Ladies and gentlemen, welcome to the Q3 2026 earnings call of TAKKT AG. The company's CEO, Andreas Weishaar, and CFO, Timo Krutoff, will guide you through the presentation in a moment, followed by a Q&A session via audio line. With that, I hand over to you, Mr. Weishaar.
Thank you, and welcome to our earnings call for quarter three. As most of you will be aware, we are currently dealing with a cyber attack on our IT systems. Today's call will focus on this topic in addition to our quarter three results. I am hosting the call together with our CFO, Timo Krutoff, who will present our financials. To start the call, let me give you an update on the cyber attack. Then I will give a brief overview of our key financials and our progress in implementing our TAKKT Forward strategy.
Before I take you through the current situation, let me emphasize that this remains a very fluid situation. Only a little more than one week has passed since we identified the attack, and our assessment continues to evolve as the forensic investigation and recovery work progress.
What I will share with you today, therefore, reflects our current understanding. We identified the cyber attack on Monday, October 19. Based on the information currently available, the attackers had already been active during the preceding weekend. The attack directly affected parts of our IT environment, in particular the ERP systems supporting Industrial & Packaging in Europe and Foodservices in North America. We were able to stop the attack and prevent further data exfiltration shortly after detecting the incident.
In line with the applicable legal requirements, we have informed the relevant authorities and are notifying affected customers and suppliers. We reacted immediately after identifying the attack. We isolated the affected systems and proactively took additional parts of our IT infrastructure offline. This was an important precautionary measure to contain the attack and limit the risk of further impact.
It also means that some of the current operational restrictions result from our own decision to proceed cautiously and restore systems only when we consider it safe to do so. We also brought in external cybersecurity experts and IT forensics specialists at a very early stage. They are supporting our internal teams with containment, forensic analysis, and the secure recovery of our systems. Based on the work completed so far, we are confident that the attack has been contained.
We have seen no indication of continued unauthorized access over the past several days. This is an important milestone, but we nevertheless remain vigilant and continue to monitor the situation very closely. Importantly, most of our web shops and our internal and external communication channels remain available across the group. We are therefore able to stay in close contact with our customers, suppliers, and employees.
We are actively reaching out through different channels to explain the incident, the resulting restrictions, and what we can currently make possible for our business partners. Our priority is not simply to bring systems back online as quickly as possible, but moreover, to restore them in a controlled and secure manner. Let me explain what this means for our current operations and our recovery priorities. After containing the attack, our focus has shifted to the controlled and secure recovery of our systems and business processes.
We have developed a comprehensive recovery plan and have started its implementation. We are prioritizing the processes that are most critical for our customers and for our business. In allocating our available resources, we are placing particular emphasis on Industrial & Packaging, which is by far our largest and most profitable business.
Core infrastructure has been restored, and we are now gradually expanding the functionalities available and the number of users who can safely access the systems. We have also started to process the orders that have accumulated since the attack in order to resume deliveries step by step. Even while the ERP systems were unavailable, our teams found manual solutions for selected orders. In close coordination with customers, we were able to process and deliver individual orders, particularly some larger ones.
As system capacity now gradually increases, we are prioritizing the accumulated orders based on their size, urgency, and importance for our customers. However, I want to be clear that this will remain a gradual process. Our operational capacity is still significantly restricted, and the existing order backlog will continue to affect our business over the coming weeks.
We will only increase access and processing capacity when this can be done in a controlled and secure manner. At the same time, we remain fully available to communicate internally and externally. Our teams are actively reaching out to customers and suppliers to explain the current situation, provide updates on orders and deliveries, and discuss what we can make possible through alternative processes. We have received positive feedback for this open and direct communication.
I would also like to recognize the exceptional commitment shown by our colleagues across the group. Our IT and cybersecurity teams, our commercial and operational teams, and our colleagues in the warehouses have worked with tremendous dedication to contain the incident, support our customers and suppliers, and prepare the recovery. I would like to sincerely thank everyone involved for their flexibility, engagement, and extraordinary effort.
