Earnings call transcript: Royal Unibrew Q2 2025 sees EPS beat, stock rises 3.4%

Royal Unibrew reported its financial results for the second quarter of 2025, surpassing earnings per share (EPS) expectations with an actual EPS of 13.2, compared to the forecasted 10.52. The company fell short on revenue, reporting 4.44 billion DKK against a forecast of 4.55 billion DKK. Despite the revenue miss, the company’s stock price surged by 3.44%, reflecting investor optimism following the earnings announcement. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation, with three analysts recently revising their earnings estimates upward for the upcoming period.

Key Takeaways

• EPS exceeded expectations by 25.48%.
• Revenue fell short of forecasts by 2.42%.
• Stock price increased by 3.44% after earnings release.
• EBIT rose 11% in the first half of 2025.
• The company updated full-year guidance for net revenue growth to 5-6%.

Company Performance

Royal Unibrew demonstrated robust performance in the first half of 2025, with net revenue growing by 4% to 7.644 billion DKK. The company’s EBIT increased by 11%, and its EBIT margin expanded to 12.5%. Organic growth was recorded at 3%, although this was slightly lower when excluding new activities in Belgium and Luxembourg. The company benefited from strong contributions from its Western Europe and International segments. InvestingPro data shows the company maintains a strong 5-year revenue CAGR of 14% and an attractive PEG ratio of 0.46, indicating good value relative to growth. The company’s overall financial health score is rated as GOOD, though its current ratio of 0.67 suggests tight liquidity management.

Financial Highlights

• Revenue: 4.44 billion DKK, below the forecast of 4.55 billion DKK.
• Earnings per share: 13.2, surpassing the forecast of 10.52.
• EBIT: 959 million DKK, an 11% increase.
• EBIT margin: 12.5%, showing improvement.

Earnings vs. Forecast

Royal Unibrew’s EPS of 13.2 significantly beat the forecast of 10.52, marking a surprise of 25.48%. However, revenue was below expectations by 2.42%, which could indicate challenges in meeting sales targets despite strong earnings.

Market Reaction

Following the earnings announcement, Royal Unibrew’s stock price rose by 3.44%. InvestingPro analysis indicates the stock is currently trading near its 52-week low, with RSI suggesting oversold territory. The stock’s performance reflects investor confidence in the company’s ability to maintain profitability despite revenue challenges. For deeper insights into Royal Unibrew’s valuation and growth prospects, investors can access comprehensive Pro Research Reports, available exclusively to InvestingPro subscribers, offering detailed analysis of the company’s financial health and market position.

Outlook & Guidance

The company updated its full-year guidance, narrowing its net revenue growth expectations to 5-6% from a previous range of 5-7%. EBIT growth is now expected to be between 8-12%, slightly narrowed from the earlier forecast of 7-13%. Royal Unibrew remains focused on operational efficiency and cost control, with plans to achieve a 10% cash return on invested capital in Norway and Benelux by 2026.

Executive Commentary

"We delivered a solid performance in our first half with EBIT growth and margin expansion in line with our plans," stated CEO Lars Jensen. He also emphasized the company’s geographical diversification, noting, "Our geographical diversification pays off with particularly strong contribution from Western Europe and our International segment."

Risks and Challenges

• Regulatory changes in Finland’s alcohol market could impact sales.
• The Finnish beverage market’s decline poses a potential threat.
• Consumer spending remains cautious, affecting demand.
• Supply chain optimization is crucial for maintaining margins.
• Market saturation in key regions could limit growth opportunities.

Q&A

During the earnings call, analysts inquired about the weather’s impact on sales in Finland and strategic shifts in private label production. The company also addressed inventory buildup in the U.S. market and detailed its innovation strategies across different markets.

Full transcript - Royal Unibrew A/S (RBREW) Q2 2025:

Lars Jensen, CEO, Royal Unibrew: Good morning, everyone, and thank you for joining us for Royal Unibrew’s First Half Results for 2025 and the presentation linked to that. I’m Lars Jensen, the CEO of Royal Unibrew, and I’m joined by our CFO, Lars Westergaard. Today, we’ll take you through our performance in the first half of the year and provide insights into our business segments, the financials and our outlook for the full year. After the presentation, we’ll open the line for your questions. Before we dive into the numbers, I would like to briefly draw your attention to the standard disclaimer on Slide two.

As always, it contains important information about forward looking statements, assumptions and uncertainties that may impact our outlook and performance. With that said, let’s move on to the business strategy highlights on Slide three. Let’s start with a look at our strategic progress in the 2025. We delivered strong revenue and EBIT growth, outperforming our European peers, a clear sign that our growth framework is working. We are executing with precision across our markets where we are fueling momentum in our growth markets, which is international, Italy and France, and we are building traction in the new markets like Norway, The Netherlands and Belux.

