De Longhi Spa

Good afternoon. This is the Chorus Call Conference Operator. Welcome, and thank you for joining the De Lunghi first quarter 2021 consolidated results. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Massimo Garavaglia, Chief Executive Officer of the De'Longhi Group. Please go ahead, sir.

Good afternoon, ladies and gentlemen, and welcome to the De'Longhi Group's first quarter 21 results conference call. Today, here with me, I have a macro change chief strategy and control officer, Stefano Bielna, CFO, Fabrizio Micheli, Director of M&A and Investor Relations and Samuele Chiodetto, Investor Relations Manager. I'm happy to announce that last month marked a record first quarter for De'Longhi, both in terms of sales and margin. Let me thank, first of all, all the employees and business partners which sustained and supported the group to achieve these outstanding results in a still very complex and uncertain environment. I think it's worth highlighting that the strong expansion obtained in the first three months of this year compares with the mid-single-digit growth achieved in the same quarter of last year, despite at that time the initiative negative effect of generalized lockdown. During the first month of 2021, consumer demand was a driving force behind the group's performance, but reinforced by the success of the launches of new products in the last months and by an higher spending on communication and very effective marketing activity to support our core brands. These conditions have allowed the group to seize the opportunity offered by the market, creating the condition to maintain a favorable trend in the remaining part of the year. In particular, looking at the A&P investment, the group has prepared and launched many activities to sustain the brands and to improve the consumer experience and engagement, such as the Kenwood Club initiative, the coffee lounge, and all the activities related to the Browns' 100-year anniversary. Over the year, other events will be announced and launched to explore the full potential of our products and brands in the coming quarters in line with our MTP, medium-term plan, strategy. In the last 12 months, The group has shown extraordinary personal, industrial and organizational flexibility in adapting to the new market dynamics and the new challenges. The manufacturing platform has been working at full speed in order to meet the growing demand from the markets, overcoming difficulties in the supply chain. Furthermore, the several complexity created by the pandemic have been put under control thanks to the dedication of our teams who were able to efficiently manage organizational and operational issues. Now let's take an overview of the full year of the results before opening the floor to Q&A session. Let me make you notice that the reported figures include the consolidation of Capital Brands Holdings, whose acquisition has been finalized on the 29th of December of last year. The consolidated revenues of the first quarter amounted to 678.7 million euros, growing by 72.6%. Expansion of the group on a like-for-like basis would have been 59.1% with sales of 625.7 million up 64.7% of constant exchange rates. During the first quarter of 2021, on a like-for-like basis, almost all the product categories achieved double-digit growth, supported by the planned increased investment in communication and marketing to support our brands. In particular, the world of coffee was favored by the expansion of all the main segments, with full auto machines growing above the group's average at constant exchange rate. The cooking and food preparation segment has benefited from the increased attention of consumers toward products related to the home experience and innovative solution, as well as to the themes of healthy food and nutrition. In detail, the kitchen machine segment achieved triple digit growth in the quarter, while remaining main subcategories achieved significant double digit growth. As regards to the rest of the business, both the cleaning and iron segment and the comfort segment achieved positive performances with a significant acceleration in the portable heater category. Now, looking at the geographies, always on a life-for-life basis, the Southwest Europe grew by 59.7% with all the main categories accelerating strongly, in particular Italy, France, at a rate higher than the group's average. Northeast Europe also recorded double-digit growth, plus 59%, showing a particular robust expansion in Poland and the United Kingdom. Here, the negative forex penalized growth by approximately 10 percentage points. America achieved significant growth, on a like-for-like basis, plus 63.3%, despite a negative current effect of approximately 14%. The major regions, Middle East, India and Africa, recovered strongly from last year, with a growth of 149.4%, supported by significant expansion of all the countries in the region. And finally, Asia-Pacific, delivered an expansion of 21.3%, supported in particular by the brilliant trend in coffee and portable heaters. Looking at the margin evolution in the first three months, I would like to highlight. Firstly, the net industrial margin, equal to $355.1 million, improved in terms of percentage of revenues from 50.4% to 52.3% with a growth of 79%, thanks above all to higher volumes and positive contribution of price mix. The adjusted BDA amounted to $128.6 million, equal to 18.9% of the revenues. On a like-for-like basis, it stood at $117.4 million with a sharp improvement in the margin on revenues from 10.7% to 18.8%. And finally, the net profit landed at 80.9 million, equal to 11.9% of the revenues, would be 72.7 million on a life-for-life basis, equal to 11.6% of the revenues. Now going to the balance sheet, the net financial position as of the end of the quarter stood at $318.2 million with a net cash generation of $86.2 million in the quarter after capex of $19.8 million. Over the last 12 months, the free cash flow before dividends and acquisition was $393.3 was almost entirely covering both the acquisition of capital brands for 329.3 million and the distribution of 80.8 million of dividends. The net working capital improved significantly compared to last year. The increase in inventory was widely offset in the 12 months by an improvement in DSO and the better management of the trade payables, thus bringing the ratio of the net working capital to revenues down to 3.8%, a marked reduction compared to last year, but in line with the values reached at the end of 2020. The operating working capital stood at 9.6% on the revenues. Closing my introduction, let me say that these outstanding results achieved in the past months, further consolidated the group standing among the global leading players in the small domestic appliance sector. Thanks to his positioning in terms of the long, sorry, the long he was able to see the various opportunity coming up in the market and to his position in terms of products and to his extraordinary flexible organization. In particular, the continuity of the sound trend in coffee and increased attention of consumers toward the domestic space have strengthened expansion in the household appliances, maintaining or enforcing our positive expectation for the rest of the year. In addition, the management of complexity arising in recent times has shown the resilience and adaptability of the group. consolidated a foundation for a sustainable growth identified in our medium-term plan. As a conclusion, based on the strong evidence provided by the first quarter of this year and the current development in Spain, we decided to revise upwards the previous guidance for 2021 and for the new perimeter, including capital brands, We now forecast revenue growing at the cost of this range rate at a pace comprised in the range between 28% and 33%. It equals a range between 18% and 22% on a life-for-life basis, with an adjusted BDA in line with 2020 as a percentage of revenues. While growing, we will continue to fund our increasing AP investment aimed at a medium-long-term expansion in line with our NTP strategy. And now I would like to open the floor to the Q&A session. Thank you very much.

