De Longhi Spa

Good afternoon. This is the Cori's Call Conference Operator. Welcome and thank you for joining the longest served half of 2021 Consolidated Results presentation. 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, let me signal an operator by pressing star and zero on the telephone. At this time, I would like to turn the conference over to Mr. Massimo Garavaglia, CEO. Please go ahead.

Good afternoon, ladies and gentlemen, and welcome to the Delonghi Group's quarter to 2021 results call. I hope you hear me well. Today, here in the room, we have Marco Cianchi, Chief Strategy and Control Officer, Stefano Biella, CFO, Fabrizio Micheli, Director of M&A and Investor Relations, and Samuel Accudetto, Investor Relator. I'm pleased to release this outstanding set of numbers that highlight the strength and the flexibility of the group in coping with many complexity arising over the last, latest months. First of all, Let me recognize the extraordinary effort made by all our people over the last quarters that allowed the company to serve customers and achieve great results in a still very complex and uncertain environment. The exceptional flexibility that the people and the organization have shown in the last period is an important signal that consolidated the group's ability to adapt promptly to the market changes and conditions. I move now to slide four and I would like just to start with the presentation that you see in the slide of some of the activities in the communication area. And this is to emphasize the commitment of the group in the last years in expanding the budget of communication in marketing activity to support our brands and our business. So you see here in the slide some activities that have been done to support the Longi brand. They're celebrating the 100 years of bone and a campaign, a very successful campaign to support our Kenwood range. Now moving to the slide eight, During the first half of the year, as you see in the slide, the group was able to consolidate and strengthen its position in the small domestic appliance market. The strong vote achieved both in Q1 and in Q2 was supported by continuous investment over the years in innovation, communication, digital marketing, and production excellence. These efforts have enabled the company to seize the opportunities offered by the acceleration of the consumption in the domestic environment and to successfully address the complexities that have emerged in the last few quarters overall in the supply chain. In this regard, it should be noted that despite several problems that have arisen in recent quarters, the production platform have worked at full speed and there has been no disruption effect in the manufacturing activities. Furthermore, thanks to the numerous measures implemented, like increased efficiency and a very careful pricing strategy, the group, we think, will be able to mitigate to a very large extent the effects of the cost increases. This strategy will allow us to achieve an adjustment BDA margin for 2010-01, improving versus last year, and I will come back on this point when I talk about our guidance. Now, let's take an overview of the half-year results before opening the floor to the session due to the questions. I would like to make you notice that the group scope of consolidation in the first half of 2021 has included for the entire half the American group headed by Capital Brands Holdings, and starting from April 1st, the Swiss group Eversys, that as you know is active in the segment of professional coffee machine, and whose entire share capital was acquired by De'Longhi. on May 3rd of this year. On slide 9, you see the consolidated revenue of the first quarter, of the first half, sorry, that amounted to 1.4 billion, a bit more than 1.4 billion, growing by 60%. Expansion of the group on a life-for-life basis would have been 46% with a turnover of slightly above 1.3 billion and up to 51% of cost and exchange rate versus last year. Now, going to slide 10 and on the geographies. Looking at the geographies on a life-for-life basis, I would like to highlight the areas that have achieved a strong double-digit growth both in the first and the second quarter of the year. Southwestern Europe showed a strong trend, growing by 52% of the cost of the exchange rate since the beginning of the year. In particular, we witnessed a remarkable expansion of the coffee business in Germany and France in both periods. Northwestern Europe grew by 53% of the cost of the exchange rate, with the whole area expanding the revenues at a double digit rate in H1. America achieved a significant growth, plus 38%, despite a negative currency effect of around 12%, and the area maintained a positive trend already