Ladies and gentlemen, welcome to Kofola ČeskoSlovensko's Third Quarter of 2025 results conference call. Martin Pisklák, the Group CFO, will present a summary of the results. This will be followed by a recording with Business Insight from Czechoslovakia, Adriatic, and Beer segment presented by country CEOs Daniel Buryš, Marián Šefčovič, and CFO Martin Rosypal.
Dear investors, welcome on our conference call. Yesterday, we reported the numbers for the third quarter of 2025. Basically, we have one positive and one negative thing which we would like to present to you today. The positive thing is that all the cost initiatives which we did, basically during the summer, work, and due to huge cost savings, we were able to deliver basically flat EBITDA compared to prior year. For us, it was very important that we stop drops in EBITDA which we reported in quarter one and quarter two. We were able to report EBITDA at the level of CZK 725 million. We were also very positive in the end of September, beginning in the end of August, beginning of September. We were also quite positive with the recent development of the revenues.
However, the rest of September, October, and now also the November sales are showing us that the negative trend and consumption sentiment, especially in the Czech Republic, is still continuing. That is why we have to review our full year expectation. Our original expectation at the end of the summer was that we will be able to deliver at least flat results compared to prior year. This means basically almost CZK 1.9 billion. Currently, we see the EBITDA result for the full year on the level of CZK 1.75 billion. The main reasons of such a decrease are basically three. The first one is, as I already told, negative sentiment, especially in the Czech retail market. The second one is the ongoing downturn in our export sales of the beer, especially to Central and Eastern European customers.
The last fact was that starting from October, one of the major retail players in Adriatic decided to discontinue sales of all branded products and turn solely to the private label products. This also negatively influenced or affected our outlook for the rest of the year. EBITDA of CZK 1.75 billion represents a decrease compared to prior year. However, it should not hurt the financial stability of the group. At the moment, we expect that the overall leverage at the year-end will represent approximately 3x EBITDA, and we should not have any major financial problems. At the moment, we are in the process of confirming budgets for 2026, and I believe that in the half of February we will be able to present you a bit more optimistic forecasts for next year. Now I handle my work to my colleagues. Thank you.
Dear investors, here is Daniel speaking. Let me comment on key moments of the top season in the Czech and Slovak sovereign market. We missed our goals, and we have to recalculate our year targets. Key factors are known: double-digit drop of the Slovak market due to sugar tax implementation, worst weather in the last decade, and additional surprise: unexpectable negative consumer sentiment. Stop of complaining. Successful launch of Targa Florio retail formats, 154% compared to last year, perfect raw replacement, and still small but dynamically growing Prager's Kombucha. Cost of material and services are under control. We have realized a cost-saving program, including a reduction of 4% FTE positions. Q4 sales development shows that market recovery in retail will be difficult. Positive trend we see in the HoReCa segment. I'm quite optimistic in next year's prediction. Material and energy prices are stable, and we expect a sovereign market recovery. Thank you for your attention, and drink Kofola. Daniel.
Hello everyone, this is Marián Šefčovič, CEO of Adriatic speaking. The Adriatic region reported an 8% decline in revenues year-over-year during the third quarter of 2025, primarily driven by broad-based demand weakness. This revenue had been a result of lower consumer spending, leading to the sales volume decreasing by 12% in Slovenia and 6% in Croatia, as well as a significant contraction in export markets, which saw a notable 6% decrease in demand across ex-Yugo markets. During this quarter, in August, we recorded a significant decrease in demand and consumption, largely driven by rainy weather and the absence of prolonged tourism in the Adriatic region. As a result, our key markets delivered a double-digit revenue decrease year-over-year for that month.
At the same time, we successfully launched Prager's kombucha on the Slovenian market, and we received one of the most prestigious design awards in the world, a Red Dot for the redesign of Oraketa. Before the school year, we delighted the children of our employees with school supplies. We held another successful prize draw for Radenska, and we gave away a mobile home. In September, we shared the new intranet Radenska Adriatic with employees, which will serve as the central tool for information, collaboration, and access to the internal content in the future. Thank you, Marián.
