Novozymes A/S (NSIS-B.CO) Q3 2026 Earnings Call Transcript

Operator: Ladies and gentlemen, welcome to Novonesis 9 Months 2026 Results Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Tobias Cornelius Bjorklund. Please go ahead, sir.

Tobias Björklund: Thank you very much, operator, and welcome, everyone, to Novonesis' conference call for the first 9 months of 2026. As mentioned, my name is Tobias Bjorklund, and I'm heading up Investor Relations here at Novonesis. In this call, our CEO, Ester Baiget; and our CFO, Rainer Lehmann, will review our performance as well as the outlook for 2026. The conference call is expected to take 50 minutes, including time for Q&A. If you change to the next slide, it's -- I would just remind you that, as usual, I would like to say that the information presented during the call is unaudited and that management may make forward-looking statements. These statements are based on current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in any forward-looking statement. With that, I will now hand over to our CEO, Ester Baiget. Ester, please.

Ester Baiget: Thank you. Thank you, Tobias, and welcome, everyone. Thank you for joining us this morning. We delivered a strong organic sales growth of 7% in the first 9 months of the year, including around 1 percentage point negative impact from exiting certain countries. Sales synergies contributed a good 1 percentage point and pricing contributed close to 2 percentage points. At the same time, we delivered a strong adjusted EBITDA margin of 37.9%. Growth was well balanced geographically with developed markets growing 7% and emerging markets growing 6% in the first 9 months. The performance once again shows the strength of our diversified portfolio. We serve a broad range of industries, end markets and geographies with different underlying growth drivers. This diversity gives us resilience. It gives us the ability to deliver consistent compounded growth in a world with changing market dynamics. Innovation remains at the heart of our performance. We launched 18 new wire solutions during the first 9 months, and we are on track to deliver more than 30 for the full year. These solutions address important and growing customers and consumer needs, including healthier and better products, higher yield and more resilient and efficient production. Based on the strong results for the first 9 months of the year and a solid start for the fourth quarter, we remain confident in our full year guidance of 7% to 8% organic sales growth. We indicate fourth quarter organic sales growth to be in the range of high-single digit. Growth for the year is expected to be mainly volume-driven, supported by a good 1 percentage point contribution from synergies and around 1.5 percentage point from pricing. The outlook also includes a close to 1 percentage point negative effect from exiting certain countries. We continue to expect the adjusted EBITDA margin to be at the higher end of the 37% to 38% range. On October 1, we completed the acquisition of the remaining shares of MicroBioGen, where we have been a minority shareholder since 2013. The acquisition strengthens our yeast technology platform with proven value applications in biofuels today and exciting potential into many of the other industries we serve. We also reached 2 important milestones when it comes to expanding our production facilities. The expansion of our culture facility in West Allis has successfully started production ahead of time. And we have also initiated the development of our new enzyme facility in India that is expected to start up production in 2030. Together, these attractive return investments strengthened our ability to support customers globally and capture future growth. With that, let us now look at the divisional performance in more detail, and we're going to start with Food & Health Biosolutions. Could you please start -- turn to Slide #4? Thank you. Food & Health Biosolutions delivered a strong organic sales growth of 9% in the first 9 months, including a negative impact from exiting certain countries of around 2 percentage points. In the third quarter, organic sales continued to be strong at 8%. Pricing contributed in line with the group and sales synergies also contributed positively to growth. The adjusted EBITDA margin was 37% an increase of 100 basis points compared to last year, mainly driven by sales leverage. Innovation continued to support growth. And in the third quarter, we launched 3 new products in Food & Health. In Food & Beverages, we launched a new solution for cooked meat that helps customers extend shelf life, while at the same time, maintaining freshness. We also launched a solution for pasta, giving producers greater raw material flexibility without impacting the texture and the quality of the product. For 2026, we expect the division to deliver organic sales growth around the higher end of the group range, driven by Food & Beverages. Could you please turn to Slide #5? Food & Beverages delivered very strong organic sales growth of 12% in the first 9 months and 14% in the third quarter despite a high comparable. Growth was broad-based across all industries with a positive contribution from synergies and pricing. The performance reflects both increasing penetration of our solutions and strong customer adoption of innovation. We continue to see customers looking for biosolutions that can help them to produce more efficiently, while at the same time, meeting growing consumer demands for healthier products and cleaner labels without compromising nor taste nor texture. Dairy continued to show strong momentum. Growth was driven by customer adoption of innovation, including solutions for high-protein