Excuse me. This is a course called Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. To remove your question, please press star and two. Please pick up the receiver when asking questions. The first question is from Murad Lamidi of Exane. Please go ahead.

Yes, good evening. So I have two questions on my side, please. The first one would be on your channel. Could you give us an ID of the sellout trends that your distributors are seeing at the moment and whether the trends that you delivered in Q1 were driven by some inventory buildup. This is my first question. And my second question, could you kindly share the split in terms of cost inflation between ANP and higher transportation costs in Q1. Thank you very much.

Thank you very much for the question.

Maybe on the first one, what we are experiencing now in the first quarter and the information that we are receiving from our partners and from our survey, show that the sell-out has been stronger in the first quarter among all the geographies for our products, continuing the trend that we experienced in the last quarter of 2020. And we believe that some of our marketing and communication activities have been behind this growth as well. Concerning the inventory built up by some of the larger distributors and retailers, we believe that some of them they took the opportunity also to make sure that preparing for their stock making available for the for the coming months but i have to say that there is something that yeah is not very different than what we have seen in the in the past quarter so we didn't see any specific discontinuation in that sense therefore the trend the the trend on on sellout has been probably the most relevant driver in the first quarter of this year. For what is concerning the inflation, what I can say is that our AP had been in line with our plan and in line with our growth increasing in the quarter by a bit more than 20 million in the quarter. And again, here, as you know, we have, we showed it also when we had our analysis day, we have a plan for the coming years in terms of communication, in terms of AP spend, so we are perfectly in line with that. Talking about the ocean freight cost and the commodity cost, we have been obviously very proactive in managing that and we have taken the right action in our opinion to make sure that we are offsetting these additional costs, these additional, sometimes also, somehow also a bit unexpected inflation of the raw material with price increases that we have been timely introducing and with more efficiencies coming from our factories and from our manufacturing network. If we look at the increase, this is overall how I can comment about these two points. I have to say that the team has made a tremendous job here in line with our commercial policy in adjusting our pricing. to fully mitigate the effect that we are seeing coming from the sea freight and the commodity cost.

