SRTSF (SRTSF) Q2 2026 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. I am Vasu Vasilios, your Chorus Call operator. Welcome, and thank you for joining the Sarantis Group conference call and live webcast to present and discuss the Sarantis Group's half year 26 results. With us today, we have mister Ioannis K. Bouras, group CEO and mister Christos Varsos, group CFO. Participants will be in a listen only mode and the conference is being recorded. The presentation will be followed by a question and answer session. As a kind reminder, you may also join the webcast by clicking on the link provided on the invitation. Please be reminded that this presentation contains a formal disclaimer with regards to forward looking statements. The presentation and discussion are conducted subject to this disclaimer. At this time, I would like to turn the conference over to Mr. Ioannis K. Bouras, Group CEO. Mr. Bouras, you may now proceed.

Hello, everyone. Thanks for joining our call for half year results 2026 today. The agenda is including some highlights for myself, then we continue with-- from the performance, and then we talk about the outlook and before the q and a session. A few highlights about the H1 26. First of all, I would like to reconfirm that, our group is keeping the focus on our strategy reconfirmed based on our categories on our countries, on our region, and, of course, the key strategic priorities. Which we consistently execute as a group. The digital transformation is well on track. We have concluded significant number of projects and go live events in all almost all countries. We have only Poland left for next year. That is what we are working right now. On the CapEx investment, we are, we are on track. We have concluded the majority of the massive program both in digital transformation, but also in our production facilities especially in Poland. I have few details later. And, of course, we will continue investing in our people, developing our organization fit for purpose, and, of course, supporting our strategic agenda. The truth is that in the h 01/2026, we have some significant geopolitical challenges. Related to Middle East. This has resulted a significant cost pressure in raw materials and logistics linked with oil prices and, of course, the overall disruption in supply chain in The Middle East. And as you remember, significant investments concluded by the end of 25, and this investments help us to counterbalance the significant part of the cost pressure. And, of course, this all of these things are still ongoing. We have challenges in a couple of countries, Ukraine, things are not going very, very well in the country. There are events that they are even harder, going harder than the last few months. Romania, there is a country that, although it is 1 of the biggest countries of the group, there are some market issues related to consumption and, of course, overall market performance. The last 1 is the phasing of our US exports. Affecting h 1 results. Although the performance in our in the markets in the market and sell out in both our Carroten brand in US is doing really, really well, and have later some details on that. Key focus commercial excellence. The hero SKUs remains as strategic focus for our, business, the winning brands, and we focus on the key brands of the business. Revenue growth management initiatives to compensate cost pressures, focusing on the right SKUs, and the promotional optimization is a key part of the market. The innovation, fewer and bigger initiatives working with consumers in the region still a key priority, and the international expansion remains 1 of the biggest growth pillars for our future. Moving on the on the on the numbers. High level numbers, Christos, so we will continue with details later on. Of course, from a top line point of view, 1.3% growth. Gross profit, similar. Underlying EBITDA plus 0.4. Strong profitability, There is, of course, pressure in the margins. There is a pressure in the market. Performance, and this is also reflected in our results in H1. If we move on, on our hero brands, which is a major focus, The Carroten brands plus Ormus plus 1% is 62% of the of our branded business. there is a clear focus from our business to develop further our brand portfolio where the major investment innovation and activities taking place Private label business is stable. We saw 11.4% of the group sales. And the overall group is $308 million, as I said before. Now if we move to our categories, in our beauty and skin, the category is -2%. This is reflecting 2 things. 1 is the export phasing, which is included in this category mainly because of Carroten brand. And The Romania pressure, as a market. Which is 1 of the biggest markets in our skincare business. Personal care, 2.7% down. This is also reflecting 2 things. The promotional pressure from all the competition in the region, And, there is a specific category that we are a significant player, it is a pregnancy-related item that is affected mainly although other categories are performing quite well both in sales growth plus market share development. Homecare solutions, +3%. Here, all the investments, all the energy our leadership position in the region, plus the focus on our key brands. And resulting in very positive momentum for our home care solutions and especially in the garbage bags category. The growth is even higher And this is also absorbing the Ukrainian the Ukrainian market, which is mainly home care solutions market for us. Great momentum here. Great projects. And, of course, we expect things to continue in a positive in a positive way in the future. The strategic partnerships part is a good growth rate +4.9% for the 6 months. This is because of 2 things. 