Earnings Call: Q3 2025

Oct 28, 2025

Ladies and gentlemen, welcome to the SIG Q3 2025 results conference call and live webcast. I am Sandra, the call operator. I would like to remind you that all participants are in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. Webcast viewers may submit their questions in writing via the relevant field. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Ingrid McMahon, Director of Investor Relations. Please go ahead, madam. Thank you, Sandra. Good morning, ladies and gentlemen, and thank you for joining us. I'm Ingrid McMahon, Director of Investor Relations, and with me today hosting the call are Anna Erkens, CFO and interim CEO, as well as Jess Spence, Director of Group Finance and Reporting, and Dilma Lebedev, Director of Group Finance, FP&A. As I believe most of you are aware, we will be hosting an investor update in two days' time in Zurich. At that update, we look forward to discussing the group's strategic direction, including capital allocation and mid-term guidance, as was referenced in the company's announcements on the 18th of September. In today's call, we would like to focus on Q3 and the year-to-date financial results and to provide more information about the non-recurring impairment charges also announced on the 18th of September. The slides for this call are available for download on our investor website. This presentation may contain forward-looking statements involving risks and uncertainties that may cause results to differ materially from those statements. A full quarterly statement and disclaimer can be found on slide two of the presentation, which participants are encouraged to read. With that, let me hand you over to Anna. Thank you, Ingrid, and good morning, everybody. Let's start with the key messages for the third quarter. In line with our announcement on September 18, our revenue growth has reflected the deteriorating consumer environment throughout the year. In Q3, this culminated with softer volume demand across geographies and channels, including in emerging markets. Given the challenging macroeconomic conditions and deteriorating consumer sentiment, customers have taken steps to optimize their inventory levels. We also saw a softer performance from the parts of the portfolio that will be deprioritized going forward as we focus on the profitable expansion of our core portfolio, including, of course, aseptic system solutions. As announced on September 18, following a strategic review of the group by the Board of Directors, and in light of the prevailing soft market conditions, we have recognized non-recurring charges of €320 million pre-tax in the quarter. This charge is almost entirely non-cash, and it is expected that the remaining part of the charge, up to €40 million, will be booked in Q4 2025. Associated cash outflows will also occur in 2026, for example, for severances related to adjustments in our structures. We will take a closer look at the composition of the non-recurring charges in a few slides. Despite the tough market environment, however, we expect to place 60 to 70 fillers in 2025. This demonstrates our strong competitive positioning even in the current market situation. However, these new placements will not be sufficient to offset the currently lower level of capacity utilization across the installed base of over 1,400 fillers. Looking ahead, we were delighted to see the commercial launch of the first products filled in our next-generation aseptic spouted pouch system with Alcacor, a leading supplier of tropical fruit ingredients. The product was introduced at the Anuga Trade Show earlier this month in Cologne and received significant interest. This major milestone is a direct result of combining our experience in spouted pouch systems with decades of expertise in aseptic carton filling, utilizing our inline sterilization technology. Lastly, we have an important update on the development of our 85% paper carton. We're very pleased to report the successful recycling trial, which took place at a paper mill in Indonesia in September. The higher paper content lowered the pipeline to half of a standard beverage carton. Crucially, the carton ran within the existing recycling infrastructure of the paper mill and resulted in an improved overall fiber quality and output. Turning now to the key figures for quarter three. Constant currency revenue declined by 3.9%, or by 4.3% on a constant currency and constant revenue basis. Reported revenue was down 6.7%. Adjusted EBITDA for the quarter was €123 million, leading to a margin of 16%. Excluding the non-recurring charges, adjusted EBITDA was €184 million and the margin was 24%. Adjusted net income was €17 million, or €61 million excluding the non-recurring charges. Q3 free cash flow amounted to €55 million, which is below the prior year period. This mainly reflects lower business performance, unfavorable phasing of tax payments, and lower upfront cash collection, partially offset by better working capital. Looking at the nine-month figures, revenue at constant currency slightly grew by 4.4% and was stable at constant currency and revenue. Adjusted EBITDA was €495 million, translating into a margin of 21.1%. This includes €61 million of non-recurring charges. Without these charges, adjusted EBITDA was €556 million with a margin of 23.7%. Adjusted net income was €153 million. Excluding the non-recurring charges of €44 million after tax, it was €197 million in line with the prior year level. Free cash flow showed an outflow of €84 million. The lower free cash flow performance reflects the lower adjusted EBITDA, including the unfavorable currency movements and higher customer rebate payments