Operator: Good morning, and welcome to The Magnum Ice Cream Company webcast. My name is Peter Black, and I will be your operator for today's call. Before we begin, please note that today's presentation is being recorded. At this time, all participants are in listening only mode. After the presentation, we will move into a Q&A session. Instructions for Q&A session will be provided at the time, and we will take your questions one by one. With that, I am pleased to turn your call over to Lloyd Midwinter. Lloyd, please go ahead.
Lloyd Midwinter: Hello, and welcome to our webcast for the Q3 2026 trading update of The Magnum Ice Cream Company. My name is Lloyd Midwinter, Head of Investor Relations, and I am here with our CEO, Peter ter Kulve, and our CFO, Abhijit Bhattacharya. Our press release and this investor presentation are available on our investor relations website, where a replay and transcript of today's webcast will also be made available. Before we begin, I would like to draw your attention to the cautionary statement regarding forward-looking statements and assumptions included in this presentation. This applies to the presentation, webcast, and Q&A session. Peter, over to you.
Peter ter Kulve: Good morning, everyone, and thank you for joining us. Sorry for my croaky voice. I have been traveling for two weeks through Asia and picked up a bug. First, the headline. Our Q3 performance was extremely strong as we gained market share driven by volume-led growth ahead of a growing ice cream category. Our revenue grew 12.1% to EUR 2.5 billion, with organic sales growth of 9.6%, led by 7.3% volume. All regions achieved strong growth in the quarter, with the extended summer in Europe aiding growth by an estimated 2% to 3%. Aside from our top-line performance, we are delivering productivity savings in line with our plans. Given our strong performance year to date, we are upgrading our growth outlook to approximately 5.5% from 3% to 5%, and we maintain our margin outlook for the full year.
Peter ter Kulve: Before getting deeper into the results, I want to briefly reiterate the value creation model we previously set out. Ice cream is a growing category, and as the leader, we are focused on building and activating our brands like the top beauty companies, bringing the execution rigor of the best bottling businesses, and building an ownership culture accountable to deliver. In practical terms, that means creating consumer desire and having the right products in the right place at the right time and at the right price. This combination of innovation, execution, and ownership mindset is driving our growth momentum. Our first summer season as a standalone company shows the impact our strategy is having on performance, share gains across all regions, and leading the category in delivering volume growth. The good news is these are still early days.
Peter ter Kulve: We have been laying the foundation for the future, investing in our brands, building our innovation pipeline, and improving our execution rigor. All of this gives me confidence in the opportunity ahead. I will now get into the quarter, which was a great one. As mentioned, our revenue reached EUR 2.5 billion, driven by organic sales growth of 9.6%. Reported revenue was up 12.1%, mainly due to 2.6% growth from acquisitions. Our growth was led by 7.3% volume, 7.3% volume, and supported by 2.2% price. This demonstrates the strength of our brands and our innovation pipeline. Our frontline first organization was able to capture higher demand with improved execution. Let me share more about what this looks like. All three of our regions contributed to growth.
Peter ter Kulve: Europe and ANZ grew 8.9%, driven by successful innovation and share gains in key markets, whilst also benefiting from favorable weather, which I will address later. We achieved double-digit growth in several markets, including France and the UK and Ireland. Magnum and Ben & Jerry's both grew double digits, with innovation driving performance. In Europe, pricing was lower, mainly due to channel mix and phasing of promotional spend during the quarter compared to previous year. Americas achieved 3.9% growth, with continued momentum from our leading brands in the US. I am particularly pleased with our volume growth of 2.3%, which reflects a disciplined approach to an evolving category. We focused on driving growth through innovation, including handheld and premium formats, with strong performances from Yasso, Ben & Jerry's, and Popsicle.
Peter ter Kulve: Consumers in the US are still willing to spend when you get the product right, and Yasso is a great example of this, growing 30% in the quarter after multiple years of growth before. Now, looking towards EMEA, sales were 17.6% higher, supported by freezer cabinet expansion, innovation, and execution. We achieved strong performance, including in Pakistan, India, and Turkey. Unfortunately, China continued to be impacted by unfavorable weather, and we experienced channel shifts that we need to deal with. Our focus on brands and innovation, execution, and availability is clearly delivering growth across all our regions. These results demonstrate both the strength of the ice cream category and our ability to win. Innovation continues to be one of the most important drivers of our growth. Year to date, more than 10% of revenue has come from new products. Our approach is aligned around four focus areas.