fresh dairy products and the strong growth in demand for probiotics. Cheese also delivered solid growth, supported by continued conversion to our DVS format. Across baking, beverages, meat, and plant-based solutions, growth was also strong, mainly driven by penetration and innovation. Here, our broader technology toolbox and increased commercial reach allow us to address more customer needs and bring our solutions into more applications. For 2026, growth in Food & Beverages is expected to continue to be broad-based, supported by synergies. Human Health was flat organically in the first 9 months of the year and declined 8% in the third quarter. Synergies and pricing contributed positively, while the exit of certain countries had around 1 percentage point negative impact on growth in the first 9 months. Advanced Health & Nutrition delivered solid performance, supported by both Advanced Protein Solutions and Early Life Nutrition with continued strong growth in HMO. In the third quarter, Advanced Health & Nutrition was soft, in line with expectations, including continued strong performance in HMO. In dietary supplements, we continue to see strong growth in the health care practitioner channel, both for the first 9 months of the year and in the quarter. Growth is supported by our differentiated and documented strengths and innovation. Outside North America, dietary supplements continued to grow. This growth is offset by the decline of North America off-line dietary supplements, which declined further in the third quarter. The North American dietary supplements market is challenged by a changing U.S. consumer behavior, further accelerated by reduced buying power. This has led to softer probiotic demand, especially in traditional formats and channels such as capsules in the offline segment, where we have a relatively high exposure. Additionally, the changing consumer and retailer preferences are affecting our customers where de-stocking added further pressure than anticipated in the third quarter. While the U.S. change in consumer behavior is currently impacting our dietary supplement business negatively, we see a strong double-digit growth in probiotics for fresh dairy, showing the strength of our diversified exposure. Our confidence in the underlying attractiveness of the category and in our ability to capture growth as consumer preference continue to evolve is strong. This is supported by a higher level of activity of reformulation projects with both existing and new customers with broader channels and formats. Further, we have an exciting innovation pipeline, building on the growing demand in areas such as women's health, longevity and weight management. For 2026, Human Health is expected to slightly decline following the weakness in U.S. Dietary Supplements. Advanced Health & Nutrition is expected to contribute positively, led by HMO and supported by Advanced Protein Solutions. We currently expect the U.S. Dietary Supplements business to recover in the second half of 2027, driven by the initiatives already underway. A market recovery by then or earlier would provide further upside to growth or accelerate the timing of the recovery. Could you please turn to Slide #6? Planetary Health Biosolutions delivered organic sales growth of 6% in the first 9 months of the year and 4% in the third quarter. Growth was mainly volume driven, supported by both pricing and sales synergies. The adjusted EBITDA margin in the first 9 months of 2026 was 38.6%, up 90 basis points, driven by sales leverage and the Feed Enzyme Alliance acquisition, while currencies had a slight negative impact. In the third quarter, we launched 4 new biosolutions in Planetary Health. In Animal, we launched 2 new enzyme solutions, enabling greater feed raw material flexibility and improved phosphorus utilization. For 2026, we expect the division to deliver organic sales growth around the lower end of the group range, supported by both sales areas. Please turn to Slide #7. Household Care delivered organic sales growth of 7% in the first 9 months of the year and 4% in the third quarter, in line with expectations. Growth was mainly driven by increased market penetration, particularly with local and regional players across both developed and emerging markets as well innovation across categories. For 2026, we expect growth in Household Care to be driven by increased penetration of solutions across geographies. In Agricultural, Energy and Tech delivered organic sales growth of 5% in the first 9 months of the year and 4% in the third quarter. Synergies contributed positively to growth. The first 9 months benefited from the inventory buildup in Animal in the first quarter, while the partial reversal had a close to 2 percentage point negative impact on growth in the third quarter. Energy delivered double-digit growth in the first 9 months across the relevant regions, reflecting increased production and penetration of solutions for ethanol and biodiesel. Strong momentum continued in the third quarter against a high comparable, especially from the second-generation ethanol. Agricultural grew in the first 9 months, driven by Animal. And as mentioned, slightly supported by an inventory buildup in the first quarter, partially reversed in Q3. Plant declined overall, impacted by a weak U.S. farm economics. Tech declined in the first 9 months, driven by order timing in biopharma, processing aids and a softer grain processing end market. Growth has sequentially improved through the year with a flat performance in the third quarter. For 2026, Agricultural, Energy, and Tech growth is expected to be broad-based, led by energy and agricultural. With this, let me now leave the word to Rainer. Rainer, please?

