we look at the financials for E&FT division, orders received for the quarter, slightly irritating, SEK 0.5 million below the same quarter last year, even at prevailing rates, currency-neutral growth, 7.9% which is purely organic in the case of this division. Sales, SEK 686 million, left an adjusted EBITA of SEK 96.4 million, which is 14.1%. It's ahead of Q4 2024 in both -- in both SEK and in percentages. For the full year, EBITA up to SEK 362 million from SEK 352 million, as Sven mentioned, currency-neutral, that's SEK 48 million up. The margin increasing up to 13.7%. So more efficiency in the operations investments, for example, in the site in Helsingborg and in [ Markaryd ] have contributed to that. If we move on to Process Technology then, Sven. Sven Kristensson: Yes. Process Technology, more dependent on larger projects and have had a challenging period, but the activity picked up towards the end of last quarter. We had a currency-neutral order growth of 15%. We also had some sales increase versus Q4 '24. We have had some positive contribution from Euro-Equip that we acquired end of first quarter last year and they are integrated and doing a very good job working with the rest of the Nederman team. The service business continued to perform strong. Customers are focused on maintaining compliance and ensuring the efficiency of existing installations. And this is, of course, a result of the lower willingness to take decision on larger investments. If we look at textile and fiber, there's still a very low investment appetite and that goes for the global market as such. There is still overcapacity globally in spinning mills and also in weaving mills and that has a negative impact on our sales here. However, we are growing the service content. The order intake did, however, increase slightly in Q4, meaning that we are taking market share, especially in India, where we have a very strong organization and some neighboring countries that we supply from there. When going to foundry and smelters, Euro-Equip supported an increased order intake. It's a very good addition to Spanish-speaking area. We had one large aluminum order in Australia and some local production in India have enabled deliveries to several smaller foundry projects there. That is something we have tried out to get inside the tariff barriers and also shorten lead times by using our strong capacity and capability in India and increase their scope by doing -- under the supervision of our German expert team, doing FS filter, which, of course, is technical mumbo-jumbo for you, but it's configurated large for hot air application like foundries and smelters. This is something we will continue to further develop for the region to take a position in APAC. Customized solutions, orders received increased. It was boosted by large orders in U.S. from pharmaceutical industry. And again, our service and aftermarket is developing well. Key activities has been the investments in upgrading test centers, upgrading buildings in Germany, including solar panels and efficient heating. We have continued positive trend for service and aftermarket business and that includes our digital offerings, our continued strong demand for energy-efficient fan for textile. This, again, the very large energy saving that you get from our newly developed high-tech fans for spinning, weaving industry. And we are soon selling our thousandth new replacement fan for that. Matthew Cusick: Financials then for Process Technology. Orders received SEK 384 million is an increase from an albeit modest SEK 368 million in Q4 last year, but nevertheless, currency-neutral growth, 15%. Sales, a stronger sales quarter for the division than the earlier quarters of the year, SEK 456 million, resulted in an EBITA of SEK 44 million, 9.6%, which is quite good for this division. It's below a very strong Q4 last year, 11.1%. That included some -- concluding some varied -- for this division, high-margin projects then. But 9.6% is pleasing. The mix with higher service -- higher levels of service business helps that. For the full year, adjusted EBITA of SEK 144.7 million is 8.8%. It's down from 182% -- SEK 182 million, which was 11%. We move on to Duct & Filter Technology. Sven Kristensson: Yes. Duct & Filter, the development during the quarter, we had a declining order intake. There were significantly fewer major projects, particularly in the U.S. and that has been very much linked to EV batteries, large investments that has flattened out. We have also seen that there has been the same problem as PT for large investments -- larger investments in smelters, foundries, et cetera. And we are dependent on getting those wood industries, et cetera. Order activity, however, increased in EMEA. Sales was impacted negatively by lower order intake early in Q3. But despite the low volumes, profit margins remained solid. If you look at Nordfab isolated, both orders received and sales decreased in the U.S., and that is a market that stands for almost 80% of division sales. Work continued on 2 large projects in EV battery manufacturing, which generate further follow-up orders. But as mentioned earlier, it's drying up a little bit with the EV battery market in U.S. Nordfab now is contributing to a higher efficiency and profitability with delivery reliability of 99.9% during the quarter. So we are the leading and first choice when they want to have secure deliveries, quick deliveries. And we have also now, which I will mention later, started with our hub in Texas in order to further strengthen our reach in the U.S. market. If we go to Menardi, orders received in the U.S. increased in Q4 and that was boosted by new major orders to U.S. steel manufacturers that are facing a revival due to the tariff protection. In EMEA, the trend remains stable. So again, the key activities have been new production warehouse facility in Thomasville is completed and it's taken into operation. Thailand and Australia have launched new stainless steel product for the food industry and Nordfab EMEA launched improved high vacuum bends and branch for easier installation. Warehouse center established in Dallas, Texas, to strengthen Nordfab Now and Nordfab Now is our concept of being able to have next-day deliveries. Amazon has spoiled people with very quick deliveries and we are now following that trend and we see good success in this new way of handling it. As mentioned, almost 100% delivery certainty. Nordfab EU obtained EPD certification for galvanized and stainless steel product families. Matthew Cusick: Briefly on the financials for Duct & Filter Technology. Orders received did drop 11% currency-neutral as did sales. Sales at SEK 179 million versus SEK 229 million last year. EBITA 17.4%, up from 16.5% last year. Okay, it's down in absolute terms, but this is -- we see the efficiency from these investments we've made in the operations units around this division. So able to maintain good levels of profitability. For the full year, 19.3% is the EBITA. That's slightly down from 19.6% on obviously lower sales volumes. Monitoring & Control Technology then, Sven. Sven Kristensson: Yes. Monitor & Control, the development during the quarter was that we had an increase in orders received and that was fueled by very strong performance by NEO Monitors in Asia. It's a division that has most success in the Asian market. However, the weak orders received in Q3 led to slightly lower sales in Q4. We are focusing on the service business and we continue to perform well in growing that part of the business. We are also here linking our Olicem, the reporting system to our -- especially Gasmet projects and seen success when we can package these things. Some segments, hydrogen and defense are developing well. Geographically-wise, we look at EMEA. It was boringly straight. It was same basically as Q4. First portal analysis to defense customer in Germany and Switzerland has been delivered. And we have also the certification process of Auburn's product line ongoing for European market, which when that will be finalized, will give us access using also our Boston manufactured products for especially particle emission measurement available for the European market. In Asia, NEO Monitors saw strong order intake. We have also come in the situation, we have more direct sales to customers. We are in more direct discussions with customers that strengthen our position. We have also increased the presence in APAC with small offices, both in Korea and in Singapore. In the Americas was the development rather weak. Fuel orders to public sectors that is customs duty and it's emergency service, educational institution where Gasmet has had a very strong market with affordable units. However, with the financial restrictions in the public sector, we've seen a decline here. The exception is that the steel industry as also has been seen in Menardi is continuing to upgrade the old facilities, which has led to some new opportunities and orders. The key activities has been the launch of LG III ICL. That's a very prosaic name, only an engineer or a Ph.D. in engineering can come up with that very market-friendly name, but it's there and it's an advanced laser gas analyzer for industrial application. The extension of Auburn's facility in Boston is completed. It was inaugurated January 21, but it was taken into use slightly earlier than that. What it means is that we have strengthened the product and logistic flow. So we have now a test base and a more efficient operationally working in that factory as well. We have also preparations underway to improve efficiency and increase production capacity at Gasmet Finland. And we have attended some of the important shows in Asia to prove our willingness to be there and grow our market. Matthew Cusick: Financials for Monitoring & Control. SEK 189 million in order intake was an increase of 10% currency-neutral. Sales, SEK 205 million is below what was a very, very strong Q4 of 2024, SEK 241 million. Currency-neutral, that's actually down 8%. Adjusted EBITA is SEK 37 million, which is 18%. That's an improvement in margin versus the full year average. So we see -- we think -- or we are seeing some efficiency in the operations, these investments in NEO Monitors in Auburn starting to have an effect right away. For the full year, currency-neutral growth was 1% positive, sales, 1% negative currency-neutral. And then adjusted EBITA, SEK 129 million versus SEK 144 million in 2024. That leaves a full year margin of 16.7%. So Sven, our outlook? Sven Kristensson: Yes. And as for the last few years and especially this year, the outlook is interesting, but the demand remains dampened in many industries. There are some areas that are better than others. We have a growing service business and a very strong digital range enable us to assert ourselves well in the current turbulent market. Following higher activity in September, orders received continued to pick up in Q4, which if it continues, would be very positive for development in the first half of 2026. At the same time, the market is dominated by considerable uncertainty, making it difficult to forecast the broader recovery in demand. But if it gains momentum, we are in a very good position to increase our margins. With a strong balance sheet, we are continuing to invest in operational efficiency, ongoing improvements to our offering, allowing us to continue to advance our position irrespective of the market condition. In the world with growing insight into the damage that poor air does to people, Nederman with its leading industrial air filtration offering has a key role to play and good possibility for continued growth. Matthew Cusick: Financial calendar annual report will be released on the 17th of March this year. The interim report exactly a month later on the 17th of April for the Q1. Annual General Meeting on the 21st of April, where we expect the AGM to approve the proposed dividend of SEK 4 per share. That's unchanged versus 2024 level. Q2 report will be released on the 16th of July and the Q3 report on the 21st of October this year. And with that, we can open up, I think, for any questions that people listening may have for us. Operator: [Operator Instructions] The next question comes from Anna Widstrom from DNB Carnegie. Anna Widstrom: So firstly, I just want to dive into price and volume in the order book. Given that there are some tariff effects, how should we think about volume versus price in the organic growth that we see in the orders? Matthew Cusick: Let me think. That's a very good question. The currency -- the tariff -- if you think in relation to tariffs, the tariffs are not making a huge effect. The tariffs affect our costs by around SEK 5 million per quarter on approximately current -- give or take on current volume. So on sales prices, they don't affect things massively. Then when it comes to price, we're not seeing massive price movement in the market. There's not -- it's not -- we're very careful not to get dragged into a race to the bottom. However, we're not increasing prices significantly. So I think when you're looking at this -- or when you look at this organic or currency-neutral growth, it is growth that you're looking at there is the simple answer. Anna Widstrom: Okay. Perfect. And just to continue there on the tariffs. Have you experienced any shift in customers' willingness to pay these new set of prices? Have they sort of been more keen on evaluating local opportunities? Or have they just sort of caused investment decisions? What's your sense in your view? Sven Kristensson: This is, of course, not something that you can empirically prove. But the biggest effect during this year is that the uncertainty that has been generated is that a lot of American large project has been postponed. We are talking about several hundred million PT project that has been postponed both in U.S. and some also in Asia due to the uncertainty of what are the rules here. When it comes to other effects... Matthew Cusick: I could answer that maybe, Sven. Sven Kristensson: Yes. Matthew Cusick: When it comes to tariffs, we don't import an awful lot into the U.S. And what we do -- of course, what we do has been impacted by certain parts of what we do is being impacted by this. But in the U.S., you have seen inflation, for example, in steel prices internally anyway. So it's not that our costs are significantly different to any competitor. And I mean, in fact, we source approaching 90% of everything we sell in the U.S. is sourced U.S. anyway. But we don't think that we're at a competitive disadvantage related to these tariffs. And like you say, the investment appetite is... Sven Kristensson: Yes. And then you have some awkward sort of more emotional feeling that some Canadian customers refuse to take the product from our U.S. factory. So we are now shipping directly from Europe and manufacturing in Europe is that it has more to do with an emotional side of it than -- and that is things that going on. So it's more that you have an uncertain world and animosity towards some. But we also have to -- EFT has more than 80%, 85% local made in U.S. Where we have some import is on MCT when it comes from our Norwegian and Helsinki. But that's where we see that. Otherwise, we have basically in all regions manufacturing for the local market. Anna Widstrom: Okay. That's very clear. So then I just want to go into the margin development in EFT. So first, I'm a bit curious on the improvement that we can see here. How much of this is an effect from the improvements made in, for example, the Helsingborg site? Matthew Cusick: There are clear improvements made. If we talk operational improvements, then, we were talking around SEK 20 million, I think we were talking. We believe we've made operations improvements of around SEK 20 million in total in the EFT division through -- and then it's very -- it's not exactly the same volumes that are going through, but we've definitely made clear operations improvements. We've also seen a part of the profitability boost is that we are -- we have seen good growth in product sales or a higher portion of product sales, which means we're filling our factory up even more with less. So there's more Nederman content in everything we sell. But operations clearly helping and 20 million is the -- what we believe is the full year effect for 2025. Sven Kristensson: And we will continue to see effects of that. And we are now also investing further in order to show, as mentioned, in the Charlotte factory, in-sourcing more. We will take less from our Polish factory. But the biggest advantage here will be that we are more competitive because we have -- we are shortening the lead time. This is actions we are going to use in other areas as well. And we are also looking at how can we utilize our capabilities in, for instance, Thailand because there are free trade agreements between Thailand, India and some other areas. So we -- you have to play this game as well. But generally speaking -- and when you mention EFT, we'll also say that the NEO Monitors efficiency program where we have rebuilt and reorganized from a more prototype version of manufacturing to a more -- when we now have got some volumes, we have also there significant improvements, then we need some further volume. We had also for NEO and Gasmet set up in Suzhou in China where we now can service locally the equipment rather than shipping them across the globe to Norway and so on. So that is also not saving so much of the cost saving. It's more attractiveness for the customers that we locally can handle their issues. It was a long answer. It was slightly outside of the -- I hope that it was okay. Anna Widstrom: And just a follow-up on sort of the short-term expectations because I think you wrote something about the orders having quite a lot of solutions and service in the order book for the division. Is that then perhaps a bit more of a negative effect for margins in Q1 if we just think short term? Sven Kristensson: I -- probably not. I think that -- our assessment is the service increase will continue to -- or the service proportion will continue to be high and that will counter any shift between the products and solutions there. That's -- but also remember, we are doing very well in our solutions with our -- now I'm almost bragging, but our superior, we get better paid for our solution because this clean air optimize would include the energy save system, it includes digital surveillance. It includes the good filters locally made. We have an attractive offer. And the reason why we get larger orders and the special orders to defense and so on is that we have proven concept. We do not have to guess that it will work. We have done it. We've been there. We've done it. We got the winners T-shirts before. So we -- and that we see especially in sensitive areas like aerospace, defense, where we have good strong performance. Anna Widstrom: Great. That's a perfect segue into my next question because for several quarters, we've noted that you mentioned large orders from defense. Do you have any sort of guesstimate on how much of the order book or sales that currently is towards the defense industry? Sven Kristensson: Matthew? Matthew Cusick: We don't have a completely accurate figure on that. So I would rather not say -- I could do some -- I will do some research on that. We will try to -- I think we will note this because it's not the first -- you're not the first person we've heard this question from. I think in the Q1 report, we will try to have some level of estimation there. So we don't -- it's -- what we -- we should say about this defense is not in one particular region that we see. This is both Europe and the U.S., is less so in APAC. Europe and U.S. is where we're seeing it and it's different countries. Some of the same suppliers -- customers, sorry, BAE, we followed -- we've seen them in Europe, U.S. -- and the U.S. Sven Kristensson: Northrop Grumman here, the big -- and it's very much -- you can say that it's the same. It's aerospace, which we've been a long-term supplier to Airbus, et cetera, that now also goes into military aircraft. You have vehicles where, for instance, our RoboVent company in Detroit has been utterly dependent on the local regional automotive market, which has declined significantly, but we have exchanged that by using their American-favored technology in defense for welding applications, but also in food and other areas. So we have exchanged somewhat the customer base. And you understand that what did they say for the company, they had SEK 130 billion in losses last year because they write off. Their investment appetite is not enormous. So we have the customer base. Anna Widstrom: Great. I have a follow-up question on this. If you've -- you're sort of answering it. But if you noted that you have sort of gained market share within this segment or having a sort of preferred supplier position? Or is the growth that you're noting is mainly from the growing of the defense industry in general? Sven Kristensson: I think the preferred supplier one, you can say something. When you -- with these customers, once you're in, you are kind of -- you are in -- it's not to say there's no competition whatsoever, but the likelihood of getting repeat orders is there. And we have seen that where like I mentioned with BAE, for example, so it is happening in more than one country or more than one project. So this signals that -- hopefully that there is some stickiness on this business going forwards. Anna Widstrom: Great. And then on the [ GST ] division, it stands out a bit on the organic order intake. Is this mainly from it having larger U.S. exposure? Or what's your view of this? Matthew Cusick: They do have a large U.S. exposure. It's around 80%, I think, U.S. And then they have -- on top of that, they have a couple of -- they were very strong in EV battery investments, which were happening late last year and actually Q1 -- sorry, late 2024 and actually in Q1 of 2025, we were receiving orders there. The other part of the market, they do have quite a large chunk of exposure to the wood industry still, which -- a lot of which is construction-related, which isn't super hot right now, but it's obviously a very, very important industry and will continue to be so. So what we've seen in Duct & Filter like we mentioned is the efficiency in the factory is clearly, clearly better, but they are lacking volume. It cannot be denied. Anna Widstrom: As you said, the margin is positive and you mentioned that improved production and warehousing process in U.S. and Europe is a positive. Is this also a benefit from having a lower ratio of very large orders? Or should this scale from current levels very well and also that activity of significant large order comes back? Matthew Cusick: We have