Peter ter Kulve: First, strengthening our core portfolio through quality upgrades and relevant flavor innovation. Second, managing our portfolio architecture across format, flavors, price points, and channels. Third, unlocking more occasions with new formats from our premium brands. And fourth, expanding the categories through new products with innovative benefits. We have had some great successes. The best example for this season is Magnum La Pistache, which has become the number one ice cream innovation across Europe and exceeded even our own expectations. This is a great example of what our enhanced focus as a standalone company can deliver. One of the areas I am most enthusiastic about, where we are delivering strong results and see further opportunities, is unlocking more occasions with new formats from our premium brands. Investing in the expansion of our Ben & Jerry's portfolio is delivering growth and bringing new consumers on board.
Peter ter Kulve: The brand has an exciting runway for growth as we combine innovation with the unique quality and purpose of Ben & Jerry's. Our new formats have been a great success, with sticks ranked as three of the top 10 in the US, and sandwiches ranking within the top five of innovations in Europe. Today, we offer Ben & Jerry's in formats for nearly every snacking occasion. A pint for relaxing on the couch, pieces for sharing, sandwiches and sticks for on the go. For consumers in the US, where snacking occasions are being redefined, we are meeting the moment, and we are taking this playbook around the world, expanding our other premium brands with new formats such as Magnum Cones, Solero Bonbons, and the Yasso Pints. Now, I will take a moment to talk about the weather.
Peter ter Kulve: Everyone based in Europe will know we had an extended summer, which was supportive to growth this quarter. Across key markets, there were more days above 25 degrees, average temperatures were higher, and sunshine hours increased. The extended summer in Europe aided global sales by an estimated 2% to 3% during the quarter. Favorable weather alone does not deliver share gains, and in some parts of the world, the weather was even unfavorable. What really differentiated our performance was improved execution, which is where our frontline first model really came into play. That said, we are not perfect. We will continue to strengthen our refreshment portfolio, create better joint business plans, build supply chain flexibility, and implement more advanced planning and forecasting. These capabilities will enable us to respond faster, increase availability, and better capture consumer demand at peak moments during the summer season.
Peter ter Kulve: Another important competitive advantage is our freezer cabinet network. We have around 3 million freezers worldwide and expanded the fleet by 4% this year, driving increased availability. We are deploying more freezers in key markets, focused on the higher growth EMEA region, and introducing new innovative formats to increase the efficiency and effectiveness of our fleet. Our approach is highly disciplined. We target the right outlets, deploy and activate our freezer cabinets, then keep them productive and reinvest with discipline. Our cabinets generate on average EUR 1,200 to EUR 1,300 revenue per year. Therefore, expanding our fleet by 4% contributes around 1% to growth, and you can expect us to continue investing in freezer cabinets to drive sustainable growth in the future. Now looking towards the full year, we are upgrading our growth outlook to approximately 5.5%.
Peter ter Kulve: Our Q4 is relatively small in terms of sales and mainly the low season and in more developed markets with slower growth. Therefore, we expect Q4 sales to be at a similar level to last year. We are maintaining our outlook for margin improvement in line with our multi-year financial framework. Productivity savings and operating leverage are expected to offset higher costs, primarily driven by oil and energy prices. On a comparable perimeter basis, we continue to expect adjusted EBITDA improvement of 40 to 60 basis points. Reported adjusted EBITDA margin improvement is expected to be zero to 20 basis points, mainly due to the impact of our acquisition in India. This reflects an expected margin improvement of approximately 70 basis points in H2 after absorbing around 100 basis points of additional cost inflation related to oil and energy.
Peter ter Kulve: To summarize before our Q&A session, let me close with a few key points. First, I am extremely proud of the team for delivering such a strong performance with revenue up 12.1% and organic sales growth of 9.6%, led by 7.3% volume and all regions growing. Our productivity program remains firmly on track. Second, our priorities are clear. We are focused on creating demand with our leading brands and innovation and are converting that demand through increased availability and improved execution. This is compounded by our frontline first ownership culture. Third, and maybe most important, we have room to run. Whilst the external environment remains uncertain, the fundamentals of our business are strong, the category is strong, and we continue to be laser-focused on executing our growth strategy and productivity program.