Okay, thank you very much.

The next question is from Alessandro Cecchini of Equita. Please go ahead, sir.

Hello, everybody, and thank you for taking my questions. The first one I would like to We know that your business has an important seasonality towards the end of the year. So I would like to better understand what the main reasons behind your great confidence actually in the year, in the achieving. So you improved your already very strong guidance. for the full year. So I would like to better understand what gives you such a great confidence about the second half against a tougher comparison. This is my first question. My second question is if you can elaborate a little bit more on what you are observing in this moment in the US. So probably US is a market that in this moment is out from the pandemic, so it's better than what we are seeing now in Europe. So I would like to better understand the trend that you are seeing in April, May in the U.S., and if you are not concerned by the fact that probably you had a positive push driven by government subsidies. So I would like to better understand this. and finally my last question is so on press on press we saw that your holding so that your main shareholder acquired relevant majority stake in Lamar Zocco that is a a business complementary with your business it's a good company so I would like to better understand the rationale behind this kind of acquisition if you may add a comment and finally my last question on China you underlined that you moved your go to market model I would like to better understand what you are seeing in this moment in the market what is the reaction coming from consumers by your products. So just to understand your strategy or your current dynamics in China.

Thank you.

Thank you very much for the question. If we look at our vision behind the guidance, obviously on one side we have seen a very good start of the year, but I have to say that we have more look forward thinking on all the things that we are doing to support our business in the future and here I have to say that we believe that we have also for this year a very strong NPD that is coming in basically all the segments where we are playing and for sure in the core On the other side, these were in combination with the work that we have been doing in terms of investment, but also in terms of quality on the marketing activities and communication activities to support our brands. we think that we have the opportunity to continue our growth. And again, remaining very loyal to what we have shown during the analyst day, what we have shown in our medium term plan. So maybe I'd like to highlight it again, to enforce this concept, our investment plan both in mpd and marketing initiative has not been changed in all the past months even during the pandemic so we have been very disciplined on that and we really stick to that and we have seen the results of that in the past months and we trust that we will continue to see the consumer that are going to be favoring our proposition also in the next months. Obviously, I have to say we also have with the level of visibility that we have today, we have taken in consideration that there could be some area of our business where demand potentially could also slow down, obviously. At the same time, we believe that in these areas, in all the food preparation, for example, the work done in the past years and also recently to position ourselves very well in the category, plus the support that we have been given through the communication and marketing activity will allow us also to continue to grow in the next quarters. We do that looking at what we are doing. We do that looking at the new products that are coming in. We're looking at all the initiatives that we have prepared for the months to come. Knowing that we are living all in a macroeconomical environment that is obviously remaining very shaky for many reasons. But we have seen that also in the regions where the lockdown has been a bit less strict, our model has been performing pretty nicely also in the past months. For what is concerning the U.S., what we are seeing at the moment is that coffee is continuing to grow. I think it has nothing to do, is a long-term trend that is not linked to what happened with the pandemic. So there is a consumer that is becoming more sophisticated, is looking at a different solution to drink not only coffee but all the coffee beverages. And we believe that in our portfolio and even more in the future, we can really perfectly answer to these requirements and to these requests coming to the market. So we see also in the US the coffee performing very strongly and we are continuing to support it. At the same time, we have seen a nice evolution also of the food preparation, mainly capital brands, with also new products coming in, extending the presence on the shelves and also online. And also on that side, we have seen the retailer listing the products for the next months and and giving us a lot of trust for also the new product that we have been introducing. Maybe I'll leave the question number three for last. I finished talking about the geographies, talking about China. We have initiated a very specific go-to-market strategy reviewing also our way of working together with the big EU retailers in China, the big pure player in China. We prepare that in the first quarter of this year, we start to see important results on the coffee side, but we are very confident that there is more than we can do with the rest of our portfolio. And yeah, we have a plan, so it's not a short term, but it's a medium term plan for China that we are very determined to support and to continue to deploy. For what is concerning what you mentioned about the acquisition made by the holding, there I have to say, and we specified also in the past months, we never had the longi group that I represented, that our manager is representing, we never had any financial or other interest in OCCO. We have never been involved in that part. And therefore, you know, it's something that is done separately from the Longhi group. What I can tell you is that on the opposite, we had since several years a financial interest in Eversys. That is a company where we share also some... technological synergies because they are obviously in the professional coffee market, which is their super automatic solution. And we are, at the management of Delonghi, very focused and more it will come and we will be informing you. of developing ever since, as of this month, we are now starting to be 100% in the hands of our group.