In the developed markets or the old Roy Unibloom woodsy beverage markets, so that would be Denmark, Finland and The Baltics, we are focused on identifying pockets of growth, improving efficiency and exiting low margin segments. Importantly, our long term financial ambitions remain unchanged. We continue to target 6% to 8% organic EBIT growth, double digits earnings per share growth and improving our return on invested capital. This consistent delivery is a testament to the strength of our strategy and the dedication of our teams. And now please move to Slide number four.

We are pleased to report a solid first half performance, which follows our internal plans. Reported EBIT was up 11% and the organic growth was 9%. And we delivered a margin expansion of 80 basis points. Organic volume growth came in at 4% and organic net revenue growth was 3%. This was achieved despite headwind in one of our main markets, Finland, where cold weather during May and June impacted performance negatively.

On a positive note, a warmer July in Finland closed part of the volume shortfall in Q2. Our International and Western Europe segments continued to outperform and especially Italy and France. This demonstrates the strength of our geographical diversification in the recent years. Our cash flow and balance sheets are robust. And today, we are launching a DKK 300,000,000 share buyback program to be completed before the ’5.

And then we adjust or fine tune our full year guidance range, we are now expecting net revenue growth of 5% to 6% and an EBIT growth of 8% to 12%. First, let’s move to our business segments on the next slide, which is five. Starting in Northern Europe, which is our largest segment. In first half, volume in the segment declined organically by 3% and revenue was down by 1%. EBIT in Northern Europe totaled CHF $632,000,000 and was on the level with last year.

We estimate that we have maintained or gained market share across most categories and geographies. The main driver behind the first half decline in volume and revenue was Finland, where both May and June were significantly colder than average, impacting the entire beverage market and especially weather sensitive categories like water, long drinks and ready to drinks. The total beverage market in Finland was down mid single digit measured on volume in the 2025, and our performance was in line with that. As already mentioned, better weather in Finland in July helped recover part of the lost volume in Q2. And in July, the market is down low single digits.

The Mento acquisition in Finland was formally integrated in Q1. We’re seeing good traction with the brands and it’s already the business is already contributing positively. In Denmark, we saw good momentum in carbonated soft drinks, in particular with Faxikondi, while Pepsi is still gaining share in Colas, but cola is declining as a category. Our beer brands, especially Royal, are gaining momentum, and we continue to perform well in energy drinks with Faxikondi Booster leading the growth in the category. In Norway, we completed the SAP integration, and we are now in the optimization phase, streamlining workflows and processes.

Commercially, we made good progress in the broader RTD space with Glaons, Hansa and Smenerifeis. We have also announced the closure of the Saarthsburg brewery by the end of the year. This is part of our long term optimization strategy. And while it led to one off costs in H1, we are on track to deliver 10% cash ROIC in Norway by 2026. In The Baltics, we achieved market share gains in Latvia and Estonia while we maintained our shares in Lithuania.

We see solid growth in energy drinks and ready to drink in The Baltics, which is newer categories with higher profit per liter than, as an example, the carbonated soft drinks space or the mainstream beer. In total, we achieved growth in both revenue and EBIT in The Baltics in the first half. Now please move to Slide number six. Western Europe delivered a strong performance in the first half. Organic volume growth was 15% and revenue growth was 16% organically, with the new activities in Beelux as the main growth driver.

EBIT increased by 34% to CHF218 million with a margin improvement of 150 basis points. Italy delivered a very strong performance in the first half of the year, both on the top line and on the EBIT level. Our branded portfolio, particularly the Cheddar Strong Ale and the Crodo range, achieved double digit growth and captured market shares. To prioritize capacity for our own brands, we deliberately scaled down private label production on the beer. This strategic shift supported a more favorable pricemix in the first half.

However, it also meant that total reported volume growth in Italy was flat for the period. France continued to gain market share in soft drinks with both Lurina and Grazie Tiger performing well. We are focused on SKU optimization and price pack architecture, which is supporting the margin expansion. In The Netherlands, we are seeing encouraging progress as the commercial dividend that we set in 2024 begins to deliver tangible results. With a strengthened off trade sales force and a solid brand portfolio, Ramona achieved growth in both volume and revenue during the first half.

And we are also expanding our category reach as we have entered the RTD segment through the acquisition of GIG, making our first steps into alcohol based beverages in the Dutch market. The new Pectrico activities in Belux that we took over October 1 accounted for most of the growth in Western Europe in the first half, 13% of the volume growth and 12% of revenue growth. We have maintained market share in Belux and are progressing in line with the plans. Still, Belux is in the early stage of the turnaround. And as a consequence of that, it is a loss making business in the first half of the year.

For Benelux as a whole, we are on track to deliver 10% cash ROIC by 2026. Now please move to Slide seven. Our International segment maintained strong momentum with 16% organic volume growth and 9% revenue growth in the first half. EBIT in International rose 55 to CHF122 million and the margin improved to 15.5%. That is reflecting both cost discipline and the operational leverage embedded in our business model.