Lloyd Midwinter: Thank you, Pieter. We are now happy to address your questions. Please start by asking one question each so everybody has a chance to participate. If you have follow-up questions after the call, please feel free to contact me and the investor relations team. Operator, please start the Q&A session.
Operator: Thank you. At this time, I am just going to remind everybody how to ask a question. As a reminder, you will need to press star 11 on your telephone keypad and wait for your name to be announced. If you want to withdraw your question, you need to press star 11 again. With that, I am going to hand over to Lloyd, and the first question is coming from David Roux.
Lloyd Midwinter: Great. Thanks. First question.
David Roux: Morning, Pieter. Yeah, morning, Pieter. Congratulations on a very strong performance. I guess as we look into 2027, I guess, the group is probably a victim of its own success following a very strong first year as a standalone business. I am not looking for guidance for 2027, but I just want to get an understanding of the strategy. Now, you obviously have the medium-term guidance for 3% to 5% OSG and 40 to 60 basis points margin expansion. I am just wondering to what extent would the business look to protect that
David Roux: next year, and what levers do you have to protect that algorithm? Or would you be comfortable temporarily operating outside this to sustain investment behind your brands and ensure long-term growth? Because obviously, we are going to be coming off a very high basis of comparison this year, in particular on the growth number. Thank you.
Peter ter Kulve: Yeah. Thanks, Dave. Sorry, my voice is a little bit bad. Yeah. Last year we did 4.6% growth. This year we do 5.5% growth. So this is 2 years that the engine is running. What is now driving The Magnum Ice Cream Company's growth? First, ice cream is a good market. The latest figures I looked at in the US, the market was growing 4%. Globally, it is growing between 3% to 4%. So we start with a good market. Then we have now a well-codified embedded system to drive distribution with a lot of operational rigor. We believe it drives approximately 1%. Then we have a very good approach, I believe it seems to work 3 years in a row, towards innovation, which we also believe contributes 1% a year. So we are fully confident with our algorithm delivering 3% to 5% a year because the engine is running.
Peter ter Kulve: We really know how to create demand in this healthy category.
Lloyd Midwinter: Great. Thanks, Peter. Now for the next question. The next question is from Warren.
Operator: Yes, sorry. Warren, your line is open now.
[Analyst] (Barclays): Yeah. Hi, Peter. Lloyd, Warren here at Barclays. Well, one and a kind of follow-up. My main question really is on the margins again, Peter. You mentioned kind of the operational leverage from this top line growth and the productivity kind of offsetting the higher cost oil and energy. I am just wondering whether you are able to kind of help us a little bit more on that, because I guess the one area where you have not quite yet shown your mettle fully is on margins. I was wondering whether we could get like a little bit of an idea on how you kind of see the kind of the gross margin and then a drop-through to the operating margin from the volume. I do not know whether there is a rule of thumb on the volume drop-through to the margin.
[Analyst] (Barclays): Then if you are able to kind of just identify and maybe quantify some of the buckets on the leverage and productivity versus the COGS pressures that you have got, just to help us a little bit more understand the shape of the H2, with regards to the kind of zero to 20 bps guidance, that would be good. Then the kind of housekeeping follow-up from what you are saying, Peter, are you able just to kind of put some numbers around market shares actually in some of the key geos? Thanks.
Peter ter Kulve: Let me, hey, Warren, let me start with market share and then hand over the margin question to Abhijit, and he will tell you how the productivity program is translating into the step-up of gross margins and EBITDA. Our market share this year was in a very good territory again. In most markets, we are gaining share. Year to date, Germany is a little bit iffy, so I am chasing the German GM. In the US, we had a period of weakness, which is correcting now because Häagen-Dazs went on a promo drive as a reaction to our stick introduction. In Breyers, we probably got the pricing a little bit wrong for 2 months. But again, we expect this year to have share growth in all regions, including the EMEA region. It is looking good, but as always, it is hard work. You have a good month, competition reacts.
