Ladies and gentlemen, welcome to the AGRANA results for the first three quarters of 2025-2026 conference call. I am Sandra, the Chorus Call operator. I would like to remind you that all participants will be 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. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Investor Relations Officer, Hannes Haider. Please go ahead.
Good morning, ladies and gentlemen, and welcome to AGRANA's conference call presenting our results for the first three quarters of 2025-2026 financial year. First of all, a happy new year and all the best for 2026. As announced in our conference call invitation, a presentation is available in reference to this call, and you can find this presentation, as always, in the IR section of our website. Our CEO, Stephan Büttner, will hold today's presentation, and as you can see on page two, the presentation is divided into three parts. We will start with a general introduction focusing on the main topics of the first nine months. We will go on then with comments on the financial performance, especially on segment level. And finally, we will conclude with an outlook for the remaining financial year 2025-2026.
The presentation will take about 15 minutes, and afterwards, the lines will be opened, and we will be glad to answer your questions. Now I may pass over to our CEO, Stephan, who will start the presentation with slide number three.
Thank you, Hannes. Good morning, ladies and gentlemen. Yeah, first of all, happy new year also from my side. So yeah, after three quarters in the actual business year, we are on track with the implementation of our corporate strategy, NEXT LEVEL . Also regarding our financial targets for the business year 2025-2026, so in Q3, EBIT, we saw a significant increase as forecasted. Also for the first nine months, we have a stable result despite the EUR 20.4 million extraordinary expenses in the sugar business for restructuring in Austria and the Czech Republic, so the sites Leopoldstorf and Hrušovany. The operative performance in sugar is still negative, but we see a slight improvement during the business year, mainly due to our restructuring or, let's say, cost savings. Yeah, a large market-driven decline in earnings. Still, the economy is under pressure.
We see this also especially in the paper industry, but also in the food industry and the construction industry. Here we are now working on our operative business-level strategy to focus also in the future even more on specialties. And Food & Beverage Solutions, again, delivered strong earnings, and this is very important for stabilization of our group EBIT, as also already in the previous year. Key figures: so revenue, EUR 2.494 billion in the first three quarters. Operating profit amounted to EUR 73.3 million. Exceptional items I already mentioned, EUR 22.8 million. This comes mainly from the restructuring or the social plan in combination with the closure of the sites Hrušovany and Leopoldstorf, and therefore then this resulting in an EBIT of EUR 48.4 million. Free cash flow positive with EUR 76 million close to the EUR 87.8 million last year.
Net debt increased up to EUR 470 million, but there is already included the cash out of around EUR 50 million for the acquisition of Austria Juice. Gearing 42.4%, up a little bit versus prior year, and equity ratio still very solid with around 44%. When we look at the implementation of the AGRANA NEXT LEVEL strategy, so of course, I already mentioned the termination of sugar production at the sites in Leopoldstorf and Hrušovany. We acquired the remaining 49.99% of Austria Juice shares from RWA. The deal was closed mid-October 2025, and now we are working on the integration, especially of the specialties, the added value business, so beverage compounds and flavors, natural flavors, and bringing this closer together with our Solutions business from the fruit preparations.
Also in summer 2025, we announced the acquisition of the Slovenian food company Mercator-Emba, also very important for growing our food service business in our Food & B everage Solutions segment. So we expect the antitrust approval in the course of January. And last but not least, we were also successful in negotiating a new contract with the Austrian beet farmers. It's a three-year contract with a new pricing formula for the raw material, reflecting the actual pressure on the sugar market, but also the higher input factor costs like energy, but also personal costs. So I think this was a very good compromise, and we are very happy that we are sure that this will secure our sugar production in Austria in the remaining site, Tulln, for the next years. Let's move on to the financials.
So I again want to inform you that we will see a new segment report, that we have this new segment reporting since March 1, 2025, but we for sure already know this. So now we have a new structure with Food & Beverage Solutions. This was the former fruit segment. We have our agricultural Commodities & S pecialties segment, starch and ACS sugar, and we are separately reporting the whole thing. So now let's move on to the revenue by segment. Total revenue, EUR 2.5 billion. I already mentioned that this is a decrease of around 8% versus prior year. So we saw a growth of 2.3% in the FBS segment, - 1.4% in starch, and a significant decline in sugar by 34%. This is, of course, volume-driven, but also price-driven. It clearly shows, yeah, the reduction of our footprint in the sugar business.
The market in sugar is still and continuously under pressure also due to the, let's say, good crop in 2025. The production volumes are, let's say, the reduced beet-growing areas are compensated by this good harvest. Therefore, yeah, there is enough supply of sugar in the market, and therefore the sugar prices are still under pressure. In starch, of course, lower sales volumes of saccharification products. Saccharification products are somehow always linked to the sugar market. If the sugar market is under pressure, also the market for saccharification products from our starch production is also somehow under pressure. Yeah, ethanol is still very volatile. We saw an increase in the recent months, but then it went down again, and now it's somehow stabilized during the last weeks at around EUR 630-EUR 640 per cubic meter.