given the strong volume growth in 2024. CapEx, including lease payments, was in line with the prior year period at €169 million. Net leverage increased to 3.3 times as of the 30th of September. We will provide further detail on net leverage in the second half of the presentation. Let me put the development of the quarterly growth rates into context on this slide, which shows our initial growth assumptions for 2025 compared to how the year has progressed to date. On the left side, going into the year, we assumed a softer start to the year with neutral to improving consumer sentiment as the year progressed. In addition, we expected the second half of the year to benefit from the contribution of new fillers placed. Moving to the right side, higher than expected growth in Q1 of 3% reflected a slightly more optimistic view from customers on end consumer demand. In Q2, however, we saw a slowdown in momentum, although our half-year assumption remained intact. The Q2 slowdown initially appeared specific to a few markets, such as India and a softer Europe, before Q3 saw a more pronounced decline in orders. We believe that this to some degree was driven by customers adjusting inventory levels in light of the deteriorating consumer environment. Turning now to the performance by region. In Europe, year-to-date revenue has declined by 2.5% at constant currency compared to strong prior year growth of above 6%. This performance reflects several factors, including lower availability of raw milk for aseptic processing compared to the strong supply conditions in 2024. Also, the region benefited in 2024 from the ramp-up of filler placements following wins relating to the European regulation on tethered caps in prior years. In particular, Germany experienced a soft third quarter. On the back of higher milk prices, there was an increased conversion of raw milk into cheese. Export volumes of UHT milk have also been lower. The juice category in the region has also declined, impacted by a weak summer season. In bag-in-box and spouted pouch, there's a good project pipeline in the region. In India, Middle East, and Africa, overall revenue development for Q3 2025 was impacted by a strong prior year comparison of 20% growth, leading to a negative 8.2% decline in Q3. For the nine months of 2025, revenue growth has been slightly positive. The region has seen a slowdown in demand for cartons in the Middle East and Africa in the third quarter. In India, market demand has been lower than expected, particularly impacting the on-the-go non-carbonated soft drinks segment. We have reported this already in the half-year, and while the main season is over, the trend is not yet reversing. On the other hand, bag-in-box and spouted pouch revenue performance has been strong, driven by growth in India. Coming to the Asia-Pacific region now. On an aggregated level, the performance of the region has been stable for the first nine months of 2025. However, the third quarter reported negative growth of 1.4%. In China, we have continued to focus on offering differentiated pack sizes and new product launches in aseptic carton. This has led to market share gains in a continuously soft market environment. In chilled carton, especially in China, performance has been affected by the competitive market environment and subdued market conditions, while in bag-in-box, there has been good growth in dairy. Elsewhere in the region, market softness in Thailand and Vietnam led to customer destocking, which was partially offset by a recovery in Indonesia. Lastly, in the Americas, revenue declined at constant currency and revenue by -2.8% for the third quarter, bringing the nine-month growth to 2.6%. Year-to-date aseptic carton has seen good growth in Mexico, Chile, Argentina, and Colombia, especially in dairy. This has been offset by customer destocking in Brazil. In the U.S., bag-in-box experienced a slowdown in Q3 following good growth, especially in syrups and dairy in the run-up to the key 100 days summer season. The out-of-home dining market has remained soft, reflecting subdued consumer confidence. Bag-in-box has also been impacted by a declining market in the wine category within the retail business and lower volumes of industrial bags. That concludes the regional section, and now let's take a look at the nine-month financials in more detail. Adjusted EBITDA at constant currency and without non-recurring charges was up by 1.3% versus the prior year period. The appreciation of the euro, particularly against the Brazilian real, Mexican peso, U.S. dollar, and Chinese renminbi, has reduced the adjusted EBITDA margin by 50 basis points. The drivers behind the improvement to adjusted EBITDA were price increases and a positive product mix, as well as lower raw material costs, mostly due to a favorable polymer price environment. Higher production costs reflected unabsorbed fixed costs and lower production efficiencies due to the weaker than expected volumes in the third quarter. SG&A costs were impacted by wage inflation and growth investments in the first half of the year, while Q3 saw a slowdown in the rate of increase compared to H1 2025. After the non-recurring charges of €61 million, the nine-month EBITDA was €495 million. Let me now provide more color on the non-recurring adjustments. In line with our standard definition, charges included as part of adjusted EBITDA are those where regional management is held accountable for the delivery of returns on customer projects, such as filling line investments or product launches. As you can see from the graph on the right, this portion amounted to approximately €61 million. Charges excluded from adjusted EBITDA include non-cash, unrealized