De Longhi Spa

Good afternoon. This is the CoreSchool conference operator. Welcome and thank you for joining the De'Longhi 1st of 2020 Consolidated Results presentation. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Massimo Garavaglia, CEO. Please go ahead, sir.

Thank you and good afternoon, everyone, or good evening, everyone. Welcome to the De'Longhi Group First Half 2020 Result Conference Call. Today, here with me in the room, I have Marco Cenci, our Chief Strategy and Control Officer, Stefano Biella, our CFO, Fabrizio Micheli, our Director of M&A Investor Relations, and Samuel Chiodetto, Investor Relator. Before I go to the illustration of the Q2 results, I'd like to give you a quick update on the COVID-19 outbreak and the measures and activities that we've been putting in place in the past months and still today to keep our business running and to continue to implement our plans and increase our commitment towards all the stakeholders involved in this very complex period. First of all, we've been working over the last month to implement all the possible measures to protect our employees and to guarantee flexible working practices As we all consider here at Elonghi that the safety and the well-being of our people, who are really the engine of our group, are top priority for all of us. Secondly, the pandemic crisis has really stressed the supply chain and the main distribution challenge everywhere in our industry. To avoid any disruption and limited consequences, we have closely worked with our suppliers, with our customers, with our partners, with our distributors both in the offline and online world in order to overcome the difficulties arising in this context. We have increased our focus on the communication in this period and we have been continuing supporting better our brands with the intention to continue to serve our customer and the final user of our products. Our factories. In our factories, we have implemented flexible models, flexible working models, in order to maximize the production capacity utilization. You can see that in slide seven, if you have the presentation in front of you. And at the time, we have been continuing to invest in optimizing and expanding our manufacturing capabilities. For instance, we have completed the investment that was planned in our new Romanian factory that is now fully operational and is ramping up to a regime level as we speak. Last but not least, we have in this difficult period carefully managed our financial position to retain the necessary room to support our growth and any strategic development that may arise in the future. Now, let me bring you to a quick overview of the Q2 and half year results. before then I open the floor for a Q&A session. I'm going now to the slide 10 and the following slides. The first six months have witnessed the strong resilience and flexibility of our group that has allowed the company to achieve the results that I have to say have been definitely above the initial expectation of some months ago. Looking at the first six months, the revenues were up by 6.9% at the normalized level, with an acceleration in the second quarter that was up 8.2%. Despite the difficulty that arose due to the past months, the group was able to achieve a significant growth in the main product categories, in the core categories of the longings. had maintained a positive trend delivering a double digit growth driven by the expansion across all the portfolio from the automatic machine to the manual pump machine. The food segment was stable in the first half driven by a double digit rebound of the Campbell kitchen machine and the old portfolio has seen an acceleration in the second quarter. We also recorded an important development in the comfort portfolio, mainly driven by significant growth in the mobile air conditioning in the last months. On the contrary, to say the trend in the home care segment has been penalized by a negative market trend, and the consequence of that are the consequences of the changing consumer preference in this period. If we look then at the geographies, the Southwest Europe region grew by nearly 12%, exactly 11.8% in the first half, thanks to a remarkable expansion of the revenue in Germany and in France, a positive contribution for all the other countries, with the exception of Italy, that was really hit by severe consequences of the lockdown, but anyhow, that shows a sign of positive recovery in the second quarter. The Northeast Euro was up by 5.5%, supported in particular by double digit growth in Benelux, in Scandinavia, and also a positive growth in Poland, in UK, and Russia. The upper region grew by 10%, boosted by Australia, New Zealand, and China, that were all up by double digit. US and Canada also recorded a positive growth in both quarters of the first semester. The Maya region was the only region that continued a negative trend, also in the second quarter, really affected by a tough macroeconomic environment and the effect that was adding to the effect of the pandemic on the consumer behavior. I go now to the margin. In the six months, if we look on a normalized basis, the net industrial margin improved from 47.2% to 49.1%, so it's up 1.9%. The adjusted ABA grew by 21.5% to $118.8 million. 13.2% of the total revenue and 14.5% in the quarter with an increase by nearly 1.6% versus the same period of 2019. This increase was supported by positive effect on volumes, on the product mix, was a consequence of a strict price discipline in our commercial policy and was only partially eroded by an increase in some operating costs, especially, we'll come back on that in AP, and higher duties in the U.S. Finally, The adjusted net income was $47.9 million in the first half, up 6.8% versus the prior year. If now we go to the balance sheet, and I'm now on slide 17, the net financial position at the end of the semester reached $388 million. which marked an important improvement over the last six months. The free cash flow before the dividends in the six months amounted to $110 million after investment of around $41 million, while in the same period of last year it was $9.6 million. So this is a net of $77 million last year of the IFRS 16. Regarding the working capital, the value at the end of June was $228 million, a decrease of $116 million compared to the value at the same time last year, with a record performance for what is concerning the working capital that is now declined to 10.6% of the total revenue. for the number at the end of the semester. To conclude my introduction and obviously remind you to the presentation with all the details that we provided you, I have to say that the first half of the year was definitely characterized by performance above expectation, as I mentioned before, tend to a clear resilience by some of the product categories where Delonghi is a global leader, namely the espresso coffee machine and the food preparation and kitchen machine. These results were made possible by the flexibility, the adaptivity of our organization, and also by the preference that was shown by the consumer in all these segments for improving the home experience. Changes that we consider, and obviously with a different degree of evolution, and obviously with all the consideration that we have to do in the future, will probably in a certain way persist also in the months to come. Some of these transformations that we have been seeing accelerated by the lockdown could probably remain in the consumer behavior indefinitely. in the distribution channel also in the future. In this concept, still considering a very large uncertainty obviously due to the overall macroeconomic landscape and the reduced visibility for what is concerning the evolution of the pandemic, We believe that after the results achieved in the first half of the year, reasonably we could expect for the year an organic growth for the whole 2020 in the mid-single digit and an adjusted BDA in value with an improvement versus 2019. I want to thank you for listening my introduction and please is open for a session of Q&A here then.