Peter ter Kulve: But again, our model of distribution, expansion, and innovation helps us to structurally gain share in the global ice cream market. But market by market, there are always ups and downs in the quarter, but we seem to be winning this year. Abhijit, over to you.
Abhijit Bhattacharya: Hi, Warren. Let me give you 2 cuts on the margin, one on full year basis and one for the second half of the year. Of course, we get with this growth leverage. But what we got hit this year, as you are aware, is the oil impact and energy impact. On a full year basis, that was about 70 bps. So we have a positive leverage of around 30 bps or so, but that gets eaten up by the oil impact. Then, of course, we had productivity gains as well as some of the commodity tailwinds that we had, which kind of offsets it, which allows us to keep the guidance for the full year flat. That is also in line with what we had said that we were planning to compensate the oil impact earlier in the year.
Abhijit Bhattacharya: Unfortunately, it has lasted the full year. But more importantly, as Peter mentioned in his opening comments, the second half, our margin impact, our overall margin improvement is 70 basis points in the second half. Despite a 100 bps impact from oil in the second half. So actually, we are exiting the year in the second half with a pretty good profit momentum despite the 100 bps from oil.
Peter ter Kulve: And we keep on investing behind our brands and behind our customers. We actually invest more instead of less.
Lloyd Midwinter: Great. Thanks, Warren, for your question. Hopefully, that answered both parts. Antoine, I think next question from your line, please.
[Analyst]: Thank you, Lloyd, and hi Peter. Hi, Abhijit. Quick question. So you said that you expected Q4 to be broadly flat. Anything to flag there beyond the pre-buying reversal in Europe? I would have thought that growth would remain good considering Breyers relaunch, US momentum being pretty good and easy comps. So yeah, anything to flag, thanks.
Peter ter Kulve: Yeah. Basically, we are a seasonal business. Q1, everybody is running very hard to get the cabinets in place to secure the new shelf space at retailers to land the innovation. So it is a built-up quarter. Then we have two quarters of harvest, where now for a couple of years we had some decent harvests. And then the last quarter is basically a slower quarter for us because it is mainly in home channel, in developed markets, and our investments tends to go to Q1, 2, and 3 because you get a better return. So it is not the season that we are driving very hard. The good news is that actually with the buildup of the Southern Hemisphere, I hope that in the future, Q4 becomes much more of an active quarter for us as a business. It is now 13%.
Peter ter Kulve: Our dream of the day is 20%, 20% fueled by innovation, fueled by trade activities, because that would balance the business a little bit more. We now guided for flattish after an outstanding year.
[Analyst]: Thank you.
Lloyd Midwinter: Thank you, Peter. Next question, please. I think from the line of David.
Operator: David, your line is open.
David Hayes: Actually, that is David Hayes, if you can hear me.
Lloyd Midwinter: That is you. Go ahead.
David Hayes: Yes, there we go. It is not David. I am going to ask the Ben & Jerry's question about the article that we saw in The Week just to put some clarification on this situation that continues to obviously linger on and off in the media. Just to understand, is Magnum open to discussions at a price? I guess everything has got a price. If something was offered for Ben & Jerry's that covered stranded costs and was just too good to be true, is that something that you would engage in, or is there a certain circle or not? I guess just to also clarify, that is the only circumstance that that discussion would take place. There is nothing that we should be aware of in the agreements that mean that an offer that comes in needs to be entertained for any other reason than any other commercial approach.
David Hayes: Thank you so much.
Peter ter Kulve: Let me start very simply. Ben & Jerry's is not for sale, and there are no offers, as you have read when you have read the article more correctly. Ben & Jerry's is absolutely flying. We had a double-digit growth quarter, year to date at 9%, driven by innovation in the handheld formats. Our occasion-based growth strategy of The Magnum Ice Cream Company is working for Ben & Jerry's. Ben & Jerry's is flying. They are very edgy in all their campaigns. Nothing has changed. We have a new independent board installed. We have a very enthusiastic leadership team. No, it is embedded. It is working. It is growing. It has always been noisy over the year. Ben is still trying to create noise. Actually, you could ask yourself the question, is that actually bad for the brand? Not when you look at the sales figures.
David Hayes: Yeah. Thank you.