derivative positions, and non-cash impairments of intangible assets. In addition, we also take charges below the line that relate to footprint or capacity rationalization, as well as rightsizing of the organization. Any such booking below the line needs group approvals and rigorously follows our standard definition. Charges excluded from adjusted EBITDA amounted to approximately €260 million for the period, taking the total non-recurring charge recognized in Q3 to approximately €320 million. On this slide, you can see the breakdown of the full €320 million. Approximately €100 million is an impairment to the value of the bag-in-box and spouted pouch businesses, reflecting the weak consumer sentiment and business performance. This has affected the recoverability of acquisition-related assets. Around €85 million of impairments concern the value of the chilled carton business. This principally reflects the weak market conditions in China, which has impacted the recoverability of the assets. Approximately €75 million relate to the reassessment of the required operating capacities in aseptic carton within the context of the current weaker market environment. This includes production capacities in India, selected equipment in China, and some filling lines across locations. Finally, under the headline innovation, around €55 million is associated with the reassessment of the group's innovation portfolio, including the impairment of equipment that's no longer required and the impairment of capitalized development costs relating to projects that have been stopped following the strategy review. As stated earlier, the total charge of €320 million is almost entirely non-cash, and it is expected that the remaining part of the charge, up to €40 million, will be booked in Q4 2025. On this slide, we show our usual reconciliation between reported EBITDA and adjusted EBITDA. For 2025, you can see the impact of the non-recurring charges on the relevant line items with the right-hand side aligning to our definitions as discussed on slide 12. Other includes costs for the renewal of the group's IT systems and consulting charges for the strategic review. While under the column for non-recurring charges, other reflects penalties related to the delay in further expansion of the group's production facilities in India and the charge for the CEO separation. Reflecting the methodology presented on the previous slide, here we show the impact of the non-recurring items on net income and adjusted net income. Profit for the period without non-recurring items was €138 million in 2025. As stated before, the ONYX PPA amortization, which arose from the acquisition accounting when the group was acquired by ONYX in 2015, was fully amortized as of the end of Q1 this year. Net cash flow from operating activities mostly reflected the impact of lower EBITDA, including unfavorable currency movements against the euro, as well as an increase in customer incentive payments for strong volume growth in 2024. Net capex, including these payments, was in line with the prior year and remained at around 7% of revenue. Year to date, there has been a reduction in PP&E expenditure following the completion of the Indian Sleeve Plant, while net filler capex has increased due to lower upfront cash. In line with the group's usual seasonality, peak cash flow generation is expected in the final quarter of the year. Turning to leverage, as you can see from the table, net leverage was 3.3 times with the increase compared to December, reflecting the usual business seasonality. Net debt as of the 30th of September was broadly in line with the prior year period, reflecting a favorable impact from the translation of the U.S. dollar denominated debt. This was offset by a slight increase in gross debt due to the construction of the Indian plant. The group's debt covenants stipulate a net leverage ratio of no more than 4 times reported biannually. The calculation is based on net debt to adjusted EBITDA, excluding asset impairments. Based on this methodology, for the last 12 months, the leverage ratio was 3.1 times. Concluding with the guidance for the year, we confirm our revised 2025 full-year guidance as announced on the 18th of September. This includes slightly negative to flat revenue growth at constant currency and constant revenue. Including non-recurring charges, the adjusted EBITDA margin for 2025 is expected to be around 21%. Excluding the non-recurring charges, the adjusted EBITDA margin is expected to be in a range of 24% to 24.5%. As announced, given the company's increased focus on capital discipline, the board of directors proposes to pause the cash dividend for the year 2025. Lastly, as Ingrid McMahon mentioned at the beginning of the call, this Thursday we will host an investor update with our Chair, Rolf Stangl, and members of the management team to discuss strategic direction, capital allocation, and the mid-term guidance. That concludes the presentation, and we are now happy to take your questions on the Q3 financials. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume of the webcast while asking a question. Webcast viewers may submit their questions in writing by the relative field. In the interest of time, please limit yourself to two questions. Anyone who has a question may press star and one at this time. Our first question comes from Jörn Ifert from UBS. Please go ahead. Thank you very much for taking my questions. I'll be limited to two as advised. The first one would be, please, a quick one on the net filler placements. You said gross filler placements between 50 and 70. What do you expect roughly for the net filler placements for this year? The second question would be, please, on the equity cash flow run rate. I mean, can you just, can I just double-check? I mean, what does it mean now for the full year, the clean equity cash flow? Should it be around $150 million plus minus? Also, can you advise, is there anything we need to consider in the bridge for 2026, like, for example, the one-off cash cost? Maybe if you can clarify how much it will be for 2026 falling into this bridge. Thank you. Yeah, thank you for the question. On the net filler placements, I guess what you try to understand is how much of the impairments that we have booked relates to fillers. I would like to clarify here that the majority of the impairments concerned here relate to fillers that we have on stock, for which we are not confident to place them within still 12 months, which is the rule for considering impairments, given that the market environment is a little softer. Those that are in market where we have taken a bit of an impairment is, of course, fillers that are significantly underutilized, but which customers would like to keep. That said, altogether, I believe we should end probably net filler placements for the year. Difficult to estimate really, but around 40 probably for the year. The second question on free cash flow. You asked where we should consider to land for the year, and I would reiterate the same bridge that we have given already earlier, considering in last year that there was a significant amount of one-timers related to the improvement of filler contracts with earlier upfront cash collection and also the building down of filler inventories. You need to take into consideration, of course, the FX impacts that occurred during the year. The very large portion of the customer rebates, and I believe consensus is not sitting too far wrongly at the moment. Looking into 2026, of course, too early to give a guidance. We will give a very first view on 2026 in two days' time. Special one-timers that you should consider, correct, that is one-off cash outflows for the severance cost of the transformation. I think that's the major part that needs to be considered for next year. Thank you for this. Can you quantify these one-off cash costs around $30 million, $40 million? Is this something I have correctly in mind? Yeah, I mean, when we did the announcement, we said more than 90%, or approximately 90%, will be non-cash. With that, I would land at the same number. Yeah. This is a cash out in 2026, right? Yeah, mostly yeah. Okay, thank you. Welcome. The next question comes from Ioannis Masmoulas from Morgan Stanley. Please go ahead. Yes, good morning. Thank you very much for the presentation. My first question is on the chilled carton where you report a large impairment. This €85 million is nearly a third of the original purchase consideration for the business. You've also noted the competitive pressure in China. I appreciate the investor days coming up, but just if you can provide some color on whether this business is fully up for sale. The second question, looking at your cost base, we've seen aluminum has been fairly strong year to date. Can you remind us of your hedge ratio in aluminum and whether you feel confident to pass through the rising costs next year in light of the weak demand backdrops? Thank you. Yeah, Ioannis, thanks for the question. On chilled, it's correct that the $85 million is a sizable amount, of course, and it reflects really the market conditions that we see, especially in China. I would ask for patience until Thursday before we discuss really the portfolio details, but I guess chilled doesn't really meet the definition of an aseptic solution business. Potentially, you will find the answers on Thursday on that one. On the raw material costs for aluminum, our hedge policy hasn't changed. We always hedge between 50% and 80%. We have done that also last year, and we will continue to do that next year. Looking again into 2026, we will provide guidance, of course, also first indications for guidance on Thursday, and then the detailed guidance as always when we have our full-year earnings release, which this time is early March. Against the market backdrop that is a bit weaker, that's absolutely correct, but we are confident that with our very competitive solutions and innovations, we will also be able to pass on price increases where that is necessary, as we have demonstrated also this year. Thank you very much. The next question comes from Lars Killberg from Stifel. Please go ahead. Good morning, and thank you for taking my questions. Two questions. The first one, you mentioned destocking and customer adjusting their inventory levels. Can you give us a sense of what sort of impact that had on the quarter in Q3? Also, looking into your guidance, of course, I guess clean sort of revenue numbers were down 4.3% in Q3. Your guidance for the full year remains flat to moderately down, which would suggest actually reasonable performance in Q4. The question there is, are you now saying that there will be some year-end sort of purchase rally, which would then also bring the margins to bring it up to your guidance kind of north of 25% in Q4? Let me start with Q3. It's very difficult to single out what is now concretely a destocking impact versus a normal weaker market development. I would also look at it not just so much on a Q3 perspective, but more really on a year-to-date perspective where basically we are flat. The seasonality for the year was a bit interesting. That's how I would look at things. What was built up earlier in the year then was probably contributing to a softer development in the third quarter. Our guidance for full year, indeed, we have confirmed that we