Excuse me, this is the COSCO conference operator. We will now begin the question and answer session. The first question is from Nicola Longley with Exana. Please go ahead.

Hello, good afternoon, everyone. I've got three questions. The first one on the sales guidance, so you are expecting roughly the same trend in H2 compared to H1. What gives you confidence that you can achieve such a good performance given the current environment? Are there any specific new product launches or commercial operations to support that? Second question on sales with online retailers. Can you tell us how much of sales did you generate with online players in H1 and how does it compare with H1-19 last year? And looking at the coming quarters, do you expect the trend to normalize or actually most of those gains could be sustained? And the last question on your EBDA guidance, so you expect an increase in absolute for the full year, but EBDA was already up 20% in H1. So does it mean you are kind of cautious on H2ABDA and you expect it to be more sustainable or potentially down? Is that the right way to look at it? And if yes, what are the main headwinds and tailwinds we should expect in terms of costs in H2? Thanks a lot.

Okay, thank you for the question.

Maybe on the first one about what we are foreseeing now in the second semester concerning launches to support the growth. The answer is yes, we have a pipeline well defined for the second semester where we don't foresee any delay. So we are implementing our launching plan according to our initial plan. And at the same time, we plan to support with AP investment as originally planned these launches. in line with our overall commercial policy and in line with what was prepared in our initial business plan for the year. And that is, maybe I would like to add, that this is... Something that we have seen, by the way, these launches that will fall in the second semester have been also following other launches that we have been done in the first semester and also in Q2. This is something that, by the way, is a trend that also was experienced in the first quarter of this year. If we look at the online, we have in the semester a stronger increase on the online with a double-digit increase in the online, both in the pure players in our e-commerce and also in the online of the traditional trader. So the online overall is growing. We keep seeing the online growing also after the lockdown, probably related to also a change in behavior of a certain consumer. We have been intensifying our effort on the digital side. So we would like to support the growth of the online also in the future, also in the second part of the year. For what is concerning the results of the second semester, We come from a first semester, as I said, that is better than our expectation. We enter the second semester with a plan that is intact, but also we want to consider on one side the fact that the overall environment, overall economic environment remains very uncertain, and therefore we will have to see the effect of some of the policies that have been put in place by several countries in the past months on the consumer behavior in the second part of the year. And also we should not forget that we will have obviously an important spending to support the brand in AP, so in all activity above the line in the second part of the year. where we are very determined to maintain because we want to play on the long run to support our brand. Therefore, we are very determined to maintain this investment in the second half with all in all the core categories, both in coffee and in food. This is the reason why we believe that considering also the limited visibility that unfortunately we have on the rest on the external side, we should consider to position our our guidance to a level that we consider reasonably under our reach.

Okay, thank you.