invested also in some more -- in the production of the -- for the larger ducting as well so that you ought not to see a decline. If we were to get more large orders, you ought not to see a decline. And in fact, with more volume, we'll have more absorption of overheads as well. So we don't -- we think this improvement is here to stay. Sven Kristensson: Yes. The improvement is definitely there to stay. The thing is, of course, we need to utilize the equipment and so on. But what you see is that we have been heavily impacted with EV batteries when we had magnificent success over a year's period when that market grew. Now we have to do the same as we did with [indiscernible]. We need to find new attractive areas where we can supply. And we have to remember, what we are doing is that we have in -- we are efficient and we are mostly used in combustible dust environment because that is -- this is a specialty. It is very clean interior in the duct work and that is the importance here. So that's where we have. So it's typically combustible dust in food. It is in EV batteries. It is in aluminum, wood, et cetera. Anna Widstrom: Great. Just 2 more questions from my side. The first one is on the Monitoring & Control Technology division that you mentioned and you mentioned that, I think, in the last quarter as well, that the conversion to new technologies amongst customers is taking a bit longer than expected and connecting this also to the political uncertainty. Could you maybe expand a bit on this? And is it a type of customers that has found this trend more clearly or regions like the U.S. or something else? Sven Kristensson: Yes, it's difficult. What we see -- the main thing here and what has been talked is the decline in the public sectors. That has had a strong impact. What we then have to do is, of course, focus a little bit more on other customers, again, like EFT has been doing and so on. If our current customer base are reluctant to do the investments, we need to work harder with some other areas. And I think we've seen -- we are launching new products in U.S. in Auburn, where we are cooperating between NEO and Auburn and the combination here, we can do better. We are working now with the Gasmet Olicem on service and quick reporting response been quite successful in this incineration business where reporting is a very important portion of it. So we are building out sort of packaging it to be even more attractive going slightly outside our current customer base in a controlled way. Anna Widstrom: Perfect. And then my final question is on capital expenditures, which is down year-over-year. While you mentioned some initiatives in the report and so what level of CapEx are you planning for during 2026? And is there differences in tangibles and intangibles? Matthew Cusick: For 2026, I think the rate of product development, which is the vast chunk of our intangibles, that will continue. We're not going to ease off on product development, digital or actually filters -- new filters, et cetera. When it comes to fixed assets, what we can say on that, 2024 and 2025 were quite high years for fixed asset expenditure with a lot sort of longer-term investments in buildings in Helsingborg, the one in RoboVent, the Nordfab ducting one in the USA as well. 2026, what are we doing on that front? We're going to invest in the Charlotte plant to some extent. But I think you can expect a drop in tangible fixed asset investments, although it will still be on a -- historically, if you go back 5 years on a rather high level. As things are now, we would expect this to drop in 2027 a little more because we don't -- we believe we've got -- we will have a footprint that is there to and can incorporate a manufacturing footprint that can handle significant growth without major further CapEx. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Sven Kristensson: We thank you for taking your time listening on this Thursday morning and we'll be back for the Q1 report later in the year. So thank you very much, everyone.
Hironoshin Nomura: [Interpreted] It is time. From now, we would like to start Nxera Pharma's FY 2025 Full Year Financial Results Briefing. Thank you very much for joining despite your very busy schedule. I will be serving as the MC today, CFO, Nomura. Today, we have Mr. Chris Cargill, CEO; COO, President and Nxera Pharma, Japan, Toshihiro Maeda; CSO, President and Nxera Pharma, U.K., Dr. Patrik Foerch attending the meeting. We have simultaneous interpretation as usual. Please click the globe icon and select the language, Japanese or English and you will be able to hear the interpreter's voice. If not, you will be able to hear the original voice of the speakers. In the first half, I will be presenting, and there will be Q&A session in the second half of the session. We have the materials shared on the screen. We are also uploading on the website. If you would like to have the materials from Investors, IR Library, Presentation, please access the materials. In the latter half of the session in Q&A, institutional investors, analysts and media people, you will be able to ask questions by raising hand. The others will be able to submit questions from Q&A button. You will be able to submit questions at any time and we would like to respond to your questions as long as the time permits. Without further ado, we would like to move on to the presentation. I will talk about the financial results. After that, Chris will talk about the operating highlights, Mr. Maeda will talk about the Japan commercial business update, Patrik will provide update on U.K. R&D progress and lastly, Chris will talk about FY 2026 objectives and beyond. Now please turn to Page 5 of the materials. This is Page 5 of the materials. Here, summary of FY 2025 full year financial results, along with the past trend by revenue segment is indicated. The revenues against the JPY 28.8 billion last year, this was JPY 29.6 billion, slight increase. Milestone revenue decreased from JPY 11.2 billion to JPY 7.9 billion and the product sales grew from JPY 14 billion to JPY 17.8 billion. I will talk about the details later on, but especially QUVIVIQ product supply and royalty became the drivers of the product sales. The milestone is declining. The blue is declining. But in 2024, Neurocrine had $35 million, close to JPY 5 billion, milestone revenue, but primarily low milestone in 2025. In terms of profit core OP was minus JPY 400 million. IFRS basis was minus JPY 8.4 billion. On a year-on-year basis, SG&A was compressed by 4% to 5%, about JPY 800 million. Clinical study development and investment in obesity, the expenditure in R&D increased by JPY 2.7 billion. There were impairment in part of the assets, primarily due to incur of JPY 1.8 billion one-off costs related to business rebuilding and structural reform. It is not included here, but the operating profit was JPY 20.05 billion deficit, and there was the costs related to the change of the terms of the corporate bond of JPY 4.6 billion in IFRS basis. In Slide 6, this is by business domain and core operating profit and accounting operating profits are shown as the breakdown. On the far left, in blue is the platform business. This is so-called bioventure-type business model. The red one to the right is a commercial business, so-called pharma-type business model. Platform profit is largely dependent on milestone for partners. Self-control is unfortunately difficult. But on the other hand, commercial, by growing that, we are targeting for the stabilization of the revenue. This is the company policy. As explained, in platform business, large-scale milestone was lacking. There was increase of R&D expenses. As a result, the core operating profit turned deficit. But last November, as we announced individually, we are rebuilding business for turning profitable. Commercial business is growing steadily on a core basis. It became in black, JPY 6.5 billion, targeting for stable growth in the next fiscal year. As for the forecast, later on, Chris will cover this in FY 2026 objectives. Please move on to Slide 7. As I mentioned about the R&D expenses, I would like to talk about the difference on a year-on-year basis in detail. Last November, we showed this slide in R&D Day. The trend has not changed significantly, but the development products in the clinical stage last year, reached the peak of expenditure, and we announced in August last year, but there was significant increase in investment for obesity area, and there was exchange rate fluctuation compared to the assumption. So this is very brief, but I would like to conclude the explanation on the financial results. Next, Chris will talk about the business highlights. Chris, over to you. Chris Cargill: Thank you, Nomura-san, and good afternoon. Now let me start by saying FY 2025's financial results, particularly the operating profit level were unacceptable. We have initiated changes to management, changes to research strategy and implemented cost controls, and I expect the benefits from these changes to become apparent in the second half of this year, FY 2026. Our strategy is clear. We aim to strike a balance between investing in research to create future value, while at the same time being as close as possible to breakeven or profitable financial status. Now there are many factors in our industry that are 100% outside of our control, such as scientific or clinical outcomes or partner-regulated strategies. However, how we allocate our capital is within our control, and we must do better. In FY 2025, we did continue to invest in programs and products that will shape our future growth. And I am proud to say that our Japanese operations are highly profitable on a stand-alone basis. Our U.K. drug discovery operations require a sharper strategic focus and stricter capital allocation. And in FY 2025, we took necessary steps to correct this. Please turn to Slide 9. Sales of PIVLAZ and QUVIVIQ exceeded our goal of over JPY 17 billion net product sales. And as I mentioned, I'm extremely proud of our teams in Japan for their continued commitment to expanding access for patients to these important products. After the year-end, we completed the in-license of vamorolone for Duchenne Muscular Dystrophy, or DMD, adding a late-stage rare disease product with a strong strategic fit for our business in Japan and the high-growth APAC region. In our drug discovery business, we were unsuccessful in completing a new high-value business development partnership deal in FY 2025. However, we did successfully begin a new Phase II trial with our EP4 antagonist program. And the early clinical data from this program is very encouraging as we aim to fast follow Ono's product with the same mechanism of action. Now following the acquisition of Idorsia's business in Japan late 2023, almost all planned PMI or post-merger integration investments across IT and business systems are now complete, which means we can look to operate much more efficiently going forward. And our goal of positive IFRS operating profit was missed due to the GPR52 option not being exercised last year in FY 2025. Please turn to Slide 10. So we do continue to advance rapidly both the drug discovery business and commercial side of the business. Our U.K. drug discovery business progressed 5 programs in Phase I, 5 programs in Phase II and 2 programs in Phase III trials across our key focus areas. Our commercial business in Japan experienced strong growth across 2 commercialized products, PIVLAZ and QUVIVIQ, and it is poised to advance 2 clinically derisked rare disease products as we expand the late-stage clinical pipeline. I believe we're on track to continue strong growth trajectory through 2026 and beyond. Please turn to Slide 11. PIVLAZ delivered $13.5 billion in sales, 7% year-on-year growth, and it's now firmly established as the standard of care in Japan. QUVIVIQ delivered $4.3 billion net sales and is now showing strong momentum with our partner, Shionogi in Japan as the 2-week prescription limitation ended in December 2025, and we expect 30% annual revenue growth for QUVIVIQ this year in FY 2026. And as I mentioned, our new late-stage product of vamorolone is highly synergistic with our existing development and commercial infrastructure. And we expect once launched that the product will contribute meaningfully to our business. Please turn to Slide 12. Now as I mentioned earlier, despite the heavy R&D expenditure last year, we did build value by advancing our wholly owned in-house drug discovery programs as well as strong momentum from our core partners, Neurocrine and Centessa as they advance our partnered programs. Now in our partnered portfolio, Neurocrine maintains the world's most comprehensive portfolio of muscarinic agonists to treat neuropsychiatric disorders, and these were all developed using our NxWave drug discovery platform. The most advanced program, the muscarinic M4 agonist, now called direclidine, is in Phase III trials for schizophrenia and top line clinical data is expected by the end of 2027. There are also several other muscarinic agonists advancing through Phase I and Phase II studies across multiple indications. Now Centessa is advancing its lead asset, ORX-750, towards a registrational program this year to treat narcolepsies type 1 and 2 as well as idiopathic hypersomnia, all huge areas of unmet medical need. And in our wholly owned in-house portfolio, we have 2 Phase II-ready assets now, NXE'149, a GPR52 agonist for schizophrenia and NXE'744, an EP4 agonist for IBD. These are both undergoing competitive licensing processes. And our aim is for both of these programs to be partnered by the end of FY 2026, if not sooner. NXE'732, our EP4 antagonist for advanced solid tumors is progressing through Phase IIa trials with Partner Cancer Research U.K., and we expect data in 2027. Our CSO, Dr. Patrik Foerch, will discuss these programs in further detail, including an outline of some of the strong indicative clinical data we have seen so far. Please turn to Slide 13. Now we recently refocused the U.K. drug discovery portfolio to prioritize areas with the greatest potential so that we can broaden our patient impact. Now this includes an innovative portfolio of next-generation small molecules for obesity, metabolic and endocrine disorders with very significant total addressable patient markets. We also work with global investment firms to create new biotech-focused companies to advance medicine through clinical development, and we disclosed plans for a new company yesterday via a press release, and we look forward to hopefully launching this company from stealth very soon. Now our GPCR know-how and our flexible chemistry approaches remain unmatched, and we plan to continue to deliver differentiated best-in-class medicines to address these high unmet areas of need. I'm going to hand over now to Maeda-san to discuss the Japan and APAC clinical development and commercial businesses in more detail. Thanks, Maeda-san. Toshihiro Maeda: [Interpreted] Thank you. Then I would like to talk about Japan and APAC. Please turn to the next page. First of all, the actual of our first commercially available product, PIVLAZ and its highlights as of 2025. Since the launch, this was used and positioned as the standard of care in Japan for the prevention of cerebral vasospasm in patients with aSAH. And as of the end of last year, it has grown sales to JPY 13.5 billion. And this fiscal year 2026, we are expecting to see the stable growth of over 4%. On patient base from 34% in 2022, the share expanded to 74% in 2025, securing dominant position in the domestic market. On the right-hand side, you see the 2025 highlights. Since the launch to December 2025, PIVLAZ patients reached 25,470 patients. In STROKE2025, over 100 abstracts were presented. Looking at this year, summarizing the Practical Guide to the Administration of Clazosentan, it is expected to be published in March. So we are expecting to have further promotion of use in the medical field. As you can see, PIVLAZ has established clinical value, market penetration and scientific evidence and growing steadily as the mainstay product. Next page, please. Let me now turn to the explanation on QUVIVIQ. QUVIVIQ is the novel dual orexin receptor agonist, so-called DORA, and this is an insomnia treatment drug, especially recently in Japan, rapidly establishing its position in the treatment paradigm for insomnia in Japan. On the left-hand side graph, you see Japan market size, and you can tell that the DORA overall is expanding. The right graph shows the sales of QUVIVIQ from JPY 1.3 billion in 2024. Last year, it reached JPY 4.3 billion. On a year-on-year basis, it exceeded 224%, demonstrating powerful growth. This fiscal year, it is expecting to see further growth to JPY 5 billion to JPY 6 billion -- 7 billion. Next slide, please. On this graph, you see the sales and profit structure of QUVIVIQ and the cost reduction outlook in the future. At this moment in time, the profit is basically royalty income. But in the future, independent low-cost supply chain will be formulated, and we are targeting for profitability from product supply already established Nxera independent supply chain from the licensor last October. Regulatory approval on second API source was obtained in October 2025. In the latter half of this year, second API is expected to contribute to profit. Going forward, cost optimization of raw materials, drug product and packaging sourcing optimization through that, we are targeting for further improvement on the profit margin. Next slide, please. From here and onward, I would like to introduce newly introduced DMD treatment drug, AGAMREE. DMD is a rare and life-threatening neuromuscular disorder characterized by progressive muscle dysfunction leading to ambulation loss, respiratory failure, heart issues and premature death. No efficacious therapy apart from corticosteroids. However, presently, there are many severe adverse events with the existing steroid treatment. AGAMREE is the first class drug candidate to treat DMD that binds to the same receptors as corticosteroids, but modify the downstream activity to express the different characteristics. The company has the development rights for Japan, Korea, Australia, New Zealand and DMD treatment is concentrated in limited number of centers. And there is approximately 70% sales synergy with PIVLAZ, which is extremely strategic product for the company. Next slide, please. On this slide, it shows the characteristic of AGAMREE. Compared to conventional corticosteroid, there is a higher likelihood of reducing adverse events significantly. The GUARDIAN study showed durable efficacy and markedly improved safety versus standard corticosteroid, specifically growth maintenance, lower fracture rate, lower incidence of cataract. Important indicators for patients are improving. Looking at the sales forecast in other countries, we're expecting to see robust growth in North America and Europe. AGAMREE is strategic product, which has potential to become long-term pillar of the company. Lastly, on the last slide, I would like to talk about the sales synergy between PIVLAZ and AGAMREE. DMD treatment is concentrated in a limited number of centers, and there is approximately 70% commercial overlap with PIVLAZ. Therefore, the network we've already forged with university hospitals can be leveraged for deployment of AGAMREE. Through this sales synergy, speedy market penetration and efficient sales activity will be possible. As an overall portfolio, we can expect to see a high level of synergy effect. This concludes my commercial business explanation on Japan and APAC. Now I would like to turn over to Patrik to talk about the R&D update. Patrik Foerch: Okay. Thank you. My name is Patrik Foerch. I'm the Chief Scientific Officer. And I'll now move over to our pipeline of innovative drugs developed through our NxWave drug discovery platform. Next slide, please. At the end of last year, we renewed our R&D focus to prioritize the programs in areas with the greatest potential for patient impact. We launched a new wave of oral small molecule programs targeting high potential targets in obesity, metabolic and endocrine disorders by leveraging our NxWave platform to deliver novel differentiated small molecules. We have 2 Phase II-ready assets, NXE'149, our first-in-class schizophrenia candidate and NXE'744, our EP4 agonist for IBD. Both of them are undergoing competitive licensing processes, which we announced earlier in the year during JPMorgan Conference. NXE'732, our novel immunotherapy for advanced solid tumors is in a Phase II clinical trial with our partner, Cancer Research U.K. And I will be providing more details on these programs over the next few slides. Next slide, please. NXE'744 is a gut-restricted selective EP4 agonist with dual mode of action. It's combining an anti-inflammatory activity and is promoting mucosal healing in IBD. All first-in-class study elements have completed dosing in the clinic. And in the SAD and in the MAD studies, there have been no concerning safety signals detected so far. Importantly, no systemic exposure, but very high gut tissue levels were observed in healthy volunteers. And we are very pleased that in preliminary analysis, this gut-restrictive profile was also confirmed in a cohort of UC patients. In addition, we are very excited about the interim analysis of our indomethacin study, showing a highly significant reduction of around 50% of indomethacin-induced permeability in our NXE'744 treatment group and thereby confirming target engagement. This asset is now Phase II ready, and we are currently engaging in a competitive licensing process and are in discussions with a number of major pharma companies. Next slide, please. NXE'149 is a first-in-class GPR52 agonist offering a novel mechanism that addresses the positive, negative and cognitive domains in schizophrenia. NXE'149 has successfully completed Phase I studies and is fully enabled for Phase II. Data from the Phase I show predictable pharmacokinetics and CSF sampling confirmed high levels of central penetration. NXE'149 clearly engaged brain circuitry relevant for the treatment of schizophrenia and also demonstrated increased alertness, which is reflected in a better cognitive performance following 10 days of treatment with NXE'149. This potential first-in-class asset is now fully Phase II ready and is undergoing competitive licensing that we announced during the JPMorgan Conference in January. Please move to the next slide. NXE'732 is a potent and selective EP4 antagonist aimed at reversing immune suppression in solid tumors. And in a Phase I study, we're very encouraged to see 2 partial responses in microsatellite stable CRC and in PD-L1 resistant RCC with tumor shrinkage of over 30%. The data also showed a very