achieved in quarter one. Then I would like to highlight also the strong recovery achieved in the Middle East region. with an increase of 142% of cost and exchange rate versus prior year. Finally, Asia Pacific maintained a double-digit growth in the first part of the year, increasing the sales by 40% over the cost and exchange rate. Going to the categories and therefore to slide 12, coffee was boosted by a remarkable expansion of all product families at a growth pace above the group's average in both quarters, driven in particular by the expansion of the full automatic coffee machines. Cooking and food preparation segments have closed the half-year with a significant double-digit growth with a substantial continuity between the first and second quarter. In particular, the increased attention of consumers for products related to the home experience supported the expansion of the business basically in all geographies. As of the rest of the business, the cleaning and ironing segment confirmed a solid double-digit expansion in the period analyzed, while the comfort segment recorded a high single-digit growth, also considering a delayed seasonal start of a portable air conditioning especially here in Europe. Going now to slide 15 talking about the margin. The net industrial margin equal in the first half to 721.4 million and improved in terms of percentage of the revenues from 48.7% to 50.4% Thanks above all to the higher volumes and the positive contribution of the five SMICs that we calculated at around 32 million for the first half. The adjusted EBDA amounted to 251.4 million, representing 17.6% of the value on a like-for-like basis. is stood at $230 million with a sharp improvement in the margin on the revenues from 12.5% to 17.5%. Such expansion was boosted by a strong volume effect and a positive price mix, which more than offset the increased investment in AMP has been slightly higher versus last year, and the negative impact of higher cost of transportation of raw material. Net profit amounted to 180.8 million, equal to 12.6% of the revenues, and a like-for-like basis would have been 140.4 million, equal to 10.7% of the revenues. Looking now at the balance sheet, at slide 17, Our net financial position at the end of June stood at $218 million, slightly declining from the beginning of the year due to a cash out for dividend at around $80 million and the acquisition of overseas for $129 million. However, the cash flow before dividend and acquisition was $196 million in the six months and $450 million in the 12 months rolling. The net working capital improved significantly compared to last year. The increase on inventories was widely offset in the six months by careful credit and trade payable management. bringing the ratio of net working capital to revenue to 2.2%, a marked reduction to last year's figure of 10.6%, but more consistent with the values that we have been seeing at the end of 2020. Therefore, I would like to make a short conclusion If we see the extraordinary set of results achieved in the first and second quarter of 2021, this is confirming the healthy and strong medium-term trends underway and allows us to look with positivity at the evolution of the business in the near future. Despite the numerous complexity and challenges that the industry is facing, such as increasing costs related to transport and raw materials, the group has demonstrated the resilience and flexibility that have allowed to maintain the production capacity at full speed, confirming our results and our targets and the margin at the NBDA level in the current year. We are experiencing a phase of strong business growth, and we believe that in order to be in line with our medium-term plan, it is necessary to continue to strengthen our investment in innovation, in expansion of the production capacity, and in communication to support our brands and products. In this regard, the second half of the year, we see the Group's focus on launching an important global communication campaign with the aim of further consolidating its positioning and boosting the business growth in the coming years in line with our medium-term plan. For this first part of 2021, we now see, sorry, for the rest of 2021, We now receive good revenues, including capital grants, low at the constant exchange rate in the upper end of the range previously communicated. Remind was between 28% and 33%. And then adjusted the BD8 improving versus last year, both in value and as a percentage of revenues. Furthermore, the consolidation of emphasis will bring about two percentage points of additional revenue growth and an EBA adjusted as a percentage of revenues in line with the rest of the group. I open now the floor to questions.