The next question is from Luca Baccoccoli with Intesa San Paolo. Please go ahead.

Hi, good afternoon everyone. Can you hear me? Yes. Okay. My first question is on the efficiency that you were mentioning on your first release. And so what efficiency exactly did you get in the first semester and to what extent this could become recurring? The second one is on the net working capital. I was wondering if you expect the material improvement achieved in the first semester to reverse in the coming quarters. So, for example, the inventory going back to the traditional level. And the third one is on the dividend. You dropped the dividend policy because of the COVID. Now the outlook seems much better. So I was wondering if you are thinking about an interim dividend in November given also the strong balance sheet achieved in the first semester.

Thank you very much. Maybe I cover first the second and the third question, then I would like to come back because I wanted to ask you maybe to explain the first one that I didn't fully get. On the working capital, yes, I mentioned it. We landed at the 10% of revenue. That is really a record probably level for us, also helped by the inventory. The plan is to build our inventory further in the months to come. So on that side, we would like to go back in terms of inventory to a more normal level that is giving more sustainable for our business. It will depend also how it will develop now in the months to come. But as you have indicated, Troy, that is an area that while we continue to monitor very closely also the inventory, I would like on that side to build more safety also in the future and also preparing well in the months to come, not only the Q4, but also the 2021. On the dividends here, I have to remind that This is a decision that obviously is in the hands of the shareholders' assembly. Eventually, then after a proposal or discussion at the board level, but this is really in the hands of the shareholders' assembly. The shareholders months ago have decided to pass on the dividends for this year. I don't have, we as De'Longhi, we don't have any other information coming from the shareholders or from the board for what is concerning the dividends. Now, if I go back to the point one for your first question, maybe if you could be... Yes, I'll try to rephrase this question.

What efficiency did you get during the first semester and to what extent this efficiency could become recurring? That's the question and a follow-up on your explanation regarding the inventory build-up. So there's going to be a sort of reversal in the coming quarters. And should we expect a similar trend also on trade receivable and payables?

Of course, in the opposite direction.

Sure, sure. Maybe to the last part of your question on the trade receivable, indeed, we have been monitoring very closely. I have to say that... The impact has been extremely limited and we want to continue to closely monitor the evolution of the residual bone and therefore on that side I don't have at the moment any indication that there will be a change in the near term on that side. For what is concerning more in general the efficiency and the cost, obviously due to this pandemic, we had some inefficiencies at a certain point in our plants due to the lockdown. I have to say that the fact that the plant, as indicated in the presentation, had been returning to full capacity utilization they were able to recover the standard efficiency level in a pretty short time and this is continuing now as I speak and we foresee that continuing in the months to come. We also had an introduced measure to strictly control our cost and our general expenses including travel expenses and all what is related to that and merchandising costs that for us are important. We will continue to do that even if I have to say that after the lockdown of course some of these costs have been then started to come back because obviously we are supporting the business in the stores and we are going back to do certain activities that have been put on hold for a while. But anyhow, overall in terms of control of the cost, the discipline is still in place and we are very cautious on releasing additional costs. and we will continue to do so until this period of uncertainty is remaining.

Okay, very clear. Thank you.

The next question is from Alessandro Cecchini with Equita. Please go ahead.

Hello everybody and thank you for checking my questions. The first one is about the pricing environment, in particular in Europe. Could you add some color on the pricing environment, competition, so just to understand what kind of competition are you observing in the market? This is my first question. is about the trend that you saw in July in term of organic growth and your expectation for August in term of sales organic trend. My third question is about Forex. If you can give us some indication on the edging that you have on the exchange rate versus U.S. dollar. And finally, so I am very curious by the fact that kitchen machines were very, so up importantly in the second quarter, while other food preparation categories were up, but not with this kind of stranger. So if you can add the your feeling on this discrepancy. Thank you.