1, our focus on the core and better partnerships. That is part of our strategy. The relevant innovation that we have in this from out of this partnership. So innovation and focus is resulting in better performance for our business. When it comes to international markets, here, there are a few highlights, related to the first 6 months. So the majority of the business are in for the Sun Care Carroten brand. And, Of course, there is a skincare Business In The Philippines, which is also doing very, very well for our business. If I-- if I leave The US last Australia is a market that coming up in the second half of the year. We are listed in the big retailers there, and we are continuing with Carroten brand. Middle East, we have much bigger plans for the first half of the year that has been affected by the situation in Middle East So it is putting the whole h 1 for the region under pressure. However, Middle East for us is a long term shot, so we expect things to improve as the situation progress in the region. The good thing also, we have a new country joining in the second half of the year. This is not in our numbers. In the first half, is Chile in South America, which is part of our expansion strategy. Of our 10 brand to Latin America. As a next step for growth. Among other countries that we are working on. In US, there is a lot of positive development in the first half of the year. However, operational reasons and, of course, stock, holding in the customers in The US and our distributor. Resulting this facing issue for the first half of the year. On the U.S., Carroten now is another 1 planning stunning brand in Amazon US. And Target, which is the number 1 retailer that we are working on it. And of course, as we are speaking right now, we are preparing next year, significant upside in our distribution footprint. Especially in brick and mortar stores, in physical stores, Because online, we are still very we are very strong in Amazon, and we continue to be like this. 1 thing is the extra distribution. The other thing is the expansion of the assortment. Where we are in a very good shape right now, and we are preparing the 2027 season. With a lot of positive feedback and from the customers and the consumers in The US. So Carroten is progressing. And we are expecting a lot of good things coming out in the near future. Coming now to geographies. So this is a split between the different countries that we are monitoring. Greece, a positive year. Positive first half. Greek market in specific is doing very well, and we are waiting over other companies. Selected international market markets -14% is what I explained about The US. Poland, very positive. Romania is having the impact as of the market performance. Czechoslovakia and Hungary, this cluster of countries, continue performing very well. West Balkans, is also having a tough 6 months. However, we see signs of improvement from a market conditions point of view because 2025 and first of 26 was quite difficult. Ukraine is positive, and of course, Ukraine reflecting the impact of the market situation. The transformation agenda, as I said, this transformation, all the new SAP implementation is in place. As we speak, we have implemented the majority number of the countries. There were 2 countries left. 1 for next year, which is Poland, We are very near to the to the final go live date. it is going to be in January 2027. And Ukraine will follow later on. From a planning point of view, we have completed all the investments for improving our planning accuracy and of course all the digital tools, enhancing our deep capabilities have been implemented in the business. Manufacturing-wise, we have concluded almost everything in our Stellapak regulation business. And we are now getting the benefits in 2026, but, of course, benefits will even further improve as we are moving on in the second half of the year and 2027, as well. Our Inovita plant in Greece, the expansion is also, in progress. By the end of 26, we expect to complete also the investments there related to our skin care and sun care expansion, both in the region and the international markets. And, of course, all this CapEx supporting also the sustainability agenda for the group. From the ESG point of view, we are improving our ratings We are in line with our with our commitments for reduction of Scope 1 and Scope 2 emissions 42% by 2030 by reducing 11.5% for this year. And, of course, we have improved the ratings from raters improving the scores on our sustainability agenda. So this is this is, the intro from my side. I will pass over to Christos right now to give you more details about the financial performance.