Volume growth in Q2 was notably strong at 20%. And as highlighted before, quarterly growth in this segment can be volatile and influenced by timing effect and particular changes in consumer inventories. While current sales outtrend among our customers have accelerated to low double digit growth, the remaining volume uplift in Q2 have particularly reflects the inventory buildup in Americas and a slight increase in the inventories in Africa due to the growth levels. This was a proactive move by our partners in Americas to reduce the short term impact of the increased tariffs. The pricemix in International was negatively impacted by the unfavorable currency developments and by country mix effects.

It is important to understand that our business in International is based on different go to market models. As an example, in Africa, we sell to distributors that manage the selling and logistics in the market. This means that revenue per liter is lower than in the markets where we are responsible for these costs like in Canada. It does not mean that we make less money on a per liter basis, but pricemix effects can be impacted by this. And therefore, this business should be evaluated on an EBIT per liter as that takes the go to market model into account.

And now I will hand over to Lars, who will go into the details with the financial numbers and our full year outlook.

Lars Westergaard, CFO, Royal Unibrew: Thank you, Lars. Please go to Slide number eight. Let’s take a closer look at the P and L in 2025. Volume and revenue growth were higher in Q2 than in Q1. This is primarily due to the timing of Easter, which fell in Q2 this year.

Furthermore, a strike in Finland shifted some revenue from Q1 to Q2. This had no effect on the half year numbers. Net revenue grew 4% to 7,644,000,000.000 in the first half with 3% organic growth. The new business activities in Belgium and Luxembourg are treated as organic. If you exclude these, the organic growth rate in first half was just below 1%.

Gross profit increased 5% to billion, and the gross margin improved to 42.8% despite some country mix changes in Q2. EBIT rose 11% to DKK959 million, and the EBIT margin expanded to 12.5%. In the first half, the cost base increased by 2%, which includes the impact from our new activities in Belgium and Luxembourg and recent M and As. This development reflects our continued focus on operational efficiencies and disciplined cost control. And a quick note on terminology.

Cost base in this overview refers to the combined sales, distribution and admin expenses. The team has done a great job in the first half improving the business despite cold weather in one of our larger markets and the ongoing integration work related to both Beelux and Mintu. Earnings per share increased 18% to 12.2% in the first half, reflecting stronger profitability. Tax and net financial costs are at the expected level in the first half. It should be noted that in the 2025, we benefited from a one off income of DKK18 million under income from associates related to the liquidation of a subsidiary in Greenland.

Please move to Slide number nine. Cash flow in the first half tracked our plans, which reflects which this is reflected in the new share buyback program of DKK300 million that we launched yesterday evening. Operating cash flow was DKK933 million, supported by higher net profit. Free cash flow came in at DKK458 million, down from DKK516 million last year, primarily due to higher CapEx. CapEx is at the expected level, and we expect the full year to be around 7% of net revenue, reflecting our current investment program.

Net interest bearing debt increased to DKK 6,374,000,000.000 by the end of the first half. This increase was primarily due to the share buyback program and dividend payment. You may recall that in 2024, the dividend was pursuant to Q4. Our net interest bearing debt to EBITDA ratio is around 2.3%, in line with our target. The DKK $250,000,000 share buyback program started in February was completed in August.

Lastly, ROIC was at the level with last year, and we have a clear target of delivering higher ROIC going forward. We remain on track to deliver 10% cash ROIC in Norway and BLOX by the 2026. And just to make definitions clear, cash ROIC is calculated as the net operating results before amortization and after tax expressed as a percentage of the net cash paid for the acquired companies. Please move to Slide number 10. Turning to our updated outlook for 2025.

We’ve narrowed our guidance ranges to reflect greater visibility by the August. Net revenue is now expected to be 5% to 6% versus 5% to 7% previously, and EBIT is expected to grow by 8% to 12% versus 7% to 13% previously. These adjustments reflect a few key factors. First, summer weather across our markets have been broadly normal without additional impact on activity levels. Finland weather was slightly negative had a slight negative impact on the full year.

And even though it improved after even though it improved after the first half. But in general, the weather impact will be small for the full year. Secondly, revenue is impacted by a reduction in private label production and negative FX impact compared to our original assumptions. The consumer environment remains challenging, but we have not seen a materially worsening compared to that we set by the 2024. So our assumptions on that front remain unchanged.

We continue to expect net financial expenses around DKK $250,000,000, a tax rate of 22% and CapEx of around 7% of net revenue. And with that, the word is back to you, Lars.

Lars Jensen, CEO, Royal Unibrew: Thank you, Lars. And now please move to the next slide, Slide 11. A few words on what we and the management team have on our agenda. We will continue executing our growth strategy with tailored efforts across growth markets, new markets and developed markets. We aim to ensure that we maximize our opportunities across the markets.

Efficiency and cost control remain top priorities. We are optimizing resource use and driving operational excellence across the business. We have not talked too much about ESG today, but I can rest assure that this remains high on our agenda. We are making good progress in several areas. And let me just mention improved CO2 intensity in our production and improved safety performance with fewer incidents.