Rainer Lehmann: Thank you, Ester, and welcome, everyone, also from my side. Let's turn to Slide #8. At the group level, organic sales growth was 7% in the first 9 months of the year with contributions of close to 2 percentage points from pricing and a good 1 percentage point from sales synergies. Sales in euro increased by 7%, amounting to EUR 3.37 billion, including a negative impact of 2% and a positive M&A impact of 2% from the Feed Enzyme Alliance acquisition. The organic sales growth included around 1 percentage point negative effect from exiting certain countries. In the third quarter, organic sales growth was 6%. Sales in euro increased by 7% to EUR 1.14 billion, including a positive currency impact of 1%. Pricing contributed close to 2 percentage points, including the minor negative effect from U.S. tariff refunds and sales synergies contributed a good 1 percentage point. The adjusted gross margin was 59.8%, an improvement of 90 basis points compared to the first 9 months of last year. Pricing, productivity improvements and sales leverage drove the improvement. Total operating expenses adjusted for PPA-related depreciation and amortization were 29% of sales compared to 28.6% in the first 9 months of last year. The development was mainly driven by the increase in resources over the course of 2025 from both organic expansion and the Feed Enzyme Alliance acquisition. The adjusted EBITDA margin was 37.9% in the first 9 months, 60 basis points higher than last year. In the third quarter, the adjusted EBITDA margin was 38.3%, 120 basis points higher than last year. The improvement was driven by higher sales leverage. And while the first 9 months of the year had a slight currency headwind, currency had a minor positive contribution to the adjusted EBITDA margin in the third quarter. Cash flow from operating activities was EUR 898 million in the first 9 months of 2026, an increase of 1% compared to the same period last year, supported by higher net profit and partly offset by increased receivables following the higher sales and planned higher inventories as new capacity was to be taken into production. CapEx totaled EUR 340.9 million in the first 9 months of the year, corresponding to a CapEx to sales ratio of 10.2%, in line with our expectations. Free cash flow before acquisitions was EUR 557.1 million, corresponding to 17% of sales and a decrease of EUR 111.3 million year-over-year, driven mainly by the temporary higher investment level. As part of the inaugural share buyback program that was announced back in August, we committed to buyback EUR 75 million in 2026. We are well on track executing it and bought back shares for a total amount of EUR 14.8 million as of the end of September. With this, let us now turn to Slide #9 to look at the 2026 outlook. Please note that the outlook presented today is based on the current level of global trade tariffs and the prevailing foreign exchange environment. As Ester mentioned, we confirm the organic sales growth outlook of 7% to 8% for the full year. Growth is expected to be mainly volume-driven with a good 1 percentage point contribution from sales synergies and around 1.5 percentage point from pricing across both divisions. For the fourth quarter, we indicate organic sales growth to be at high single digits. The full year outlook includes a close to 1 percentage point negative effect from exiting certain countries. As mentioned earlier, the first quarter benefited from an inventory buildup at a key customer in the Animal business. For the full year, this effect will be neutral. Additionally, and included in the full year outlook, U.S. customer tariff refunds are slightly impacting the sales growth in the second half of the year. We expect the adjusted EBITDA margin to be at the higher end of the range of 37% to 38%. Compared to last year, the improvement is expected to be driven by a stronger gross margin, the Feed Enzyme Alliance acquisition and synergies. The currency effect on the margin will be slightly negative at current rates. Net debt-to-EBITDA ratio is expected to be around 1.8x at year-end, supported by strong cash generation and continued de-leveraging despite the increased CapEx level, the acquisition of the remaining 77% of the shares in MicroBioGen and the share buybacks. A noncash revaluation gain on step acquisition of around EUR 35 million relating to Novonesis existing 23% ownership stake in MicroBioGen will be recognized in the income statement in the fourth quarter, benefiting net profit. As previously communicated, our temporary step-up in CapEx means that in 2026, CapEx is expected to be towards the higher end of the 12% to 14% of sales. We have delivered strong results in the first 9 months of the year with a solid start to the fourth quarter. With that, I will now hand over to Ester for a wrap-up. Ester?