good safety profile and strong target engagement supporting its potential as a best-in-class profile. The Phase II expansion study is underway in combination with atezo and is being led by our partner, Cancer Research U.K. Please move to the next slide. As we announced earlier in the year, we are leveraging our NxWave to design the next generation of small molecules for obesity, metabolic and endocrine disorders. As we communicated, we launched a broad new pipeline strategically focused on best-in-class therapies to achieve long-term weight maintenance through convenient oral small molecules. We are targeting a number of receptors, GLP-1, GIP, amylin plus multiple others and are focused on safety, tolerability and expanding access to a diverse patient population. Our metabolic disease portfolio underscores the versatility of our NxWave platform and our commitment to tackling major global health challenges. Next slide, please. Moving on to our partner portfolio. Our long-standing collaboration with Neurocrine showcases Nxera's GPCR discovery power and industry-leading muscarinic pipeline. Neurocrine's muscarinic portfolio now includes 5 clinical stage programs spanning selective M4, M1 and dual M1/M4 orthosteric agonist, addressing cognitive and psychotic syndromes across a range of psychiatric disorders. Our most advanced candidate is a M4 selective direclidine, which is currently in Phase III for schizophrenia and in Phase II for bipolar mania. NBI-'570, the dual M1/M4 agonist also initiated a Phase II trial in schizophrenia in Q4 last year. This continued momentum underscores the quality of our assets and is a major validation for our platform. Please move to the next slide. Centessa is advancing a portfolio of potential best-in-class orexin receptor agonist discovered through our NxWave. The most advanced asset, orexin 750 is in development for the treatment of narcolepsy type 1, type 2 and idiopathic hypersomnia. Initial Phase IIa data show robust efficacy in addressing wakefulness needs of patients across all 3 indications, and this matches rival molecules from competitors. A registrational program is expected to initiate in Q1 this year, positioning ORX-750 as a potential best-in-class treatment for hypersomnolence disorders. And I now hand back to Chris to outline the objectives for 2026 and beyond. Chris Cargill: Wonderful. Thank you, Patrik. Please turn to Slide 30. So looking ahead to the next 12 months, these are our priority objectives. We want to achieve net product sales of more than JPY 19.5 billion across PIVLAZ and QUVIVIQ. We aim to secure at least one additional late-stage product for Japan and APAC as we continue to build out our highly profitable pharma business unit in Japan. We want to execute or sign one or more high-value partnership deals from our portfolio of wholly owned in-house programs, and we want to initiate at least one new Phase II trial with a partner. Of course, we want to reduce total costs in the business by over 10%, and we aim to achieve full-year profitability on an IFRS basis. Slide 31, please. So for the full year 2026, achieving both core operating profit and operating profit is our aim. As you can see from the chart, top line revenue growth, excluding any new business development deals, has been strong since FY 2023, reflecting our commitment to building a highly profitable commercial pharma business in Japan and APAC. And if we can achieve multiple milestone payments from our existing partners and successfully out-license multiple Phase II-ready wholly owned in-house programs, then I expect to see a strong year of performance. We will continue to review our wholly owned in-house portfolio dynamically and allocate capital more effectively. Slide 32, please. Now this slide provides a bit more detail about our 2026 guidance. The drug discovery platform side of the business should be able to reach breakeven on a core basis. We expect to see continued strong growth from our Japan and APAC commercial business. And with disciplined execution and continued cost rationalization, we believe profitability is achievable for FY 2026. I'll just add one more point, and I said this at the beginning, we implemented changes to management, changes to pipeline and cost reduction initiatives, and we expect the second half of 2026 is when these changes will start to wash through our financial statements. Please turn to Slide 33. So the year is shaping up to be another strong year of execution as we work towards our 2030 vision. As you can see on this slide, we are expecting several potential catalysts, both internal and partner-led as multiple clinical trials reach key development milestones with partners. Slide 34, please. The 2030 vision rather, remains intact, and it is to build a high-growth, highly profitable Japanese biopharma company. We're very happy with the addition of vamorolone to our late-stage portfolio. It provides further growth potential towards reaching our goal of $50 billion of annual revenues and operating profit margins above 30% by the end of 2030. So we're very excited about what's to come this year, and we believe we are well positioned for success much beyond 2030. So thank you for your time. Management team and I are very happy to take any questions now. Thank you. Operator: [Interpreted] [Operator Instructions] The first question is from Hashiguchi-san from Daiwa Securities. Kazuaki Hashiguchi: [Interpreted] Hashiguchi from Daiwa Securities. The performance outlook, the forecast, I would like to know the basis for the forecast. The lower limit does not include the new partnership. But on the other hand, with respect to the milestone, there are some which may incur and which may not, and there are the ones with high probability and not. And for the lower limit, the uncertainty of a milestone, how are you factoring in? And on the other hand, between the lower limit and the upper limit, it is JPY 15 billion. And this JPY 15 billion, with what kind of idea is this based on in order to set this figure? Hironoshin Nomura: [Interpreted] Yes. Thank you for the question. There were 2 questions. And since this is related to the performance forecast, I would like to respond. And if there is any additional remark, Chris will respond. Page 32 is the breakdown of the lower amount, especially the top left platform milestone part. How much uncertainty is involved? I understood this was the question. The platform milestone, as Mr. Hashiguchi mentioned, this is milestone in the first place. So we still do not know. It really depends on the progress as we have been explaining. And there are many pipelines in the late stage of the clinical stages. And also, there's also public comments as well. And we have accumulated the figures as a result of that, and we have deducted some of the figures, and that will arrive at JPY 40.3 billion. And the milestone is JPY 2.5 billion, and that is equivalent to the milestone. This is quite conservative, not everything. But even what is likely to occur is deducted. So this is the milestone part. And moving on to the second part of your question. So your second question was JPY 15 billion and the rationale for JPY 15 billion. The rationale for JPY 15 billion, this is BD. So there is no solid rationale. From our perspective, this is our aspirational target. Of course, if these 2 out-licenses go well, there is a possibility of exceeding JPY 15 billion. But rather than having the rationale, the 2 assets we have, this is more of the expectation to our 2 assets. So Chris, do you have anything to add? Chris Cargill: Thank you, Nomura-san. I mean Hashiguchi-san, I think the easiest way to think about this is lower end of the range is my minimum expected performance from the business. And the top end of the range is if there is absolutely 100% perfect execution across all elements of revenue generation. The important caveat is, as I know you know, we operate in the biotech industry. So there's lots of risks. But equally, a lot of our large sized milestone income comes from partners. And that is without -- it's not within our control. So this is our best guess estimates for my minimum expected performance, both internally and across our partner portfolio. However, we need to have an aspirational goal because if we are successful in marketing programs that are in our pipeline and executing new business development deals as historically, we have demonstrated we are very good at doing, then perfect execution leads us much closer towards the top end of that range. So that is -- that would be my additional response to your question. Thank you. Kazuaki Hashiguchi: [Interpreted] I have one additional question. And the structural reform effect is expected to incur in the second half of the year. And also compared to the full year expense of this year, there will be less expense in the next fiscal year. Am I correct to understand this way? Or that effect or benefit, that there is a possibility for reinvestment. So it is not possible to decrease in the next fiscal year. Am I correct to assume this way? Hironoshin Nomura: [Interpreted] Thank you for the question. Your question is related to the expense this year and the next year. So I would like to ask Chris to respond. Chris, can you respond? Chris Cargill: Yes, certainly. As I mentioned during the presentation, our goal is to reduce costs across our business -- across our core businesses. So our business today is very heavy on costs throughout research and development, which is expected. We also have costs across G&A, which is another area that we will be focused on reducing expenses. And technology is helping us in being able to drive down cost in that part of the business. I think the business has made great progress in reducing sales and marketing expenditure, particularly last year. So we are becoming much more efficient in our commercial organization. Of course, if we can reduce costs by as much as I expect that we will, that should have the benefit of increasing our chances of achieving profitability. But we always have opportunities to reinvest capital, and we will continue to do so if we believe that there are high-value programs or high-value other opportunities that we can invest in that will create value for the future, particularly things that will contribute to our 2030 vision. That would be how I would respond to that question. Thank you. Operator: [Interpreted] Matsubara-san from Nomura Securities. Matsubara: [Interpreted] I am Matsubara from Nomura Securities. Can you hear me okay? Hironoshin Nomura: [Interpreted] Yes. Matsubara: [Interpreted] My first question is about EP4 agonist. It's for IBD. And there are different mode of actions being available, TYK2, IL-23 as oral compounds, they may come and EP4, how would you differentiate that from others? And then what are the discussions taking place with your potential licensing partners? Hironoshin Nomura: [Interpreted] Thank you very much. So this is about R&D. So Patrik, would you be able to answer this question? Patrik? Patrik Foerch: Yes. I'm happy to take that question. You're right, there are multiple assets on the market or in clinical trials for IBD. Where we see a clear differentiation for EP4 agonist is that we're having, as you pointed out, a dual mode of action, anti-inflammatory as well as a barrier repair function. Most of the treatments in IBD at the moment are anti-inflammatory with a clear efficacy ceiling. And when we see how to position EP4, I think there are 2 separate TPPs. You can see EP4 agonist as a monotherapy in mild to moderate cases. But equally, there's also a clear opportunity to use our EP4 agonist small molecules as an add-on to biologics to break through the resistance barrier and efficacy barrier that most of the treatments have at the moment. So as an add-on to classic biologics, which are approved. And a last comment to the process. As we started off this partnering discussion during JPM, we got very good tractions. We have quite a few discussions with some of the major players. The mechanism certainly resonates. And what is very clear, the target engagement showing functional response in the indomethacin challenge study is very well received and the overall package that we have in our -- from our Phase I studies, again, is clearly recognized that this is a very consolidated package understanding the mechanism as well as positioning this program to move forward into a Phase II trial. Hironoshin Nomura: [Interpreted] I have additional comment. So existing ones for anti-inflammatory suppressing the immunity, but ours is completely different. It promotes the recovery. And Patrik mentioned add-on. So it's very different from the existing one. So we can differentiate ours from others. That's all from me. Matsubara: [Interpreted] So it has a different mode of action. So you are expecting the milestone upfront and this compound may actually exceed the expected value going forward. Hironoshin Nomura: [Interpreted] Yes, I'd like to give you a brief answer to that question. So realistically speaking, yes, there is a possibility. But at JPMorgan, as has been explained, several companies have shown interest. And these big companies, more than 5 companies are in discussion with us. But when it comes to actual deals, to what extent they are serious. So this is something that we would have to pursue going forward, but then we have quite high expectation. Matsubara: [Interpreted] My second question is about obesity and your development strategy. So oral GLP-1 and GIP drugs are being available and for subcu, INHBE, so which maintains the muscle mass while reducing the body weight. So these are new ones. And then you are spending a lot of money for R&D right now. But going forward for obesity, what would you be doing to overcome your competitors? Hironoshin Nomura: [Interpreted] Thank you very much for your question. So this is about R&D. So Patrik, would you be able to take this question? Patrik Foerch: Yes, happy to take that question. You're absolutely right. This is a very competitive field. We are very much aware about that. However, when you look at these targets obviously GPCR targets where -- which is right in our wheelhouse, where we are best placed to come up with very selective high-quality molecules. And with the exception of GLP-1, most of these targets are very much driven by, as you said, subcut or generally peptide molecules. When you look at the cost of goods, and convenience of administration, the next wave of these targets is clearly small molecules where we are very well placed to follow the data coming out of the frontrunner molecules and then follow up with a very clearly defined TPP for a best-in-class small molecules, especially as we see that the whole metabolic area, the whole indication field expanding very, very rapidly. So we are working, and you might have seen the announcement of our Metabolic Advisory Council to have very clearly defined TPPs for our metabolic pipeline that we can position our selective and highly efficacious small molecules exactly at the right position in the market. Chris Cargill: Nomura-san, I might just add a comment to that, and thank you very much, Patrik, for your answer. Our approach to this area is not solely about obesity. We are thinking much longer term. Many of the top pharmaceutical companies have GLP-1s. And as Patrik said, they are either subcutaneous injectable peptides. They are going to need small molecules to follow on to those franchises, and they are going to need GP antagonists, amylin agonists, et cetera, as part of their portfolio of combination therapies that will go with the GLP-1s. But it's not just about obesity. This is about chronic weight management for the long term and longevity. So the way that we see the market shaping out over the next 10 to 20 years, we want to see really strong health outcomes for patients the world over and the market will eventually shift towards once-daily oral small molecule approaches to treat not just obesity, but the range of comorbidities that come with that and then longer-term chronic weight management, which will produce health outcomes across the board. So it's not just an obesity play in competition with current obesity companies. It's about thinking about longevity for human beings and health outcomes over a much longer time horizon. And that's why we are planning to offer a portfolio for pharmaceutical partners to look at where we've got oral small molecule approaches to all of the necessary targets to deliver on those goals. Thank you. Operator: [Interpreted] Moving on to the next question. Pathology Associates, Dion-san. We cannot hear anything at the moment. Can you hear my voice? It seems like there is technical trouble. So excuse me, Dion-san. We would like to move on to the next question from Jefferies Securities, Yamakita-san. Miyabi Yamakita: [Interpreted] Yamakita from Jefferies. Can you hear me? Operator: [Interpreted] Yes, we can hear you. Miyabi Yamakita: [Interpreted] I have 2 questions. The first question is on cost. The SG&A cost in platform, you see a slight increase in SG&A. And this is for the promotion of out-licensing. I would like to know the details. And the overall cost, suppose it is difficult to achieve profitability, how much buffer do you have? Is it a level you cannot go further for the reduction? Can you give us the sense? Hironoshin Nomura: [Interpreted] Yes, I would like to respond to the question. Starting from SG&A increase, as you said, this year, we need to be more active on BD activities and IT investment for the purpose of efficiency, we need to continue this year as well. And in commercial business, we had some SG&A costs. But in platform, there was a transfer internally. So it is slightly shifting. So that's the technical part. Combining that together, there is a slight increase. On the other hand, if we cannot achieve profit, then we -- do we have room for further cost down? The answer is both yes and no. Of course, we are continuing such efforts. And when we face such circumstance, we need to consider additional measures. But this cost reduction from the second half of this year, Chris mentioned that we will be addressing more seriously, but our outsourcing company, if we need to stop that, there will be further time buffer to that. In that context, we will be making such efforts. So in that context, it is yes. But can we do this flexibly? Unfortunately, we will be too late if we start that in the second half of the year. So if possible, in the first half of the year, we would like to accurately grasp the business situation and BD. We would like to make sure that we can close the big deal. So we are now focusing on that now. Chris Cargill: Thank you, Nomura-san. I might just add 2 comments. I mean we are an extremely cost-conscious operation. Now we will always be looking to take costs out of our business and become more efficient. For example, over the last 3 years, we've been making enormous gains from implementing new IT systems and business systems that we will be able to extract significant efficiencies from going forward. And as Nomura-san said, I expect those efficiencies to come to bear in the second half of 2026. So we will be able to operate significantly more efficiently going forward. That is something I'm very, very excited about. Of course, we can't take too much cost out of the business. If you get to a point where you remove too much, the business will stop functioning. So it's a balance, and we always need to be able to invest for the future so that we can achieve our 2030 vision, which is to have JPY 50 billion of sales and 30% or more operating profit margins. But I just want to give all of the analysts and investors out there the comfort that both Nomura-san and I are continuously -- and the broader management team as well, but in particular, it is very clear across my management team that we are always looking to reduce costs wherever any cost can be taken out of the business and technology can be used to be more efficient. Thank you. Miyabi Yamakita: [Interpreted] That's clear. And coming to my second question, it's about licensing out. And these days, the Japanese companies are struggling on out-licensing and partnership. And that is probably because of the uncertainty in the U.S. drug price. Especially for the large assets, the global pharmas are scrutinizing quite seriously, and there will be more requirement for additional data compared to the past. Is my understanding correct? And you mentioned that the discussion is ongoing in JPMorgan. But with the current data available, do you think you can close the deal? If additional data is required, what will be required? Do you already know what is necessary? So what is the environmental change in out-licensing? And I would like to know how you would like to react to that? Hironoshin Nomura: [Interpreted] So on BD, Chris -- I would like to ask Chris to respond. Chris, are you able to respond to the question? Chris Cargill: Of course. Yes. Thank you. And I'll make a very bold statement. I think we have one of the best business development teams of any company that's listed in the biotech or biopharma space in Japan. If you look at our track record over the last 10 years, the number of partnerships that we have been able to execute with top 20 global biotech and biopharmas, I honestly don't think that there are any companies in our peer set that can match what we can achieve. We have a fantastic team. We have a business development group that is split across 2 territories. We have key members in Japan. We have key members in the U.K., and we have extremely strong business relationships with the biggest and best pharmaceutical and biotech companies in the world. So I think we have a fantastic opportunity to do business development this year. Of course, whether or not we can convince another partner to do a deal is another question. But from our capability standpoint, I think we've got a fantastic opportunity. Now to your point around other Japanese companies potentially struggling with business development, that's a very broad statement. I don't necessarily believe that is true. There is clearly -- for the very large companies, they are operating in a very difficult environment right now, particularly those that have U.S. businesses. There's a lot of uncertainty from the regulatory perspective, and there's also a lot of uncertainty around pricing and how that will ultimately shake out. The best thing about our business, though, is when it comes to business development, we're pretty much Japan only focused on the way in. So we are in-licensing products for the Japanese market from small to midsized biotech and pharma companies that are not as concerned or susceptible to some of these global regulatory or pricing pressures. As you will see, at the start of this year, we were able to in-license vamorolone. That was a competitive process. We did that process from start to finish in 8 weeks. So when we choose to execute, we can execute very quickly and very effectively, and that has always been a strength of our team. From the U.K. drug discovery side of our business, where we are out-licensing programs, we're typically giving global rights away or certainly, we are giving rights to global ex Japan, which ultimately hands the project or the program over to the partner, and they have full control at that point. So I don't think that we're really going to see any problems. I think we're really well positioned, both on the way in for products that we're trying to bring into Japan and on the way out where we're trying to license programs, particularly for the U.S. market for a U.S. biotech or U.S. pharma company to control. So that concludes my response. Thank you, Nomura-san. Hironoshin Nomura: [Interpreted] I think we are running out of time. So I would like to conclude this Q&A session for direct questions. We have a lot of questions in the Q&A box. But I think there are 2 questions that are similar about the Japan business, which I would like to take up. And it's about vamorolone. Vamorolone, one thing is that PMDA skipping the Phase III, do you have any feedback from PMDA regarding skipping Phase III for vamorolone? Another one is assuming that you are to conduct a bridge study, while you have cost pressure, can you invest enough resources for the bridging study? So Maeda-san would like to answer this question. Maeda-san, please? Toshihiro Maeda: [Interpreted] Yes. Thank you very much for that. So the first question is about the feedback from PMDA. We are in the process of planning to have the consultation with PMDA. And probably in the second quarter, we will have more visibility regarding that point. And if possible, as you have pointed out, we would like to have this consultation as soon as possible. But given the past track record, this is -- unless it's a really, really special case without having any Japanese data, you can't really file. So from the past experience, it could be difficult. But given the recent attitude of PMDA for pediatric and rare disease development, they have been quite flexible. So we'd like to have thorough discussions with PMDA so that we can skip Phase III trial. Another one is about bridging trial. If we have to conduct a bridging study, it's not going to be a large-scale trial. That's what we assume. And therefore, as you can see, the Japan and APAC budget within this budget framework, we will be able to afford such a bridging trial. That's all from me. Hironoshin Nomura: [Interpreted] I hope that responds to your question. There are many questions in the Q&A box, and we are sorry, we have not been able to respond to you. But for the ones we weren't able to respond, as usual, we would like to respond through our official web blog. It may take some time, but I hope to ask for your understanding, and we would like to upload this video to our website. And now unfortunately, the time has come. So thank you very much for joining this session. With this, we would like to conclude FY 2025 full year financial results briefing. Thank you very much for your participation. Thank you. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Daniel Sundahl: Good morning from Asker, ladies and gentlemen, and welcome to TOMRA's Fourth Quarter Results Presentation for 2025. My name is Daniel Sundahl, and I'm Head of Investor Relations. As is usual, Tove Andersen, our CEO, will start today's presentation by giving you the highlights. And afterwards, CFO, Eva Sagemo, will dive deeper into the numbers and give you the updated outlook. And after the presentation, we will open up for Q&A for participants in the team's webinar. [Operator Instructions] We aim to conclude the presentation around 8:40 today. But without further ado, I give the word to Tove Andersen. Tove Andersen: Thank you, Daniel, and also welcome from me to our quarter Q4 2025 presentation. And we present today a strong final quarter in a year that has been characterized by volatility and market uncertainties. In Collection, we report a record quarter, record revenue and record EBITDA, and we have seen that the rollout in Poland and Portugal is stepping up. Recycling, we are presenting a good quarter in a year that has been a weak year due to the challenging market sentiment. And in Food, we are seeing the results of the improvement initiatives and an improving market sentiment, and we delivered a strong quarter, which also then makes 2025 a record year regarding profitability in the Food segment. Let me then give you an update on the different divisions and our Horizon portfolio. I'll start with Collection. In Collection, we have had very good sales in existing markets in the quarter. As many of you know, we have a strategic ambition that we should grow our existing markets with 5% annually. And in 2025, existing market represented 87% of our sales. In this quarter, we saw particularly good growth in Continental Europe, partly then driven by our new innovations. And one of those are our multi-feed machines, the ones where you don't need to put one and one bottle into the RVMs, but you can just drop a whole bag of bottles into the machines. And we did increase our installations of multi-feed machines with 50% in 2025, and we have roughly now 1,100 multi-feed machines installed. Also in the quarter, we saw then installations in Poland and Portugal slowly picking up. We delivered 1,000 or installed 1,000 reverse vending machines in Poland in Q4. And if you look at the picture top right here, that is a picture from Poland. This is our S2 machine that we developed then specifically for Poland. It's an outdoor machine. And as you can see from the picture, it can endure cold weather, snow, rain and also warm weather. And a significant portion of what we are installing in Poland is this machine. But also as this picture illustrates, it's been quite a challenging period to install outdoor machines in Poland, and I'm very impressed by our service technicians and installation people that they have been able to install so many machines despite snowstorm and really bad weather. End of last year, we had roughly 2,600 machines then installed in Poland, and we are currently installing 100 machines per week. So we have roughly now 3,000 reverse vending machines in Poland. Also in Portugal, we are then stepping up installation. We installed around 300 machines in Q4, making the end of the year an installation base of 500 machines in Portugal. And today, we have roughly 700 machines in Portugal. But there is still much left to install. In Poland, as we communicated before, the first phase with the large retailers represent 10,000 to 12,000 reverse vending machines, and then we expect a significant tail, which could be 5,000 machines or even more. So we do expect that we will see a similar tail as we have seen in, for example, Romania, where we have been continuing installing machines still now so late after they go live. So actually, our installed base in Romania in last year grew with 20%. Also, we have seen similar things in Hungary where our installed base in Hungary last year, 2025, increased with 30%. Another highlight is that we have been appointed as a return point network operator in Singapore as 103 with a minimum installation of 350 RVMs. And we are very excited and looking forward to work with BCRS, which is the system operator there to make this successful launch of the first deposit system in Asia. And then, of course, this year, an exciting thing is U.K. U.K. will go live with a deposit scheme in November next year, November 2027. And we are seeing significant commercial activities there. We believe -- so many of the large retailers have already published an RFP, and we expect others to do it shortly. So we believe a lot of the contracts will be signed this year, but we expect most of the installations then to happen in 2027. Also in the U.K., there has been questions about if it's the whole U.K. that will go live next year or if Wales will not be part of it, and there were some positive news that came out yesterday. So it was a press release that the deposit return scheme for drinks containers in Wales, the regulation had been laid to the parliament. And it was then stating that they have now an agreement with U.K. where the debate has been around glass and that they now are planning to go live also then on 1st of October. Still need Senate approval, but it looks like everything is set up now for that the whole of U.K. will go live late next year. In addition to that, as always, we have included on the slide here the different countries. I'll give a short update on the ones that I haven't commented upon. Greece was supposed to go live late last year. It has been delayed, and there is not communicated yet a new start date. Moldova has announced that they are going ahead with the deposit scheme with the latest start-up in January 2027. And in Spain, we are waiting for the scheme operator to be appointed. There was an expectation that, that will happen late last year. It hasn't happened. And we are now seeing when it's going to happen. If it doesn't happen before May this year, there might be 1 year further delay. And you can expect that after a scheme operator is appointed, it takes 1 to 2 years before the scheme goes live. But overall, no question about if it's really about when. And of course, the underlying picture here is the targets that are part of the single-use plastic directive and the packaging waste regulation that all EU countries needs to meet the collection targets in 2029, which means that they will need to implement a deposit system. Then over to recycling. I want to start with that we really believe in the long -- mid- to long-term picture within recycling. The way that we are utilizing our resources today is not sustainable. If you look at all resources we use annually, less than 8% is circular. So this needs to change. And most waste streams comes as a mixed waste stream, which means that you need to have automated sorting to enable this at scale. However, currently, we do see a weak market sentiment, especially within plastics and waste in Europe, but also in the Americas. This is driven by low plastic prices. It's driven by that the new targets are not really kicking in before 2030 because in Europe, we have the packaging and the packaging waste regulation with the targets for 2030, which then to be met, you need to at least double the infrastructure in Europe. And it's also in Europe, the reason for weak market sentiment is import -- cheap import from Asia. And it's positive to see that the EU recognize the challenges that the plastic recycling industry in Europe has and are facing. And last week, they passed what they call a winter package, a circularity winter package, which is about how to implement the single-use plastic directive, especially then how to calculate for the recycled content saying that if you are going to include recycled material to meet the recycled content targets until late next year, November next year, it needs to be sourced from the EU. And after that, there needs to be a mirror process, which means that the imported material needs to meet the same strict regulations on environmental health and waste management as in the EU. So it's good to see that there are some movements there to secure that recycling industry in Europe. However, we don't expect then a short-term recovery. We don't expect a recovery in this market this year, and we'll see then what will happen next year. So that's why we had to take measures to ensure that we are regaining our profitability at the levels we wanted to be. Our revenue for 2025 is 18% down versus the year before, and we really need now to adjust and rightsize our organization to meet the current market sentiment. So that's why on Wednesday, we informed our employees in recycling about the cost reduction initiative. The objective of that initiative is to take us back to an EBITA percentage above 20% as soon as possible. We will take out EUR 16 million of cost. This will then have a full effect from next year 2027, and it represents approximately 175 positions. And also, we will work on optimizing our global footprint and the supply chain. And the objective there is really to use this opportunity also to look at our organizational setup so that we have a more scalable global operations going forward. Then to Food, very good year for Food last year. We really now see the impact and the effects of the improvement programs that we have put in place to cut costs but also to drive customer-facing commercial activities. At the same time, we see now a positive market sentiment in many categories. But we're also now much more well positioned to take a significant part of that improved market sentiment. So we are then also ending last year with a very strong order backlog with large orders to be delivered this year. Also good to see how the profitability has improved significantly. And as I said in my introduction, we have the highest profitability, both in absolute and percentage terms ever in our Food segment. But also as part of our improvement initiative in Food, we have worked a lot on our innovation agenda and our innovation road map, and we believe that it is crucial to maintain our good margins and to gain market share in the core categories that we are focusing on. So we have a pipeline of initiatives where we will then gradually launch new products. And last week, we launched our new Blueberry machine. So this is 5S Spectrim with LUCAi, which means it has built in our deep learning AI algorithms. Blueberries is a very important segment for us. It's a segment that is growing because of increased consumption. So it's increased planting areas coming. And when you have that, you also need the infrastructure to pack and sort those blueberries. And this machine, which I think looks amazing, and it's a very cool machine and is very well received in the market. It's about really increasing the throughput. Speed is always important. It's making sure that we spread the blueberries well, that we have less material staying in what we sorted out and the opposite. And actually, this machine per second, you can take 385 blueberries through it. So it's -- speed is very important. Very well received in the market, and we have already received orders for it, but it's a good illustration on also how we are constantly working now to keep our technology leadership to generate value going forward. Then to Horizon. Horizon is then our portfolio of business building ventures as we call them, where we are leveraging our competence and technology to build new businesses to create value going forward. c-trace is the company that we acquired a bit more than a year ago, which is then within smart waste management. Very happy with the performance of c-trace last year. They delivered according to our expectations with double-digit growth and an EBITA above 20%. Reuse is our venture for solving the problems with takeaway packaging and single-use packaging at events and festivals. Last quarter, we had the 2 pilots of our event solution, both the one in Oslo at the Intility Arena and then at the Fairground Festival in Hannover. And you see the picture bottom left here from Hannover, very cool solution where we are providing a technology solution where you have a barplate. So when you buy the beer in a reusable cup, it's automatically match with your payment method. After the drinking, you just throw it through a hole. You can even take all your friends' cups together with it and throw all of them, and they will automatically be identified with your payment cards, so you get the money back for the deposit. Very good feedback on this solution, and we are working now really hard on then a scaling plan for that. Feedstock is the venture where we are focusing on solving how to divert plastic from ending in landfill or incineration. We have invested in one plant in Norway there, Omra, and we had a very good start of operations in last quarter, and we ended then 2025 with a positive EBITDA run rate. Ramping up now to 2 shifts. We also have had a German plant in construction, and we have decided that we are putting the remaining investments of the German plant on hold due to the current market situation. And we rather want to utilize the flexibility we have to find an optimal setup of our assets in order to deliver the value in our offtake agreements, which has previously been announced. For feedstock, we are planning to have a positive EBITDA contribution in 2027. So that concludes my update. And as I said in the beginning, we end the year with a strong quarter, showing that even in a year marked by volatility and market uncertainty, TOMRA's strategic foundations are strong, and we are exceptionally well positioned for the growth cycles ahead. With that, I hand over to Eva. Eva Sagemo: Thank you, Tove. And let's start with the group P&L for the fourth quarter. The fourth quarter ended at EUR 382 million, down 4% compared to a very strong Q4 last year. Collection ended up 2% compared to then a strong Q4 last year. Recycling down 27%, but in line with the conversion ratio that we estimated for the quarter and Food down 3%, however, strong, delivering above the estimated conversion ratio. If we look at the full year revenues, the revenues came in, in line with last year adjusted for currency effects. Gross margins ended at 46% in the quarter, in line with Q4 last year. Looking at the OpEx, we have a strong cost control across our divisions in the quarter with OpEx of EUR 105 million. That is slightly up compared to Q4 last year, where most of the increase is explained by high activity, adding in CLYNK and also inflation in the year. When we look at the EBITA, that results in an EBITA adjusted of EUR 71 million and an adjusted EBITA margin of 19%. And then looking into Collection. Revenues came in at EUR 207 million. That is 2% up compared to a very strong Q4 last year. In Q4 last year, we had strong sales from Austria preparing for its DRS, while this quarter, sales has come in from new markets such as Poland and Portugal. In 2025, existing markets have delivered well in line with our target of 5% annual growth, resulting of then 87% of total revenues. This year is stemming then from our existing markets. And when we look at the contribution from new market, that includes Poland, Portugal, Romania and Austria. And for gross margins in Collection, they have delivered a strong gross margin of 42% in the quarter, but also in the year compared to last year 41%. And the gross margin in the quarter has been positively impacted by business mix, but also release of warranty accruals. As I said, good cost control in our divisions also for collection with OpEx of EUR 47 million in the quarter, down compared to Q4 last year. That gives us an EBITA in the quarter of EUR 39 million and an EBITA percent of 19%. And for -- we talk always about the ramp-up cost in Collection for the year. And then for full year 2025, the ramp-up cost has been north of EUR 20 million in Collection. And then looking at the recycling results. The top line came in at EUR 75 million. That is down compared to a very strong Q4 last year, but in line with the conversion ratio that we estimated for the quarter. And as you can see from the overview, the weak performance continues in our biggest markets being Europe and North America, explained by the challenging market sentiment, both in the Plastics segment in Europe, but also in the waste segment in the U.S. Gross margin ending at 52% in the quarter, that is reduced compared to Q4 last year, however, improved compared to previous quarters this year, explained by the product mix and the segment mix in the quarter being more waste orders and that we have sold AUTOSORT machines in the quarter. And we are taking measures on cost in recycling. And with that, we have had EUR 1.2 million as restructuring costs in the quarter. If we look at the OpEx, it ended at EUR 19 million, which is slightly up compared to Q4 last year, but it's down compared to previous quarters this year. That results in an adjusted EBITA of EUR 21 million in the quarter for recycling and an EBITA margin of 27%. And as always, we look into the order intake, and that has continued weak also this quarter, explained by the market sentiment. And the order intake was down 20% compared to Q4 last year, resulting in an order intake of EUR 61 million. And that results in a declining order backlog, declining 12% compared to end of last year. And when we look at the trailing 12 months, recycling is down 25% on the order intake. Moving over to Food. Food came in strong at EUR 88 million on top line. That is down compared to last year, 3%, but higher than what we estimated on the conversion ratio. We have seen especially a strong quarter in the Rest of the World and a decline in Americas. But if you look at the full year, all markets have delivered a solid performance in 2025. Gross margin ending strong at 52%. It's significantly up compared to Q4 last year and historically, the strongest that we have had in Food. And the strong margin is a result of a combination of the full year cost savings effect, but also positive product mix and release of warranties and tariff accruals. If we look at the OpEx, it ended at EUR 29 million, which is then flat compared to Q4 last year. And as a result of the strong gross margin in the quarter, EBITA ended at 18% in Q4, resulting then in a record EBITA margin for the year of 13%, which is then an overachievement of our target of 10% to 11% EBITA for the year. And also here, looking into the order intake and for Food, we have seen a continued positive momentum in the order intake throughout the year. We are up 2% compared to Q4 last year, ending then at EUR 86 million. And as I said, all regions have delivered a solid performance, and we see especially an uptick in the citrus category this year. The order backlog was up then 26% compared to Q4 last year, ending then in a backlog of EUR 136 million. And also here, when we look at the trailing 12 months of order intake, it's up 12%. Still a solid balance sheet for TOMRA end of the year. And if we look into the cash flow for the quarter, it ended at EUR 24 million. It's down compared to a very strong cash flow from operations in Q4 last year. And that is explained by timing effects of customer payments and release of contract liabilities. And that's also something that you can see in the cash conversion cycle for the year. Equity ended at 35% and the gearing at 2.3 and our ROCE ended at 15.2% ending 