The Magnum Ice Cream Company N.V. 2026 Q3 Earnings Call

Lloyd, please go ahead. 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, Pieter 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.

Pieter, over to you. Good morning, everyone, and thank you for joining us.

Sorry for my croaky voice. I have been traveling for 2 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%-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%-5%, and we maintain our margin outlook for the full year.

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.

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.

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 U.K. 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 U.S. 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.

Consumers in the U.S. 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 AMEA, 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.

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.

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 U.S., 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 U.S., 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.

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 Celsius, average temperatures were higher, and sunshine hours increased. The extended summer in Europe aided global sales by an estimated 2%-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 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.

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 AMEA 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-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%.

Our fourth quarter 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 40-60 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.