Ester Baiget: Thank you, much, Rainer. Please turn to Slide #10. Let me summarize our message here today. We continue to demonstrate the strength and resilience of our diverse portfolio, supported by innovation and broad market reach. We expect continued strong growth also in the fourth quarter. We remain confident in our full year outlook and the trajectory towards our 2030 targets. We stay focused on executing our strategy and delivering on our long-term ambitions. And with that, we're now ready to open for Q&A. Operator, if you could please follow up. Thank you.

Operator: [Operator Instructions] The first question comes from the line of Alex Sloane from Barclays.

Alexander Sloane: Two from me, please. First one, just thinking about the kind of the group organic growth momentum and outlook into '27. I mean thanks for all the color on Human Health. If that does remain a drag in the first half of next year, can Food and AET provide sort of enough growth fuel to sustain the 6% to 9% organic algorithm next year, do you think? And I think I heard you're planning to launch 30 new products by year-end, I think, from 18 at the 9-month stage. So presumably, that's giving you some incremental fuel for next year. So I'd be interested if there's any kind of divisional skew to those skew rather to those incremental launches in Q4? And then the second one, just on the AET division. I mean, I think in terms of your Q4 guidance for high single-digit growth, it would appear that's the division that maybe is stepping up versus Q3. So just be interested in maybe some of the moving parts there in terms of what's driving that between Animal, Tech, and Energy.

Ester Baiget: Thank you, Alex, for very thoughtful and relevant questions. To your first question on how do we feel today and also how do we envision the future ahead of us, we feel in a comfort place. We see that the underlying drivers of the demand for our solutions remain in fact, remain strong. And that's true across all the areas. Let me just then dwell on the practicalities we see only in dietary supplements in North America to also give you comfort. But if we speak about the overall company, if you look about health, if you look about healthier nutrients, if you look about low sugar added, high protein, factors driven by GLP-1, we're extremely, extremely well positioned to continue to capitalize that. We see that in the 9% growth year-to-date on the Food & Health division. We see that in Q3. We see that on the momentum moving into Q4, where we expect that this segment continue to deliver on the high end of the range, and we see no change also moving for next year. Then particularly in Human Health, it's a very isolated case only in North America, where we have actions in place, working with our existing customers with a broader range of customers we see that active pipeline of projects of reformulation, very exciting innovation also coming in on women's health, on longevity, a very good project also with Novo Nordisk on GLP-1, very exciting innovation pipeline that gives us comfort for the future. And Dietary Supplements coming back to growth, North America in the second half. Altogether, comfort for the company from Food & Health and growth this year and moving forward in align to the 6% to 9%. Same applies from AET, where we see again, underlying drivers of producing more with less of decoupling from fossil markets looking for alternatives of fossil-based alternatives in gasoline, continued penetration in detergents and yes, continued pull of innovation and very strong momentum in Animal. So place of comfort with a solid growth year-to-date, good growth also in Q3 relative a very strong comparable. Look at the nominal value, and you will see how strong the Q3 sales are. It's a very strong quarter from a revenue perspective. Good start for Q4, good place, and also good underlying drivers for continue to deliver on demand. Then to your comment on AET, on Q4 and how do we see it coming? Yes, we see an acceleration, partially driven also by a softer comparable in place. And as I mentioned, the underlying drivers of the demand are the same, as I said before.