Thank you very much. Last point on production. So are you seeing discontinuation in your production trends? It seems not, but just to... to have a feedback if you are missing some components and so on. Thank you. Maybe because it was a bit disturbed, could you eventually... Sorry, can you hear me?

Now we hear you better, sorry.

It was just if I understood well, you stated that your production currently is a foot speed, so you don't see problems in terms of components or so just to... to have a feedback on this part that some other industrial names have some problems on components and so on?

Obviously, you know, this is public knowledge that some of the components and the commodities, the markets are becoming very tight or they have been very tightly in these months. It has to be, and also for the long, it is a concern that we need to monitor very strictly. What I can say is that we have formed immediately, already months ago, a task force that has been working on these topics, including activating very fast alternatives to replace some of these components. namely also in the microchips area. And so far, we didn't have any impact on our plants, on our activities have been full speed, and they are full speed, as I speak. And we trust that we will continue to manage in the months to come, obviously also here we are confronted with a situation that is not always easy to define in details. But I trust that our presence on the ground, our strong manufacturing footprint, the strong connection with suppliers and being very loyal as a customer for many years with most of them, that have been together with us in the growth of the past year is giving us a very good chance to manage also in this very difficult environment, hoping that this situation will ease then obviously hopefully at the end of this year. So at the moment there is no impact. We don't see any impact in the next months on our manufacturing network. and we are currently working at full speed in the plans.

Okay. Thank you very much.

The next question is from Lorenzo Margiotta of Bank of America. Please go ahead.

Hi, guys. Well done on an excellent quarter. Two questions from me. The first one is, could you explain why, given revenue guidance has increased you haven't also increased margin guidance. So I think it stayed that you expect the margin in line with 2020. And I guess given you're expecting sales to be quite a lot better than when you last gave that guidance, why is none of that dropping through to extra margin? That's one. And then secondly, could you share with us any idea you have on How much of the strong performance currently is general market strength versus are you gaining significant share from your key competitors?

Thank you. Thank you, Lorenzo, for the question.