You can read more about that in the first half report. And finally, we remain fully committed to deliver on our long term financial targets, including EBIT growth, EPS expansion and improved return on invested capital. When we move to the next slide, which is Slide 12, I would like to wrap things a bit up. We delivered a solid performance in our first half with EBIT growth and margin expansion in line with our plans. Our geographical diversification pays off with particularly strong contribution from Western Europe and our International segment.

In Finland, performance was impacted by unusual cold weather in Q2, but a better July helped recover parts of the shortfall. Our balance sheet remains robust, giving us the flexibility to return value to shareholders while continuing to invest in strategic initiatives. And we remain firmly on track to deliver on a fine tuned full year guidance. And with that, please go to questions. Operator, please go ahead.

Conference Operator: Thank you. We will now take the first question from the line of Matthew Forge from BNP. Please go ahead.

Matthew Forge, Analyst, BNP: Good morning all. And just two questions from me, please. The first one is on the guidance. So you mentioned, obviously, we’re eight months through the year now with much of the kind of profitability already generated. Just be interested to kind of if you can walk through your assumptions embedded within the sort of the 8% to 12% EBIT growth range.

What assumptions are you baking in to get to the top and the bottom of that range over the next kind of four months? That’s the first question. Then the second one just on current trading, you mentioned on Finland an improved weather picture in July. Just wondering if you could give some more color across some of your major markets, how July and I suppose August have been trending? Yes.

Lars Jensen, CEO, Royal Unibrew: So if I take the 8% to 12%, I would call out the consumer potential changes in terms of ups and downs. So it’s not that we see something. Specifically, as Lars mentioned, this is in line with what we guided when we started the year, the dynamics. But the history has shown over the last three years that sometimes something happens and then that might turn out either to the positive or the negative side of things. So that is, I think, the single biggest factor in the span here.

We are past the summer. It was a normal summer. And normally, that might lead you to being in the top range. But as this is normal, then that’s not going to happen. And then just on the maybe on the revenue guidance, just to clear that out.

As we also mentioned in the first half, we are doing some structural changes that which is deliberate choices to take some business out. That was business that we thought we would have but that we when we started the year, but we decided to take it out as a private label in Italy, which is a better deal for us as a company. And when you put those, I would say, structural pieces together, then the underlying growth is slightly higher than the 1% that Lars talks about for the first half year. And then it accounts, I would say, for most of the difference between the five percent to 6% and the 5% to 7% of guidance. On your questions in terms of trading so far, it’s a good July, as we have mentioned, in particular, I would say, in Finland and also in Norway, where we had quite good weather and for both countries compensate for colder weather in May and June.

And I would say for the rest of it, we are following the plan. So that’s the essence, I would say, and no major swings in any countries.

Conference Operator: Thank you. We will now take the next question from the line of Andrea Pistacchi from Bank of America. Please go ahead.

Andrea Pistacchi, Analyst, Bank of America: Yes. Good morning, Lars and Lars. With the first question, I just wanted to go back to the sales guidance a minute. Your updated 5% to 6% implies an improvement in the second half, I think, to around six percent to 8% reported. And you did, I think in H1 about 3.5% reported.

So what in your expectation will drive this acceleration? Clearly, you won’t have the weather drag that you had, which was quite significant, you said in H1 in Finland. But at the same time in Q4, I think you’ll be lapping the benefit of the inclusion of Beilux. The second question is on COGS. So when you strip out the various perimeter effects, could you give a sense please of what the level of organic COGS inflation that you faced in H1 was?

My estimate was probably slightly, slightly negative. And with the hedging that you likely already have in place or some hedging for next year, is the outlook for COGS still favorable looking into 2026? Yes.

Lars Jensen, CEO, Royal Unibrew: If I go over the sales guidance and then maybe Lars should take the COGS question. So yes, we do anticipate that the second half is going to be more favorable than the first half on the revenue side of things. And the July numbers is a part of that math, obviously, as it compensates both in, yes, I would say, in two of our large revenue markets. And then when you look at our flight attitude, and I think if you point to Western Europe and international, we are super happy about the flight attitude that we have been able to establish. And our core assumption is that we will keep benefiting from that.

And that is why we do see both Belux and also The Netherlands picking up. So if you look at month by month growth rates from them, then you would see that the development in the second quarter is stronger than it was in the first quarter, so an acceleration due to all the initiatives that we take in those countries. So yes, all in all, on our I would say, on our own performance, we are a bit more optimistic on the second half. We know the weather. We know until now how it looks like.

So it’s not a market, I would say, assumption that has changed in terms of how much the consumers are going to drink and how they’re going to drink. It’s more our flight attitude and, yes, the seven weeks that we know of by now.

Lars Westergaard, CFO, Royal Unibrew: Okay. And on the COGS piece, we are very much focused on taking cost out of our business. And we’ve done a number of initiatives to reduce COGS, and we’re seeing some improvements in COGS related to complexity reductions and other initiatives. So there’s a slight improvement on the COGS line compared to our initial assumptions. If you then and it’s very early days, if you look into next year, so far, it looks like there’s going to be a slight increase in COGS.