Operator: The next question comes from the line of Thomas Lind Petersen from Nordea.

Thomas Lind Petersen: Two questions from my side, please. First one on Food & Beverages, if you could put a few words on the strong growth there. It's remained around the mid-teens for 3 consecutive quarters. I was just wondering how much reflects structural demand, market share gains? And is there any customer inventory, any timing effects in these numbers? So sort of what is a reasonable growth level in Food & Bev for 2027? That would be my first question. And the second one is regarding energy, where you maintained double-digit growth against, as I understand, a demanding comparison. How much came from end market growth versus penetration, customer adoption in this division? And if I can sneak in a third question, then if you could put a few words on the democratic sweep in the U.S. and what that potentially could mean in terms of E15 in the U.S.

Ester Baiget: Yes, that was a lot of questions. Thank you, Thomas. Particularly the last one, let me just chip in. We see good momentum on Bioenergy, we see countries seeking for the value of decoupling from fossil from not only competitiveness point of view, but also geopolitical stability, driving local jobs. And that's true across all the world. We see it in Brazil, in India, in Indonesia. And yes, as you mentioned, E15 is in play. It has been in dialogue for a while. What is important is that it's not in our long-term financial plan. Everything we have in our long-term financial plan, it is in alignment of the reality we live today. If E15 would happen, that will be an accelerator or further upside from the reality that we see today. And when it happens, then we'll speak about it. Then to your other questions, Food & Beverages, yes, really, really nice momentum, double-digit growth. and driven by solid drivers where the underlying drivers of that demand continue to remain true. Let me just put a little bit of color of what is the -- I wouldn't say magic, but the strength of the growth behind. A, we bring answers that they are responding to what our customers and consumers seek. Biosolutions respond to the trend and to the needs of cleaner label, healthier products, higher protein, alternatives to GLP-1, lower sugar added, lower salt, non-alcohol, low alcohol, higher probiotics also and dairy. We are providing all those answers to our solutions. But then on top, we bring productivity, more with less, more cheese with same amount of milk, more yogurt with the same amount of milk, higher freshness, food preservation. These 2 drivers remain intact. The innovation pipeline that you mentioned, yes, that gives a lot of comfort. We continue to bring solutions that put us apart, that continue to make us the driver and the partner of growth. A very important milestone that we took this last month, the start-up of our Plant in West Allis, that was a really good sign for the market. Our customers see we are investing. We are investing to be the partner for growth. And that gives comfort on the long-term growth. And that put us in a good place where we said that Food & Beverages is going to be a contributor for the long-term growth, and we feel well for the 6% to 9% that we have promised and on track to deliver on that. Then on energy and the double digit, let me just dwell here. Apologize if not clear, double digit is 9 months that we see year-to-date with, again, the strong momentum across all the areas. And it's a combination of everything we said. We're collecting the fruits of the strategy. We're collecting the fruits of investing in innovation with the beauty combination of yeast and enzyme. We're collecting the fruits of investing more boots on the ground by growing in Brazil, in India. We're collecting the fruits of a diversified portfolio, not only biofuels, ethanol, also biodiesel. And we continue to see the very strong momentum and the need for decoupling in a world with growing energy demand where biofuels are competitive and also they drive local jobs and they enhance the competitiveness of the countries. So double-digit growth year-to-date, and yes, good momentum also through the year-end and moving forward. Bear in mind that in Q3, it's a tough comparable. If you look at the -- I would encourage you to look at the nominal value across every single businesses that we are in, and you will see the very high values on Q3 relative to a strong comparable.

Operator: The next question comes from the line of Soren Samsoe from SEB.