To summarize, we have contained the attack and are implementing the recovery plan. Core infrastructure has been restored. Initial processing of order backlog has resumed, and deliveries are gradually being restarted. Nevertheless, our operational capabilities remain significantly restricted, and the incident continues to have a material impact on our current sales and earnings development. Before we move on, let me clearly separate the current situation from the development during the reporting period.
The cyberattack occurred after the end of the third quarter. The figures we are discussing now, therefore, reflect our business performance through the end of September and are not yet affected by the incident. Overall, our performance in the first nine months was in line with the expectations we communicated at the beginning of the year. The stabilization we saw in the second quarter broadly continued into quarter three, despite a market environment that remained challenging and volatile.
On the top line, organic sales declined by 5.1% in the first nine months. In the third quarter, the decline was 4.3%, broadly in line with quarter two. We saw some improvement in our core German market and at Foodservices, while performance across other markets remained mixed. The broader economic picture remained mixed as well. GDP expectations and PMIs in Germany and the Eurozone have improved, but the recovery remains gradual and fragile.
Customer investment decisions are still cautious, while higher energy, fuel, and transportation costs continue to create pressure. The U.S. environment remained more dynamic than Europe, although growth also slowed and Foodservices demand continued to be restrained. On profitability, our gross profit margin remained robust and was slightly above the prior year level. Together with disciplined cost management, this allowed us to offset part of the earnings impact from the lower top line.
Our adjusted EBITDA margin was 3.2% for the first nine months, in line with our expectations at the beginning of the year. Free cash flow remained negative at EUR -12.7 million after nine months. Cash generation remains a priority. In the fourth quarter, we will continue working to release meaningful net working capital and evaluate additional options to generate cash. Against this backdrop, we continue to implement our TAKKT Forward priorities during the third quarter.
Let me briefly highlight the progress we made before handing over to Timo for the detailed financial review. Let me start with our focus agenda. We continue to simplify the portfolio and concentrate our resources on activities with stronger strategic and value creation potential. This includes the sale of XXLhoreca which we completed at the end of June, as well as the discontinuation of less profitable activities in Foodservices.
These are consistent steps towards a simpler portfolio, lower complexity, and a clearer allocation of management attention and resources. At the same time, we further simplified our organizational setup. We reduced the integration of group functions and gave the divisions greater autonomy and accountability for their respective businesses. Most recently, we also aligned our HR organization more closely with this model. Since the beginning of October, the divisional HR teams report directly to the respective division presidents.
This brings HR closer to the businesses and enables the teams to support their specific priorities even more effectively. Overall, these measures translate the focus agenda into both our portfolio and our organizational setup. A leaner group structure, stronger divisional ownership, and a clearer concentration on the businesses that matter most for TAKKT's future development. Let me now turn to growth.
Across the divisions, our initiatives follow a common principle, understand customer needs better, engage customers more actively, and make it easier for them to do business with us. At Industrial & Packaging, we have continued to professionalize our customer analysis and segmentation. This is an ongoing development of our commercial capabilities, giving our sales and marketing teams a more differentiated view of customer potential, purchasing behavior, and retention risks.
Based on these insights, we can tailor our activities more precisely to different customer groups and combine personal sales, digital channels, and targeted marketing more effectively. Touch points with loyal customers were twice the planned level, demonstrating the rollout of our more targeted approach. At Office Furniture & Displays, the two businesses are pursuing different growth priorities. At NBF, we are strengthening the transactional business through a better digital buying experience, more competitive shipping and pricing, and improved web execution.
This transactional business is important in its own right, but it also serves as an entry point for longer-term customer relationships. Customers who initially make a smaller purchase can subsequently be developed into repeat customers, and where appropriate, into larger project opportunities supported by our sales and design capabilities. At D2G, the focus remains on proactive account management and on increasing the value of relationships with high-value customers. At Foodservices, our first priority remains to stabilize the business and rebuild customer momentum.