Yeah, going to the first point, you know, we have, as we mentioned also when we organized our Analyze Day presentation, we have a view on the medium-long term. And we believe that we should reach our targets in terms of profitability, in terms of cash on the medium-long term. So we have several initiatives that they look forward. In the position where we are today, and by the way, we have indicated in the guidance that we see the percentage of EBITDA on our revenue to be in line and if I mean not substantially in line like it was in the previous statement, in line with the 2020 term of percentage, it reflects on one side a very strong, obviously, increase in terms of EBITDA, in absolute terms. At the same time, it considers that we want to be cautious on the way in which we are managing the next months considering that I want to be very disciplined in continuing with the plan on investing on the brand in launching our product timely because we believe that this is what will help us to reach the sustainable growth that is our target for the coming years. So I want to introduce this element of remaining very strict on the plan and therefore, as a matter of fact, we avoided to be very bullish on the other side, on the bottom line. And also, while we believe that all the work that the teams are doing and so far give a clear indication that we will be able to manage the increase on the raw materials cost, the increase on the freight and so on. We are living in a world in which unprecedented things are happening, like it was, for example, a few months ago, the Suez Canal blocked for weeks. And therefore, you know, Yeah, we have taken also in the equation, and when we make our assessment, we also take in there some room of understanding a bit how it will really develop on the side, because it looks like we have everything under control, but we don't want to be taken by surprise by events that will happen in a world that is not stable at the moment for For many reasons. So this is a bit our reasoning and I hope you will appreciate that. For what is concerning our growth, obviously as I mentioned in my presentation, there was a trend in the market that has been supporting us. We see the market supporting us also in the future. We think that for many reasons consumers are approaching to our products and to these categories more in a stable way, so we don't think it's a spike. For sure it's not in coffee that is a trend, a growing trend since many, many years, since a lot of time and you have seen it also in the results of De'Longhi. We see a lot of interest also in food and food preparation in different ways coming from a more healthier lifestyle, more attention to the nutrition, to the fresh food, sustainability, zero waste. Also the home experience we believe will continue in the future to be more relevant and more important. Smart working is not going to disappear in one day. Probably will stay as a part of life of the people. And also people, they understood that They can prepare food very easily at home in a much more sustainable way, avoiding packed food, knowing the ingredients that they are using when they are feeding their kids and so on. So we see really a lot of potential in that direction. We see the market continuously supporting ANZA. What we also see is that, and I hope it will happen also in the future, Our model and the strategy that we have been putting in place including perfect launch and execution of our MPD and the support that we are giving to our brands both in the digital and traditional world in terms of communication and marketing activities is paying back also in terms of market share gain. This is something that we want to be very persistent with the deployers.

Thank you for that really detailed answer. Super helpful. Congrats again. Good quarter.

The next question is from Andrea Bonfala of Banco Acros. Please go ahead, sir.

Hello, good afternoon to everybody. My question is related to your current, let's say, situation of booming sales, just reported, but also with prospective solid indication. I'm wondering if you can help us to understand if this kind of growth is evenly, let's say, spread between pure e-commerce players or also brick and mortars. And according to your answer, I will have a second question.

Thank you very much. Yeah, thank you for the question.

What we have seen is that obviously there have been some disruptions in the market due to lockdowns and so on in the past months, but we have seen that Customer input channels have been increasing nicely. But definitely, and obviously I think the e-commerce part has been growing faster. And when I say e-commerce part, it's both the pure player. but also the dot-com of the traditional customers. So all the online world of our customers has been growing in the past quarter, I would say in the past quarter, faster than the traditional market. And also here, maybe if I may, I would like also to add, because it's been a question I think we received also during the analyst day, We have been putting since a while now a lot of effort on our own e-commerce, and I was very happy to see that in the quarter we surpassed the 2% revenue made with our own e-commerce on the total sales. In some brands it's higher than that, but on average it's a 2%, and I consider that to be a step in the right direction. The intention is really to continue to invest also on our own e-commerce.

Thank you very much. Would you say that Amazon is gaining market share with your products or not? uh non-material and the final question is that can you confirm again maybe we already asked this question to you but just to be reassured that if you sell to the uh let's say pure uh e-commerce player like amazon your profitability is not uh affected yeah thank you for the question maybe also here yeah we

I would prefer not to talk about a specific customer. We have obviously, as you know, several e-players that are our partners. And yeah, they are growing obviously faster. What I can tell you is for sure, and this is also very important in our model, is part of our commercial policy and is valid for all the regions, so not only here in Europe, but also in Asia where there are different, obviously, players or marketplace players and so on. For sure, our profitability is not impacted negatively by the growth of that channel.