Lloyd Midwinter: Very good. Okay, so time for the next question. Guillaume, please go ahead with your question.
Guillaume Delmas: Thank you very much. Guillaume Delmas here at UBS. Good morning, Peter, Abhijit and Lloyd. My question is on Turkey, really. A key country for you. Peter, can you maybe talk about what you saw in Q3 in Turkey, and particularly to what extent you have been able to compensate for all these measures imposed by the Turkish Competition Authority? Are these measures having a significant impact on your margins there because Turkey tends to command above group average margin. Any color on what you saw in Q3 and the outlook for Turkey would be great. Thank you.
Peter ter Kulve: Great question. Guillaume, why is Turkey such a special country? Because over time, we were able to get consumption up from 0.5 liters a head to 7 liters a head, which is almost a German level. How did we do that? It is innovation driven, penetration driven, bringing new occasions, and extending distribution to when you go on holiday in Turkey, basically, there is literally an Algida at Amslenks, just that there is Coke at Amslenks. This year, Turkey had an unbelievable run with innovation, whether it is the Bold Cone, whether that is their new scoopable take-home range, whether it is their new Cornetto program, honestly, it is one of our best innovation machines. When we got to intervention, which obviously we implemented in Q2 to keep 30% of the shelves empty in smaller outlets, we basically did the following. The team focused on building new sales channels.
Peter ter Kulve: We built up a 3,500 units scooping business around Turkey. We extended our market shares in hard discounters, actually quite successfully. We opened more out-of-home outlets, the smaller type. And in some smaller outlets, we extended the size of the cabinets that we could still sell our former portfolio. This basically led to a very satisfying performance in Turkey, where we basically hit all the original growth targets and with that, all the leverage. But more importantly, most of the innovation we put in was actually quite premium innovation, which had a good impact on the margin. Now, so Turkey is in outstanding space, and we continue to work with the authorities to help them with their program.
Guillaume Delmas: Thank you very much.
Lloyd Midwinter: Okay, so moving to the next question. Over to you, Sam from Goldman Sachs.
[Analyst] (Goldman Sachs): Morning. Thank you for taking my question. Congratulations as well on the results today. I just wanted to dive into your comments on innovations. Firstly, thank you for quantifying the impact that it has had for this year. Is that similar to historical years, or have you really seen a step up in 2026 versus history? How is that comparing with the market? Then just thinking through to 2027 and beyond, we have seen a real step up, at least, as a consumer, I have seen that on the shelves, a real step up in genuine innovations from Magnum. How do you make sure that essentially you still have new, exciting formats and flavors that stay relevant and that it does not become too crowded? Thank you.
Peter ter Kulve: Sam, thank you for this question, because we have two drivers that gives this business a growth rate ahead of the industry. One is distribution, which we have already discussed. The other one is innovation. Basically, we created an innovation model that is focused on creating new ice cream occasions and new ice cream benefits. This year, when you look over a 2, 3-year period, 30% of our products is new. In the first 9 months of this year, 10% of sales comes out of new products. These are not just new products, a new flavor of Ben & Jerry's. No. New formats, driving new occasions, driving category growth. That is why at this moment in time, actually our customers are also very happy with us because we truly drive category growth. We also drive new benefits. We are leaning in very heavy on protein.
Peter ter Kulve: Yasso now being more than half a billion. Who would have imagined that growing at 30% is phenomenal. Ice cream is full in the protein because we are a dairy product, but these protein versions obviously accelerate even more. Our Hydro:ICE, our hydration products. Our innovation engine works, and our innovation next year is better than this year, and I am more than convinced that the year after will be better yet. Because the motor is really starting to up. Not only in the US, but also in China, also in India, and also in Europe. Innovation is one of the things that sets The Magnum Ice Cream Company apart, and I am really proud of that because it is really a lot of work, but our models work, our combination of R&D and marketing works, the link to the markets for fast implementation works.
Peter ter Kulve: It is an engine that is humming.
Lloyd Midwinter: Great. Thanks for that question, Sam. Now moving to the next question from Michiel, KBC.
Operator: Michiel Declercq, your line is open.