Excuse me, this is the Cori's Call Conference of Bridges. We will now begin the question and answer session. Anyone who wishes to ask a question may press the star and 1 on the touch-tone of the telephone. To remove yourself from the Q&A question queue, please press the star and 2. Please pick up the receiver when asking questions. Anyone who has a question may press the star and 1 at this time. The first question is from Mr. Francesco Brilli with Intermonte. Please go ahead, Mr. Brilli.

Good evening everyone and thanks for taking my question. Many congratulations for the results achieved. I have a few questions on my side. The first one is on the profitability of the acquisitions. It seems like I make some calculations. It seems that dropped significantly from 21% in Q1, where only capital brands were included, to slightly higher, to 15% in Q2, when overseas was added. It seems something related to a material increase in labor costs, and I was wondering if it is due to some exceptional items or seasonality or something. other things, and if you can provide some additional color on these. And in your guidance, you mentioned that overseas we have an adjusted EBITDA margin in line with the group average. Should we expect the same for capital brands for full year? And then I have an additional one on the pipeline of the new product introduction in the second half of the year. Which percentage have you already achieved in the first half of the year and what are you expecting for the rest of the year? And the last one is on price mix. If you are planning to implement additional price increases going forward in Q3 and Q4, also to offset inflation of transportation costs and raw materials, and to which extent, if you can provide some indication on this.

Thank you.

Please hold the line. The conference call will continue in a few seconds.

Thank you.

Thank you very much for the questions.

Maybe I will take one by one. On the new acquisition, we have integrated, we started to integrate capital brands in the first months of this year. We see a nice evolution of the business. There are some elements that have to be managed by the new acquired company including obviously the valuation of the dollar that had to be managed in terms of pricing and something that they are currently doing. And also with the team of Capital Brands, we have agreed to start an investment plan in AMP that will be rolled out in the next years. And that was started already in the first half of this year. We started also to reinforce the organization. with the objective to create the basis for future growth in the future. And to start also to prepare also further expansion that will happen in the last quarter, but then more in the next year outside of U.S. Having said all that, obviously the objective remains to deliver a BDA on percentage of the revenue that is in line with the group. That was our objective. obviously to continue with the management to explore opportunity to leverage the brand that is really very strong in the US to expand further with new products that will be prepared for 22 and 23. So there are a lot of activities happening at the moment with capital brands but we are very happy with the evolution of the business and we see in our simulation also considering the higher cost and considering the devaluation of the dollar, we see a contribution on the EBDR basis of the new company that is in line with the rest of the group. For Eversys, we just started to have it fully at the perimeter. The environment of the professional coffee business is improving. And we see already the order book that is growing. Therefore, also, we believe that the contribution on the BDA basis to the group results will be in line with the rest of the group in percentage of the revenue. And we should see that coming in the next quarter. For the new products and new products in production, there was a nice rollout of the products that were introduced in the last quarter of 2020, a nice rollout in the different geographies in the first semester of 21, with a very good reception from all our biggest customers, both online and traditional customers. We have a very strong set of new launches foreseen in the second half of the year, namely in the last quarter of this year that, as I mentioned in my short speech, will be strongly supported by an important campaign, a global campaign that we will launch as of September. Finally, a very important point about the pricing. uh we have been working on pricing strategy uh since the beginning of the year and i was very happy with that and i was very happy with what the team has done has been done in a very structured way and not in a reactive way but in a proactive way and therefore today we are in a condition to say that we see Obviously, as everyone in the industry, the cost increasing due to the transport, mainly the ocean freight, and also obviously on some components and commodities. But our pricing strategy together with the increased efficiency in our plant, we believe, as I said before, we'll be able to offset a large majority of this increase in the cost of the then also to the strategic results adjustment that we made throughout our portfolio. So I believe that this has been a big achievement for our group.

Thank you very much.

The next question comes from Mr. Murad Lamidi with BNP Paribas. Please go ahead, Mr. Lamidi.

Yes, thanks for taking my question and congratulations for this very strong quarter. Actually, I have a couple of questions on the cost headwind that you saw in H1 2021. Can you give us a broad idea of how much came from the increase in ANP and how much came from the increase in input costs like transport and raw material. And is it fair to say that you will probably see most of the input cost headwind in the second half? Thank you very much.