Okay, thank you very much.

The next question is from Francesco Brilli of Intermonte. Please go ahead, sir.

Good evening. Thanks for taking my question, and congratulations for the results. I have a couple of questions. The first one is on the profitability of capital brands. It seems that it's around 21% is slightly higher than what we had in mind before. And just if you can share with us if it's a level that is normal, if there are some extraordinary effects for the first quarter of this year. The second question is on production and again on shortages. If in the case of a hard shortage from suppliers, how can you carry on the production for how much time you are able to produce without a proper supply flow? And then on working capital, a very nice development on working capital on sales. I wanted just to ask you if you can share with us what you consider a sustainable level for the remainder part of the year and what you have in mind for the full year. Thank you.

Thank you, Francesco, for the questions. Talking about capital banks, we are very happy. We are very happy because the company is developing according to the plan. The management remains in place and they are continuing the work that was done before our takeover. And yeah, the bidamage that you mentioned in the around 20% has been proven to be sustainable, also considering the fact that the business model that they have is based on a very lean organization. And on that side, we made sure that that was remaining and not changed and therefore they have also benefited from new model launches that have been introduced with the similar profitability of the one that they've been replacing while also they've been adding a bit more communication also in that case especially in the digital world. you know, the structure of the business, the way in which the business is built and the model is built, considering the organization being very lean with a low-cost base, allows if, obviously, you know, on the top line, since we go in the right direction, to see these margins as, we believe, as sustainable. For what is concerning the shortage of components, you know, here, and then personally, you know, with our team of supply chain and head of operations following up this path because obviously it's very important for all of us, I can tell you that De'Longhi is benefiting from the very strong relation with the strategic supplier. Now, you know, to answer the fact that some of them will be tomorrow not able to supply for a very long period of time is very difficult now to factor in and to consider. The level of disruption that we have been seeing and which we have been simulating also for the future, sorry, making some simulation for the future, we believe that we can manage it through our stock policy, through the relationship that we have, through the alternatives that are very proactive from the beginning. We have been... we have been introducing, and I'm not talking about the dual suppliers, that obviously is a normal thing, but we have been really expanding to a different number of alternatives. And here, if I may, I've been helping a lot also the know-how of De'Longhi and the technical team of De'Longhi in developing alternatives and solution using different type of technologies to eventually compensate or offset a possible shortage on certain components. So, you know, to your question, yeah, we can get to a certain point and think very far on managing it. Yeah, if there would be heavy disruption that we don't factor in, that nobody's factoring in at that point in time, obviously, it would be probably a different story. But for the time being, from what we can see, we have a very robust plan of managing this period of difficulties from some of the suppliers. For what is concerning the working capital, I mentioned what I mentioned last time. I believe that it would be healthy for us to have a working capital below the 10% on revenues. We are working very hard to manage that. I don't want that we are becoming paranoid on the uh inventories because i want to give always priority to the service level and to uh and to our customers but obviously we need to work always as we are doing on the rotation of our inventory inventories and on managing all of the tail of our our skus but having said that uh uh the instruction any of the the tpi that we have internally and that we consider healthy for our organization is to run the business with a working capital below the 10% on revenues.

Okay. Thank you very much.

The next question is from Isacco Brambilla of Mediobanca. Please go ahead, sir.

Hi. Good evening, everybody. Thanks for taking my questions. I have a The first one is your implied assumptions in your full year guidance. Is it correct to assume that the low end of the guidance is projecting some sort of growth in the second half of the year despite the very tough comparison base? The second one is more on longer-term perspectives. How is the current exceptional outstanding performance impacting your expectations for the next three years? Is it correct to assume that stronger than expected growth in 2021 is not triggering an increase in your three-year targets in terms of top-line and EBDA, just sort of anticipation of a future drop. And the last one is on Eversys. I was just wondering if you have set any sort of internal target for turnover and EBDA for Eversys in the mid-term.