But this is not something that will play the same story as we’ve seen in previous years. So I would say from a commodity price point of view, the trend is a little bit up, but we need to offset that with efficiency initiatives. So not a big story to tell around COGS.

Andrea Pistacchi, Analyst, Bank of America: What drives the slight increase? Is it energy mainly, something else?

Lars Westergaard, CFO, Royal Unibrew: Yes. So there’s some impact from energy. And then you see aluminium is up a little bit. You see sugar in Europe is down this year, but it’s expected to be up next year. So I would say it’s there’s a lot of moving parts in this space, but nothing is dramatic.

So I don’t think you can read a lot into it.

Lars Jensen, CEO, Royal Unibrew: Then you see a few, Andrea, you also see a few legislative things here in terms of the OpEx that needs to go to certain levels because of regulation from EU, and everybody needs to do the same at the same time. And that generates some inflation in some categories. But as this is something that hits everybody, then it shouldn’t impact Royal Uniblue individually.

Andrea Pistacchi, Analyst, Bank of America: Perfect. Clear. Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Aron Adamski from Goldman Sachs. Please go ahead.

Aron Adamski, Analyst, Goldman Sachs: Good morning, Lars, Lars and Fleming. Thanks for taking my questions. I have two. My first question is on your efficiency agenda in Netherlands. Can you please give us an update on what you have achieved there year to date?

And what impact did it have on profitability in H1? And I guess, what are the remaining areas of focus for that business? And when do you expect to see further improvement in margins? The second question is on something that you mentioned, the inventory buildup in The U. S.

Related to tariffs. I was wondering, based on the current depletion trends, how long is it going to take your partners to clear that excess stock? And should we expect that buildup will fully reverse in Q3?

Lars Jensen, CEO, Royal Unibrew: Yes. On The Netherlands, we it’s impressive how many changes that we are actually making in a fairly short period of time. And it’s really impressive to see the team changing the business from being, I would say, to become much more active in the market and really to play the game of being a challenger. We have in the first half, we have been building our field muscle in off trade, and we have proof of concept to that. That means that we deliver value and a good payback.

So this is about scaling it up over time, which is the plan that we laid out when we bought the business. We have bought this RTD business, GIG, which enters into a new and fast growing category, and the team has taken that on board. We have put in a new line. We have taken out one line. And we are have been upgrading the glass line while introducing and starting to in source because of that production and to get new price pack architecture into the markets.

And then on top of that, we have also taken some brands out that is not going to make a difference or have been where the investments have been made and where it didn’t get traction. So we have taken out a kombucha brand, as an example, and we have exited the energy drinks category in collaboration with PepsiCo after having tried for three years to make Rockstar, I would say, sizable in the country, decided to take that out. So on one hand side, we are streamlining the business. And on the other hand side, trying to implement the growth framework that we have for the group, which is working well in the other countries. And that also means that as we are past, I’ll not say all of these changes, but many of these changes, we would anticipate that our margins would be going up already in the second half of the year.

And that is in line with the plan that the team built for the year. Yes. So we are pretty optimistic on the Dutch business. And I would say the journey in Belux is fairly similar. We are now implementing SAP and will be up and running during Q4.

And then on the back of that, of course, we can start streamlining both on the back end on the supply chain and play a more, I’ll say, commercial role in the Belux market, also by introducing some of our own brands into the portfolio like Crazy Tiger and Lemon Soda. So this is, all in all, why we are confident that we are on the right track to deliver the 10% cash ROIC

Lars Westergaard, CFO, Royal Unibrew: fairly soon.

Lars Jensen, CEO, Royal Unibrew: On the tariffs question, you should count a couple of percent of the growth relating to inventory buildup. So this is not it’s not a big thing, and it’s not something that I would urge you to take into any spreadsheets. It’s just for us to give an explanation for the difference between low double digits and the growth that we deliver. And then, of course, in the signal that it’s fantastic that we have customers that are thinking commercially and smart so that you postponed the effect from the tariffs.

Aron Adamski, Analyst, Goldman Sachs: Okay. Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Richard Wieseken from Kepler Cheuvreux. Please go ahead.

Richard Wieseken, Analyst, Kepler Cheuvreux: Yes. Morning all. Two questions from me, please. First of all, on Finland. Now following the change in regulation to allow 8% ABB products to be sold in retail, I mean, the competitive pressure seems to have increased quite a bit.

So how has Royal Unibrew reacted to this? And how do you assess your execution in Finland in the first half? And then the second question is on Italy. The Italian business continues to do really well. So perhaps you could discuss what the next growth step will be that company could make in Italy as the basis still seems fairly limited and the local team executes very well.

Lars Jensen, CEO, Royal Unibrew: So on Finland, it is correct that the 8% regulation change that came into place beginning of Q4 last year, and now we are close to being circling that effect, has increased competition in the alcohol space, and the shelf has basically expanded in the stores and also at price points that are fairly attractive for the alcohol that you buy. So the dynamics that we see in and have seen since the October 1 is that the long drinks category has been hit, which includes our original long drink. And I would say on the flavor side, not the grapefruit version, which is the old heritage version. So the whole flavor range is being challenged because that you have alternatives also with higher alcohol for a cheaper buy. And then you have seen the hot seltzer category continuing to expand.