During the third quarter, we saw encouraging momentum in Hubert's managed accounts business, particularly among larger and highly loyal customers. We also made progress in the emerging restaurant chains business, where the pipeline and order activity continued to develop positively. These are still selective improvements rather than a broad-based recovery, but they indicate that our more focused commercial approach is beginning to gain traction.
Turning to Performance, our priorities remain protecting gross margins, creating a leaner cost structure, and improving cash generation. We continue to take a disciplined approach to pricing while differentiating by market and reflecting local competitive conditions. In sourcing, we are expanding best-cost country procurement, although we expect the larger part of the positive impact to materialize next year. At the same time, we are simplifying the assortment and reducing product complexity to focus resources on the most relevant products and categories.
We also continue to streamline our operating model. This includes further automation of order processing, the relocation and outsourcing of selected back-office activities, and the consolidation and optimization of our logistics footprint. Across the group, these measures reduced the cost base by around EUR 9 million during the first nine months, partially offsetting the earnings impact from lower sales. Cash generation remains another important priority.
We progress with disciplined inventory and receivables management, improve supplier terms, and streamline our asset base. Together, these initiatives are intended to translate operational improvements more consistently into profitable and cash-generating activities over time. With that, over to Timo who will present a more detailed look at our financials.
Thank you, Andreas. Let me now take you through the financials. Let's start with the group financials of the third quarter. Group sales came in at EUR 232 million. The sale of the European Foodservices business, XXLhoreca, impacted sales with 1.5 percentage points. Currency effects were positive and increased sales by 0.6 percentage points. Adjusted for these effects, organic sales declined by 4.3%, very similar to Q2. We were therefore on track to continue the stabilization seen in the previous quarter before the cyberattack.
On profitability, gross profit margin improved despite elevated freight costs, which partly offsets the lower sales. Overall, costs remain broadly at the prior year level as we continue to invest in systems and processes. Personnel costs also remain broadly unchanged despite a lower headcount. This reflects the release of bonus provisions last year, whereas this year we accrued variable compensation as usual.
EBITDA came in at EUR 5.6 million. Our adjusted EBITDA margin was 3.0% in Q3, compared to 4.3% in the previous year. Moving over to the first nine months of the year. Sales came in at EUR 685.6 million, 6.9% below prior year. Currency effects impacted sales by 1.4 percentage points. The sale of XXLhoreca impacted with 0.4 percentage points. Organic growth was at minus 5.1%, which was also impacted by the discontinuation of the Foodservices bid contract business in the U.S. of around one percentage point.
On profitability, lower sales had a negative impact of EUR 20 million. Gross profit margin was slightly above prior year. With the cost management initiatives we have implemented last year, we were able to reduce costs by around EUR 9 million, and with that compensate part of the earnings impact from the lower top line. One-time costs were higher than last year at EUR 7 million.
EBITDA reached EUR 14.5 million. The adjusted margin was 3.2%, down one percentage point to prior year and in line with expectations we communicated at the beginning of 2026. Let's now take a closer look at the divisions, starting with I&P. Organic sales declined by 3.4% in Q3, unchanged from Q2. This means we maintained the more stable development seen in the previous quarter. Regional performance remained mixed. Some markets showed signs of improvement, but the overall development remained volatile.
On profitability, looking at the first nine months, higher freight costs weighed on gross profit margin in Europe. Pricing adjustment helped, but did not fully offset the impact. Adjusted for one-offs, costs remained broadly at the prior year level as we continue to invest in commercial initiatives, systems and processes. One-time costs amounted to EUR 5.8 million, mainly related to the implementation of a more efficient logistic network.