Thank you for the question. On the pricing and the competition, what we have experienced in these months, I have to say that overall all the players in the field where we are in the air, where we are playing, have been very disciplined on that side. Probably also considering that everybody obviously has to face a period of uncertainty, difficulties. So we have not seen a real discontinuation in terms of behavior of the major players versus what we probably could experience and understand in the past. So on that side, we see that continuing in these months. Here maybe I can add what we are doing because that's what I know very well. We have a commercial policy where price discipline is very important and we are implementing all the action to retain that. Obviously coupled with, as I mentioned before, ATL investment and AP investment to support more the brands. On the month of July, we see that the trend is in line with what we have been experiencing in the recent past. So we have not seen today again any discontinuation in our trend. Obviously, I remind you, and you know it very well, that the most important quarter for us will be quarter four. So this is something that then obviously we will have to look at in the months that are coming. Maybe if I pass to the exchange rate, We have today a policy that is foreseeing a core hedging on a rolling basis against all the most important currencies, including the dollar. Now, obviously, as you know better than me, with the devaluation of the dollar, we have taken some opportunity to extend it. but always within the guidelines of our cover hedging policy and therefore with the percentage that is now starting to close for the 2020 and the cover that is already taken for the two-partiary on the uh 2021 and our idea will be to continue to do so always averaging this is the the way in which we are operating minimizing the risk rolling and averaging the cover in the most important uh the most important currency uh adding on the what you commented on the correctly on the on the kitchen machine i would like to highlight one important thing that looking at the q2 All the food is positive and for us was an important achievement. Of course, within that we have seen some products that are growing more than others. I think this is a bit, you know, if you let me pass this expression, a bit of business as usual. But the most important thing is that we, as a group, we now want to have a clear focus on the food categories. You will see in the months to come there will be launches that will support more the kitchen machine, more other products of our food preparation, on the blending, on other parts of the food preparation. So we want to look at the portfolio in a wider way. And obviously trying to continue to support the portfolio in food, maintaining this momentum that as I said has seen the overall performance of the quarter in a positive territory.

Okay, thank you. A follow-up on this specific point on launches, on the food preparation, but is something, I mean, fine-tuning or are you planning to launch something, I don't, sorry, your business is not something, I mean, revolutionary, but just to understand if it's something that is based on color, because in the past... I saw that probably two years ago your dynamism in coffee was stronger but not in the food preparation. So I would like to better understand if your product launches are something just to fine-tune or something that can add really some novelties.

Thank you for the question. I believe that here in Duronghi what I can see is that we have really very strong technical know-how both in coffee, where we are foreseeing our launches in the second semesters, very important for us, but also in food, both in Canva, for the range of Canva, the older range of De'Longhi and the range of Brown. The launches that we are of new products for the second semester are launches that obviously we believe will add additional features to our existing range, that some of them will be very important in term of differentiation versus existing product that we have today and hopefully obviously meeting the expectation of our clients and also new potential clients. Obviously all launches that will be within the frame of our portfolio with intention to enforce it, with intention to support the growth, with intention to keep the momentum in the category.

Thank you. The next question is from Andrea Bonfa with Banca Acros. Please go ahead.

Hello, good afternoon. Thank you for taking my question. I hope you can hear me. The first one is again, sorry, the repetition on the kitchen robots and the food in general. I would like to have, let's say, your sincere opinion if this current trend is the same at some extent or much or very large extent related to the coronavirus situation and the effect of the stay-at-home, and if there are some risks in terms of comparison for next year, or if you believe it's a more, let's say, positive trend related to the fact that your range of products improves, your capabilities improve, your commercial policies have improved. So this is the first general question. The second one is, sorry for two boring questions. One is on the tax rate, and the second one is on, which was very high in the first half compared with our full year forecast. If you could give us an indication for the full year. And on the coffee, which I saw a 10% growth in the first half. It was plus 16 in the first quarter. So there was some deceleration in the second quarter.

Just a small comment on your side. Thank you.