And also, I would say, RTD in all shapes and forms is gaining traction. So what you see is a dilution of, I would say, it’s a gain for the consumers that move from beer into this broader, I would say, non beer alcohol space with low alcohol content. So that’s a gain. But then for the long drinks or the heritage categories that used to be there, it’s a bit of a drain. So what we have done to address this is make sure that the base of original Longrich stays intact, and we continue to develop that.

So that’s the grapefruit. And then we are putting a lot of innovation into the game, both on the flavors of Original Long Drink to continue to play the game as we have done over the last years with orange, pineapple and blueberries and whatever. And then on top of that, we have introduced hard seltzers, and we have introduced RTD brands with Hartwell mostly Hartwell, I would say, as the endorser for the brand. We have also introduced Schaeger, which is a Danish RTD brand because you need to be extremely innovative in this market to capture as much as possible. And then we have the last thing that we have done is that we have introduced more and more, I’d say, competitive variance in this 8% space, mostly with wine as a base.

So we are growing our share in that category ongoingly because of the offering and, I would say, the hardware trade business that supports that part of it. Yes, so we take a lot of initiatives and we do see some improvements and then we will circle that from the October 1. We’ll circle a year into this dynamics. So on one hand side, positives because it moves consumption away from beer, which is not where we are earning most of our money. And then it moves into the broader RTD space where we historically have been extremely strong and is still the biggest player.

Yes, so that’s the dynamics. Any follow-up on Finland, Richard?

Richard Wieseken, Analyst, Kepler Cheuvreux: No. Yes, maybe just when did you start introducing those hard seltzers, those RTDs? Is that that was in the first half of the year then, I guess?

Lars Jensen, CEO, Royal Unibrew: No. We have no. We launched we have been we have had versions, but we have been putting more effort into it over time because the category is expanding, the flavor territory is expanding and so on. So we are doing more and more. So yes.

Richard Wieseken, Analyst, Kepler Cheuvreux: Anything on price? I mean are you changing price points?

Lars Jensen, CEO, Royal Unibrew: We on I would say, on the hard seltzer RTD, no. We are running some tests on the price elasticity on original long drink, both for the flavor part but also for the grapefruit part. So we are testing that. No conclusions made yet.

Richard Wieseken, Analyst, Kepler Cheuvreux: Okay. And then maybe Italy question.

Lars Jensen, CEO, Royal Unibrew: Yes. Italy, yes, so we, our performance is super strong. Organic drive, stronger distribution, stronger execution, more field people that drives the growth further on. And in a market, I would say, the beer point of view, where you see that strong lagers is the place to be from a category standpoint. A lot of it is driven by introduction of new packs, so cans, which has never been a part of the game play, but it is now both for us and for our competitors.

And on the soft drinks side, we see a bit of the same trend as I commented on in the Danish market for Colas, and that is that all growth by now that sits in CSD, in most markets, we see that in the flavor territory. And this is where Le Mansola the Le Mansola range also with the new SKUs that we are bringing in, the zero versions, is just building and building and building. And we are building in the small pack sizes, so to a lesser extent on the large PET bottles but more in cans. And we have introduced mini cans, an example, which is a new occasion. So we are building as yes, ongoingly with multiple angles but with the same toolbox as we have in the other countries.

So we are not in an urgency, I would say, to put new elements into the business, new categories. We are launching a local beer around the brewery, but that is local initiatives. And then we have launched the Cheddar’s Lager, which is has been launched in the South, but it is in the same space as where we are today. Yes. So that will be my comments on Italy.

Richard Wieseken, Analyst, Kepler Cheuvreux: We

Conference Operator: will now take the next question from the line of Andre Thormann from Danske Bank. Please go ahead.

Andre Thormann, Analyst, Danske Bank: Yes. Good morning. Thanks for taking my question. Just two, please. First, on Norway.

Can you maybe give some comments on the progress you’re making and maybe also add what is remaining to do here in the handset solar business? And then second of all, just coming back to Netherlands to be sure, did EBIT grow in the ’25 compared to ’24? Those are my questions.

Lars Westergaard, CFO, Royal Unibrew: Yes. So if we start with Norway, I think we are pleased with what happens in Norway at this point in time. We have launched a number of good innovations in beer that seems to stabilize the beer market share and get some momentum into that piece as well. And then on SADA RTD, we continue to grow our share and grow the category. So that looks really promising.

And then of course, we are now starting to cross sell the Solea and enhance the portfolio. So that gives some momentum, in particular, in OnTrait. So on the top line, we are pretty happy with what goes on. Of course, we are spending an awful lot of time internally focused in Norway to get the structure and the IT platform right. So we’re closing the Sarpsborg site later this year, upgrading the facility in Bergen with some minor investments there.

