26. Financial risk management

In the course of its business, the Group is exposed to a number of financial risks: liquidity risk, market risk (including currency risk, commodity risk and interest rate risk) and credit risk. This note presents the Group’s objectives, policies and processes for managing its exposure to these financial risks. Note 32 includes an overview of the derivative financial instruments that the Group has entered into to mitigate its market risk exposure.

Exposure to liquidity, market and credit risks arises in the normal course of the Group’s business. Management and the Board of Directors have overall responsibility for the establishment and oversight of the Group’s financial risk management framework. Management has established a treasury policy that identifies risks faced by the Group and sets out policies and procedures to mitigate those risks. Financial risk management is primarily carried out by the Group’s Treasury function. Management has delegated authority levels and authorized the use of various financial instruments to a restricted number of personnel within the Treasury function.

Liquidity risk

Liquidity risk is the risk that the Group will not meet its contractual obligations as they fall due. The Group evaluates its liquidity requirements on an ongoing basis using various cash and financial planning analyses and ensures that it has sufficient cash to meet expected operating expenses, repayments of and interest payments on its debt and lease payments.

The Group generates sufficient cash flows from its operating activities to meet obligations arising from its financial liabilities. The Group had unrestricted cash and cash equivalents of €350.4 million as of December 31, 2025 (€287.8 million as of December 31, 2024). It has two committed Euro revolving credit facilities in place to cover potential shortfalls and access to local credit facilities in various locations, which are available if needed to support the cash management of local operations. In the year ended December, 2025, the Group refinanced its loans and borrowings that matured in June 2025. See also notes 4 and 23.

The following table includes information about the remaining contractual maturities for the Group’s non-derivative financial liabilities as of December 31, 2025. The table includes both interest and principal cash flows.

The agreements with the Group’s bond holders and other lenders contain covenants and/or certain clauses that may require repayments earlier than indicated in the table above. The Group monitors the covenants as well as the aforementioned clauses on a regular basis to ensure that it is in compliance with the agreements at all times.

The interest payments on the two term loans, six of the SSD tranches and draw-downs of the revolving credit facilities and local credit lines are variable. The interest rate amounts included in the table above that relate to those borrowings will therefore change if the market interest rates (Euribor or SOFR) change. The interest rate amounts are also subject to change depending on the Group’s net leverage or the achievement of sustainability-linked targets. See note 23.

The Group has entered into an interest rate swap that fixes the variable interest rate on its US Dollar term loan for one year, which is not considered in the table above (see also section “Interest rate risk” in this note). As of December 31, 2025, the interest rate swap is estimated to reduce the interest payments on the US Dollar term loan by approximately €0.8 million until it matures in July 2026.

Amounts used under the Group’s unsecured committed revolving credit facilities are classified as non-current as the Group has the right to roll-over the used amount for more than twelve months. However, the related cash outflows are presented in the table above as occurring within one year as the Group uses the facilities for short-term net working capital needs. The cash outflows after one year relate to commitment fees.

Trade and other payables include liabilities that relate to arrangements where aseptic carton filling lines are deployed with customers via the involvement of a financing partner (see note 18). The majority of the outstanding obligations for the Group to repurchase the filling lines from the financing partners are expected to be settled within two to five years.

The future cash flows relating to the contingent consideration for Scholle IPN is assessed to be zero as of December 31, 2025 (see note 32).

The Group enters into derivative contracts as part of operating the business and may, from time to time, also enter into financing-related derivatives. Commodity derivative contracts are net cash-settled. Foreign currency derivative contracts and financing-related derivative contracts are net or gross cash-settled. The related derivative assets and liabilities recognized as of December 31, 2025 and December 31, 2024 represent the Group’s liquidity exposure as of that date (see note 32). The cash flows resulting from a settlement of the derivative contracts may change as commodity prices, exchange rates and interest rates change. However, the overall impact on the Group’s liquidity from the derivative contracts is not deemed to be significant. The expected impact of the Group’s interest rate swap is described above. See sections “Currency risk” and “Commodity price risk” in this note for additional details about the Group’s outstanding foreign currency and commodity derivative contracts.