Thank you, Yannis. Let me now provide some details behind the key numbers Yannis described. As you will see, we share underlying and reported numbers. Difference between the 2 relates to a 1-off event: the sale of the old non-operating factory of Polpak. A difference from the value, the brokerage fees and other expense relevant to this €800 thousand. Thus, the underlying P&L is the ongoing 1. The difference between underlying and reported is only this 1, so this influences all lines from EBITDA down to EBITDA, the way to net profit. We should note here that maintaining the non-operating Polpak factory had annual expenses of €500 thousand But after the sale, we will save this going forward, starting from the relevant portion in half year 2. Our net sales grew by 1.3% compared to 2025. We focus on our core categories, on our branded business which improves favorably the mix of sales. Majority of our geography did well with decline though in Romania and Ukraine, which influenced the performance. Also, we have the phasing element on our sales of the US, which influenced the first half. But will be normalized in the second half. In terms of price increase, these were minor in half year 1, and the actual pricing is expected to be effective in Q4. Our gross profit margin remained flat at 38.6%. We started seeing improvement in cost of goods sold as a result of our investments in our production capabilities and the regranulation in Poland. However, this can balance the pressure in the supply chain from the ongoing Middle East conflict leading eventually to the same gross profit margin. Underlying EBITDA grew marginally to $€48.5 million with pressure also in the cost of transportation despite, as mentioned, the mix performance and the cost benefit from our investment. Underlying EBITDA margin was flattish at 15.7%. Underlying EBITDA, €36.7 million posted a 2% decline to prior year with a margin of 11.9 Financial expenses in 2026, although improved in terms of interest expense, following the prepayments of loans, especially in the second half of prior year, were impacted by more than €1 million negative mainly due to the devaluation of the złoty. Following this, our underlying earnings before tax declined to €34.8 million from 36.5 million in 2025 with EBIT before tax margin of 11.3%. Underlying net income of €27.7 million down by 5% versus 29.2 million in 2025, leading to underlying earnings per share at €0.44 Moving now to our product category so you can more about the dynamics in the first 6 months of the year. Only private label is impacted by the sale of the old and has difference between underlying and reported. Starting with beauty, skin, and sun care. This category, as you know, is a key pillar important for our organic growth plans. We have year 01/2026, net sales declined by 2% to €54 million, impacted by the phasing of our US exports in H1 which will be normalized in H2 and by performance in Romania. However, despite the net sales pressure, category EBIT grew by 7.4%, and EBIT margin grew by 280 bps above last year almost 52% affected by the mix within the category. Personal care. In terms of personal care, this was the category with the strongest promotional pressure from the competition and with decline in the sub-segment of pregnancy-related items. We had a decline of 2.7% in net sales, compared to prior year, with EBIT being impacted further by 17% to reach €7 million EBIT with EBIT margin of 14.2%. Homecare Solutions. Homecare Solutions grew by 3% to €95 million. With EBIT growing ahead of sales by 3.6% to €10.8 million. With EBIT margin being stable. Private label sales were flat at €35.2 million compared to prior year with breakeven EBIT. We remind you that we use private labels on a tactical basis to absorb cost from branded business and will, over time, increase branded business and decrease the private label portfolio. Finally, strategic partnerships, We had an increase of our sales by 4.9%, mainly driven by mass distribution, which rose by 12%. While selective business declined by 9% in the period. The EBIT declined by more than 30% to €1.9 million, driven mainly by selective distribution, especially in Romania. As mentioned, the total group will have a solid net sales performance reaching €308.2 million. And we have underlying EBIT of €36.7 million with EBIT margin of 11.9%. Turning now to our geographies. The underlying and reported classification only affects Poland. For Poland, we are also splitting between branded products and private label for better understanding of the dynamics. Greece domestic market grew by 1.9% to €81.6 million, with EBIT being flat, and the EBIT margin below moving by 30 bps. Select international markets, net sales came below prior year to €15 million as a result of the phasing that we mentioned