We have rolled out SAP. We have merged a lot of order to cash processes, which is a pretty big change. So I would say there’s a lot of moving parts in Norway. The good thing is that the commercial part is doing well, and we can see that, that is working. And then we have a lot of very clear building blocks into next year on the cost side, where it will be easier to operate and a lot of complexity will be taken out of the business.

So I would say, I think the road map for Norway is pretty clear. And then on Netherlands, there’s not like a flat movement year on year in terms of EBIT. Remember that a lot of the things Lars mentioned have been executed in the first half, so more people in on the streets, closed down of some brands. And then we’ve had two big CapEx programs that have been finalized in the first half and should start to pay off now. So I would say an awful lot of activity happening and a business that’s more fit for the opportunities that lies ahead.

Andre Thormann, Analyst, Danske Bank: All right. Thank you so much. Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Soren Samse from SEB. Please go ahead.

Soren Samse, Analyst, SEB: Yes. Good morning, Lars and Fleming. So I have three questions. Firstly, a question on the business in France, which is starting to show better and more consistent performance. Can you talk about what is driving the stronger performance and what you have done to achieve this?

Second question is on the Benelux business. How will this contribute in the coming years? And what is the margin trends of the business? And how sizable do you think it could be? And then finally, on the cash flow, it was declining in first half.

Can we expect to see positive development in second half? And if yes, what will be the drivers of that? Yes.

Lars Jensen, CEO, Royal Unibrew: On France, we have been through, I would say, a focus process together with the team, which we ignited in the beginning of last year. So that means, I would say, a continued focus for Lorena on driving value and driving single serve, which is not the standard, I would say, occasion for Eliminate in the past. And that is we are getting very good traction on that. Now this is an initiative that have been, yes, in the market for the last four years. We are gaining quite a lot of distribution in convenience, so the Boulang series.

So again, a new occasion for us for the Lurina brand. And that obviously comes at higher net revenue than it does in the retail business. And then for Crazy Tiger, we keep pushing the one liter, which is the core of the brand. But the introduction of the small 35 centimeter PET bottle at a sharp price point, still profitable for us, But at a sharp price point, it seems to be something that can move the needle also going forward for the brand and move it into the more single serve occasion. So I would say a very strong focus on a few things and then managing the business without any interruptions, so to speak, on the supply chain side, logistics side, being sharp on your forecasting and these kind of things.

So it’s a well run machine. And with margins by now that are EBIT margins that are higher than the average of the group. So we’re pretty satisfied with what we see in France, although that is still fairly small in our Unibrew perspective. So what’s the you asked the question, what’s the prospects for Belux? I think we see a lot of opportunities in Belux, but we also reckon that this is not something that is going to happen very fast.

It’s the same toolbox as we have used in the Nordic countries, but also the same toolbox as we are using in the Dutch market. So a lot of price pack architecture is what we are going to do. And then we have some in sourcing of production, and we have the SAP up and running and so forth. So yes, so a lot of initiatives. But at the end of the day, it’s the commercial side of the coin that will have to make the difference.

Lars Westergaard, CFO, Royal Unibrew: And if we run through the cash flow. So if you look at the absolute level of working capital at half year, it is lower than it was at the same period last year. We don’t see any changes to anything structurally. At the full year, we are expecting to get a positive contribution from working capital. In the cash flow statement, there’s a lot of opportunities to optimize, amongst other, the inventory as we don’t need as much inventory with the more the CapEx that we have deployed in the last couple of years.

So expect, what I’m saying, strong cash flow for the full year with positive contribution from working capital. We’ve given you the 7% on CapEx tax, 22% and then profit is something that you have to estimate. So I think cash flow looks pretty good for the full year, which is also driving the share buyback that we have.

Soren Samse, Analyst, SEB: Thanks. And can I just one small question on PreciTarga? I think you introduced it into, I think it was Italy a while ago, and have gained some market share. Do you continue to see growth with Crazy Tiger there?

Lars Jensen, CEO, Royal Unibrew: Yes, we do. Yes. So are not putting marketing money behind it, so to speak. So this is a distribution game, and we are building distribution with a solid rotation. So yes, so that’s still in the making.

Soren Samse, Analyst, SEB: Great. Thanks.

Conference Operator: Thank you. We will now take the next question from the line of Thomas Lin Peterson from Nordea. Please go ahead.

Thomas Lin Peterson, Analyst, Nordea: Hi, good morning everyone. Also a few questions from my side. The first one is regarding your sales distribution expenses. They are just up 1% year on year, very impressive. I think you’re citing or saying that it’s due to lower logistic costs.

I was just wondering if you could elaborate a little bit on these efficiency initiatives that you have ongoing and how we should also look at that a bit going forward. Is that all the CapEx projects, production lines that you are getting up and running? And then a second question also, perhaps a bit the same ballpark. In Italy here, you’re saying that you’re taking out the private label, you can push your own brands. Is that also because you’re running at 100% capacity in Italy?

And is there still room to grow in Italy, at least from a capacity point of view? Those would be my questions.