Soren Samsoe: Just a couple of questions. First, on your free cash flow, which is declining. But of course, you have higher CapEx due to the CapEx program and also a one-off from [indiscernible], but maybe explain when we start to see an increase in your free cash flow. Then on Human Health, just it's, of course, growing below your longer-term ambition of above 6% to 9%. Is the 6% to 9% still your ambition? And what would trigger you to revisit that at some point?

Rainer Lehmann: So let me take the first one, Soren here. So free cash flow, absolutely, you said it right, right? Right now, it's impacted, of course, by the negative impact of the net working capital. Keep in mind that at year-end, we actually have always the effect of higher payables due to the CapEx being more drawn to the fourth quarter. We're building that up over then the 12 months again. And the net investments, as I pointed or as we pointed out also in previous periods, the elevation in 2026. We said if you take the nominal value roughly, it should also be that in 2027. And then from there, it will go down to the high-single digit until 2030. So of course, the free cash flow will follow that pattern.

Ester Baiget: And regarding Human Health, we spoke about the efforts we're taking and the good traction with our customers and new customers that gives us comfort that we're going to see growth in the second half on dietary supplements in North America. Important to mention, if the market will rebound or move or recover faster or earlier, we would also capitalize on that trend. So that's on the reality that we see today with an upside, we would see a stronger recovery. No change on the 6% to 9% for the company where we see Human Health growth, and we will see Human Health growing as a business next year also with Dietary Supplements in the second half, but continued momentum on HMO, continued momentum across also HCP Channel and on the rest of geographies.

Soren Samsoe: And then just a third question on your planned expansion in Milwaukee that's now up and running. Will that be positive to the gross margin now that it's up and running? And when will we see that?

Rainer Lehmann: Yes. Overall, yes, that will be, of course, overall accretive.

Ester Baiget: Most importantly, it supports growth. That's very accretive.

Operator: The next question comes from the line of Chetan Udeshi from JPMorgan.

Chetan Udeshi: First question, not to -- I don't want to focus too much on Human Health per se, but I can't help, but ask this question. How much -- I mean, you're flagging this Human Health issue as very North American driven. And I'm just curious, is there a level of competitive pressure that is also sort of sneaking into this business? When I look at U.K., for instance, and if I just search for probiotics on Amazon, it's like littered with so many unknown brands. And I don't know if all of those brands necessarily use Novonesis products. So I'm just curious how much of this probiotics pressure in the U.S. is just competitive pressure that Chinese players are now willing and able to supply into the U.S. probiotics market. My second question, again, I'm just following up on the previous question on cash flow because we understand the CapEx cycle, but it just feels like your working capital is also running very, very high. You had an outflow of EUR 265 million year-to-date, which is quite high. And I guess the question is like how do you manage this business to deliver not just organic sales growth, but translating that into cash flow outside of CapEx, which we understand the cycle, but it just feels like the cash flow is not moving in tandem with your organic sales growth.

Rainer Lehmann: I can start with the cash flow. You're right, net working capital. So let's dissect that a little bit because there's a little specific in there. If you look at the core net working capital, we, of course, see the higher receivables on the back of a strong revenue. We also mentioned that we planned higher inventory levels. And we see right now over the 9 months, a decline in payables. That decline in payables actually will see coming up in the fourth quarter, mainly driven by increased CapEx spend. So in year-end, the net working capital will be -- from the core net working capital will be looking better. And then in addition, we had also related to the Feed Enzyme Alliance acquisition, some kind of contract liabilities that have been flushed through now in 2026 that will not occur anymore in 2027. If you look though, if I invite you to elevate, if I look at free cash flow in percent of sales, we're running at 17% of sales, and we're looking to rather expand on that going forward over the next years.