2025. Looking at the financial position, it's a nice spread of our debt maturity ending the year at 4.2 years and in average. And then we had undrawn facilities of EUR 54 million ending 2025. And moving over to the outlook. And starting with Collection. As always, we mentioned that it's a high activity related to deposit return systems in new markets, but also growth in existing markets. And the short and midterm performance will, of course, depending on the timing in the new markets, but also the activities happening in the existing markets. And when we look at 2026, we need to separate the growth expectations into what is coming from existing markets and what is coming from new markets in Collection. And starting with existing markets, we expect revenue growth at mid-single digit annually on average, which aligns with our strategic ambition for this division and also what we have delivered in 2025. And then for new markets, we expect Poland, Portugal and Singapore to contribute with approximately EUR 100 million from current orders. And on top, as Tove said, there is an attractive tail in Poland, similar to what we have experienced in Romania with independent stores, representing then a total market opportunity of approximately 5,000 machines or more where we already have a dozen preferred supplier agreements at hand. However, the timing of sales into this segment can follow a trend as what we have seen in Romania, meaning that they take -- that the revenue will come over a period of time after the market has gone live. Another new market activity worth mentioning is the ramp-up of volume in Tasmania as well as continued contribution from Romania and Austria. And in addition, we will have the full year effect from CLYNK, the company that we acquired in September in 2025, expected to come in at around EUR 25 million in revenues for 2026. And then for gross margins in Collection, it should continue to stay above 40%, but the quarterly variations may occur depending on the sales mix between the quarters, meaning in quarters when we sell more equipment, the gross margin will be normally lower. We expect a continued good cost control in Collection. However, we might have OpEx variations between the quarters depending on investments into new markets. And when it comes to investments into new markets, this is where the ramp-up for OpEx run rate comes in, and we estimate that to be at around EUR 20 million for the full year, so the same level as we have had in 2025. And then over to the outlook for Recycling. And as Tove mentioned, despite the belief in the strong long-term drivers like regulation and the demand for recycled materials, the market is currently facing challenges. And as a result of that, timing of orders in recycling is uncertain. And this challenging environment is expected to continue throughout this year and then possibly into 2027. And we have taken measures to restore our profitability already announced this week, where the target is to come back to an EBITA margin above 20% as soon as possible. And with the cost savings program that we have announced, we target to save a gross EUR 16 million as an annual run rate, and that will have a full effect in 2027. And the cost of that will be approximately EUR 15 million. And the cost saving will be approximately 1/3 in COGS and 2/3 in OpEx. And we expect the savings to be gradually implemented in the year, so more towards the end of 2026 as it takes 3 to 6 months to execute on the program. And that means that we will have approximately 50% of the savings as an effect in 2026. And then looking into the coming quarter, we estimate a conversion ratio of 40% of the backlog as revenue in Q1. And with the market uncertainty, it's important to mention that there is a risk that orders may be postponed over quarters for recycling. And as we know, volumes and product mix impact the gross margin in recycling. And in 2025, we have had lower volumes than previous years and in combination with a higher share of metal orders being delivered, these 2 factors impact the overall margin in 2025. And then looking into Q1 and the conversion ratio that we now have indicated of 40%, the volumes are estimated to be on the lower end. And in the combination with product mix in the order backlog, this will have an impact on the margin for Recycling. And for Food, the outlook in Food, here, the drivers are the automation and higher standard for food quality and safety, and that creates new opportunities for our business division, Food. And although the market has now normalized, macroeconomic uncertainty may still influence customers' willingness to invest. Food growth -- revenue growth for 2026 is projected to reach mid- to high single digits. And looking into Q1, we estimate a conversion ratio of 55% based on the order backlog ending the year. And then the restructuring and cost reduction program has improved the gross margins in Food. And in 2025, the product mix that we have sold less third-party equipment in addition to release of accruals have impacted the gross margin positively. And for 2026, we expect the gross margin to remain in the mid-40s based on project and product in the order backlog. However, we might see quarterly variations dependent then on volume, business and product mix. And we have delivered a robust EBITA margin of 13% in 2025, which is ahead of our ambition to reach a mid-teen target by 2030. And for 2026, we expect maintaining strong performance in Food with an EBITA margin of approximately 12%. And why 12%? The outlook builds on the positive momentum from 2025, but we anticipate changes in the product mix and an increase of third-party equipment sales, especially given the large orders that we are -- that we have in the order backlog that is going to be delivered into 2026. And then over to Horizon and the outlook, that is where we have the venture activities, feedstock and reuse and also c-trace. And c-trace have delivered a strong year in 2025 with double-digit growth in EBITA above 20%, and which is then projected to continue into 2026. And for feedstock, it's all about ramping up the capacity at Omra, where we plan to increase it to now 2/3 of full capacity. And we expect a positive EBITDA contribution in 2026 from the Omra plant, given the successful capacity ramp-up and also current market prices. And then as Tove said, a positive EBITDA in 2027 already. And then with the underlying OpEx for feedstock and reuse for business building, that is expected to remain in line with 2025 levels, but we will have an increase in costs related to Omra with ramping up Omra and also c-trace due to higher activity levels. So the OpEx run rate estimated for Horizon as a total is estimated to be around EUR 40 million for the full year 2026. And then lastly, on CapEx, the total CapEx for the year is estimated at approximately EUR 100 million, and that will be primarily directed towards our core divisions, meaning collection, food and recycling. And we do not expect large CapEx investments into Horizon, explained also by the remaining investments in the German plant, the feedstock plant is now put on hold. So with that, I think we end on the financial side, Daniel, and can move into Q&A. Daniel Sundahl: Thank you, Eva, and thank you, Tove. We will then take questions. [Operator Instructions] And I see that we have a few questions coming in. The first one coming in from Elliott Jones at Danske Bank. Elliott Geoffrey Jones: Congrats on the results this morning. Just a couple of things for me. On Collection, yes, you mentioned this in the outlook that kind of orders equate to EUR 100 million in sales for 2026. And like you said, it's just current orders that you've received and maybe obviously more to come from Poland alone and the others. But can you just help us understand kind of in general, what the time lag is between you receiving orders and then being able to kind of deliver them just on a general basis? Eva Sagemo: Yes. On a general basis, it's -- I think it's -- I think we need to discuss more specific for Poland, right? Because as Tove said in her note on collection is that we have an installation plant for Poland with 100 machines per week, and that's kind of like the phase that we are now working according to. And as you know, we announced contracts during the fall, and that's what we are now delivering according to, and it's included in the EUR 100 million revenues on the current order base. So that includes Poland, Portugal and Singapore. Tove Andersen: And if I can add to also what we said is that in Poland, we expect deliveries on the existing contracts first half of this year. And as Eva said, we have a dozen of frame agreements with the smaller retailers, which means that the frame agreement is there. So it's just a call off and that could be very quick. So a retailer can just order a machine and it could be delivered a few weeks later. So on those, we have a very quick turnaround. Elliott Geoffrey Jones: Got it. And then also just a question on operational leverage in Collection. Yes, if you kind of look back all the way to kind of Germany, I know that TOMRA kind of had an OpEx base that was able to be stable as revenue started to take off. And obviously, you just made comments on ramp-up costs this year being north of EUR 20 million in 2025. You said EUR 20 million in 2026. So I just want to kind of kind of test like beyond 2026 when there's more new markets coming, how do you stand with regards to that, do you expect any kind of big jumps in OpEx? Or would you say that along the way, you have been investing in regions such as France and Italy and the like already? Tove Andersen: Yes. So the way -- first of all, we're doing quite a bit now on structuring Europe in a good way. In collection, we just reorganized the whole region to make sure that we are really set up to run that efficiently as new markets are coming along. On the kind of backbone, the operational backbone, the supply chain, procurement, production, et cetera, is well set up to handle then the growth. But what you have to expect that each time a new market comes, we need salespeople on the ground, we need service people on the ground. So of course, there will be some OpEx coming in every market, while at the same time, we are working on ensuring that we have as much operating leverage as we can. Daniel Sundahl: And the next question is coming from Adela Dashian at Jefferies. Adela Dashian: Yes, if we first could start on Collection. I appreciate the guidance of EUR 100 million revenue contribution in 2026 from the newer markets. But when I plug that into my model, I still have a difficult time getting up to a double-digit growth rate for the full year for Collection, given that existing markets are growing by mid-single digits. So could you just explain if you -- and I guess also with U.K. now not coming live until late 2027, could you explain like what's the -- how you will achieve double-digit growth, which is what consensus is assuming right now? Tove Andersen: So as Eva explained, so we are from the existing contracts. So in Poland, that is the large retailers with existing contracts, the contracts we have in Portugal and Singapore that represent EUR 100 million to be delivered and most of that in first half of this year. Where we land the year will then depend on additional sales into these markets and additional sales into Romania and Austria. Adela Dashian: I see. Okay. So it's just based on those confirmed orders. Okay. Makes sense. On recycling, I'm assuming that there was no -- it was a quite nice beat versus expectations, but I'm assuming that the restructuring effects, I mean, it's very, very subdued. These were now so no effect of that in Q4. So could you explain, was it a sequential better mix as well that drove the results in the quarter? And also on the restructuring costs, what should the phasing be in the quarters? Eva Sagemo: Yes. I'm not sure if I got the first question, Adela, but I can answer the other one, and then maybe Tove can fill in if she got the first one. So on the restructuring cost, it will be -- it's estimated to come in, in Q2 and Q3 at large, of course, depending on how this restructuring program will go into effect in the year. Tove Andersen: Yes. And we had EUR 1 million in restructuring costs in Q4. So that was the only effect in Q4 from the restructuring. Adela Dashian: Sure. And maybe... Daniel Sundahl: Yes, sorry, Adela. On recycling, the mix that we delivered was more normalized into waste. But however, the order backlog still has a higher share of metals in it to be delivered going forward. Adela Dashian: Okay. I see. Daniel Sundahl: Good. Thank you, Adela. The next question will come from Fabian J�rgensen at Pareto. Fabian Jørgensen: All right. If we talk Spain and U.K. phasing, Spain is obviously a bit more uncertain. We say that the RFPs for U.K. have already started. Spain is a much more consolidated market than, for example, Poland, Romania, where you have the long tail end. When do you expect the capacity to be all rolled out in the U.K.? Is this a play where you expect most to be in place by October, meaning that sales could start in late 2026? And how should we think about that? Tove Andersen: So we expect that the U.K. start will be a hard launch. That's the current expectation. You know that in Poland, we had a soft launch. They had a 3-month grace period. We don't expect that to happen in the U.K. It can change, but at least that's what is communicated, which means that you should expect a significant portion of the installation to happen before the go-live date. Fabian Jørgensen: Exactly. Okay. And so I think one of the most important things to note in the report is the margins here. Food was obviously very great again, similarly to Q2. But also on Collection, you state that the added cost for 2026 is very limited. And if you look at consensus estimates now, what they basically assume for 2027 is that OpEx in Collection expand 30% to 40% relative to 2025. Is that way too high? Eva Sagemo: So on the OpEx for 2027, that's down the line, and we need to come back to that at a later point, Fabian. What we have said is... Fabian Jørgensen: Does it make sense that it's up 30%? Eva Sagemo: It depends on... Fabian Jørgensen: To your business model. Do you think so? Eva Sagemo: I think. Yes, I think the level of the OpEx depends on the activity in the markets, right? So what we are working according to is to have good cost control in Collection and across the divisions that we have. And then, of course, a large part of TOMRA Collection is related to existing markets. And then for new markets, we manage the activity going into new markets in a very prudent way. So cost will, of course, occur with going into new markets, but the levels we need to come back to. Daniel Sundahl: And the next question is coming in from Morayo Adesina at Barclays. Morayo Adesina: Just one for me, just a follow-up on the product mix in recycling. So I know that there was some softness in the waste recovery segment of recycling in 2025. Are you now saying that we're seeing that coming back, especially in the U.S.? I know that there was some sort of effects from the geopolitical backdrop yes, just wondering where we're at on that. Eva Sagemo: Yes. Not necessarily. So what we see in the quarter is a result of what we had in the order backlog for the year. And in Q4, we had more waste projects into the -- to be delivered to the P&L. So that's the reason we don't necessarily see a recovery in the waste segment because of that. Daniel Sundahl: And we will take 2 final questions, one from Markus Heiberg at SEB. Markus Heiberg: So a 2-parted question on the competitive position in recycling. So the first one is how do you see the competition there now as the market is softer in plastics, are you seeing higher competition? And also maybe in metals, are you seeing any changes there? And the second part of that question is now as you are downscaling your cost base, are you seeing that impacting your own product road maps? And I imagine there are some opportunities there in AI and what's happening there. So some discussions on that will be interesting. Tove Andersen: Yes. So first of all, it's clear that our competitors are experiencing exactly the same as us. So we are not losing market share. It is the market that is down. But that also means, of course, it becomes very competitive on the orders that are out there. So in a situation like this, yes, there are pressure on margins, but we are still, I feel in a very good competitive situation versus the others. When we are -- what we are doing is rightsizing the organization. We have reduced turnover with 18%. We are not 100% sure when it will come back. It will come back, but when it will come back. So we need to take down our organization to meet the current market sentiment, which means that we are reducing all over in recycling, including that we are reducing on some of our innovation activities because also we see that the market will not be there to take those innovations and we can get real value of it short term. At the same time, we have been very focused on making sure that we don't take out things that will make us less competitive when the market comes back. So this is, of course, a balance. So we believe that we have the balance right, which means that we are still investing into our innovation portfolio, including AI with the new organization or the new manning that we will have then as of -- yes, mid this year. Daniel Sundahl: Thank you, Markus. We have one last, but no longer in the queue. So I think with that, we have reached the end of today's presentation. Thank you very much for tuning in. The next time we will be here is on the 24th of April for our Q1 results the day after AGM. Looking forward to seeing you then. Until then, have a nice day, and goodbye.
Operator: Good afternoon, and thank you for waiting. We would like to welcome everyone to Ambev's 2025 Fourth Quarter and Full Year Results Conference Call. Today with us, we have Mr. Carlos Lisboa, Ambev's CEO; and Mr. Guilherme Fleury, CFO and Investor Relations Officer. As a reminder, this conference presentation is available for download on our website, ir.ambev.com.br as well as through the webcast link. We would like to inform you that this event is being recorded. [Operator Instructions] Before proceeding, let me mention that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Ambev's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depends on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Ambev and could cause results to differ materially from those expressed in such forward-looking statements. I would also like to remind everyone that, as usual, the percentage changes that will be discussed during today's call are both organic and normalized in nature. And unless otherwise stated, percentage changes refer to comparison with 2024 fourth quarter and full year results. Normalized figures refer to performance measures before exceptional items, which are either income or expenses that do not occur regularly as part of Ambev's normal activities. As normalized figures are non-GAAP measures, the company disclosed the consolidated profit, EPS, operating profit and EBITDA on a fully reported basis in the earnings release. Now I'll turn the conference over to Mr. Carlos Lisboa. Mr. Lisboa, you may begin your conference. Carlos Eduardo Lisboa: Good afternoon, everyone, and thank you for joining our fourth quarter and full year 2025 earnings call. As we close the year, here is the message I hope you take away today. We made meaningful progress on the mission we set from day 1, even in a dynamic context that stress tested our strategy. Here is how we progressed. First, avoiding disruptions. We built on a strong foundation and maintained execution consistency across the company. Through active listening, we protected what was working and implemented improvements without destabilizing the organization. Second, keeping momentum. Over the course of the year, we advanced quarter-by-quarter on different fronts, finishing the year with a better performance for 2026. Third, building a stronger company. We avoided changing directions with the context. We advanced simultaneously on the 3 pillars of our strategy because that is where our differentiation comes from. This is what we mean by being ambidextrous. And it is building a flywheel that strengthens each year and sustain our performance over time. As a result, we ended 2025 stronger than we started. We strengthened our portfolio, got closer to our customers and consumers and advanced profitability. Volumes, however, were pressured by the environment, and that matters because it frames our ambition for what comes next. To use a simple analogy, 2025 was a tough season to play with a wet beach, cold weather and a game that kept changing. It forced us to build muscle, resilience and adaptability, and it strengthened our collective ownership as a team. And just as important, that strengthening showed up in our people. In a demanding year, employees' confidence in our future increased, driving engagement indicators to all-time highs, back to post-pandemic peak levels and reinforcing that our culture truly stands out in challenging moments. All that means we are coming out better prepared for the next season, which in 2026 happens to be the FIFA World Cup, a big passion point in our markets. So let me touch on another passion, beer. What we saw in 2025 reinforces our view that the headwinds were primarily cyclical and occasion driven, not a sudden change in beer fundamentals. A strong proof point is this. The most engaged consumers, our beer lovers, got closer to the category and the category equity strengthened over the year. In other words, beer continues to be loved, culturally relevant and deeply connected to socialization across our markets, where it holds a high share of alcoholic beverages. And we continue to see meaningful runway ahead. The category has headroom to expand, supported by favorable demographics in Latin America and growth through occasions development, both out-of-home and at home and through a broader portfolio that addresses trends and needs, recruiting new consumers. Simply put, what changed in 2025 was not whether consumers want beer, but how often the right moments happen. Now let me connect that to our strategy. Under Pillar 1, as the category captain, our job is to bridge the gap between beer potential and actual consumption, fostering category growth. In 2025, we led where the category expanded the most, premium, balanced choices and nonalcohol. We elevated the core segment through innovation and investments while building adjacencies like flavored beers. And that leads us to our Pillar 2, where we