On the kitchen, obviously we are now monitoring very well the evolution. I have to say that I would like to give a perspective to look at it. What I could notice was that already last year there were several investments that were done in food especially, and also obviously in the kitchen and kitchen machine. And in fact, as a result of that, already the first quarter of this year showed an improvement, significant improvement, I have to say, especially in the kitchen machine. Not in all the food range, but especially in the kitchen machine. So the acceleration that we have seen in the second quarter came on top of what we have seen in the first quarter. Now, is this one enough to justify that these are numbers that we can make an extrapolation, easy extrapolation for the long run? Probably not. What it's saying is that there is definitely a market that is moving in that direction. and will offer us the opportunity if we keep on investing, if we keep on developing the right product, if we keep on doing the right things to reach the end user, both with our traditional distribution network but also on the online, that there is definitely a trend that is there. That would be really up to us, and it would be up to us to consolidate. Now, to me, at the moment, in fairness, it's not easy to make a prediction on that side. The only thing that I can say is that we believe that we have the opportunity and we have the right resources. to support this important part of our business and we are determined to continue to invest also with ATL dedicated investment also in digital to support our portfolio in that direction including as I mentioned the new introduction that will be launched in the third quarter and then obviously with the focus in the fourth quarter. For the tax rate comment here is to evaluate the fact that comparing now this year with the prior year is very difficult in the sense that last year on one side we had an important contribution that came from the patent box agreement that when, you know, was, as you know, terminated in 2019 and the benefit of that in the first semester had been much more limited and on the other side they were playing some non-recurrent positive element in the first half of the prior year that we didn't have this year. So that's why you see an increase in the tax rate versus the prior year that makes it very difficult to make it comparable. So, yeah, we should probably assist in the second part of the year to a more normalized task rate that will not take into consideration, obviously, the positive effects that were, yeah, very beneficiary for the 2019. I have to say that this is something that we already foreseen, we've been already probably factored in our results. On the cost, we have some of the cost The Q2 has benefit of some of cost reduction. Also thanks to savings that have been put in place and more strict control that have been put in place. As I mentioned, some of them will be recurrent and we stay, we want to monitor and we stay also in the months to come. Some others probably will be temporary because obviously, as I mentioned, some of the commercial costs, like on the merchandising and so on, will be obviously reactivated in the second part of this year. This is an explanation that maybe I hope is answering to your questions.

Thank you. For me, on the coffee side, if I'm correct, you reported, as I say, a lower growth in the first semester compared with the first quarter. Is it just a matter of commercial launches, or is it possible to elaborate on that on

See, maybe, sorry for that, I missed that part.

On the coffee, yeah, maybe, yeah, you pointed right, a good point. The Q2 has been, as you know, and we have seen it in fairness on coffee, affected by definitely a deceleration in the first month of the quarter. So we have seen... in the last part of March and in the first half, I have to say, majority of the month of April, a deceleration, and then a pickup to a more normal level for our coffee business in the second part of the quarter. That's why, you know, maybe if you compare the two, you have this effect. is mainly due to the April effect. This is something that is explaining to you the dynamic of the quarter. Thank you.

Thank you very much.

The next question is from Francesco Brilli with Intermonte. Please go ahead.

Yes, good evening and thanks for taking my question. I have three questions from my side. The first one is on CAPEX. On the level of CAPEX for the full year 2020, is it fair to assume a significant lower level of investment in the second part of the year since you mentioned that CAPEX for the new plant in Romania and investment for the headquarter has already been made in the first part of the year. And the second is on the performance of the Asia-Pacific region, if you can give us some additional corals on these, and specifically on China, which is increasingly gaining share on sales. I was just curious if you're specifically focusing on this market or probably leveraging also the online channel or is something simply linked to the market trends? And the third one is on M&A, if there are some additional news and some additional factors that you can add compared to what you said before in the previous call. So are you still looking at scouting for targets from the market and if If you are continuing to look also at professional products and professional targets in the food space.

Thank you.

Thank you for the questions. Quickly on the CAPEX. We are maintaining the CARPEX at the level of our plan, so I didn't want to have any on the side reduction with the intention to build further production capabilities. You correctly mentioned our plant in Romania. I also said before that it's now full operational and ramping up in terms of infrastructure. and is ramping up as I speak. So the total investment for the year we foresee to be in the range of $75 million in total. That is in total for the year that is above what we have been investing in the prior year. and that should allow us also to add additional capacity. At the same time, as you know and as we have indicated, we are completing with investment the expansion of our portal with the intention to expand especially our technical centers. So this is important to me, very important. So adding new capabilities in our technical center for the development of new products. For what is concerning Asia Pacific, the region has been growing. We are supporting it. China has been growing traction. The full increase in China is coming from the online, obviously. The majority of our business today in China is done obviously with the online and with the major online platform in the country. We have been deploying some of the investment to support the brands and we will continue to do so also for the introduction of the new products in the next month. So we want to maintain a focus on Asia and definitely we want to to possibly increase our focus on China. For what is concerning the potential M&A, as you know, the group has a position that allows us to be very vigilant in terms of opportunity. I believe that we should follow an approach that is We have to be very selective in the way in which we are proceeding with the M&A and very consistent with the strategy that we have been developing in the past year, building our strength in specific core categories. And at the same time, we have to look at opportunities that we believe will give us value, will create value for the long in the long run. So that should not be short term opportunity with a short term but the possibility to be additional to the group and create a sustainable value in the long run. Now, obviously, I will tell you, we are considering all the time opportunities, but we should not move we are not sure that these two criteria are respected and therefore being selective in what we approach and also sure that the addition to the group will give us the opportunity to create value in the long run being additional technical capability being additional scale where we want to play, being additional cover of geographies where we want to be.