Michiel Declercq: Yes. Hi, Michiel Declercq from KBC Securities, and thank you for taking my question. My question will also be a bit of a follow-up on EMEA, Turkey. I appreciate, of course, the measures that you have taken, being the supermarkets, the bigger focus on the scooping part, et cetera. Now, if I compare it towards Q2, it implies a meaningful step up in volumes, Q3 versus Q2, whereas you still had those TSA impacts. I am just wondering, what is the big reason for this step up? Is it also maybe the other countries, Pakistan, India, that are accelerating? Or is it really in Q3 that you saw these measures that you have taken in Turkey come into effect? Just the bridge a bit here from close to zero to almost 6%. The drivers behind that, and if it is more than just Turkey.
Peter ter Kulve: India is on fire, but we will publish the results on 6 November. But have a look. Pakistan is on fire, is really doing really well. Turkey is doing really well. In Q2, we actually got stock back because we had to empty all these bloody cabinets and that is negative sales. Now, we basically implemented a whole program and Turkey is full on volume growth again. So the Turkey program worked, but also the rest of the region is doing extremely well. So that is basically driving it. It is a very proud part of our portfolio because the whole model, I took a bunch of analysts to Turkey. India is now in full implementation of the Turkish model, and will it work? In Pakistan, we started a little bit earlier. Pakistan is on fire.
Michiel Declercq: Cool. Thank you.
Michiel Declercq: Thanks, Michiel, for your question. Moving to the next question now, over to you, Charlie, at Rothschild. Please go ahead with your question.
[Analyst] (Rothschild): Yeah. Hi, Peter, Abhijit. Thanks for the question. Hope you are well. I just wanted to follow on a bit on the EMEA region and ask a bit more information on China, please, where I think you spoke about some bad weather and channel shift. Is that the right amount of stock in the channels at the moment after the bad weather, or could we perhaps see a bit reversing? Then maybe just a follow-up on India. Can you just provide a bit more color on the recipe transformation and shifting more to dairy? When should we start seeing those new products coming to market? Thank you.
Peter ter Kulve: Thanks, Charlie. Good question. Maybe you do not know, I worked five years in China and I helped to create a model that delivered multiple years of share growth. We are now a clear number two in China for many years. Yes, the weather in China was not very good, especially in Q2, beginning of Q3, but that is not the real thing. I spent a month in China to really investigate what is going on. What you see is that we have a stronghold in convenience stores and supers. Convenience stores and hypermarkets, not supermarkets, they are mostly hypers, are under severe pressure. There is a new channel building up, which is the snacking channel. These are 200 to 300 meter stores dedicated to snacking, with sort of 15,000 snacking products in there, and they are growing like gangbusters. Three years ago, there were zero, there are now 70,000.
Peter ter Kulve: We need to adapt our business model, trade structures, partly innovation, investments, to better capture the growth in this channel. That is why I was there. It has a benefit for us because these channels are more tier 4, tier 5 cities than convenience and hypermarkets, which we are very focused on tier 1 and tier 2 cities. So we are adapting our business mix to the channel shifts, and that is actually way more interesting than the weather. There are no overstocking in China. I have worked in China too long. As a hawk does, Abhijit and I look at stocks, at distributors in every single country in the world. Not under our watch will this become a problem, and it is not a problem now. But of course, when it slows down, you really see it in the figure that it slows down, and that is fine.
Peter ter Kulve: Structurally, China is a really good market and I am convinced that we can further grow our shares. Flipping to India, we did four things in India. We changed our formulations to dairy ice cream. We got a very good response on that, both in impulse and take home. By next year, most of our portfolio should be in dairy, and it is working. We see that in brand image tracking, but we also see that in sales. Can not say too much, 6 November. What we also did is do a price adaption to hit popular price points. Again, seems to work, volume is coming through. We changed the distribution system for more modern trade and wholesale trading to the Turkish distributor cabinet model. Seems to be working and accelerating growth.
Peter ter Kulve: I can not say a lot more about the result because otherwise I get into trouble with the Indian regulator. 6 November, the results come out.
Lloyd Midwinter: Great. Thanks, Charlie.
[Analyst] (Rothschild): Thanks.
Lloyd Midwinter: Hopefully that addressed the two parts there to your question. We've got next question coming from Jeff. Jeff at BNP Paribas, please go ahead with your question.