are using data and technology to shape our own future and stay ahead of the curve, strengthening the core business while building new growth engines. On the B2B side, our priority is to go deep with BEES as an enabler to make the core business stronger, helping us win through better execution at the point of sale. Our ecosystem is built on the idea that the better our customers perform, the better we perform. That is why we are embedding digital sellout activation tools powered by our data and insights, benchmarking what works across points of sale and translating it into sharper activation and portfolio recommendations. Also, BEES marketplace continues to scale with full year GMV growing 70%, driven by 3P expansion and gross margin up 3.5 percentage points versus last year, reinforcing both relevance and improving economics. On the consumer side, Z� Delivery closed 2025 with all-time high performance, delivering BRL 4.7 billion in GMV, up 13% versus last year. 67 million orders and 27 million yearly active users, up 11% versus last year, consolidating its position as one of the major convenience platforms in Brazil. Strategically, Z� put us close to young adult consumers with nearly 80% of buyers either Gen Z or millennials, and it accelerates both execution and our test and learn innovation loop. It is our food in the future. And this brings us to our third pillar, the muscle that makes the other 2 pillars scalable. In 2025, we set a clear ambition to expand Ambev's consolidated EBITDA margin again, EBM. Despite industry softness and FX and commodity headwinds, we delivered a meaningful evolution from top to bottom line that came from thoughtful choices on resource allocation, revenue management, productivity and expenses governance while sustaining brand investment. That discipline translated into delivery. At the consolidated level, we expanded organic EBITDA margin by 50 basis points, marking our third consecutive year of margin expansion and by 110 basis points in Brazil Beer. And that reinforced our confidence in capital allocation. Consistent with our commitment to return excess cash to shareholders over time, we announced approximately BRL 20 billion in shareholder returns in 2025, the highest in our history through BRL 13.2 billion in dividends, BRL 4.2 billion in interest on capital and a new BRL 2.5 billion in share buyback program. And we are starting the year paying the first BRL 1.2 billion tranche of the IOC declared by year-end. Now let me give a quick overview across our footprint. In 2025, we grew EBITDA across all our business units, and we expanded EBITDA margin in 4 out of 5. In Brazil Beer, full year volumes were in line with the soft industry, and our performance reflected 2 different halves. Our revenue management initiatives weighted on share in the first half. As conditions improved in the second half, market share expanded meaningfully. In Q4, as weather sequentially recovered, so did our volumes. October was the main drag, and we returned to growth in December. For the quarter, we delivered a low single-digit market share gain in Nielsen sell-out. We continue to lead where the category is expanding the most. premium and super premium volumes increased high teens, and we closed the year as leaders in the segment, reflecting stronger portfolio brand equity. Our balanced choices brands grew high 60s and nonalcohol grew around 30% as we continue to expand leadership and unlock incremental occasions. In the quarter, we delivered 100% of the Brazilian beer industry's growth in premium and nonalcohol according to our estimates and Nielsen sell-out data. In the core segment, softness was more pronounced given its higher reliance on out-of-home socialization. We are sustaining its recovery through stronger trade activation, marketing campaigns and continued innovation, and we started to see progress with market share gains in Q4. In Brazil NAB, during 2025, the disciplined execution of our strategy and resource allocation supported EBITDA growth with margin expansion. At the same time, Guaran� Antartica's equity improved, showcasing the strength of the brand. In the first half, volume momentum and commercial execution supported market share gains despite margin pressure given higher costs. In the second half, the CSD industry decelerated amid the same cyclical drivers that impacted beer. and price relativity became less favorable following our revenue management decisions, resulting in market share pressure while delivering a better profitability profile. In Argentina, the macro environment continued to improve with lower inflation and less FX volatility. The consumption recovery, however, is taking longer than we expected and continued to weigh on results in 2025. Still, performance improved sequentially throughout the year with a more balanced dynamic between top line and bottom line in the fourth quarter, supported by tighter execution and revenue management. Looking ahead, we remain constructive on a gradual recovery as the consumption environment improves. In the Dominican Republic, the consumption environment also improved sequentially through the year despite a weather-related disruption in Q4. In this context, beer gained share of alcoholic beverage in full year, supported by healthier dynamic between categories, while Presidente's brand health reached all-time highs. In Canada, we outperformed both beer and beyond beer industries, supported by our beer mega brands and continued beyond beer momentum while maintaining disciplined cost execution and delivering EBITDA margin expansion. With that, I will now turn it over to Fleury. Guilherme Fleury de Figueiredo Parolari: Thank you, Lisboa, and hello, everyone. As we enter 2025, we made it clear that this would be another year focused on long-term value creation through disciplined execution of our capital allocation framework. In a dynamic operating environment, we focus on what we can control and delivered another year of normalized EBITDA growth with margin expansion, EPS growth, resilient cash generation and a higher capital return to our shareholders. Let me walk you through our financial performance for the year, starting with the margin improvement dynamics. We closed 2025 delivering consolidated normalized EBITDA margin expansion of 50 bps reaching 33.4%, mainly driven by 3 factors: First, net revenue per hectoliter growth of 7.5%, supported by stronger brands, revenue management strategy and continued premiumization across our portfolio, leading to net revenue per hectoliter growth across all of our business units. Second, financial discipline. Consolidated cash COGS per hectoliter performance benefited from productivity initiatives and operational efficiencies across our industrial and logistics operations. Brazil Beer is a clear proof point. Despite the cost headwinds anticipated at the beginning of the year and the operational deleveraging associated with lower volumes, our cash COGS per hectoliter, excluding non-Ambev marketplace products increased by 6.1% in 2025 at the lowest quartile of our guidance. And third, efficient resource allocation. In SG&A, we continued to invest behind our brands while keeping total cash SG&A growth under control. Now moving to below EBITDA lines. We closed the year with almost BRL 4 billion in net financial expenses mainly explained by FX variation losses related to foreign currency-denominated assets and the BRL appreciation, coupled with expenses related to sourcing U.S. dollars in Bolivia. In terms of income taxes, our effective tax rate for the year was 17.7%, reflecting some one-off effects mainly from Q3, such as the Barbados divestment, the partial reversal of tax liabilities associated with the 2017 Brazilian tax amnesty program and certain effects related to tax credits. Absent such one-offs, our consolidated effective tax rate would have been approximately 20% for the year. As a result, stated net income reached almost BRL 16 billion with stated EPS increasing 8.2% year-on-year, while normalized EPS increased by 2% in the year. Now turning to cash flow. Cash flow from operating activities remained solid and totaled BRL 24.5 billion, BRL 1.6 billion lower than last year, mainly due to softer volumes that impacted working capital. Cash flow consumed in investing activities totaled approximately BRL 5 billion, mainly driven by CapEx investment broadly in line with last year. Cash flow consumed in financing activities amounted to BRL 26.8 billion, driven by shareholder payouts and the completion of our 2024 share buyback program. In total, we returned BRL 21.7 billion to shareholders on a cash basis, meaning that approximately 90% of our operating cash flow was returned to shareholders in 2025 and reinforcing our commitment to sustainable long-term value creation, our return on invested capital continued to be meaningfully above our weighted average cost of capital and improved in 2025, driven by NOPAT margin. For 2026, we remain consistent towards our capital allocation priorities of: one, reinvesting in our organic growth to keep supporting the development of Pillar 1 and Pillar 2 of our strategy; two, maintaining a disciplined approach towards M&A opportunities; and three, consistently return excess cash to shareholders over time. In terms of costs, in 2026, we expect Brazil Beer cash COGS per hectoliter, excluding non-Ambev marketplace products to increase between 4.5% and 7.5%, driven primarily by commodity prices, aluminum, in particular, and portfolio mix with higher cost pressures anticipated in the first half of the year. At the same time, we remain focused on identifying opportunities and enhancing efficiency as we continue to pursue our ambition of expanding consolidated margin over time. And before handing it back to Lisboa, I would like to share a team update. Patrick Conrad, a seasoned finance professional, is joining our Investor Relations team, succeeding Guilherme Yokaichiya. Yoka, in turn, will transition to a fully dedicated position leading Ambev's treasury team. I would like to take this opportunity to thank Yoka for the outstanding work he has done leading Ambev's Investor Relations team over the past 5 years and to wish both continued success in their new roles. Now back to you, Lisboa. Carlos Eduardo Lisboa: Thank you, Fleury. As I reflect about 2025, it was another year marked by a very dynamic operating environment, and that strengthened our ability to read and adapt to market changes. 2026 will certainly bring its own dynamics, but it is also shaping up to be a promising year for socialization, and those moments have already started. Carnival is underway, not only in Brazil, but across several of our Latin American markets. From there, we begin to warm up for the FIFA World Cup, the biggest additional record in favorable time zones for our footprint, creating another interesting backdrop for people to come together. On top of that, in Brazil, a holiday-rich calendar adds several long weekends throughout the year, creating additional occasions for socialization. In this context, I want to leave you with 3 reminders. First, beer is a loved category in Latin America with strong fundamentals, and that strength comes with headroom for growth, given its versatility to address consumers' trends and needs. Second, we, as a company, are advancing simultaneously on our 3 strategic pillars, strengthening a flywheel we can compound year after year. And third, we entered 2026 as a stronger company with momentum carryover and how we navigated 2025 was another proof point that our culture stands out in times like this. And none of this happens without our people. I want to close by thanking our teams across all markets for their ownership, adaptability and execution through a very demanding year and for the energy they are bringing into 2026. With that, let me hand it over to the operator. Operator: [Operator Instructions] Our first question comes from Nadine Sarwat from Bernstein. Nadine Sarwat: I'd like to double-click on Brazil. So firstly, great seeing that commentary about December beer volumes being in growth. Can you unpack that a little bit, the magnitude factors behind that? Was it all weather? Or were there any other favorable shifts? And are you able to comment any trends in January? And following up to that, secondly, Brazil NAB, I know you guys called out your revenue management strategy as a reason behind the volume decline. Can you add some color as to what the exact decisions were that resulted in that decline? And then what can we expect for volumes in '26? Carlos Eduardo Lisboa: Nadine, nice to talk to you again. Lisboa here. Look, I'm going to follow the protocol. I'm going to get the first answer. Regarding Brazil Beer, to your point about what are the drivers. So quickly reminder, what happened last year made 2025 like an outlier year for the beer industry in Brazil. Prior to that, 10 years' time, 5 years' time, 3 years' time, there was consistent growth and pretty much driven by favorable demographics and disposable income increase. Last year, and we mentioned that during the result announcement, what we saw was unseasonable weather impacting mostly the wintertime and boosted by the La Nina phenomenon that somehow made the winter go deeper and longer in the second half. And that created unfavorable type of situation for beer because it impacted the most an occasion and out-of-home occasions that are where the beer category volume resides. So that's the reason why we saw the impact. Obviously, it was not an easy situation for us to manage. As I said before, it was the first time that we saw such a strong impact in our industry, but I think the team put all the emphasis behind things that we could control. And by doing so, we kept evolving quarter-by-quarter. And when the weather changed during the last quarter of last year, we were ready to ride together with the more favorable weather impacting the demand again. And this is exactly how the situation went through. In October, pretty much the month represented the vast majority of our decline in the quarter view year-over-year. We got to a better position in November. And then in December, when you combine the better weather with the market share gain that we got in the final round, the final quarter of the year, which represents around a low single-digit in sell-out data growth, that explains the positive territory that we landed. I won't go into the details about the first quarter of this year. But what I can say, Nadine, is the following. Actually, that weather pretty much came into the first round of this year, the first month of this year, what puts in a year-over-year comparison, the weather impact is neutral, which is important for us. Henrique Brustolin: Sustaining and even improving profitability in 2025. You ended up doing that. There was an impressive performance on the SG&A, especially distribution costs. I would just like to get your thoughts about how you're thinking about this going into 2026, when you think about the hedging that you have for Brazil Beer as well as the room for additional efficiencies, how you see all of that shaping up for the year? Guilherme Fleury de Figueiredo Parolari: Thank you, Henrique, Fleury here. Can you hear me well? Just checking the mic here on my end. Henrique Brustolin: Yes, I can. Guilherme Fleury de Figueiredo Parolari: Great. So let me start with how we put your question. I think 2025, just to recap, was really a year that when we started, we saw important cash COGS pressure. I'm talking about Brazil Beer. That's why we have given a guidance last year of 5.5% to 8.5%. And we have done here a series of, I would say, projects looking to different lines of our P&L. As I said in my speech, we focus on the industrial side, we focus on the distribution, always privileging the investment behind our brands because that is what we need to continue to focus to make Pillar 1 and Pillar 2 work better. By a series of implementation of these strategies, we are happy that we landed on the 6.1%, which was the first quartile of our guidance, okay? Now when we look into '26, I think there are 2 things that remain the same. One is we need to continue to work very hard on the initiatives. We need to continue to make it very focused on our side to -- with our ambition of coming with another year of margin expansion, and we are already doing that as we started the year. And when we do our analysis, when we look into the costs, our hedging, which is nonspeculative, when we look at the commodities, so on and so forth, we are giving the guidance to the market of 4.5% to 7.5% for the full year of '26, which is midpoint broadly in line with what we have done in '25. And that is pressured, as I said in my speech, from commodities, aluminum in particular, and portfolio mix. But be in mind that we will continue to work very hard. It's our job here to do the work and probably throughout the year, come narrowing or come with news on here. So far, that is the guidance that we have. Carlos Eduardo Lisboa: Henrique, Lisboa here. Just to complement Fleury. You can imagine that nobody here, we are not expecting such a challenging context in terms of volume drop for the industry, especially here in Brazil. So that put a lot of stress on our ambition to protect margins for Ambev again. And I think last year was -- that's the reason why we said it was a stress test for us. Because if we could somehow overcome the FX, overcome commodities, and on top of that, overcome the lack of capacity to dilute costs without having the volumes that give us confidence. Somehow, I think the obstacle made us develop internally the right muscles to be prepared for another ground, but in a way better shape in my point of view. So again, was not a training season for us, it was already a hard game last year, and I think it was good, you're right, to test and be prepared for what's coming. Operator: Our next question comes from Gustavo Troyano from Itau BBA. Gustavo Troyano: My question relates to capital allocation. And how should we think about your approach towards dividends throughout the year? Last year, you paid interim dividends on a quarterly basis, but I just wanted to touch base on how you're thinking about the policy for this year, not only in terms of the final payout target, but also on the timing of the distributions throughout the year. So it would be nice to understand if we should expect dividends being concentrated towards the end of the year as we were used to see until 2024 or if there is something new towards this discussion? Guilherme Fleury de Figueiredo Parolari: Thank you for the question. Let me just start highlighting again what we have done in '25. I think you have seen a very proactive discussion that we have had with Lisboa and our Board here to make sure that we are able to change the payout or return to shareholders on a consistently basis quarter after quarter on last year. On this quarter or beginning of this quarter, Lisboa just mentioned on his beginning introduction that we're also paying part of the IOC that we've approved with the Board at the end of 2025. I cannot -- this is not a guidance. I cannot tell you how that will come over the year. But what I can say as a CFO that we continue to have every quarter discussions. We continue to look into our cash position, the cash generation on our side, taking into consideration always the 3 points of our capital allocation, invest in organic growth, look into selective M&A and deliver sustainable shareholder return over time. Operator: Our next question comes from Thiago Duarte from BTG Pactual. Thiago Duarte: Yes, in my question, I wanted to circle back to some of the topics I think we discussed a year ago, right after the return of both of you to Ambev and things that are related to the strategic vision that you shared with us at the time, and I wanted to comment, if possible, in light of not only the quarter, but I think 2025 results as a whole. The first one is to you, Lisboa, when you referred to make, I remember a year ago, bigger investments in the core brands as part of your analogy of making the company more ambidextrous and fostering the category growth. You mentioned briefly about elevating the core in your initial remarks. But when we look at the portfolio and the way it performed throughout the year, it appears that was premium, not the core that really stood out. So I wanted to hear how you think core stands a year later in terms of potential or whether you think it will continue to be gradually eclipsed by the premium brands and the portfolio will be somewhat transitioning more into premium and core losing relevance. So that would be the first of the topics we discussed a year ago. And the second one is related to the portfolio itself. In the past, I don't know, 5 or 6 years, Ambev made lots of investments in innovation, introduced many new brands, you repositioned the pricing. And obviously, I think this led to higher costs and expenses to support that expansion. And I remember a year ago, you mentioning that you believe the portfolio was stronger and it was time to reap the benefits of these investments. So on the question of the SG&A dilution, whether you think what we saw this year is really related to that and obviously, the sustainability of that going forward, which you mentioned a little bit before in the previous question. So those will be the points. Carlos Eduardo Lisboa: Thiago, nice to connect to you again. Look, one of the feedbacks we got from you all was about following the protocol, one answer only. So I'm going to get the first one. Okay, the first question. So based on the core question, what is the core role here for us? And I understand your point is more related to Brazil, given the fast growth rate we are delivering with the premium. I continue with my point of view, Thiago, regarding us being a company capable of managing ends not only one side of the portfolio partition especially because the part that you are alluding to the core, it is the stronger part of the industry. And if -- when you take in consideration the majority of the population in Brazil still rely pretty much on one minimum salary. The core has a meaningful play to gain in the game because it promotes accessibility to the category. On top of that Brazil is composed by different regions. Those regions is very interesting. I think I never told you that, but one of the things that caught my attention is how cyclical the portfolio is per region. So some places in Brazil that used to be a Brahma place today is an Antarctica place. Another one is a Skol place. And at a point in time, I told you guys, Skol is still a very relevant brand in several states of Brazil, here in Sao Paulo, for instance. So it's critical for us to protect that strength