Yeah, and Food & Beverage Solutions, we are happy that we again saw the growth this year in the first nine months. When we look at the sugar world market prices, but also in the European Union, you see in the graph the massive decrease of sugar prices in the last months. So now we see somehow a stabilization. Yeah, it will be very, very interesting to see what happens now in March, April when beets are seeded for the production processing campaign in 2026 autumn. So one thing is very clear: we need a further reduction of areas planted, beets planted in the European Union. Otherwise, the market will not be able to stabilize, also facing this hard pressure on the world market side for sugar.
The outlook for 2025-2026, so we confirmed our outlook with a significant increase in EBIT and a moderate decrease in revenue on group level. And, outlook for the segments: Food & Beverage Solutions, a slight increase in revenue and a slight increase in EBIT. ACS Starch, a slight reduction in revenue and a significant reduction in EBIT. And in Sugar, a significant reduction in revenue and a significant improvement versus prior year in EBIT. So, thank you, ladies and gentlemen, and let me hand back to Hannes Haider for the financial calendar.
Thanks so far. Before we go on with the Q&A session, just one remark. I wanted to remind you that our annual results for the full year will be published on the 12th of May, and the annual general meeting will be held on the 3rd of July. We will now go on with the Q&A session.
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 while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Vladimira Urbankova from Erste Group. Please go ahead.
Yes, hello. Good morning and happy and successful new year to you as well. And I will have a couple of questions. First of all, looking at the performance of the individual business areas, if you could a little bit elaborate on the 3Q slowdown in the FBS segment while quite significant improvement in the starch. I know there was in the starch a low comparative base, but still, because these divisions developed a little bit not as it is indicated for the full year, I would like to know what were the major reasons for the 3Q developments and if these reasons continue to affect the fourth quarter as well. And then my next question would be related to the sugar area. Here you pointed to a new pricing model.
Maybe if you can, in a nutshell, share with us what is the major difference between the old pricing model, new pricing model, where do you see the key factors which will affect performance of sugar segment? And last but not least, what are, in your opinion, preconditions for sugar segment return to profitability, in particular, with which price levels at your currently streamlined structure will allow you to get out of the red zone? This would be it for now. Thank you.
Yeah, thank you very much for your questions. So first question, Q3 performance, food and beverage solution segment, so we see no significant decline versus prior year. So in the year 2024, 2025, in Q3, we had an EBIT of EUR 22.5 million in Q3, and this year we have EUR 21.8 million. So this is a normal, let's say, normal development. It's a seasonal effect. So third quarter is always weaker than the quarters before in the FBS segment, so there is no significant change. And in starch, I think it's always very important to know that the wet corn season is taking place in Q3, which gives us significantly lower costs in the raw material side, and therefore the performance is higher, but also ethanol prices were significantly higher than in the Q2 and Q1.
Your next question, sugar business, yeah, it's not a new model, but the model is more or less the same that we negotiated with the beet farmers in Austria, but it's a different curve. It's a different price curve for the raw materials. This means the raw material price, so the beet price, is directly linked to the sales price of sugar. And then I think it's very simple to explain it in that way that you say, "Okay, now we have a different increase in the beet price if the sugar price goes up by EUR 50 per ton than before." So we significantly flattened the curve. And this is very important.
The old agreement was made in 2017, 2018, and this was a time when we never expected an inflation that we saw in recent years, and therefore we were not expecting sugar prices of, let's say, around EUR 500, EUR 600, EUR 700 per ton. And therefore, yeah, the curve was not appropriate, let's say, for these price levels from our perspective. So we were successful at renegotiating this, and now we have a much flatter curve than before when we're talking about the price range between EUR 500 and EUR 750 per ton of sugar. And when you ask me for the preconditions, so that, and please let me also mention, we do not see any sugar producer currently in Europe having no losses, clearly saying that, yeah. So we don't think that with the actual price levels of EUR 500, EUR 550, the industry is able to survive.
So we think that at least EUR 600 per ton are necessary for growing beets on one hand for the farmers and on the other hand for the processors to enter or to leave the so-called red zone, yeah. But this is our perspective, yeah.
Thank you very much.
The next question comes from Baptiste de Leudeville from Kepler Chevreux. Please go ahead.
Yes, hi Stephan, hi, Hannes. Happy New Year to you. Thank you for the presentation. Most of my questions have been answered previously, but maybe one question about the M&A. Can you just remind us the cash flow impact of the acquisition of the remaining shares of Austria Juice and also of the acquisitions of Mercator-Emba? And also, can you give us some explanation on the rationale of the acquisition of Mercator-Emba? Maybe going a bit deeper on this and the profile of the company and what do they do and what is the size? What is the size of it? That's the first question, and then I will have a second one. Thank you.
