MICC

Business Context and Reporting Period

Company: The Magnum Ice Cream Company N.V. (TMICC)
Reporting Period: Fiscal Year ended December 31, 2025
Context: TMICC completed its demerger from Unilever PLC on December 6, 2025, and began trading as an independent, publicly listed company on December 8, 2025, on the NYSE, LSE, and Euronext Amsterdam. The 2025 results represent the first full year of standalone operations, utilizing predecessor accounting for the separation. The company operates in 80 markets with 16,500 colleagues and 30 factories.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue: Reported revenue remained flat (-0.5%) due to a -4.3% negative impact from foreign exchange (primarily the strengthening Euro against the Turkish Lira and US Dollar). Organic Sales Growth was 4.2%, driven by 1.5% volume growth and 2.6% price growth.
• Profitability: Operating profit decreased to €599 million from €764 million. This decline was primarily due to separation and restructuring costs, foreign exchange impacts, and increased Transitional Service Agreement (TSA) cash costs. Adjusted EBITDA margin contracted by 100 basis points to 15.9%.
• Cash Flow: Free Cash Flow dropped significantly to €38 million from €803 million. This was driven by €564 million in demerger-related cash outflows, €105 million in new interest costs, and €38 million in TSA-related depreciation charges.
• Balance Sheet: Net debt increased to €2,967 million following a €3 billion debut bond issuance in November 2025 to fund the separation and settle Unilever payables. The company received investment-grade ratings (BBB from S&P, Baa2 from Moody's).

Guidance, Outlook, and Risks

Guidance and Outlook

• 2026 Organic Sales Growth: Expected to be between 3% and 5%.
• 2026 Adjusted EBITDA Margin: Expected to improve by 40 to 60 basis points on a comparable perimeter basis. Reported margin improvement is expected to be 0 to 20 basis points due to the anticipated acquisition of the India business in H1 2026.
• Medium-Term Targets: 3-5% average annual organic sales growth, 40-60 bps annual Adjusted EBITDA margin expansion, and €0.8-1.0 billion Free Cash Flow from 2028.
• Dividend Policy: Target payout ratio of 40% to 60% of net income after adjusting items.

Management Commentary

Management highlighted the successful transition to a standalone entity with a dedicated salesforce and supply chain. The company is executing a €500 million productivity program focused on supply chain transformation and overhead reduction. Growth is being driven by premiumization, "better-for-you" products, and expansion in emerging markets.

Risks and Contingencies

• Demerger Execution: Risks related to establishing new IT systems, exiting Transitional Service Agreements (TSAs) by end of 2027, and stabilizing the operating model.
• Commodity Inflation: Significant cost pressure from cocoa and other raw materials, partially offset by pricing actions and productivity savings.
• Hyperinflation: Continued exposure to hyperinflation in Türkiye, resulting in a €31 million net monetary loss in 2025.
• Cyber Security: As a new entity, TMICC faces heightened cyber risks while transitioning from Unilever's infrastructure to its own stack.

Investor Verification Checklist

• Demerger Costs: Verify the run-rate impact of separation costs and the timeline for exiting TSAs with Unilever to understand the path to normalized margins.
• India Acquisition: Confirm the closing date and financial impact of the planned acquisition of Kwality Wall's India Ltd (expected H1 2026).
• FX Sensitivity: Assess the exposure to currency fluctuations, particularly the Turkish Lira and US Dollar, given the significant negative FX impact in 2025.
• Productivity Program: Monitor the execution of the €500 million productivity program to ensure it offsets commodity inflation as projected.
• Debt Servicing: Review the interest coverage ratio given the new €3 billion debt load and the shift from Unilever's centralized funding to standalone interest expenses.