that our company has, the category has because somehow these brands, they represent the category. And there's plenty of room for us to make these brands very relevant in the future. How? Take as an example, what we are doing as we speak with Skol. We just brought to the game a new brand variant, which is Skol Zero Zero. We are not just following the zero trend. We are doing so with novelty because this brand extension brings something different from the others, zero alcohol, zero sugar. And this is the way, one of the ways we keep these brands relevant for our consumers in the future. And it's interesting because when you do so, when you find a way to be really ambidextrous is when you see the full potential coming to life. I'm going to give one example, which is the last quarter of last year this is when we saw the full potential of our portfolio coming to [indiscernible] because the share gain not only came from the new partitions being premium, being nonalcohol or being balanced, it came from the core as well. And coincidentally or not, this was the time when we started to see Skol also stabilizing, gaining momentum, especially in those states where we put more emphasis behind the brand. So -- and as a consequence, our share improved not only through the segments, but also through the channels and also through regions in Brazil. And this is what we want because we believe that our strength relies on the portfolio strength, and this is the game we want to play. And the core side of the business plays a very meaningful role there. Guilherme Fleury de Figueiredo Parolari: And Lisboa, if I can just add like one thing here, Thiago, quickly. I think connected with the strength of our portfolio, core was more impacted by, I would say, weather-impacted occasions, which were not fundamentally impacting the category. And with the other side of the portfolio, we led where the category expanded. And that's where we came with the bulk of the growth in premium and zero in Brazil. Operator: Our next question comes from Renata Cabral from Citi. Renata Fonseca Cabral Sturani: My question is related to GLP-1 drugs and the potential impact on company's portfolio. We are seeing the discussion a lot developed in the U.S. Of course, the penetration of the drug has been much higher than in Brazil. So my question for you is the weakness of the portfolio this year somehow can be attributed to that. And more than that, since in March, one of the patents will expire in Brazil. So the usage can expand in 2026 or maybe '27. What is the expectations of impact in the portfolio and what the company is working to mitigate that and offer other options to consumers, not only in beer but also in the portfolio? Carlos Eduardo Lisboa: Renata, thank you for the question. I think it's always important to go back to '25 in order to really understand what happened. There are 2 different kinds of impact. One is attitudinal change. The other one is behavioral change. What happened last year was a change on the behavioral side due to the weather, mostly, okay? When you have bad weather when you have colder and longer winter time, the most important drinking occasion in Brazil, which is the out-of-home among friends sharing beer is the one mostly impacted. And this is what explains the majority of the drop that we saw last year. And by the way, as explained by Fleury, the brands that depend the most on this occasion are core brands. And that's the reason why you saw the core brands somehow following what happened with the industry, okay? So what is good about that is the fact that even with such a challenging circumstance context we measure the attitudinal side of our consumers regarding the category constantly. And we see not only protection of the relationship between consumers and the category, but with those that are more -- that are closer to the category, we saw a strength, which doesn't mean that those that are more unfrequent consumers, sporadic consumers do not fluctuate. And for those consumers, we are working with a very versatile category to attend more needs and trends. That's the reason why you see us developing zero alcohol beer. We are developing functional beers like gluten-free, lower calories. And we are also attending those consumers with more sweet flavor beers like Flying Fish that we introduced last year. So regarding the point about the GLP-1, we haven't observed any meaningful impact on our business. But like any other emerging trend, it requires time, more evidence, and as a consequence, I just want to say that we're going to keep monitoring and acting accordingly. Operator: Our next question comes from Isabella Simonato from Bank of America. Isabella Simonato: I mean my question is about 2026 beer Brazil. I mean, as you mentioned, last year was quite challenging in terms of weather and occasions, and you highlighted several tailwinds this year, especially regarding that the World Cup and et cetera, more holidays as you mentioned in the past. But at the same time, you're coming -- your guidance probably shows that costs will grow above general inflation. And you're coming off from a base of SG&A that seems tough in the sense that, that was a very good performance in the last year. So when you balance things between maybe a more favorable backdrop and what you're facing internally, I wanted to hear your thoughts on your pricing strategy for 2026. And also if you could give us a little bit of a color on how should we think about mix, especially during the World Cup? And among those variables, across those variables, what do you think should be more relevant when we're thinking about volume growth for the year? Carlos Eduardo Lisboa: Isabella, it's a long question. So let me take the point about pricing, which is very sensitive. So I'm going to try to answer without going to any -- a territory that we don't want. So our pricing has a mission composed by twofold. One side of the pricing story is keep our industry accessible. And the reason why for that is what I mentioned before. A good -- the majority of the population in Brazil still depend a lot on accessibility to be close to the category. So we must keep an eye on it. That's the reason why core has a role to play. That's the reason why packaging assortment has a role to play because we want to give them accessibility alternatives. If we rely only on premium, we're going to make their lives even harder. On the other side of the story, pricing has the role to protect our profitability moving forward. And as you know, we have an ambition to continue expanding margin in the -- ambition. The same way we anticipated to you in the beginning of last year. We keep this ambition alive and Fleury mentioned that in the beginning of the session. So we're going to -- we need to be always balancing the 2 sides of the story. So it's not an or, but it's an and game. The beauty about our situation today is when you look to our flywheel, first and foremost, our portfolio is more complete today. And it is complete regionally speaking. So it gives us alternatives to move forward with our revenue management strategy for the year. On the second side of the story, the second pillar of our strategy, you find the digital ecosystem. And I already mentioned to you all BEES is enabling us to strengthen our core business while creating new growth engines. On the first side of the story, go deeper on the core business. We are using technology to go more granular, to execute our revenue management strategy in a different way than we used to do before. We are more effective today than before in terms of dollar invested in promotions and so on and so forth. Our algorithms help us to recommend the right portfolio of brands for each type of point of sale and so on and so forth. By doing so, we not only improve our capacity to execute the pricing per se, but we also bring together a very interesting mix impact for the game. And the 2 together should be enough to offset what kind of impact we see on the COGS side as we did last year. That's pretty much the balance we have to keep in place every single day. And I must confess that the more we do it, the better we get. So again, similar to what I said before, I feel like last year was a very good acid test, stress test for us to be ready for the year to come. Guilherme Fleury de Figueiredo Parolari: And Lisboa, Fleury here, just to add one thing here, Isabella, when you look into our costs, another way of thinking about that cost and expenses, you look at that in a holistic way. You always do the resource allocation over and over, as Lisboa was mentioning, measuring returns from market promotions from everything that we do. And it's also fair to say that, as Lisboa mentioned, over time, we want to increase -- we have the ambition of increasing our margin. But most likely, we're not going to be able to do that every quarter because when you look into Pillars 1, 2 and 3, those will be maximized over time, but that's our long-term ambition. Looking to our costs, taking out of the equation what didn't make sense and refuel and reinvesting behind our brands. And that's what Lisboa mentioned as a flywheel. So that's what we want to continue to gain momentum over and over. Operator: This does conclude the Q&A section. I will now hand the floor back to Lisboa for any closing remarks. Please go ahead, sir. Carlos Eduardo Lisboa: Thank you for joining our call today. I would like to close reinforcing some messages. Our mission is to always strive for our better version. And we will do that by leading and shaping a loved category with clear headroom for growth. Advancing simultaneously on the 3 pillars of our strategy is what set us apart. 2025 stress tested our strategy, and we closed the year stronger and better prepared for what comes next. Thank you, and hope to see you soon. Enjoy carnival. Operator: This does conclude today's presentation. You may now disconnect, and have a wonderful day.
Jesper Hatletveit: Good morning, and welcome to the Fourth Quarter 2025 presentation for the Norwegian Group. My name is Jesper Hatletveit and I'm the VP of Investor Relations here at Norwegian. Today's presentation will be held by our CEO, Geir Karlsen; and our CFO, Hans-Joergen Wibstad. The presentation will be followed by Q&A from the audience and the web. Please go ahead, Geir. Geir Karlsen: Thank you, Jesper. Good morning. Good morning to all of you following this also online. It is a beautiful morning in Oslo. It's the winter holiday coming up. I heard on the news on the way in here that 80,000 people is leaving Oslo today. And I know that quite a few of them are flying with Norwegian. So, it's a good day. Going to the highlights for the quarter and also a little bit on the full year of 2025. EBIT of NOK 21 million. That is an improvement from last year. We have seen passenger growth in both airlines in the quarter. And we are continuing to do well on what we call operational excellence, where we are seeing an improved regularity and punctuality for both airlines compared to the same quarter last year. On unit costs, as many of you know and remember, we have been guiding a flat CASK for 2025 as a whole, and that's also where we ended up. That means that the Q4 CASK is slightly up, but for the year, we are sticking to what we have been guiding over the last couple of quarters. 2025 as a whole, a very good year with an EBIT of NOK 3 billion in combination between the 2 airlines, EBIT of NOK 3.159 billion in Norwegian and NOK 585 million in Widerøe. That converts into an EBIT margin of 9.9%, which is historically strong for this company. We are continuing to grow our network. In 2026, we will fly close to 500 routes between the 2 airlines. We are continuing to be among the best airlines in Europe when it comes to punctuality and we have very few cancellations, thereby the regularity is absolutely top notch regardless of who you compare us to. I'm going to share a little bit of information on the NPS score where we're also doing fine. And we are, after all, the airline with most direct routes from the Nordics to Europe. We are continuing to do well on the corporate side of the market. I will share some details on that as well. Spenn is starting to show results, and we are looking very much forward to bringing the Reitan Retail group into Spenn during the next weeks and a few months. Also nice to have taken delivery of the first of 80 aircraft that we have on direct order with Boeing. We took delivery of the first one in October. That means that we have 79 remaining deliveries that will take place from now until 2031. This is aircraft that is brand new. They burn quite less fuel than the 737 NGs, 14% to 15%. And we are seeing a huge appetite from the leasing and financing community in order to finance these aircraft at terms that we look upon as very attractive. We are, as mentioned many times, planning to own a significant share of this fleet ourselves because it reduces the ownership cost for the years to come. Dividend is had news I can see this morning. We started to pay dividend, as you know, in 2025. The liquidity position at the end of the year, NOK 10 billion. The liquidity position today is higher. We ended the year with an equity ratio of 18.2%. And we also spent quite a lot of time in 2025 to work on the balance sheet. As you remember, we acquired 13 aircraft that were currently leased to Norwegian. And by that, we booked the profit, and we also are looking forward to having a recurring reduced ownership costs on these aircraft as long as we keep them. We also repaid the corporate debt in 2025, and we distributed our first dividend. For 2025 with a payout in 2026, we would like to pay NOK 0.8 per share in dividend. That converts into a payout ratio of 31%. And this is, of course, subject to an approval by the upcoming AGM taking place in May. I'm sure Hans-Joergen will share a little bit more on that. A little bit statistics, 6.2 million passengers in the quarter, 0.4% up year-on-year. Very happy to see the load factor especially in Norwegian, 86%, 2% up. And also, very happy to see the punctuality and regularity in both airlines, I would say, massively up compared to the same quarter last year. And this shows that the efforts that we are putting in place on this area is starting really to have an effect. So now it's all about making sure that we can continue this strong performance in the quarters to come. Very happy about that. This is a chart that we have been showing you for quite a few quarters. This shows the seasonality that we are exposed to in Norwegian. It also shows that we are adjusting capacity between the seasons. And we did actually in the fourth quarter of 2025, reduce the capacity with 3%. That is because we thought that we were then more aligned with the demand, with the market as we saw it. And I think we did quite well. We saw a load factor, as mentioned, coming up to 86%, and we also saw the yield coming up with 4%. This trend has also continued into January, where we have seen a load up 4% and with a significant higher unit revenue. So, all in all, we are happy with the last months, including January. I'll come back to the period in front of us. Also, for Widerøe, again, very happy with the operational performance, a very strong quarter, more than 1 million passengers, up 2%. I'm very happy to see that Widerøe in the fourth quarter is definitely contributing to the result for the fourth quarter, delivering an EBIT of NOK 124 million. Also worth mentioning that Widerøe had a great, fantastic 2025 with the best results ever. Looking forward to the left, 7 days rolling sales figures on passengers. As you can see on the red line, we are ahead of the curve compared to 2024. That said, you know that we have reduced the capacity in the first quarter compared to the first quarter last year. And then we are going to ramp up into the second quarter, increasing the capacity with 6%. So have that in mind when you're looking at the curves, but we are very happy with the New Year's sales campaign and the bookings are continuing to look promising into the rest of the low season and into the second quarter. Looking at the revenue on the right-hand side, this is travel from February to June. And as you can see there as well, we are ahead on the red curve there, we are ahead compared to the previous years. And if you look at March and April as one because of the Easter effect, we could say that during the next months in total, we are up both on load and on yield. And that looks very promising also heading into the last portion of the low season and into the spring and the summer season. So as per today, we have sold 250,000 tickets more than the same period last year. Yes, I know that we have a 6% capacity increase in Q2, but the load is up more than 6% heading into the second quarter. So, it's looking promising for the months to come and into high season. A little bit on the NPS score. As you can see, the NPS score has moved from 38.5 to 50.1 in 2025. NPS of 50 is a really strong factor. NPS is really a tool we use to measure loyalty, customer loyalty. And this shows that we have a strong, loyal and engaged customer base. We are spending a lot of time communicating with our customers. We know exactly what matters the most for our customers. On top of the list is punctuality, as I have mentioned, we are doing well in both airlines, I would say. Another one that is extremely important is our ability to help our customers when things go wrong. And unfortunately, sometimes things go wrong, and we have done massively improvements on that area as well during the last couple of years. Now it starts to have an effect on the NPS score. And of course, helpful staff, service-minded, friendly. We have a fantastic staff in Norwegian that applies both to our great colleagues flying in the air and as well as our colleagues on ground. Customer initiatives, obviously, punctuality, where we are doing great. And we have, as mentioned many, many times, very high regularity. We had close to 0 cancellations. On the rewards side, we are also performing well. Spenn is starting to show results. And I think you should anticipate that we will come with news on the rewards side during the next weeks and months that I think will be attractive to our dear customers. And as well on customer care, we are doing quite much better today than last year and the year before, and that is also starting to show results, not at least into the NPS. Corporate. Corporate is actually a little bit interesting because it shows, if you look at the Avinor figures, it shows that the corporate market is definitely not back compared to the pre-pandemic levels, 60% below still. And a little bit interesting as well is that 2025 is actually showing a reduction in corporate travels according to Avinor by 2%. However, if we look at the Norwegian figures, we are up in 2025, both on number of passengers and the revenue. That shows that we are continuing to take market share. The chart on the right-hand side shows that we are up 8% on revenue, and that includes both an increase in yield towards these passengers as well as an increase in number of passengers, so it includes both. When we are talking to the big corporates, more and more of these corporates are now saying that they are flying more than 50% of their travels with Norwegian. And they're also mentioning the importance of, as mentioned many times today, punctuality and regularity. We are also doing a bet in Sweden. The Swedish market is moving, I would say, in the right direction. Also happy to share that we signed a 4-year contract with Swedish government through Kammarkollegiet that started up in September 2025. And looking at the performance on that contract as per today, it looks promising. Initiatives ahead that we haven't taken out any effects of yet is the new -- the so-called new distribution platform that we are launching these days. This will also give us the ability to do interlining, proper interlining. And the first airline coming up is obviously Widerøe, but it gives us also the ability to interline with others if we should wish so. So hopefully, we can get live with that as soon as absolutely possible. So, the corporate market is showing progress. We are continuing to take market share, and this is a focus area for this -- for both airlines in the months and quarters ahead because we think it is an attractive part of the market. It's high yielding, and it can also take down the variations between the different seasons. Hans-Joergen Wibstad: Thank you, Geir. Good morning, everyone. Nice to see you here and also the ones on the web. So, I will go through the financial results for the fourth quarter '25 in some more detail as well as addressing some of the full year results. As mentioned, revenues came in at NOK 8.5 billion for the quarter, which is up 4% compared with the same period last year and Widerøe contributing a nice NOK 2 billion to that number. What's driving that is really a robust traffic figures across the group. We're seeing that the unit revenue is up 6% year-over-year, both on the back of higher loads as well as higher yields and then also Widerøe having a good quarter. So, meaning that the quarterly operating result for the group ended at NOK 21 million plus, which is up from a negative figure last year. And with -- of course, as mentioned by Geir, Widerøe contributing very nicely and with Norwegian just marginally negative with NOK 91 million and then with Widerøe with NOK 124 million. Full year result, a great result for Norwegian earnings before tax of NOK 3.016 billion. Very happy to see that figure, EBIT margin of 9.9%. And then going back to Widerøe, a great result from Widerøe, significant improvement from last year. Last year, 2024, that is, was a good year, 2025, even better. And there actually bottom-line result is NOK 528 million before tax, so it's a good combination between the 2 airlines. Unit revenue, full year unit revenue as guided previously at NOK 0.5. Happy to see that figure. I think we've been quite predictable in our guidance. We've taken down the guidance through the year, and we're ending up exactly where we had hoped to be. I think it's good to see also that the cost control in the business during 2025 has been good. We have had very few surprises. And I think that really is encouraging for a strong organization to continue to deliver predictable cost levels. Needless to say, the unit or the CASK is impacted by the transactions on the aircraft where we purchased 13 aircraft during the year. And then we -- as a consequence of that, we reversed some of the maintenance reserves related to these leases. So that obviously impacts the CASK, but a good level and as guided. So happy to see that. I think very important for 2025 was the cleanup