earlier in our US export. This is expected to normalize in the second half. EBIT was also impacted by this, declined to €6 million. The EBIT margin remains at the 40% level, the highest in the group, declining just marginally by 9 bps. Select international markets remain a key focus for our growth strategy, having the strongest margin. And as Yannis described earlier, we expect this to grow in distribution, especially next year. In Poland, total business has net sales of €94.3 million, a 4.9% increase versus prior year. With EBIT growing by 20% driven by branded business. And branded portfolio grew by 2.3% to €65.7 million, whereas the branded business EBIT grew by almost 12% and the private label EBIT improved as well in lower margin, though. In other territories, we had a mixed picture driven by specifics in each country. Romania continues a declining trend, started on the second half of last year, with €44 million of net sales, a decline of almost 5% versus prior year. In terms of EBITDA Romania, achieved €5.7 million, representing a decline of 16.8% with a EBIT margin at 13%. Decline equals 200 bps. We expect this to this trend to continue in the second half of the year as well. Czechoslovakia and Hungary accelerated growth by adding 11.5% more net sales, reaching almost €35 million with €3.45 million which is a 22% increase to prior year. In terms of EBIT margin, this improved by 109 bps, reaching 12.9%. West Balka showed a decline in the net sales of 4% to €18 million, mainly impacted by the Serbian market. In terms of EBIT delivery, West Balkans declined to €1.2 million from €1.6 million in 2025. And then the EBIT margin dropped to 6.8%. West Balkans are expected to improve in half year 2. For Ukraine, this is another year of pressure in the results identified already from our full year results discussion. The net sales dropped by almost 10% to €9.5 million and EBIT continued in the negative territory. Declining further to a €700 thousand loss. As the geopolitical conflict in the area continues and as we witnessed lately, it accelerates. We expect additional pressure from Ukraine in the second half of the year as well. Moving now to our healthy and strong balance sheet. As we have also discussed in the past, we maintain a strong balance sheet which can support our organic growth the next stage of our transformation agenda and M&A activities. As of June 30, we had net debt of €29.6 million compared to €32.8 million net debt on 30/06/2025. In 2025, we also received €20.8 million from a sales order, which 1 in 2026, we did not have a similar amount of cash. I remind you that due to seasonality, our working capital positions as of June were at their best in December. Already today, as we speak, net debt is largely improved versus June standing at €19 million. But by year end, we should again be at net cash position. We have, for H1 2026, improved our working capital by 2 days, releasing extra cash to the business. As we have discussed also the full year results, in the last quarter of 25, we have made early debt repayment of €17 million reducing our financing expenses this year. We have now informed 1 of our lenders for a €7.5 million prepayment to be executed by end of this month and thus improving our earnings per share. We also expect another loan prepayment in Q4. Finally, as of today, we have committed loan facilities of €120 million as a war chest for future acquisitions. Enhancing our shareholder value is key for us. Underlying earnings per share is €0.44 from €0.46 last year declined by 4.4%. During the first half, we paid dividend of €28.5 million or €0.39 per share, representing a 25% increase compared to million paid last year. This represented a 47.1% payout ratio versus 43.5% payout ratio last year. I would like now to provide an update on our coverage for this year. Our new CapEx expectation for 2026 is for €22 million from the €20 million, we communicated earlier this year, which will complete most of our big projects. €18 million was already deployed already. Now coming to our Outlook. The group continues to monitor the ongoing geopolitical volatility to mitigate as far as possible the resultant pressure on raw materials, energy and logistic costs. The pressure continues in terms of cost in Q3, while the price increases that are expected to be largely placed from September late and mostly in Q4. Complexity is further amplified by local pressures mainly within the Romanian and Ukrainian markets. Our strong brands disciplined execution, sharp focus on cost control, and commitment to our strategic priorities provide confidence to continue safeguarding healthy profitability. As the current environment is pretty liquid, we will be able to provide updates on the outlook later in the year. If needed. Thank you very much.