[Analyst] (BNP Paribas): Okay. Thank you. Two questions, if I may. The first one is just thinking about COGS pressures a little bit more. This year you've got oil, but on the other side, you've got cocoa. If we think forward, obviously there's a lot of things going on, but as things stand today, how would you frame the aggregate COGS picture for next year versus what you've experienced this year? That's the first question. The second question, you've spoken before, Peter, about GLP-1s, but predominantly through the lens of the US. I'm just wondering if there's been any incremental learnings from markets like the UK, where GLP-1 penetration's starting to quite meaningfully now, and whether you're seeing anything different to what you saw in the US. Thank you.
Peter ter Kulve: Yeah. Hi, Jeff. Two good questions. Yeah. This year, we had swings and roundabouts. Chocolate came down, oil went up. Next year, we expect a sizable COGS inflation, approximately 6%, EUR 180 million, 50% in D&E, 50% in developed markets. We can manage this. Our pricing capabilities in emerging markets is the same as the former mothership. In developed markets, we'll need a little bit of pricing. Everybody will need pricing. Retailers will need pricing. Competition will need pricing because costs go up, and that should not be a problem. We feel that we can handle this in our normal business mix. Then, getting to your second question on GLP-1, it's fascinating we get more and more data going in. I've also presented that at the Barclays Back to School conference. GLP-1s lead to different snacking and food behavior, when you make it specific for ice cream.
Peter ter Kulve: What you see, the scoop of vanilla on top of a big apple cake, that is going away because the apple cake is going away. But handheld ice cream, portion control, more premium, better ingredients, wellness is booming. It's growing more than 6% in the American market, where not a lot grows in food. We get actually pretty decent tailwinds there. Obviously, we also have to manage Breyers brand, so it's not all everything goes up. But Jeff, can you believe it? Yasso growing with 30% after five years of growth, now more than half a billion. We have some serious tailwinds behind our business.
[Analyst] (BNP Paribas): Thank you.
Lloyd Midwinter: Thank you. The next question now coming from Tom. Tom at Deutsche Bank, please go ahead.
Operator: Tom Sykes, your line is open.
Tom Sykes: Thanks. Yeah, hi. Tom Sykes at Deutsche. Just to follow up on the COGS question. Do energy costs form part of the basket that retailers look at when you are negotiating prices? Do they just look more at the agri commodities, then you have to factor in or try and negotiate more on the energy costs? Then just on the shelf space, the cabinet expansion, footprint expansion, could you maybe say something about how larger retailers are viewing that for next summer, given some out of stocks and the strength of demand? Maybe on the energy side, do you at all see people switching off cabinets and reduced capacity when energy costs are high? Presumably it is a high cost for them to run the chilled cabinet in their own retail outlet. Thank you.
Peter ter Kulve: Abhijit, can you take the first question on energy cost? I will take the second part.
Abhijit Bhattacharya: Hi, Tom. When we discuss with retailers, we take the whole basket of commodities, and that will include chocolate, dairy, milk, but also energy is very much a part of cost. It is not that we leave it out. The energy cost partly sits in our gross margin, and partly sits in our distribution cost. From a P&L point of view, you see it above the gross margin and below. But yes, it is part of the negotiations, absolutely.
Peter ter Kulve: Yeah. On are cabinets being switched off? No, they are not. Do retailers, small and large, need price increases because their own logistic cost and their own energy costs up? For sure. We are here together with our customers that we need to manage the P&L of the category. Out of stock this year, I think we learned a lot. It looks easy growing double digits in the market with a lot of volume. It is actually not that easy. It is a logistic tour de force, not only of our own factories, our own warehouses, our own distributors, but also for the retailers. Actually, we had too much out of stock in Q3 in certain countries, certain customers.
Peter ter Kulve: Together with them, we are now working on plans, more store delivery, more back of store space, for example, in certain hotspots, putting a refrigerated container in the parking lot. We are working through with a lot of operational rigor in plans to help the retailers live with heat waves, because I do not know whether we will have three or four next years, but we are going to more heat waves. All of us need to learn to work with these heat waves because there is a lot of money in a heat wave. Because a heatwave is an unpromoted sale, both for retailers and for ourselves. They are super profitable, but you need to be able to get the stock in the right place. Imagine, during a heatwave on Sunday, that is a logistic tour de force.