of the balance sheet. We're now coming out of the -- of 2025, we really have a balance sheet which is well-positioned for the activities ahead of us. We did repay the corporate debt, the legacy debt. We got rid of the convertible bond. We got cleared with what -- on the government ownership that held a portion of the convertible bond. So there now they sold out. We did the aircraft transactions, which is a very good use of the balance sheet, bringing down the cost as we move forward. We came into the year with owning 4 aircraft, now we own 17 aircraft, which is a really good -- on the way to -- on our ambition to own a much higher portion of the fleet. And finally, of course, that enabled us to pay a dividend last year, which we have worked very hard to do. So, and then with all these transactions, we're still coming out with a very robust balance sheet with a liquidity position of NOK 10.1 billion. That includes some short-term investment and also deposit for the outstanding bond. Equity ratio, a solid 18.2%. And then very happy to announce the NOK 0.8 dividend equal to a payout ratio of 31%. It's actually an increase of 33% from last year, a total of NOK 844 million. So happy to see that. And then we're sort of setting the stage for being a business that gives priority to dividend as we move forward, balancing the dividend amount with the investment requirements, so of course, very happy to have that and being our second dividend for the company. All right. So that's kind of the broader summary. Revenues. Obviously, we see from quarter-to-quarter last year coming from NOK 6.4 billion for Norwegian to NOK 6.6 billion, obviously driven by lower CASK, but we see the benefit of the lower capacity on the yields as well as the load factor coming up. Then just a small other factor, bringing the total revenue to NOK 6.6 billion, adding a very nice contribution from Widerøe and then ending up with a group revenue of NOK 8.5 billion. A little bit of a deep dive into the P&L. On the top line, we can clearly see operating revenues going up by 4%. We're seeing that the cost lines are as expected. We have the personnel cost expenses, which are up as expected due to the salary increases, both particularly among the flying crew. So, no unexpected events there. We see the aviation fuel at a pretty stable level. We have the benefit of the weaker U.S. dollar and also lower fuel price, but we also have additional costs relating to the ETS allowance -- reduced ETS allowance and increased SAF mandate. The increase in the airport and ATC charges as well known. We talked about that for several quarters. Up 16% compared with the same period last year, bringing us down to an EBIT of NOK 21 million that we just mentioned compared with minus NOK 93 million last year and then with a bottom line result of minus NOK 16 million versus minus NOK 233 million last year. So, a good improvement, of course, seasonally impacted by -- particularly on the Norwegian side with Widerøe being kind of the stabilizing factor, having a more stable quarterly variation. So overall, we're happy. It's a good fourth quarter for Norwegian. Looking at the full year, obviously, very happy to see the earnings before tax of NOK 3.016 billion, just about NOK 3 billion, nice improvement on operating revenues, 7%. Personnel expenses, we talked about that several times. Same on the aviation fuel, some headwind, some tailwind on that. And then the airport charges, as we've talked about so many times, coming up -- going up by 21%, so a good result. Obviously, aircraft lease depreciation and amortization, quite a bit down, impacted by these 13 aircraft purchases where we reversed previous maintenance reserves relating to the leases, having kind of obviously a very positive impact on the depreciation line. Then we have the EBIT of NOK 3.7 billion and the profit before tax of NOK 3.016 million, a significant improvement from 2024. Balance sheet. This is between the quarters, not a big difference between each of the quarters. Really, total assets is literally the same. We did take delivery of 2 aircrafts in the quarter, impacting tangible assets slightly. But otherwise, other than that, no big differences. Seasonally down on the cash balance. I'll come back to that in a minute, but in a very strong position. And as Geir mentioned earlier, since the end of the quarter, since the end of the year, it's seasonally up as we always expected. So we are in a good position. Final comment on the balance sheet. We're happy to see that the group on the aircraft -- air traffic settlement liabilities, it's up by 6%. That's kind of proof that our -- the sales is better than last year. And we're happy to see that number, and that matches very well with the load curve and the load figures that Geir just mentioned. And then with an equity ratio of 18.2%, pretty much the same as at the end of the previous quarter. Net interest-bearing debt, slightly up by NOK 1.1 billion, driven by a seasonal reduction in cash and also the aircraft financing related to the delivery of the 2 aircraft. So total control of net interest-bearing debt in a very good position. And we are, as a business, literally debt-free with the exception of the aircraft financing. There is a little bit of small debt in Widerøe. But with that exception, all these transactions that we actually undertook during 2025 has left Norwegian without corporate debt. And that's a really good position to be in as we move into 2026 and the years beyond, where we have a lot of deliveries and great financing deals ahead of us for the financing of the aircraft fleet growth. Again, going back to the dividend, happy to see that we can announce subject to AGM approval, of course, NOK 0.8 equal to a payout ratio of 31%, an increase of 33% compared with 2024 and kind of signaling a strong commitment from the Norwegian to shareholders that we would like to continue to have a dividend-friendly mindset on that. Having a responsible level of dividend as we move forward. Final comments on the cash. I think we talked through that a lot, not very big variations, largely driven by normal seasonal variations with the cash going from -- that is -- this is the cash excluding the short-term interest investments as well as the money placed on deposit for the retained claim bonds with the cash going from NOK 7.8 billion or NOK 7.9 billion to NOK 7.4 billion, reduction in prepayment seasonal. Good operational cash flow, normal level of investments and then also a normal level of financing activities in the quarter. It's also worth noting that we have prepaid to date NOK 3.6 billion of the order book that we have with Boeing, and we have very, very limited remaining prepayments before 2028 of less than NOK 0.5 billion. So overall, we are in a robust financial situation. And I think 2025, also from a balance sheet point of view and how we've been driving the debt levels down and getting rid of the corporate that has been a good outcome, enabling us also to pay dividend. Thank you. Geir Karlsen: Okay. The way forward. To the left, you can see a beautiful picture from when we took delivery of the first of the 80 aircrafts in Seattle in October. We are very cost conscious. We're not planning to do deliveries as glossy as that on all the aircrafts. So, this is -- this was a special occasion. It's the first aircraft. And this aircraft also delivered with a new logo, the new Norwegian logo, which looks fantastic, I have to say. But on the aircraft side, these new 737 MAX 8s are burning less fuel, which is extremely important. It also delivers a better experience for the customers and for the employees in Norwegian with less noise. So, it's just a better product on many areas. We are also very comfortable on the fleet that we need for the upcoming summer. We are having one delivery prior to the summer, which we expect to happen within the next few weeks. And then we are all set on the fleet side for what looks like a good summer coming up. I like the optionality that we have also on the fleet side. As you can see on the chart, we still have quite a few 737 NGs. Most of them are leased. And looking at the growth for the coming years, building the fleet from 95 aircraft in the upcoming summer to 104, we have the flexibility of potentially extending the leased aircraft if we should wish so. And if the market allows, we could grow more aggressively. That's an optionality we like, and we like to play that in the next coming years. We have also done quite a few acquisitions during 2025 of the leased aircraft. And if opportunities comes up on similar basis, we are more than welcoming that and time will show whether that will materialize. But that is the fleet side. I'm also going to share a little bit more on Program X this time. In 2025, Program X delivered NOK 1.3 billion, NOK 900 million of that is what we call nonrecurring. The majority of that includes the profit that we booked on the acquisitions of the 13 aircraft. And the portion of that also is included in the NOK 400 million, which is recurring, and which will take down the ownership costs on these aircraft going forward. In 2026, we do expect to materialize NOK 600 million in effect from Program X. So, in total, in 2026, you will have NOK 1 billion recurring effects coming out of Program X. If you take that NOK 1 billion and look at the pie chart on the right-hand side there, that is how it divides. So, 22% is applicable to the fleet side, acquisitions of the aircraft. 32% is coming from the new distribution platform and the revenue opportunities that gives us. That also includes the interlining capabilities that, that will bring. And we will start interlining with Widerøe as soon as absolutely possible. Group synergies is synergies between the 2 airlines that includes facilities. It includes organizational synergies and not at least the procurement synergies that we are seeing on the basis of the fact that we are a bigger company with more power towards our vendors. Also on the cost control, it includes the huge areas in the airline. It includes the whole fuel value chain. It includes the ground ops operation that is quite significant. It also includes another big area, which is crew efficiency and how we utilize our crew. And it also includes, as mentioned, the whole value chain around fuel, not talking about the fuel price, but everything else related to fuel, including the handling of fuel, et cetera. We have, during the last quarters, been guiding more than NOK 1 billion in effect in what you call profitability improvement. We are increasing that to more than NOK 1.25 billion as per today, and then we will see during the next quarters how that delivers. So I would say that Program X is delivering in accordance to plan and happy to kind of increase the guiding slightly this time. Finally, outlook. On capacity, 3% up for the year as a whole. We are -- we have reduced capacity in the first quarter, but then we are going into a ramp-up period for the remaining 3 quarters in 2026. On unit costs, we are saying low single-digit percentage increase versus prior year. But have in mind, comparing to prior year, we are adjusting for the nonrecurring effect in CASK in 2025. So, the basis for the low single-digit increase is a CASK of NOK 0.52. We have been writing it at the bottom of the page. So have that in mind. All in all, 2025 was a good year. 2026 is also looking to be a quite good year for actually both airlines. Hopefully, we can beat 2025. That ends the presentation. Jesper? Jesper Hatletveit: Thank you. Hans-Joergen as well, if you can come up. We'll then start with some questions. We'll start with the audience. Any questions here? We'll start with Hans Jørgen. Hans Jørgen Elnæs: A few questions for me. Happy to note that you did the best year ever in '25. Congratulations for that. Also very happy to learn that the new distribution platform is now soon in place. That's something we have been waiting for quite some time. And that will open up for able to sell into Widerøe. Can you explain a bit about that? Does that only apply on your own booking engine? Or will it go on the GDS travel agent and so on use? And will this also open up for interlining that other airlines like long-haul airlines, Sai, Singapore Airlines, British Airways or Finnair that you can do agreement with them so you can fly passengers to their points in and out of Europe and how are your plans with that? Also, Wizz Air has recently tested what they call WIZZ Class, which is a kind of copy pass past of SIS, new Europe business class product where you block the middle seats. This was a success and Wizz Air this week informed that they will roll this out on all their routes in Europe. What is the Norwegian plans for this segment as you are so keen on improving your corporate and premium leisure sales? And then the last one is on Starlink. Starlink is Southwest just will fit Starlink on all the 810 aircraft. Norwegian has a Wi-Fi system today, which is aircraft ground based. Do you have any plans to migrate to Starlink because it seems like Starlink is going to be like a standard for the aviation, for the airlines going forward? Geir Karlsen: Let's start with the first one. Yes, the new distribution platform is delayed. No doubt about that. But we are now currently, as we speak, running a so-called AB testing where 50% of our customers is going to the new platform and 50%, and then we will test the conversion. Hopefully, that shows good results, and then we can go live in all the 3, let's say, important markets, meaning Norway, Sweden and Denmark. That will give us the ability to do interlining with Widerøe. That means that we will also be able to sell Widerøe on Norwegian's platform. We think that that will definitely have an effect, so do Widerøe. When it comes to interlining with -- when it comes to kind of the SAS portion of that, what we are seeing is that the transfer passengers between Widerøe and Norwegian or Wider or SAS is developing in the right direction for us, meaning that passengers going to assess aircraft is going down, it's going up for us. And that is, I would say, as expected. We are not planning to go the risk direction by blocking the middle seat. As you saw today, we had in the fourth quarter, 86% load, which is very promising. That said, what you -- I think you could say that what you are seeing in the, let's call it, the ultra-low-cost market or low-cost market, if you include the U.S., is the fact that the low-cost carriers are actually moving towards the legacy players offering a more premium product, not all the way, but partly moving in that direction. And that is actually the position that we have today in Norwegian. So, we are very happy with the position that we are currently having, where we feel that we are -- where we think we are actually having a better product than the ultra-low-cost guys. So that is -- so we are very happy about that. What was the last one? Hans Jørgen Elnæs: It was about Starlink. Geir Karlsen: Starlink. Yes, we are seeing that a few players are making a lot of media attention on Starlink. I mean we are upgrading our Wi-Fi system on board our aircraft. As per today, Starlink is not even certified for a 737 MAX. And then we will see down the road how we -- what we decide to do. But right now, we are staying with what we have, but on an upgraded version. Hans Jørgen Elnæs: And just one comment before we get the next one, you didn't answer my question on Norwegian's plans of interlining with other airlines outside the group. Is there anything in that we can see in the near future to happen? Geir Karlsen: Yes. First of all, we would like to come into a position where we can actually do interlining, and we are now very close of being in that position. I've said earlier that we are in dialogue with a few of the airlines that are currently flying into Scandinavia. And then we'll see. It depends on a few things, not at least a commercial agreement and whether that makes sense for us. It brings complexity into our operation, and we need to get paid for that complexity. So that is the status. Jesper Hatletveit: Move to the next question, Tomas? Tomas Helgo: Tomas Helgo from Danske. On airport and ATC costs, now that some airports have put out their price increases for this year compared to last. How much of an increase can we expect this year compared to 2025? And then I have a follow-up question after that. Geir Karlsen: This is a constant, I would say, dialogue that we have, first of all, here in Norway with Avinor. And they have had over the last couple of years, quite aggressive cost increases, fee increases. For 2026, it looked quite bad during the period. But how we ended up was in a much better place meaning it's a single-digit increases on the fees. It's, I have said many times that I think we need to be careful when we are looking at the cost level at, for example, Avinor and the fee increases they are bringing on to us and other airlines in a way that we have to be careful. So, we're not kind of pricing us out of the market. And the fact is that neither us or SAS, which is our main competitor is actually growing in Norway these days. And Avinor fees is a factor in that picture. And we are free to move aircraft where we want, and we have also been moving aircraft around in 2026 compared to 2025. So this is a constant. I'm calling it the dialogue. It's a tough dialogue. Tomas Helgo: And then on the follow-up question regarding carbon quotes for prices, are actually regarding the need to acquire these quotes for 2026. Have you hedged a portion of that? Or is it, do you pay kind of spot prices when needed? Geir Karlsen: The policy that we have is to stay current. So meaning that when you have been flying a month, you buy the quotes for that month and then by that, you are staying current. Right as we speak, we are more or less covered for 2025 because we have been expecting that the prices for those quotes to come down. And as we discussed with you this morning, what you have seen just during the last couple of weeks is that the price has come down from, let's say, mid-90s down to mid-70s. Why has that happened? Yes, because it is a speculation that that EU will postpone or even keep the free quotas, not for the airline industry but for other industries. And that's why you are seeing a selling off of these quotas over the last weeks. That is an opportunity for us. Should we take the benefit of that opportunity and buy more? Maybe. So I think both on that area also within -- on the currency side, we have seen, as many of you have seen, the dollar weakening. I think we have some -- there is some tailwind both on ETS and on the development of the strengthening of the Norwegian kroner weakening of the U.S. dollar, which at the moment is, has a positive impact for Norwegian. Jesper Hatletveit: I then think we move on to some questions from the web. Start with Ole Martin Vasa from DNB Carnegie. Can you comment on the current competitive landscape? And adding to that, how do you see industry capacity growth in 2026? Is there a risk that the capacity growth represents potentially any negative yield impact? Geir Karlsen: I think the short answer on that, Jesper, is that the competitive landscape is, I would say, relatively stable in the markets where we are flying. Jesper Hatletveit: We move over to -- I think actually, we move over to a question from Andrew Lobbenberg there. Competitive pressure from SAS specifically, okay, growing quite a bit in Copenhagen. Do you see any pressure from that? Geir Karlsen: I mean SAS is our main competitor, and it's a constant fight between the 2 airlines. And yes, they are moving. They are focusing very much on Copenhagen. So what we need to do in Copenhagen is just to make sure that we are treated fair in kind of as a main hub. But the fact that they are moving towards Copenhagen as a hub also gives Norwegian an opportunity. And that's why we are coming up with a slogan, Why Connect When You Can Fly Direct. And that is, it's a slogan but it's an opportunity, a big time. Jesper Hatletveit: Another question from Andrew. The outlook for Widerøe and Widerøe margins into 2026 coming out of a strong 2025. How big of, call it, an impact or how big of a factor is the PSO subsidies to PSO Widerøe to this? Geir Karlsen: Well, I mean the PSO routes is performing well also due to the fact that the ticket prices has been reduced by 50%. That continues into 2026. And then the opportunity that we have between the airlines is to make sure that the commercial part of Widerøe can be even better aligned with the Norwegian network going forward. So we can actually increase the performance from the commercial part of Widerøe. But looking into 2026, as mentioned here on Norwegian and the bookings and how the market is developing, it looks equally as promising for Widerøe in 2026 as 2025 turned out to deliver. Jesper Hatletveit: Final question from Andrew. Outlook for cost of revenues given the current or the recent strengthening of the NOK. Geir Karlsen: Yes. I think, obviously, we -- the fact, as I mentioned, the quite significant weakening of the U.S. dollar has a big impact on our cost base. We're hedged just above 20%, 25% at the moment at good levels. They've come further down. So, I think that is something which has to go into the spreadsheets of the analysts to factor in a, should we believe in a continued weaker dollar, which a lot of analysts believe and also the consensus is, that should impact our CASK and also our cost level positively during 2026. Hans-Joergen Wibstad: And have in mind that 40%, 45% of our cost is in U.S. dollars and that converts into the fact that NOK 0.10 on the NOK is more than NOK 100 million on the bottom line. And it's not only obviously on the CASK, it's also the fuel CASK, including fuel. Jesper Hatletveit: Then we move on to a question from Petter Nyström, ABG. Interest costs, it was a bit up in the fourth quarter. Is this a representative level for the coming quarters? And how is the interest cost impacted by new aircraft entering? Geir Karlsen: I mean that is the answer to the question. We're adding aircraft, and that is really the reason for why interest costs are up. And so the net interest is coming, is developing not negatively, but as expected on the cost side. So it's really only the impact of the additional aircraft that is impacting that. There may be some also currency fluctuations, particularly in Widerøe on the net financial cost. But overall, it's purely impacted at the moment on the increase or changes in the aircraft fleet. Jesper Hatletveit: That's the final question we have from the web. I'll ask again if there are any questions from the audience. There are none. So that means that we conclude the session. Thank you very much. Geir Karlsen: Thank you.