Ladies and gentlemen, at this time, we will begin the question and answer session. If you wish to remove yourself from the question queue, then you may press To our audio participants, please use your handset when asking your question for better quality. Anyone who has a question may press star and 1 at this time. The first question comes from the line of Iacovos Kourtesis with Pyrrell Securities. Please go ahead.

Yes, good afternoon, gentlemen. My first question, as far as I understand, you said you are going to provide an update on the outlook later in the year. However, taking into account that we are almost close to the 9-month period. And today, your initial guidance for the year, it calls for €620 million in sales plus 3.4%, and EBITDA of €97 million, it seems that taking into account your performance until now and the relevant headlines in Ukraine and Romania, would you say how confident are you that you are going to achieve this guidance? Sir, my second question has to do with the fact that you ensured the firepower of financing of €120 million for future acquisitions. How close are you to close any acquisitions? And if you could identify for us potential geographies, what will be your strategy for acquisitions going forward with parts of the business are you targeting for acquisitions going forward? Thank you very much.

Thank you, Iacovos. Thank you for the for the questions. Related to the guidance. I think, that is why because we said the environment is very and there is a lot of uncertainties around Of course, we see things and we say that we can commit for a more accurate number later on the year. And I think what we said is there are lot of pressure in the market. But at this moment in time, we cannot commit to a specific number. Related now to the €120 million facility, What we know, Sarantis Group, has been proven over the years that is always there in the market. The strategy has not changed. We still focus on our Eastern Europe territory. Because, as we said, we focus on categories and geographies that we already present. Which will also give us the benefits of synergies, same channels, and, of course, same categories that we have the knowledge. And we continue to do that. So there is no new geography in the horizon for us at this moment in time. Also what we see since the beginning of the year although in the previous years, was theoretical interest for potentially new, targets that there were, more theoretical interest. Now we have seen more specific processes coming through. Meaning that is more that we have more robust and more, how to say, specific processes around potential targets. However, as we speak right now, cannot say any specific things related to any potential M&A.

Okay. Okay. And my if I may, 1 last question relating to your 5 year plan. I suppose that going forward for 2027-2028, your target remains intact. Your plan remains intact. Going forward. Is it is this correct?

Yes. Yes. It is. Yeah. It is.

Okay. Thank you very much.

€120 million by 2028. December 2028. EBIT of €100 million. Thank you very much.

The next question comes from the line of Natalia Svyrou Svyriadi with Eurobank Equities. Please go ahead.

Good afternoon, and thank you for taking my questions. I hope you can hear me. I was wondering if we could get an indication Well, we cannot we cannot get a number for the full year, but an indication of the of the current running rate. We saw a 1.3%? Was this mainly volume driven? And how has this been evolving Well, for Q3 to date or on what you are looking into current, current figures? On the top line so we could, probably understand if the remaining sales would we should be expecting the 3% rise or something closer to 1.5%. And on top of that, I would like to understand a bit and get some color on the operating expenses rise. Gross margin was stable in H1. So probably, the pressure, apart from the 800 thousand coming from, obviously, from the from the sale of the plant. The remaining operating expenses will have had this pressure. Where did this come from, and have you seen this continuing Should we expect this to continue? I am trying to understand a bit the dynamics of the margin and how much we will be able to catch up to the year end. Well, based on current numbers you have. Thank you very much.

Based on the numbers for the second half of the year, we expect a higher growth rate from a top line point of view. Because the 1.3% needs to be accelerated. So this is minimum you can have in the second half of the year, but we are aiming for higher than that And related to the operating expenses, first of all, on the margins point of view, as you saw from the mix of the category sales, we see that the partnerships, the strategic partnerships part of the business is growing faster than the rest. Right? This is affecting significantly the mix of our portfolio and, of course, the overall margin of the business.

Related to operating expenses, apart from the 1 that Christos has mentioned, there is also some impact in I think it will it will have the impact on transportation and transport expenses. Because of the kind of the fuel and everything else not related to the middle East crisis.

And that was really the part. It was not coming from our, let's what we have under control. It was because it was more external, like the operating expenses. And also, it is little bit more depreciation that is affecting the operating expenses related to the CapEx investments over the last few years that is coming into gate into play, the difference between be the EBITDA and the Yeah.

Okay?

Okay. Yes. Yes. that is what I was trying to understand. it is transport expenses. So probably these will continue. It has to be tough given that the oil price is on the rise again. So Right.

We have to think about also in Q3 is that what we have in Q3 is that we have the pressure from cost, but the pricing will start to hit in Q4. So, potentially, this will be a bit weak at that point.

Oh, okay. Okay. Thanks for clarifying that. Do you have a I do not know if you have a number. How volumes are evolving? Like, in the top line?

We have said that the portfolio of Sarantis Group is so diversified. it is volume wise. You have to go category by category. I can tell you right now, the first 6 months, there is no there is no price increase in the first 6 months of from an from a sales point of view. So the volume that we have is volume driven volume driven growth.

Okay. Great. That is very clear. Can I have another question on the CapEx and the Do you have an updated number on the €22 million you have given us for 2026, you believe this will hold?

We have already done, I think, €18 million. Yes. Yes. As presented, is €22 million, so we expect, instead of the €20 million that we talked about in March, we expect 22 now. But €18 million of this is already done. So it is the remaining part to be done.

Okay. Thank you. Thank you very much for taking my questions.