The adjusted EBITDA margin was 6.4%, compared with 8.4% last year. Let me now move on to OF&D. Organic sales declined by 4.6% in quarter three following growth in quarter two. For the first nine months, the organic decline was 1%. At NBF, demand remained positive, including a strong September order intake from government customers ahead of their fiscal year-end. However, weather-related delays in container shipments limited product availability and deliveries in September, leading to a higher order backlog.
This was a temporary delivery constraint rather than a reversal of the positive demand trend. We expect these orders to translate into sales in October and November. At Displays2go, sales remained slightly below the prior year, broadly consistent with the development in the first half. On profitability, looking at the first nine months, gross profit margin improved, while savings in marketing and other costs help offset the impact of lower sales.
As a result, the adjusted EBITDA margin reached 6.3%, slightly above the prior year level. Let's now move on to Foodservices, where Q3 marked a step in the right direction following a difficult first half. Organic sales declined by 6.3%. This remains a significant decline, but represents a noticeable stabilization compared with the first half and the weaker development seen last year. Managed accounts at Hubert and the business with smaller emerging restaurant chains developed positively.
On profitability, we implemented meaningful cost savings in Q3 and improved gross profit margin year-on-year. However, the prior year margin was particularly weak, so the comparison benefits from a low base. Still, Q3 delivered a clearly positive earnings contribution and an improved EBITDA margin, reflecting the progress made at Foodservices. After nine months, the adjusted EBITDA margin stood at 0.4%, leaving the business close to the break-even point.
Overall, these are early signs of progress in the turnaround, which we aim to build on in the coming quarters. There is still substantial work ahead, though. Let's now turn to free cash flow. Free cash flow after nine months was EUR -12.7 million, fully in line with our expectations for this stage of the year. Cash flow before changes in net working capital was EUR 5.5 million, compared with EUR 18.6 million last year, mainly reflecting the lower EBITDA. Higher inventories and trade receivables contributed to a cash outflow from working capital and other adjustments of EUR 4.2 million.
This brought cash flow from operating activities to EUR 1.3 million. We maintained capital expenditure discipline, with investments declining to EUR 3.9 million. Proceeds from asset disposals, including real estate, contributed EUR 2.2 million. Lease repayments amounted to EUR 12.3 million, including a one-time payment. Together, these items resulted in free cash flow of EUR -12.7 million.
In Q4, we are working to release cash from net working capital and exploring additional opportunities to generate cash inflows. However, the cyber incident is also expected to weigh on free cash flow in the fourth quarter. Let's now turn to the balance sheet. Net financial liabilities remain broadly stable at EUR 134.7 million, compared to EUR 131.5 million at year-end. This includes lease liabilities of EUR 42.8 million, down from EUR 52 million. The equity ratio stood at 48.1%, compared with 50.6% at year-end, and remained in the upper half of our internal target range of 30%-60%.
At the end of Q3, we recognized an impairment at Foodservices following an update of our multi-year plan, which assumed lower free cash flows in the coming years. The impact on our equity ratio was limited. And with that, back to Andreas for the outlook.
Thank you, Timo. Let me conclude with our outlook for the full year. As explained at the beginning of the call, the cyber attack occurred after the end of the reporting period and therefore has materially changed the starting point for the fourth quarter. Before the incident, our performance after nine months was fully in line with our expectations and with the full-year guidance communicated at the beginning of the year. The cyber attack is an external event outside our control.
The resulting operational restrictions are currently affecting order processing, deliveries, and invoicing, and therefore have a direct impact on sales, earnings, and cash generation. At the same time, the underlying market environment remains challenging, with cautious customer investment and continued uncertainty regarding the broader economic development. At this stage, the overall financial impact of the incident cannot yet be reliably quantified.
It will depend primarily on how quickly we can restore the affected processes, how long the current restrictions continue, and to what extent delayed orders can be processed and delivered. Against this background, the risk of finishing the year at the lower end of our guidance ranges has increased significantly. Depending on the duration of the restrictions and the pace of the recovery, there's also a risk that organic sales growth and the adjusted EBITDA margin could come in somewhat below the respective ranges.