will be slightly negative to stable for the full year growth rate. With that, I believe, yeah, we confirm it fully. That leaves Q4 somewhere also negative, but we expect it might be slightly better than what we have seen in Q4. Talking about a year-end rally, as always, the fourth quarter is our strongest quarter. That will not change. That's also what we see for this year. Of course, the last quarter will also drive the margins to a higher level. Yeah. Just to be clear then, as far as your customer contacts would suggest, destocking, we're sort of done with that in Q3. Are you? Your guidance would imply that is the case. Yeah, I mean, that's difficult again to estimate, but I believe Q3 has seen the major portion of that. Yes. Thank you. The next question comes from Pilar Amital from Barclays. Please go ahead. Good morning. Thank you for taking my questions. A couple of them. Firstly, in terms of the softness in various markets that you're highlighting, such as India, China, Germany, etc., are you seeing any structural changes in terms of the per capita dairy consumption? That's one. Secondly, can you just confirm that the restructuring charge and adjusted EBITDA is still expected to be $75 to $100 million for the full year? You have confirmed $61 million for the third quarter. I just wanted to make sure that $75 to $100 million is what you are still expecting for the full year. Yeah. Overall, I would say we don't see really structural changes in the markets. What we see right now is a temporary softness, and we will also be discussing our perspective on markets and opportunities on Thursday. Now, on the non-recurring charges, it's correct that within adjusted EBITDA, we have booked $61 million in the third quarter, and we expect further bookings in the fourth quarter, which of course will also fall into that bucket. Yes, we would confirm at this moment the $75 million to $100 million also in that bucket. That said, I think you also mentioned, or at least I understood that you mentioned severances. Severances don't fall into this bucket, but that would be below the line, as discussed earlier. Thank you. Yeah, welcome. The next question comes from Cole Hathorn from Jefferies. Please go ahead. Morning. Thanks for taking my question. I'd just like to understand a little bit better how you're thinking about 2026. If, you know, volumes have been softer and utilization has been lower, do you plan to kind of pull back some of your CapEx, your filler placements into 2026 to improve utilization of your current filler base? Should we be thinking about kind of a lower CapEx number in 2026? Related to that, on the free cash flow side, should we be thinking about lower volume rebates being paid out in 2026? Lower CapEx and lower volume rebates supporting free cash flow in 2026. Thank you. Thank you for the questions. On 2026, I would ask for a bit of patience still. I mean, it's only October. I think the consideration that probably 2026 is not going to be a year where we hit a record filler placement of above 90 again is a fair assumption. Thinking about free cash flow, where we have discussed for this year that we have had a significant negative impact for volume rebates payout, I would not expect that something like this repeats to that extent, of course, in 2026. For a full 2026, as discussed, the first guidance we will provide on Thursday, and then all the details we will give as always when we release the full-year earnings. Understood. Maybe just focusing on the 2025 free cash flow to help us understand a little bit better the moving parts, just because there's always a very big second half weighting of the free cash flow. You mentioned that the consensus was around the $140 to $150 million free cash flow, broadly in the right space. Could you just reiterate some of the benefits that you get into the fourth quarter? I just missed some of that earlier. Thank you. Yeah, I think as always, the fourth quarter really is driven by two factors. Number one, it's a very large quarter, so more sales, of course, also in the end deliver more profit and with this more free cash flow. You should also consider that in the fourth quarter, there's typically no more payments for volume rebates of the year, because that happens largely in the first half, sometimes in the third quarter, but definitely not in the fourth quarter anymore. Of course, also don't forget we have always a bit of an inventory build-up throughout summer/autumn for the strong year-end season. That inventory will also come down and will drive also a higher free cash flow in the fourth quarter. Does that help? Yes, that was very helpful. The last follow-up, I know you're going to give more on your investor day, but if we think about the impairment buckets and what has been impacted, if you look at the chilled carton, $85 million, that's around 25% of the value that was paid for the packed Evergreen acquisition in China. I'm just wondering, could you give a little bit more context of what you have done in chilled carton to integrate it with your aseptic? Is it still a separate business or how integrated is your chilled carton versus your aseptic business if that is considered non-core for disposal? Thank you. I think it's a separate business and you can run it separately. Of course, we bought it also back then for the reason that it opens up a new customer base for us, also for the aseptic carton. We have been successful in diversifying the customer base in China over the last couple of years. We believe that it's really a standalone business also still today. is no footprint like manufacturing overlaps, etc. You're not producing items in the same factories. It's still