Ester Baiget: And then relative to your question on Human Health, we're really in a very dynamic market where we see changes on the consumer preferences and also changes on the way that the market is evolving. The beauty about Novonesis is that we're capitalizing on those changes holistically as a company. We are really shining on the trend of capturing the increasing demand of health products. We see that in food. We see that in dairy with probiotics. We see that in the HCP Channel where our science validated claims also in North America, we see growth in the HCP Channel. We see continued growth across all the areas in probiotics and with the exception of North America, and we continue to see strong momentum on HMO. Again, particularly in North America, you mentioned very nicely, there are changes on the consumer habits on purchasing and also changes on the value chain. And that's the actions that we're taking. We are working with our existing customers on the offline channel. We're working with new customers, bringing a broader reach of players that we play with. And also with a very -- and we see already the pull we did with a very strong pipeline of reformulation products with validated claims and on top, continue to stay firm on who we are, which is innovation and bringing science-based claims with a very good pipeline in women, longevity, and also solutions for GLP-1.

Operator: The next question comes from the line of Lars Topholm from DNB Carnegie.

Lars Topholm: Congrats with a good quarter. I also have 2 questions. The first one goes to the completion of your U.S. culture production expansion. So, I just wonder how tight you have been running your what should you say, your old capacity given the strong demand, are you in a situation where having access to more capacity should make us expect a step change in absolute revenue here looking at the coming quarters? Or is it more just continued business as usual, which, of course, is not too bad? And then a second question is that goes to your comment on pricing impact on the full year results of 1.5 percentage points. Maybe it's a silly question, but since you're close to 2% for the 9 months, does that imply there will be no pricing in Q4?

Ester Baiget: Thank you, Lars. I will let Rainer bring color on the dynamics of the pricing of the 1% to 5%. But then regarding to our expansion of West Allis it's a beautiful sign that we're giving to our customers of comfort. So -- and it's part of the plan. That's why we approved it. We saw the demand. We saw the trend. We saw how we can help on produce more with less, extend shelf life, bring a high protein, probiotics, healthy solutions while we continue to help our customers to differentiate and on top, the conversion on DVS on cheese that it enhances and boosts the productivity of our customers. So that's why we built the plan. It came ahead of time. Beautiful example also shows gives comfort on the strength of our operations team that put the Plant on time, on CapEx, safely and in alignment with expectations, and it's very well perceived by our customers. Again, one more dot on the implementation of the strategy, where we're investing in innovation, we're investing in CapEx, we're investing on people to continue to be close to our customers and capitalize the growth.

Lars Topholm: And my question is if capacity has been a revenue constraint in recent quarters?

Ester Baiget: No, it has not been a revenue constraint. It was part of the plan, and it came on the way that then we are providing and also supporting locally and giving the good volume growth for our customers.

Rainer Lehmann: Lars, on the pricing, basically, think about that it's close to 2% right now after 9 months, it's around 1.5%. So we're really talking about bps points here at the end. So it's not that. We still expect some pricing also in the -- pricing contribution in Q4.

Operator: The next question comes from the line of Nicola Tang from BNP Paribas.

Ming Tang: The first was on Human Health and maybe just a clarification. Ester, I thought I heard you mention that there's some kind of stocking impact as well in Q3, which made it come in worse than you expected. Maybe you could clarify if I heard you correctly. In other words, when we talk about this continued weakness until H2 2027, I was wondering if the minus 8% that we saw in Q3 is the kind of right run rate or if there was something specific going on in the quarter? And then the second question, perhaps on inputs. I know you usually -- I guess the question is what's the outlook for next year, including on energy? I know you usually hedge. So sort of any clarity on what your outlook is and also your plans around pricing would be helpful.

Ester Baiget: Thank you, Nicola. As usual, very precise and well observed. The comments of de-stocking were particularly brought just to bring a little bit of color on our rates that we said we're going to finish with a slight growth, and now it's slightly softer for the Human Health with a slight decline. And the delta here, it is simply we have seen a stronger de-stocking of our customers, which is affecting the sales for the end of the second quarter -- the third quarter and making that -- moving the year-end from slight growth to a slight decline. That was the driver behind, not continue to be moving forward.

Rainer Lehmann: And then on the input cost, yes, we see it go up. But as you've seen in the past, Nicola, we actually also have several levers at our disposal from pricing, from productivity, from a stringent cost management. So overall, as I also pointed out, we feel confident in our trajectory towards our Ambition 2030.