Lars Jensen, CEO, Royal Unibrew: If I take the capacity question first, we have been upgrading during the first half quite a bit of equipment, I would say, into the facility, both in terms of the brewing capacity expansions and on the glass line, where we have added elements to the line. And that short term, of course, means that we do not have access to the same amount of capacity. Now we have all of that up and running, and we can see that the capacities are coming through. And then let’s judge what we do for 20 but we are not sold out on capacities yet. But we need to get a reasonable, I would say, profitability out of the private label because if not, then it’s better to keep that flexibility for ourselves to support either Italy or international from a network perspective.

Lars Westergaard, CFO, Royal Unibrew: And then well spotted on the distribution side. As you may recall, we have moved a lot of the production for beer to Italy. We moved that production from Denmark to Italy, and that saves quite a big chunk of distribution charges. And sorry, international freight rates are also coming down, so that is also supporting a little

Lars Jensen, CEO, Royal Unibrew: bit on that line.

Thomas Lin Peterson, Analyst, Nordea: So just thinking a bit further ahead, is this the level then that we should expect going forward also? Is that what you’re saying?

Lars Westergaard, CFO, Royal Unibrew: I think you’ll see that there’s a lot of moving parts in this in the coming years. This will not, I wouldn’t say, this is permanent, but we have moved to Italy. So that saving, we should see going forward. But we have a number of initiatives going on in the distribution area. In Denmark, we’re building a big warehouse.

So we’re also trying to capture some efficiencies in Denmark going forward. But that’s a story for a later date.

Conference Operator: We will now take the next question from the line of Mitt Collett from Deutsche Bank.

Lars Westergaard, CFO, Royal Unibrew0: You had negative pricemix in Northern Europe. And I think you say in the release that it’s primarily driven by country mix. So can you give pricemix for your key geographies in Northern Europe, Denmark, Finland, Norway and The Baltics. Are you seeing any signs of increased price aggression from any of your peers? And how should we think about pricemix growth for the remainder of the year, both Northern Europe and I guess for the group overall?

Lars Jensen, CEO, Royal Unibrew: I think when you look at the first half country mix, it’s the same as what we said in Q1, would say, and that is that it’s the Finnish business that is slightly down, right? And then we see growth in other countries where you have a lower net revenue per volume. So that’s what is driving the mix. So if you look at the countries individually, then that is a more positive story. And then that goes a bit for Royal Unibrew as a whole.

When you put it into segments, then you might have one country that outgrows the other, and then that makes a mix either good or bad. But so the way that we’re looking at it is much more country driven and category driven. And then ultimately, we manage our business on an EBIT level because there’s also various cost levels depending on markets and as we said in the speak. So there’s no major movements in the Nordic countries apart from Finland being revenue wise lower and the other ones being more positive.

Lars Westergaard, CFO, Royal Unibrew0: And then how should we think about it for the balance of the year?

Lars Westergaard, CFO, Royal Unibrew: I think what we have already expressed is that Finland was down in the first half. Finland came a little bit back in July. So Q3 started out positively in terms of mix. So I think the rest of the year, it’s all going to be down to how the country mix moves. As Lars mentioned, this is not due to increased competition.

This is more based on mix between categories and what and countries, so what moves and what doesn’t move.

Lars Westergaard, CFO, Royal Unibrew0: Thank you.

Conference Operator: Thank you. We will now take the next question from the line of Arun Adamsky from Goldman Sachs. Please go ahead.

Aron Adamski, Analyst, Goldman Sachs: Hi, guys. Thanks for taking my follow-up. I had a quick question about the new warehousing facts that I think is now operational. Can you just give us some color on what new capabilities does that give you and how it helps drive better efficiency for the business overall? And is that something that will start to benefit you in the second half of the year?

Or is it more likely in 2026?

Lars Westergaard, CFO, Royal Unibrew: I think I didn’t hear what you mentioned. You said some CapEx in Faxai. Which one did you mention?

Aron Adamski, Analyst, Goldman Sachs: Yes. I think a new warehouse in Faxai that you opened or is now operational?

Lars Westergaard, CFO, Royal Unibrew: So yes, so well, let’s start it. We have we are investing a sizable chunk in FACS in two parts. One is the Low Bay Warehouse, where we have a picking area that is now operational. And then we’re also investing in an expanded High Bay Warehouse that will only be operational in Q1 next year. When those are operational, we can, what you say, eliminate a lot of movements from our production sites to external warehousing and back again.

So that is something where we will capture the benefits primarily from Q1 and onwards next year.

Lars Jensen, CEO, Royal Unibrew: From Q2? Yes, yes. So it’s operational in the

Lars Westergaard, CFO, Royal Unibrew: end of Q1. And then after Q1, you will see the benefits,

Richard Wieseken, Analyst, Kepler Cheuvreux: Thank

Conference Operator: you. There are no further questions at this time. I would like to hand back over to the speakers for closing remarks.

Lars Jensen, CEO, Royal Unibrew: Thank you very much for your participation and a lot of good questions. And as I would always say, you know where we are if you need us. So thanks.

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