Cash generation remains an important focus area. We will continue working to release a meaningful amount of net working capital and evaluate additional options to generate cash. However, the operational restrictions make this more difficult and have increased the risk of a negative free cash flow for the full year. Finally, the response of the past days has demonstrated the strength of our organization.
Our teams have reacted quickly, worked closely across functions, and shown exceptional commitment in supporting our customers, suppliers, and recovery efforts. This gives me confidence in our ability to manage the current situation, and I would once again like to thank everyone involved in the mitigation and the recovery. With that, we are happy to take your questions. Over to the operator for the Q&A.
Yes. Thank you very much, Mr. Weishaar. Thank you, Mr. Krutoff. We are now moving to the Q&A session. Dear participants, you have the opportunity to ask your questions by raising your hand. We enable the function of taking the audio questions, so please feel free to do so. Use the raise your hand button, and if you are dialed in by phone, please press star nine. Mr. Bruns, you should be able to unmute yourself and ask your question.
Yes. Hello, Mr. Weishaar. Hello, all together. I think you can hear me?
Yes.
Okay. At first, I would like to get an idea about the financial impact of the cyber attack. Maybe it is early, but to have, I assume, a ballpark number would be good. I think you have additional IT costs now, you may have cancellations of orders, and you might also have an idea about the financial impact on the earnings in Q4 already. The second one, which I am also interested in, is the reputational impact you think about. Will there be a lasting effect at your customers?
Thank you very much, Christian, for your questions. As mentioned, at this point, we cannot reliably quantify the financial impact of the cyber attack. Before the incident, or moreover, the attack, our performance after nine months, as mentioned, was fully in line with our expectations and our full year guidance, and we continue to believe at this point that the lower end of our guidance range is well achievable if the recovery progresses as we intend. However, the recovery process involves a number of uncertainties.
This is regarding the pace at which we can restore operational capacity and the extent to which delayed orders can still be processed and delivered. It is very important, and that's the reason why we issued the communication earlier this week, for us to be transparent.
At this point, we are unable to fully and reliably quantify the impact, be it from a top line or from a cost side, which you equally referenced. As far as the reputational impact is concerned, to date, and thanks to the great work of our customer-facing teams who reacted swiftly, communicated proactively and clearly to customers as well as suppliers, that was then the procurement team, we have received positive feedback on the clarity, the timeliness, and also the personal as well as digital outreach we have done. Consequently, I do not consider this to be a long-lasting reputational impact on our business and our well reputable brands.
Okay. Thank you.
If there are any more questions, you are allowed to raise your hand, and I can ask you to unmute yourself. T o all the participants, if you may have any questions, use this opportunity. That's not the case by now. Mr. Bruns, again, you might have a follow-up.
Yes. I will take the opportunity if I may. Of course, I have more questions, I didn't want to
Please.
Okay. I n Office Furniture & Displays, you showed a 6.3% EBITDA margin, and I was wondering if also the Displays2go business is in positive territory, or is it just a very good office furniture business?
Are you talking about the sales development, or you mean the margin?
No, the EBITDA margin. The margin.
Both of them are positive.
Okay.
Not far apart from each other.
Okay. The problems at Displays2go is not as big as I feared. Okay. Then maybe, of course, we cannot expect now, after the cyberattack, a strong Q4. I think this is clear. Therefore, I think it is important to look a little bit further ahead in the year to come. We see PMIs are improving. I think you do not have a problem with the gross margin. I think in this environment, which we now face, it is more an average environment. It should not be anymore a very distressed environment. in 2027, you see a lot of early indicators moving in the right directions, at least in Europe.
I would just get an idea of what you think about next year, especially if you could give us some hope that we might see a positive top line, which will translate then hopefully also in a profitable- Lots of time.