Ming Tang: I wonder if I could squeeze in another one just on the AET division and looking more into 2027. As you were talking earlier about how the growth in energy was double digits. So it feels like energy has really been driving the growth. I think aside from that, could you talk a little bit about the underlying drivers for the other areas of AET ex-energy?

Ester Baiget: Yes. We have seen -- I mean, it's not only Bioenergy, Animal is also driving growth very nicely. We're very pleased on the momentum with our customers. We see the fruits of combining probiotics and enzymes together in Animal. We see the penetration in areas that we had before, maybe not so strong presence. We see good momentum in Latin America, good momentum in Asia, good momentum in U.S. And yes, it gives a lot of comfort, not only the results that yes, they were a little bit boosted up in Q1 because of the one-off on the inventory, but the underlying drivers of the demand are there. This year, the area that we're not so pleased, it's Plant. where we have seen -- particularly in U.S., our customers having to make hard decisions based on the very high fertilizer prices and hindering the demand. But then we continue to see good pipeline and good momentum in emerging geographies, and we're excited about that moving forward. So overall, across AET, Bioenergy, Plant, Animal. And then, yes, we have Tech, which is a combination of many, many, many areas with the bumpiness that we have mentioned many times on Pharma that will continue to be there.

Operator: The next question comes from the line of Sebastian Bray from Berenberg.

Sebastian Bray: I have two, please. The first is on pricing. The amount disclosed on the slides for Q3 is 2%. Can you remind me, is this net of whatever tariff refund effect was occurring in the first -- in the second half of the year? And is the actual underlying figure a bit closer to 3%? Does that have any implications for the type of price increases to be achieved for 2027? And my second one is on Human Health. I'm trying to understand the magnitude of the business that's affected relative to the wider group. So from memory, this Human Health category is about 10% of the group and half of this was related to the U.S. Is the U.S. down by about 30%, 40% at the moment? And how does this compare to the wider market?

Ester Baiget: I will answer Human Health. We see a strong decline in the Dietary Supplements offline segment, close to a double-digit decline. And again, as I mentioned before, good plans, good momentum with our customers on bringing back. We're not immune to the decline of the market, which is also double digit. But as we thought the market -- with the market that we see, we have good plans in place and the pipeline with our customers to bring it back to growth in the second half. Would the market recover, that will happen faster.

Rainer Lehmann: And regarding the pricing, yes, it is a net number that we, of course, show the close to 2% for the year-to-date. And I think your estimation there regarding the tariffs is probably on a bit higher side. The impact is less.

Operator: The last question of today's call comes from the line of Andre Thormann from Danske Bank.

André Thormann: I have 2. So first, just a follow-up on this de-stocking you mentioned in Human Health, Ester. I just wonder, is this solely due to a weaker market? Or is it because the customers don't want your products to the same extent? And the second is in terms of next year for Food & Bev, I just wonder if you start to have any fear of the high comparables you're currently posting in 2026?

Ester Baiget: No fear here, only good thoughts. And then it is true that when the baseline increase, maybe the double digit, we -- that's not what we are committing. That's not in the 6% to 9%, but no fear. Only continued comfort by the pull from our customers of our solutions and by collecting the fruits of our investment in innovation, in people, and also in investments that give comfort to our customers. The de-stocking is simply the outcome in Human Health. The de-stocking in Human Health is simply the action of our customers when they seen themselves losing traction in the market. It's the rapidly changing dynamics that we all saw that coming, but it happened faster than expected on formats, preferences, purchasing habits from the consumers that make that de-stocking faster or bigger than we originally forecasted just a few months ago. Again, as a company, we're capitalizing on the upsides of that change, too. We're seeing that in double-digit growth in Dairy for probiotics. We see that trend of higher health in the pull for low sugar, high protein, low salt -- lower salt. And also, we see that trend on HMO in HCP and across all the other categories. And we have the actions in place to bring back Dietary Supplements North America on growth for the second half of the year. My thanks to you all. Thank you for joining us for the questions. I'm looking forward to continuing the dialogue with many of you in the forthcoming days. Thank you very much. Bye.