separate production for chilled. Exactly. There's limited overlap, and of course, it's in separate buildings. Yeah. Thank you. Welcome. The next question comes from Ben Tielmann from Berenberg. Please go ahead. Yeah, hey guys. Hey Anna, thank you for taking my question. I have two, if I may. The first one would be, if you onboard new clients in 2025, do you have any price erosion year over year, let's say for your cartons or your bag-in-boxes compared to last year? That would be the first question. Thank you. I'm not fully sure I understand that, but if the question is, do we have price decreases? I would say the answer is no. To the contrary, you also see it in the EBITDA average that in the positive wall or positive top-line contribution, of course, comes from pricing. No, the answer is no. Yeah, okay. That was the question. I was wondering, is this the case for all of the substrates you're selling, or is there a mix effect that you have it for the cartons, but not? No, I think that's the same across the different substrates. I mean, you always, of course, for the bag-in-box part of the SIG Group AG business, need to consider the resin portion. That's why we always call it out, and that's why we publish the two growth rates. In that business, as you know, basically you pass on the fluctuations of the resin cost. The resin cost has been coming down, but I wouldn't consider this a price impact as such. That's just the normal fluctuation of the algorithm there. Okay, perfect. Maybe one question, which is a follow-up on the question from you regarding the net filler placements or the gross filler placements. Is there any color you could give us how many of those 50 to 70 on a gross basis or the 40 on a net basis? I mean, this is only related to the aseptic business, right? Maybe any color on the bag-in-box and the spouted pouch business? Yeah, also in the bag-in-box and spouted pouch business, we have been continuously placing new fillers and new equipment. I think we're very happy with the development over there also. Okay, perfect. That's it from my side already. Thank you. Good. Thanks, Ben. As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from Christian Arnold from Oddo BHF. Please go ahead. Yes, good morning all. Question on the non-recurring charges, the $75 million markets and capacities. Could you just repeat what's behind that and give us here maybe some additional color? Yeah, absolutely. The majority of this concerns our Indian plant and also China. In India, we were aligning our capacity investments with the demand outlook in the country. India has not yet achieved really the expected run rate. We need to ensure that the group focuses on really profitable projects in line with our focus on higher margin aseptic system solutions. In China, this relates mostly to impairments of production equipment. The last portion is also fillers, and as I described earlier, fillers that we have in stock which haven't been sold or redeployed within a 12-month framework. It is really very limited on fillers that are in the market that customers want to keep, but which don't run at the capacity utilization as they should. These three baskets, are they kind of similar size or what is the? No, I would say the Indian basket is the biggest. Okay. The second question will be on the net leverage increase to 3.3 times. I mean, you also just mentioned the higher cash flow generation you're expecting in Q4 as always. That should come down by year end. Maybe still, do we have to fear some higher financial expenses on the back of the higher leverage? Some risk premiums you have to pay? I would say, yeah, first, correct, of course, the leverage ratio should come down until the end of the year again, as always, the usual seasonality. Talking about interest costs or finance expenses, in line with the last, the underlying rates being more favorable, of course, also our finance expenses are developing very decently for the year. We are overall below last year. If there's any adjustment on because of hitting a different leverage ratio, that should be really a marginal impact, especially considering the favorable development of the underlying rates. Thank you very much. Thank you. The next question comes from Alessandro Foletti from Octavian. Please go ahead. Yes, good morning everybody. Thank you for taking my questions. Also related on the impairment charges. In a way, I don't really understand where they come from in the balance sheet when I look at your assets in the annual report. Can you give a little bit of an indication how much comes from the fixed assets and how much comes from the intangible assets? I'm not fully sure. Let's put it differently. All the splits, of course, we will publish with the financials for the full year. I think it makes sense to give us the time to really also finalize all bookings during Q4. You can expect, of course, that a very significant portion of the impairments will go to intangibles related to the PPA of the acquisitions. There will be also impairments on PP&E. I think that's basically the two blocks where you would find that in the end. Okay. The capitalized R&D, can you give an indication of how big that is? Yeah, that is a small double-digit million euro amount that we have there. You probably remember from the discussions that were held back then on that topic that this very much relates to know-how generated for a new filling platform that was developed over a couple of years, which in the current market environment proves to be probably too complex and too costly for customers to adopt. That's hence why the decision was taken to stop the project and to not market that equipment further. Right. Is