Thank you very much.

The next question is from Isacco Brambilla with Mediobanca. Please go ahead.

Hi, good evening everybody. Thanks for taking my questions. I have three quick ones. The first one is on AMP. Can you share with us the incidents on sales in the first half and if you confirm your kind of commitment to invest some 12% of sales in AMP for the two years? The second question is again on cost. Can you provide more color on the impact of temporary layoff schemes sponsored by the government? How did it help your personal expenses in the first semester? And final question is on gross margin. Your results in the first semester was quite impressive. Do you see the current level in terms of gross margin as sustainable, even in 2020 and going forward?

Excuse me, I missed the last part.

Could you repeat the last one?

Yeah, sure. If the current level of gross margin can be seen as sustainable, both for full year and going forward.

Yeah, sure. Thank you for the question. On the AP, I'm just now collecting. I will give you a precise answer. I will collect you the number. Don't contribute. so for the semester yeah for the semester was just to be precise to be precise was for the first semester this year 10.8 percent on the on the revenues versus last year same period of 10.3 percent uh this is the precise number maybe i can comment that yeah on the ap we want to continue so our plan remains unchanged for the second part of the of the year i explained before that our intention is to give a support of the brand where we expect to have not only a short term return but also a return in the medium longer long term On the state aids, we have made use of what was available. I have to say that the fact that some state aids were available was helping for a rather limited period of time because then all our plants had to go back urgently to full capacity to support the growth that you have seen. So at the end, you know, I have to say that we are not planning, at least we are not planning to use additional aids if available in the months to come, simply because, yeah, we need to have the plant that... running at the really full capacity as I speak. For what is concerning the margins, yes, the effect that we have seen and was explaining before was due to, on one side, a price discipline of our commercial policy. On the other side of the fact that we had a mix, a certain mix that for us has been compared to the last year more favorable. Now, what I can say is, for sure, on the first part, our commercial policy will continue to be disciplined. So on the part that is related to the price discipline, for sure, we are determined to maintain the same approach. On the mix, I have to say that that will depend a bit on the evolution of the demand and that that part, yeah, we will need to monitor it and to stay very close to make sure that it's going the direction that we want. But, you know, at least on the two big parameters, that have been helping us besides obviously the volume, but the two big parameters that have been helping us are one, yeah, that is more in our hands for sure we are determined. On the second one, obviously, we try to guide it through our commercial policy and through our investment on the brands, but there, of course, we depend a bit then on the, yeah, also on the behavior of the consumer and the mix effect may change depending on that.

Okay, thanks. Clear. Just a brief clarification on the second answer on temporary layoff schemes. Should we assume that the impact was somehow not material in the first half?

Panto?

I'm collecting just to be sure that I give you precise information. Okay, so we're checking the information. So considering not only all state aids, so not all state aids available, we have been talking about something less than three million. So yeah, we consider that, yeah. In the old scale of this year, probably not. very material. So, as I said, you know, if it will be available and we have the opportunity to use it, I think there is no issue for us to do it. We should do it, by the way. What I can say, in the next months, this will not be, even if it is going to be available, we will not be able to use it because we need to have the full, all the plants around the world at full speed. Okay, clear. Again, many thanks. Thank you very much.

The next question is from Nicola Sturer with Kepler. Please go ahead.

Thank you. Good afternoon, everyone. A very brief one on raw material. Can you share with us which trends are you experiencing on raw material costs?

Thank you.

Yeah, maybe just to briefly, obviously, as you already know, it's explaining. So we are taking some cover of the most important roles. We have been benefiting, if we look at the current market price, looking at the first semester versus the market, we have calculated the benefit of around 1% versus the market. across all the portfolio due to the cover that we made in 2019. For the second semester, the cover will be made afterwards according to our edging covering policy. We estimate to have a benefit also versus last year of roughly 1% on the total cost of the roads. Thank you. Thank you.

Mr. Garavaglia, there are no more questions registered this time.

Yes, thank you very much. If there are no questions, I consider concluding the call. I want to thank everyone around the phone for the conversation and thank you for the question. I hope I was able to answer to all of you in a satisfactory manner. Thank you again and have a good evening.