Thank you for the question, Christian. Obviously, it is very early, looking at 2027, to give us a reliable assessment of the market environment we will face in the upcoming year. As you know, we intend to provide a more concrete view on our expectations for next year once we enter 2027. That said, we do see, as you pointed out, some encouraging signals in recent macro indicators. Sentiment has improved, and current forecasts point to gradual recovery, especially of the German and the overall European economy.
At the same time, we also see that the industrial environment remains subdued, and we have not yet seen a broad-based improvement in customer demand. From today's perspective, we probably expect a more gradual improvement rather than a sharp rebound. For us, for TAKKT, the important point is that we do not want to rely on a significant market recovery.
With our TAKKT Forward strategy, we are working intensively on strengthening the commercial performance of Industrial & Packaging and improving the cost base, so that we are well-positioned to benefit for when demand improves in the upcoming year and thereafter.
Maybe, if I may add on question about the financials. Because the equity ratio still looks very solid even after the write-downs, the impairment at Foodservices. If I look a little bit at net debt EBITDA, I think I begin to get nervous about your situation, which was always, I think, not such a big problem. Now, I am wondering, that was the question before I had about the earnings potential you see. Your midterm margin assumptions are still very high. Your profitability assumptions allow for even higher net debt, but you are far away from this target level. Therefore, at the current level, I get a little bit worried. Maybe you can help me.
Timo, you want to address?
Yeah. Sure, I can do that. Let's start from the financial. Of course, if EBITDA is very low, as close as it gets to zero, it's very difficult to get a good ratio on the debt level. In general, I can say from a financial or financing perspective, looking at debt, I'm not worried at all. We prolonged all major loans that we have very easily, again, to very favorable, very good terms. All the discussions with the banks are very good. Again, without the cyber incident, we were on a very clear path to a good enough positive free cash flow.
That, of course, also would've helped the debt situation. I n general, that doesn't worry me. On the other side, of course, our ambition is still out there. We want to increase margin significantly.
As Andreas said earlier, you won't get us to tell you the guidance for next year already today. We do understand your wish for that. Let us please work through the cyber incident now first, then we'll finish our budget plan for next year, and then we'll come up with some numbers. But I think in general, we're still very positive about the future of this company.
Okay. Thank you. It was worth a try.
Of course.
Thanks.
Yes. Thank you very much for your questions, Mr. Bruns. We are waiting for some more participants with raised hands.
I think there is a question written.
Yes.
Question, right?
We already take one question we reached in our Q&A chat. I will read this out for you. It has been 10 days since the cyber attack. Based on the statements made, the impact appears to be very severe. To get a sense of the extent of this impact, at what percentage of its normal capacity is the sales division currently operating, assuming 100% represents the normal level? Are all areas of the sales function affected or only certain parts?
Thank you, Klaus, for the question. Overall, it is important to understand that the cyber attack has impacted primarily our Industrial & Packaging and Foodservices division. Equally, it is important to understand that customers are still able to place orders that then add to our backlog that we are accumulating. What we are seeing now is as part of our gradual recovery process, we expect to be at a 10% operating, and that is delivering capability. As we pointed out, we will prioritize customer orders appropriately to ensure timely fulfillment.
Over the coming weeks, as we bring in additional devices, systems, and processes in the safe environment, we expect that our capability will be fully restored in the coming weeks.
Thank you very much. In the meanwhile, we did not receive any more questions. There are no raised hands among the participants. I will wait a few more moments. No more questions. We come to the end of today's earnings call. For any further questions, please feel free to contact the investor relations department. By now, I say thank you and goodbye, and hand over to Mr. Weishaar for some final remarks of this call.
Thank you everyone for your participation and interest in TAKKT today. We will keep you updated on our recovery, and we are looking forward to speaking with you on the road or at upcoming conferences. We will publish our preliminary full year 2026 figures on February 25, 2027 and present the results in a webcast on the same day. Thank you again, and have a great day.