Yeah. First of all, cash flow impact from the acquisition of Austria Juice, we said that the payout for acquiring the shares is around EUR 50 million. So this is the direct cash flow impact. For Mercator-Emba, yeah, the size is around EUR 35 million cash out if the transaction will be approved by the antitrust authorities. The rationale behind this, clearly, we want to grow our Food & Beverage Solutions segment. Austria Juice, we already mentioned several times that we want to bring together our competencies of Austria Juice in the added value business with natural flavors, but also beverage compounds with our food preparations business and the global footprint. So we roll out our competencies there globally. And so let's say primarily these are market-driven synergies that we are looking for. And Mercator-Emba is a very important supplier of large quick-service restaurants in the food service segment.
Food service segment is one of our growth pillars in our Food & Beverage Solutions segment, and this is a very strong company with huge skills in the production of dessert toppings and sauces, and it matches perfectly well with our competencies in our food preparations business.
Thank you. Very clear. And the second question is regarding sugar. You seem very clear about the fact that there would be no rebound if the surface of beets does not reduce. When will you have more visibility on this? In March, April, you will have good visibility on this? Okay. Yeah.
Yeah. I mean, we already see some signs, yeah, so we expect a reduction. Of course, we have more visibility in March, April, and then it depends on the weather conditions. I mean, we saw already a significant reduction in the beet planting areas in the last year. Unfortunately, or yeah, we must say unfortunately, the weather conditions were so good, yeah, that the campaigns are now really big in Europe, and the production volumes are much higher than in the previous year. Therefore, the reduction of the surface was compensated by that, and therefore there is no outlet because the world market prices are so heavily under pressure, so everything is coming together right now. We have excellent, yeah, harvesting conditions or expectations in the major countries of sugar production like Brazil, India, Thailand, and so on, and we have a very good crop in Europe.
So there is no space for, let's say, exporting sugar to the world market for good prices. So the sugar stays in Europe and leading to heavy price pressure in the European market because there is an oversupply. And therefore, we need a significant reduction of sugar production in 2026. Otherwise, the markets will not stabilize and the prices will not go up. So yeah, I think we need to wait for March, April, and then see what happens in the summer. But when you look at the curve of the development of the sugar prices in the last years, I mean, it's up and down. Now we had a massive downward trend. I think it was also triggered by the high import volumes coming from Ukraine during two years, significantly more than one million tons duty-free. And sugar can easily be stored.
So this is weighing, let's say, on the sugar balance in Europe. And therefore, we have all these problems now.
Understood. Thank you. Thank you, Stephan.
The next question comes from Elias New from ODDO BHF. Please go ahead.
Yes, good morning. Thanks for taking my question. I just have a question on your guidance, your EBIT guidance for this year where you're still guiding for EUR 45 million- EUR 60 million, I believe, and given you've reported around EUR 48 million year to date for nine months, that would leave quite a big range for Q4, so I calculate around - 3 million to +1 2 million, so just wondering if you could comment which assumptions are baked into this guidance and whether you expect to end up closer to the top end of that EBIT guidance or closer to the bottom end.
Yeah. So it's not so easy, I mean, to predict right now. We still have volatilities, especially in ethanol. So it depends what happens in the last three months or the last quarter in ethanol prices. And then, of course, it also depends on the evaluation of our stocks in sugar. It also depends on the sales volumes in Q4, which means how big will be the demand, what will be the final stock situation in sugar, how do we need to evaluate it. So these are, let's say, plus minus the variables here. And our expectation is an EBIT for Q4 of between EUR 6 and EUR 12 million, I would say. So we will come closer to the upper range than to the lower range.
And therefore, this means our EBITDA should amount between EUR 190 and EUR 200 million for the business year 2025, 2026. But this is our actual estimation. It really depends on all these things happening in Q4. So it's not so easy to predict, especially in sugar and ethanol.
Understood. That's very clear. That's very helpful. And just a second question on the tariff impact. I mean, I believe your FBS business is quite exposed to the U.S. Could you just give us an update here in terms of the impact you're seeing from tariffs in the current financial year and whether we should expect a similar impact in the next financial year as well?
No, it is not impacted. Our FBS segment is not impacted by the duties from the U.S. because we have a local business there. The major impact comes from duties on goods that we import to produce, especially our food preparations in the United States for the customers, the local customers. But all the price increases are passed on to the customers. So there we see no negative impact when we also do currently not expect a negative impact in the next year, provided that things remain as they are. So if there are new ideas coming, potentially new tariffs on products from Mexico, Canada, and so on, so then we need to reassess the situation. But currently, we see no impact, no major impact.
Perfect. Thank you very much. And just final question from my side on the savings as part of your NEXT LEVEL strategy. I was just wondering, are we still on track to achieve around EUR 50 million of savings this year, or where do we currently stand?
Yeah, yeah. Of course, we are still on track. So we can increase the number up to EUR 60 million already.
Perfect. Very clear. Thank you.
As a reminder, if you wish to register for a question, please press star followed by one. Gentlemen, so far, there are no further questions. Back over to you for any closing remarks.
Thanks, as there is no further questions. Thank you for your interest in AGRANA and your participation in the call. We wish you a nice remaining day. Goodbye.
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