Dear investors, this is Martin Rosypal speaking, Finance Director of the Beer Segment. I'm pleased to provide you with a brief update on our performance for the third quarter of 2025. During the summer season, the overall consumption in the Czech beer market decreased. Our domestic revenues were slightly above last year. We continued to invest in our brands. Our new products in the fast-growing non-alcoholic flavor beer segment performed very well and contributed to our performance. On the export side, revenues continued to decline, mainly in Central and Eastern Europe, as we continued to prioritize margin improvement and scale back lower-value private label businesses. Taking Czech and export beer markets together, these dynamics led to an overall 9% decrease in revenues in Q3. Zubr celebrated a major victory this year.
The lager Zubr Gradus 12 won first place in the Czech Beer 2025 tasting competition in the main category of pale lagers. The success confirmed that the brand's modern energy is built on strong foundations of integrity and craftsmanship. Although the short-term results are not satisfying, we remain committed to our transformation strategy. Our focus is on building a stronger, more profitable brand-driven business that will deliver sustainable growth in the long run. Thank you for your continued support and attention. Wishing you a successful day ahead.
Ladies and gentlemen, now it's time for your questions. If you wish to ask a question, please click on the raise hand icon on your participant panel. When prompted by the organizer, click on the unmute me icon. If you have no further questions, click on the lower hand icon. We have a first question from Mr. Bartek. Please go ahead.
Good morning. Can you hear me?
Yes, we can. Good morning, Peter.
Good morning. Thank you for taking my questions. I would have three questions. First, if you can elaborate a little bit more on what you see in the Czech market. Whether you see, for example, more promotions or price reductions by your competitors, KMV and others, or whether you see, for example, a move to the private label more. Second question would be prices of sugar and sweeteners for 2026, if you can share the result of your purchases for the next year. And third, with 3x projected leverage for the year-end, what influence would it have on your dividend policy? You did not mention or did not repeat the dividend policy in the slides to Q3, so if you can talk about the dividend policy, how it looks. Thank you.
Okay, thank you for your question. Let's start with the easiest one, which is sugar. Basically, for 2026, we expect that the sugar price will increase by some 1% or 2%. Nothing major, basically. It should be very stable compared to 2025. In terms of the Czech market, actually, what we see is that all the competitors are decreasing the prices. That's very natural because also the material prices were decreasing during 2025, and the market simply works. Everyone was able to decrease the prices. Our competitors did. We did as well. Some price decrease will continue also in the beginning of 2026. That's more than sure at the moment. I think there is not a major shift to private labels. What we see is rather that people are spending less on the food and beverage category in retail.
That's something basically what we see in all the market researches which we have available, and it's also very visible on the market. You can see that, for example, during the summer, you were able to buy a bottle of the beer for less than 10 CZK, which is the price which was not basically available on the market for a very long time. The discounts are very deep in all the segments, and the customers are not buying so much goods as we expected them to buy. What we see is that people are spending more because all the macroeconomical indicators are showing that people basically have more disposable income, that the macroeconomical situation is improving, and so on and so on. Consumers are worth spending the mother rather for services in 2025. We see a huge increase of the travel agencies, for example, in 2025.
On the other hand, the sector of the hotels on the Czech markets during the summer was reporting some 20% decrease in the revenues. Most probably, people simply left for the holidays abroad, so they did not spend the money here in the Czech Republic. We also see that the other categories of services are improving very significantly in 2025. We believe that now, in the last quarter, we should find the bottom of this trend, and from 2026, we should start with some moderate growth to improve the position again. In terms of the leverage and dividends, at the moment, I would say that if the results will be comparable with prior year results, I would also expect a comparable dividend with prior year dividend.
Still, what we see is that we believe that the dividend yield should be somewhere between, let's say, 4% and 5% of the share price. Let's see the situation in the second quarter when we will be deciding for the exact dividend, but at the moment, I would say that if the result will be comparable with prior year, also the dividend will be comparable with prior year.