Lloyd Midwinter: Great. Thanks, Tom. Hopefully that addressed your questions. Next question comes from Maxime. Maxime at ING, please go ahead with your question.
[Analyst] (ING): Hi. Good morning, Peter, Abhijit. Hope you are doing fine and safe recoveries to you, Peter. One question actually on TSAs. I understand from the press release that you will start the digital implementation in the UK in November. When may you see the first results and what is basically the plan in terms of communication to the market with regards to that transition? That would be all for me. Thank you.
Abhijit Bhattacharya: Could you just repeat the last part of your question? Sorry.
[Analyst] (ING): Yeah. Basically, when and how do you plan to communicate with the market with regards to the IT transition, any milestone we should be aware of?
Abhijit Bhattacharya: Yeah. First, the TSAs, we have been updating every quarter since we separated, and we have been exiting them in line with the original plan. You see that also in the press release of this quarter. The IT TSAs, we will now start unwinding as we implement the new IT system that we have. From an implementation point of view, we go live on 1 November this year with UK, Hungary, and Romania. That will happen. We have taken all the necessary precautions of pre-selling a little bit so that no customer is affected. When we come with our Q4 results, we will tell you how that has gone.
Abhijit Bhattacharya: Then we have further rollouts as planned next year, and the idea is to have it all done before the end of next year so that we can exit the TSAs before the end of 2027.
Peter ter Kulve: But so far so good. Fingers crossed, but we are prepared. We often talked about this tech switch as an enormous challenge for the business. To be honest, it is, because it is a humongous project. We need to data harmonize over the whole company. We have redefined 860 processes and harmonized them. But when we get out of this, and I am sure we will, we have the most modern tech stack in our industry, and we will have way more data and way more opportunities to apply agentic solutions to run the business better. It is a lot of work, but by the end of next year, this will truly be a different type of company. Much more Reflute and much less ABN AMRO.
Lloyd Midwinter: Great. Thank you, Maxime. Good question. So time for, I think, our final question before we wrap up the call for today. Jeremy from Van Lanschot, please go ahead.
[Analyst] (Van Lanschot): Hi. Morning, all. Just to follow on the pre-buying and technology rollout questions topic. I just had a few quick-fire questions. Are you able to quantify the impacts that you experienced in Q3 of the pre-buying? You mentioned that the technology rollout would start in November. How long will customers be impacted for, do you think? Does it impact all the customers in the markets you just mentioned or certain parts of the market? I assume this technology needs to be rolled out to other countries in the future, so other countries will experience similar pre-buying and pull forward as a result? Thanks very much.
Abhijit Bhattacharya: Yeah, let me take those quickly. So one is the impact for pre-buying, because it was only small countries, and we are doing it in the off-season, it is not big, it is less than 50 bps in the quarter. For Q4, it is slightly bigger, simply because the sales in Q4 are smaller. It impacts all customers in the market because you change, and that is why we ensure that we supply some of them a bit in advance so that there is no impact to the customer. There is a regular plan. Per country, this is a cadence that we will roll out over the next 12 months. So it happens with any kind of rollout. We have a very experienced team. Yeah, we do not see anything new to be looked at on this.
Lloyd Midwinter: Okay. Thanks, Abhijit, for answering that question. That is it for our Q&A session today. So time to wrap up the call before we close.
Peter ter Kulve: Yes. Thanks for joining. Yeah, it was a good quarter. Most importantly for me, the quarter showed that operational rigor is improving, that we could deal with heightened demand in an efficient way. Still things to do better, but it was heavy lifting. Most important, our underlying model is working. Distribution expansions, I spoke about at the Capital Markets Day during the launch of the business, are truly delivering the growth. Our innovation engine is firing, which makes me feel confident that we can also sustain decent growth rates in a decently growing industry. Productivity is coming through. Tech transformation is heavy lifting, but at the end of it, we have a different type of company. Thanks for following us, and thanks for being present at this call.
Operator: This concludes today's.
Peter ter Kulve: Thanks for joining.
Operator: Oh, sorry. This is the operator here. I was going to say, this concludes today's conference call. Thank you for participating. You may now disconnect.