there more capitalized R&D on the balance sheet, or are we talking small amounts at the end of the day? After this, basically nothing. Very small amounts are left. Right. Maybe one last thing. Those fillers that I have now understood, you have some fillers on stock where you have impaired part of it because you cannot deliver them in the next 12 months. Maybe two sub-questions to this. It has nothing to do with this filling platform. You just impaired the R&D on those fillers? For the fillers that are impaired, there is also equipment relating to this new platform that is not going to be filled. The fillers on stock that I had commented before, you know that when fillers are deployed with customers, but then don't reach the utilization that we agreed, we have the opportunity to take them back, which we also do. We redeploy them typically with other customers. For ourselves, we have defined the rule: if such a redeployment doesn't happen within 12 months, then this is an indication that the value of the filler has impaired. In the current market environment, it's more difficult to redeploy fillers, which is why we have taken the conservative approach and have impaired those fillers that sit on stock and haven't been redeployed within 12 months. Will be redeployed later on? Yeah, I mean, this is not perishable goods, of course. If we find an opportunity to redeploy them later, of course, we will do that. Absolutely. Okay, good. Thank you. Thank you. The next question comes from Miro Tuzak from JMS. Please go ahead. Yes, hi Anna, and hi everybody. Thanks for taking my question. Just one question. In the last eight years, you had quite a high increase in installed capacity. Just the net filling machines, the increase, but also given the fact that you install high efficiency fillers and you take back low efficiency fillers, it means that your capacity has grown, the installed capacity has grown much faster than your sales or organic sales growth. The question here, given the fact that at the moment there are some changes happening, you ran into some problems. You mentioned the fillers that you had to take back. Is it fair to assume that in the coming couple of years, the expansion in terms of numbers of fillers is probably going to be a bit less compared to the time in the past? Miro, thanks for the question. I don't have now the numbers of the last eight years perfectly in my head, but if I recall, while filler placements also over the last years, and not only the last two or three, have always been varying between 40 and 90, I believe, 91 being the top and 23 that we achieved, I believe. There are fluctuations in the number of fillers placed, I think it's very normal. Would I agree that 2026, as I said earlier, is probably not a high number of 90 plus, given the current market environment, I would also agree to that. Now, the development of the overall fillers in field versus own growth, we should always also take into consideration that you have a filler with a customer, and then it depends on how much that customer is also growing and develops its business. There is never a one-to-one correlation between the market growth and the growth on the installed filler base. I think that also needs to be taken into consideration. Okay, thank you. Welcome. We will take now some questions from the web. Back over to Ingrid, please. Thank you. We have some questions from Charlie at BNP. He's asking, in total, how much cash one-time outflows do you expect in 2026? Yeah, thanks for the question. Let's come back to the overall announcement that we made, where we said 90% of the non-recurring charges is non-cash. That leaves you with about 10% on the range of $310 million to $360 million, and I think that's a reasonable assumption. Of course, that is pre-tax, that number. His next question is, what share of bag-in-box and spouted pouch today is aseptic? The share of bag-in-box, so aseptic in bag-in-box and spouted pouch, is more than 30% already today and improving year over year, especially now with the placements of the spouted pouch fillers generation two. We believe that this number will grow significantly over the next couple of years, but also in bag-in-box and the dairy segment, of course, we see increases in aseptic content. Great. Thank you. Final question has basically been asked, but I will ask it. What do you estimate to be the destocking effect in Q3, and what gives confidence in the employed sequential improvements in Q4 based on full-year guidance? Yeah, the answer would be the same. It's difficult to single it out perfectly, but we feel that especially taking into consideration the seasonality throughout the year with a stronger build-up in the first quarter, we believe that the majority of the destocking probably has happened in the third quarter, but potentially a little more ongoing also in the fourth quarter. Okay, very good. Are there any further questions? Yes, madam. We have a follow-up question from Jörn Ifert from UBS. Please go ahead. Thank you very much. It's just a follow-up question, please, on the accruals and the volume discounts you are paying. Can you just remind us what is the volume discount you have paid out in 2025 compared to 2024? That way we get a feeling what could be the bridge for the equity cash flow going into 2026. Yeah, I believe our customer incentive accrual at year-end 2024 was approximately €400 million. With the current volume, we believe that this will be lower at the end of this year. To quantify the impact on the free cash flow this year, I believe you could easily assume a very good double-digit number, a mid-double-digit number in million euros for the year. I would believe