Okay, thank you. Maybe one more question regarding the beer segment. What cost development do you see there in their raw materials?
The cost development is very similar to the development in non-alcoholic beverages, so there are no major cost shocks or whatsoever. In the beer segment, we did not realize so much cost cuts and initiative. We are still continuing in investing into the market. We changed the branding of Zubr and Holba. Next year, Litovel is coming, and we are investing heavily into the market as it was in our strategy. We did not realize much cost cuts in this segment. We believe that this investment should return in some one or three-year period, definitely.
Thank you.
Next question is from Mr. Kubík. Please go ahead.
Good morning, everyone. I would like to hear if you correctly hear me.
Yes, we can.
Thank you very much. I would have a question related to new product launches. Compared to investments, are you planning a few more launches next year or keep it similar to the pace of this year? What about exporting or, respectively, launching the beer products in Slovakian markets? If you could elaborate more on the product line. Thank you.
Of course, we are planning quite significant launches in 2026. This is part of our strategy to support the growth of the consumption again. Basically, we would like to invest in the categories where we are not so successful at the moment. One category from all of them are, for example, functional waters, which are becoming very popular on the Czech market, especially in the on-the-go segment. This is the category where we are not the strong player, so we would like to invest into this category definitely a lot. We should also improve our portfolio also in the cola drink and CSDs in general, which is still one of the biggest categories which we have.
In terms of the beer segment and export for Slovakia, still we have in our plan to start proper export of our beers to Slovakia in next year, but I will elaborate maybe more on this in 2026 expectation later next year.
Ladies and gentlemen, as a reminder, if you wish to ask a question, please click on the raise hand icon on your participant panel. We have a question from Mr. Arashka. Please go ahead.
Good morning. Good morning. If you can more elaborate your information about a key customer in Adriatic who probably reduced their demand for your products, is the customer from Slovenia or will you manage to replace this drop in the next year? Thank you.
This is a customer which represents approximately 8% of our retail revenues. Retail revenues, it's one of the international retailers which is present also in Slovenia. He basically decides to delist all the branded products, so not only Radenska, but also branded products in categories like cheese, chocolate, basically all the categories are now without branded products in the stores, and they are selling only their private labels. Private labels in some long-term or next year for sure, people will go and buy Radenska in other stores. Very short-term, in the rest of the year, people who are used to shop in this specific retailer, they will shop there. That is why we expect that in the rest of the year, there will be a drop in our revenues in Adriatic in the retail segment.
From 2026, we believe that customers will return for their favorite brands, not only Radenska, but also other brands to other retail stores, and our revenues for 2026 should not be hurt significantly. Basically, we do not expect that we lost 8% of our revenues also in 2026. In 2026, I think that our retail revenues should not be affected by this anymore, but the very short-term impact of this change will be visible in the last quarter of 2025 for sure.
Okay. There is another question from Mr. Kubík. Please go ahead.
I would have one more following question related to products. Could you elaborate a bit about the state speculations of overtaking the Marienbad Waters or, respectively, if you are planning to go deeply into medicinal waters, as was several times mentioned in the media. If you could elaborate. One more thing, if you are planning more acquisitions related to alcoholic products, there was in media briefly that you were interested in acquisitions of, I believe, Znovín Znojmo. If you are planning not exactly this acquisition logically, but some other related. Thank you.
Thank you for your question. Healing Waters are a very special category of the functional waters. As I said, functional waters are increasing very significantly currently. This is definitely the category where we are interested in. Especially in this case and also the case of the winemaking company, I will not comment as we do not comment on any acquisitions which are not realized yet. I cannot provide you with more information.
Mr. Arashka, do you have any further question?
No, no. Thank you. Thank you.
Thank you. Ladies and gentlemen, one more reminder. If you wish to ask a question, please click on the raise hand icon on your participant panel. There are no more questions. This concludes today's conference call. Thank you for your participation. Recording of today's call will be available on our web page. You may now disconnect. Thank you and goodbye.