See note 18 for information about the Group’s participation in a supplier finance arrangement, which provides the Group with extended payment terms with one supplier.

The following table includes information about the remaining contractual maturities for the Group’s non-derivative financial liabilities as of December 31, 2024.

Market risk

Market risk is the risk that changes in market prices, such as foreign currency exchange rates, commodity prices and interest rates, will affect the cash flows or the fair value of the Group’s holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters.

The Group buys and sells derivatives in the ordinary course of business to manage market risks. The Group does not enter into derivative contracts for speculative purposes. Hedge accounting under IFRS 9 is not applied.

Currency risk

As a result of the Group’s international operations, it is exposed to foreign currency risk on sales, purchases, borrowings and dividend payments that are denominated in currencies that are not the functional currency of the entity involved in the transaction (see notes 8 and 24). The Group is also exposed to translation currency risk arising from the translation of the assets, liabilities and results of its foreign entities from their respective functional currencies into Euro, the Group’s presentation currency. The functional currencies of the subsidiaries are mainly Euro, US Dollar, Swiss Franc, Chinese Renminbi, Thai Baht, Brazilian Real and Mexican Peso. Notably for year ended December 31, 2025, the strengthening of the Euro against the US Dollar, Chinese Renminbi, Thai Baht and Saudi Riyal negatively impacted the Group’s translation reserve in equity.

In accordance with the Group’s treasury policy, the Group seeks to minimize transaction currency risk via natural offsets wherever possible. Therefore, when commercially feasible, the Group incurs costs in the same currencies in which cash flows are generated. In addition, the Group systematically hedges its major transactional currency exposures (by entering into foreign currency derivative contracts), using a 12-month rolling layered approach. See also note 8. The Group does not hedge its exposure to translation gains or losses related to the results of its entities with a functional currency other than the Euro.

The following table provides an overview of the outstanding foreign currency derivative contracts entered into as part of the operating business as of December 31, 2025.

The following table provides an overview of the outstanding foreign currency derivative contracts entered into as part of the operating business as of December 31, 2024.

The Group’s primary unhedged transaction currency exposure as of December 31, 2025 relates to intra-group Euro-denominated loan receivables of entities with the Swiss Franc as their functional currency. A 5% weakening of the Euro against the Swiss Franc as of December 31, 2025 would have resulted in an unrealized foreign currency exchange loss of €16.2 million as of December 31, 2025.

The Group’s primary unhedged transaction currency exposure as of December 31, 2024 relates to intra-group Euro-denominated loan receivables of entities with the Swiss Franc as their functional currency. A 5% weakening of the Euro against the Swiss Franc as of December 31, 2024 would have resulted in an unrealized foreign currency exchange loss of €47.2 million as of December 31, 2024.

Commodity price risk

Commodity price risk is the risk that changes in the prices of commodities purchased by the Group and used as inputs in the production process may impact the Group, as such commodity price changes cannot always be passed on to the customers on a timely basis. The majority of the customer contracts in the bag-in-box and spouted pouch businesses include clauses that enable commodity price fluctuations to be passed on to the customers. This is normally not the case for the customer contracts in the carton business, where there is generally a time lag between increased commodity prices and the implementation of higher customer prices.

The Group’s exposure to commodity price risk arises principally from the purchase of polymers and aluminum. The Group’s objective is to ensure that the commodity price risk exposure in the current year is kept at an acceptable level. The Group generally purchases commodities at spot market prices and uses derivatives to hedge the exposure in relation to the cost of polymers (and their feedstocks) and aluminum. This strategy means that the Group is able to fix the raw material prices for the majority of its anticipated polymer and aluminum purchases, which substantially reduces the exposure to raw material price fluctuations over that period. The Group also hedges a part of its electricity price exposure in continental Europe.

The realized gain or loss arising from derivative commodity contracts is recognized in cost of sales, while the unrealized gain or loss associated with derivative commodity contracts is recognized in other income or expenses.