something between €50 million and €80 million is a reasonable assumption for the year. As a cash outflow linked for the incentives for 2025, this is unlikely falling away in 2026, given that your volumes are flat to mighty down. I'm not perfectly sure that you can make that bridge, to be honest. It's always the combination of how much you pay in a year for last year and how much you collect in the year for that year. It's a bit more complicated, that math. If you ask me, while it was a significantly negative hit for this year, it should not be a negative hit, definitely next year to even slightly positive. Okay, thank you. It is never black and white, but not to the same degree. Yeah, I understand. Thank you very much. Thank you. We have another follow-up question from Cole Hathorn from Jefferies. Please go ahead. Thank you for my follow-up. Just an administrative point. For your investor day on Thursday, are we expecting a release in the morning or after market, just so that we can get some context of how you're going to put it out on today? Thank you. Hi Cole, yes, as usual we will have a release on the day summarizing the contents of the investor update. We will put that out in the morning together with the presentation. Thank you. We have another follow-up question from Miro Tuzak from JMS. Please go ahead. Yes, hi, thank you. One question regarding also again the number of filling machines and the impact on your free cash flow and CapEx number. If you look into the past years with these record high installments of new fillers, 2022 and 2023, and also the elevated levels around these two years, we could see that the upfront cash number liability in the balance sheet has also gone up quite significantly. If you install less fillers, there are two opposing effects, I believe. One is obviously you have lower CapEx, but you also have lower upfront cash, and then you also probably have to run down or to deliver the goods, which are now basically stated in your balance sheet number. The bottom line from these three opposing numbers, is it positive or negative? If you take all the three numbers into consideration and you assume that you have less gross filler CapEx going forward, is it positive or negative for your free cash flow? I wouldn't look at gross filler capex in that respect, but always at net filler capex. That is, I think, important to bear in mind because over the last couple of years, I believe the team has done a very good job in improving the procedures and our contract frameworks also on how we place fillers to the market. We have managed to drive the ratio of upfront cash up quite a bit. If I recall well, in last year, the filler capex or the net capex of fillers in % of revenue was only a little more than 1%. That's significantly less than what you have seen in earlier years. That said, I think it also makes sense to, of course, also consider a ramp-up time of fillers. It always takes up to, I don't know, 12 to 24 months to ramp up the fillers if you want to model what it means if you have a lower placement rate. Again, I think we have said that for quite a while, any number between 60 and 80 is a good number. While we have been at 80 or higher a couple of years now, probably the next years, it's rather in the lower end of that range. Overall, the impact of net capex related to filler placements is not a big one anymore as it used to be because of the improved go-to-market model here. Sorry to follow up, to ask again, would the bottom line then be positive or negative? You know, if you grow less quickly? Yeah, if you grow less quickly and consider that you don't have a super big investment anymore these days, it will have a negative implication for the free cash flow. That's, I think, clear because the lower growth probably means also then lower profits. Okay, thank you. We have another follow-up question from Palav Nital from Barclays. Please go ahead. Hi, thank you for the follow-up. You did comment on aluminum and the cost being high over the last few months, and you will clearly give more clarity in a couple of days. Any indication in terms of your liquid paper board because those are slightly longer contracts and you do negotiate in Q4? Any indication on how we should think about the paper board costs for next year? Yeah, I think no change compared to the usual answer on liquid paper board. We have a number of multi-year contract arrangements with our suppliers, and there are fixed mechanisms in there, which typically result in a low single-digit price adjustment. I wouldn't see any reason why that should be different next year because both contracts are in place and will be executed accordingly. Thank you. Welcome. This was the last question from the phone. Back over to you for some other written questions. Thank you. We have a question from Thorsten at CapLabs. Can you provide an update with respect to the litigation? Any changes in context of what has happened since summer? Any updates on the timeline? Thank you for the question. We don't have an update on the arbitration processes compared to what we have discussed in summer. There's a further question from Massimiliano at Stifel about the dividend. We'd ask for your patience to wait for the investor update, please, in two days' time. Good. I think those are all the questions that have been asked. If there are no further questions, we will end the call. Thank you all very much, everybody, for dialing in. Thank you for your questions. We look forward to welcoming you on Thursday in Zurich. Thank you. Thanks. Ladies and gentlemen, the conference is now over. Thank you for choosing this call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.