Thanks. Budgeting voltage, eh? Thank you very much for the question.

I will just clarify one point because I missed it. For the first question, yes, we see, despite the high comp, the growth in the second alpha with the elements that we have in front of us today. As I mentioned, thanks to all the work that has been done in the past months and marketing and communication activities of which we have been working and we are working for the coming quarters and also from our plan of MPD that I'm very happy that is coming in timely with all the launches that will be done according to our plan. So on that side we have a very robust plan for the coming quarter in line with our MTP in the different geographies and we see that translating in a growth or so in the second quarter where we know that there is a high comp versus last year. For what is concerning the impact on our MTP three-year plan, we were discussing internally. I believe that would be my suggestion that we take a bit of time and probably after the summer we will be in a position to review. We will have more elements. and eventually making some new considerations. What is for sure is that the model that we have indicated with the pillar of growth that we have identified, the projects and the enablers, will not change. And some of them we initiated today, but obviously will last also for a longer period of time. But obviously, you know, if it will be the case to review some of the financial, we will do it. But I think it's correct that we do it once, you know, we consolidate a bit more in the course of the year. So we should take some months to before we touch that part of our sustainable growth plan. For what is concerning overseas here, thank you for the question, but as you can imagine, we just took it over. A team led by Macro Change is currently working on an MTP, medium term plan, for the new acquired company that hopefully will be ready in the next months and will be then integrated in the MTP of the Longhi Group. So we will be in a position in some months to give more information on what are our objectives and what are our targets also for this part of the business.

Okay, clear. Thank you very much.

As a reminder, if you wish to register for a question, please press star and one on your touchtone telephone. The next question is from Luca Baccacoli, excuse me, of Intesa San Paolo. Please go ahead, sir.

Hi, good afternoon, everyone. Just two questions from my side. The first one regards the advertising and promotion budget. I was wondering if you expect to increase the expenditure given the stronger than expected sales momentum. So, I mean, referring to the 100 bits increase as a percentage of sales of the advertising and promotion expenditure. And the second one regards the metering update. So, if you can share with us The trend in April and the first part of May would be helpful just to understand how the first semester will be shaped.

Thank you. Yeah, thank you very much for the question.

Talking the A&P, yeah, we disclosed that this is, again, part of our plan, the increase of 100 basic points on the EMP. Here what I can say is that we are committed to do that. We believe that is an essential part of our sustainable growth plan. What I can say is that we are working, besides on the investment, working very hard also on the quality of the investment. So there will be activities that will come in in the next months on which we are working that hopefully will make even stronger our communication plan and the support on our brand. So it's not just a matter of percentage. because obviously in absolute value there will be significant increase on the spend but we've been working very hard reviewing both in the digital and traditional channel also the quality of the AMP and the way in which we are executing especially in the digital world in the social media the way in which we are executing our plan we think it will give an additional boost to our business. If you allow me, in a few months, we will be able to disclose a bit more about that, and we are very convinced that we will be a very strong partner. a booster for all the brands of De'Longhi. We are currently working very hard on that. For what is concerning the current trading, I can say that we are continuing to perform in the right direction. We see our partners and customers responding nicely uh to uh our product we know we all know that the april will be a easy compra because obviously last year was a difficult month for the reason that that we know so for us would be obviously kind of easy to have a very strong performance but overall you know we enter in the q2 with a lot of plans, with support from the customers, with a new product that are coming in, and they start to be introduced and presented. So from what we see today, being the 12th of May, things are moving forward and make us so far quite happy.

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

Thank you very much again. Thank you all. Thank you for participating. And, yeah, we will talk soon again.

Thank you.

Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.