The Group recognized an unrealized loss of €4.2 million for the year ended December 31, 2025 and an unrealized gain of €8.9 million for the year ended December 31, 2024 relating to its derivative commodity contracts as a component of other income. It recognized a realized loss of €4.7 million for the year ended December 31, 2025 and a realized loss of €7.7 million for the year ended December 31, 2024 relating to its derivative commodity contracts as a component of cost of sales.

The following table provides an overview of the outstanding commodity derivative contracts as of December 31, 2025.

The following table provides an overview of the outstanding commodity derivative contracts as of December 31, 2024.

Assuming a 10% parallel upward or downward movement in the price curve used to value the commodity derivative contracts with all other variables remaining constant, a remeasurement of commodity derivative contracts as of December 31, 2025 would have had an impact of €19.1 million on the Group’s profit before income tax (an impact of €18.1 million on the profit before income tax as of December 31, 2024).

Interest rate risk

The Group’s interest rate risk arises primarily from variable interest rates on its Euro and US Dollar term loans, six of the tranches of its two SSDs, and draw-downs of its revolving credit facilities and local credit lines, but also from cash and cash equivalents. The Group pays a fixed interest rate on its bonds and four of the tranches of its two SSDs.

In July 2025, the Group entered into an interest rate swap that hedges the cash flow exposure arising on the US Dollar term loan at variable interest rate. It replaced an interest rate swap that matured at the same date. The Group’s forward interest rate agreements that hedged the cash flow exposure arising on the Euro term loan and the SSD tranches at variable interest rates matured in the second quarter of 2025. The interest-rate derivatives are presented as financing-related derivatives as part of other current assets. The fair value changes are recognized in finance income or finance expenses. See section “Liquidity risk” and note 32 for additional details.

The interest rate profile of the Group’s significant interest-bearing financial instruments as of December 31, 2025 and December 31, 2024 is presented in the following table.

A 100 basis point increase in the variable component of the interest rate on the Euro term loan, the SSD tranches at variable interest rates and the draw-downs of the revolving credit facilities and local credit lines would have increased the annual interest expense by €13.1 million as of December 31, 2025.

A 100 basis point increase in the variable component of the interest rate on the Euro term loan, the SSD tranches at variable interest rates and the draw-downs of the revolving credit facilities and local credit lines would have increased the annual interest expense by €8.5 million as of December 31, 2024.

The effect of the Group’s interest rate derivative contracts is considered in the above analyses.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The carrying amount of financial assets represents the maximum credit exposure.

Credit risk arises principally from the Group’s receivables from its customers. Historically, there has been a low level of losses resulting from default by customers. This is also the case in the current market environment (see note 5.4).

The credit risk relating to trade receivables is influenced mainly by the individual characteristics of each customer. Given the diverse global operations and customers across the Group, credit control procedures are jointly managed by the Group’s Treasury function and each of the operating businesses within the Group. These joint responsibilities include, but are not limited to, reviewing the individual characteristics of new customers for creditworthiness before accepting the customer and agreeing on purchase limits and terms of trade as well as regularly reviewing the creditworthiness of existing customers and previously agreed purchase limits and terms of trade.

The Group limits its exposure to credit risk by executing a credit limit policy, requiring advance payments in certain instances, taking out insurance for specific debtors as well as utilizing securitization and non-recourse factoring programs. See also note 16.

In addition, concentration of credit risk is limited due to the customers comprising a diversified mix of international companies, large national and regional companies as well as small local companies, most of which have been customers of the Group for many years.

Management believes that the recognized loss allowance sufficiently covers the risk of default based on historical payment behavior and assessments of future expectations of credit losses, including regular analysis of customer credit risk.

In line with its treasury policy, the Group generally enters into transactions only with banks and financial institutions having a credit rating of at least investment grade (long term: BBB or Baa rating or higher and short term: A-2 or P-2 rating or higher as per Standard & Poor’s or Moody’s).