Let me thank you for the question. Here, you know, if I may, I would like to give you some figures that will, so that's a bit how we see it, that we cover the full year because then the way in which certain costs are coming in in the different period that we are monitoring, but we are very committed because this is a way in which we see also the development of our medium-term plan. or what is happening in the full year. We see in the full year an impact on the cost from mainly coming from logistic commodities or components and so on in the around 2.5% of the revenues in 2.5, 2.6% of the revenues in the course of 2021. And that's where we say thanks to our initiative on the pricing strategy and the efficiencies, we are able, we believe we are able, as we did in the first half, we are able in a large majority to cover this impact that we have seen, that we see in the course of 2021. For the EMP, here I would like to go back to what we already announced when we presented also our medium term plan. Overall, we are committed to increase our spend on EMP by 100 basic points of revenues in the full year. And we already have seen the first half moving in term of percentage on the revenues from 10.9% to 11.2%. So we talk about around 15 million increase on A&P in the first half of this year. And yeah, as I said, our commitment also to support the beef campaign that we have is to increase compared to the prior year our EMP on revenues from 12.4%. to around 13.5%, so these 100 basic points. That will be split, and I think we have been showing that also during the MTP presentation will be a lot on the ATL side, so media and communication, with also an important part of that going on digital communication.

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

Hello, everybody, and thank you for taking my question. So the first one is about the trend that you saw in the second quarter, so very, very strong, so plus 40% organic growth. I would like to better understand if you could split, if you can elaborate a little bit more on product categories, so between coffee and food preparation for this specific quarter. And instead, I would like to come back a little bit on the headwinds on the cost side. So if I am not wrong, your calculation is roughly 80 million euros of production headwinds for this year. So it's more for you in terms of transportation costs or more in terms of commodity components and so on. So just to better understand if for you it's more important this element or the other one. Thank you very much.

Thank you very much, Alessandro, for the question.

Talking about the categories, I mentioned we have seen all the categories growing very strongly. Obviously, the coffee has been performing even stronger, accelerated even stronger for us. all the food preparation with cam, wood and bone, they've been growing significantly in the second quarter. So I have to say that, you know, we have seen important growth coming from all our portfolio. The only exception has been the portable air condition that anyhow remains you know, part of our business, especially in this season. But again, you know, it's really linked to the season, especially in Europe. But if we exclude that, that has a limited impact on all the rest. We have seen, you know, good performance on all the different, all the other categories, including the food preparation. We believe that all the new products, new launches, and the campaign that we have been doing to sustain Cambodia and also Poland with the 100-year celebration in all different countries has been behind this growth and has helped us also to consolidate our share in the market. For what is concerning the cost, yeah, you know, the increase that we have seen, that I think obviously is coming from all the industry, is somehow split between the transportation, mainly as I mentioned ocean freight, and the cost of the commodities. I always would like to highlight the fact that, you know, Our manufacturing footprint is very well balanced because we have a very strong industrial platform here in Europe. They've been not impacted by or limited impacted by the ocean freight. Maybe more than 50% of our production is today based here in Europe. Therefore, on that side, I think we have been well balanced. We were well positioned, in my opinion, to absorb these additional costs. Also, Delonghi has a very strong sourcing operation. in the different countries, and I think we were able to leverage that to manage well in the best possible way, I would say, the impact coming from the cost of the commodities and the components. Obviously, there is an increase. I quantified it. You translate it in an absolute value. I quantified it in roughly 2.6%. in the course of this year, but again I would like to stress that the large majority of this cost has been covered by very well executed pricing strategy, proactive pricing strategy that has been initiated early in 2020, 2021.

Okay, very clear. Thank you.

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

Hi, guys. Congrats on another very good quarter. Two questions from me, please. Firstly, on components, do you expect that you will have any issues with actually sourcing components, or do you think that will be fine? I think it's well understood that pricing is increasing, but to actually source them, some of your competitors are talking about potential issues there. And then just secondly, I think some sort of back of the envelope maths suggests that your revenue this year might not be very far away from your sort of midterm guidance for 2023. Is that something... I guess, how should we think about that mid-term guidance today as we approach it already, sort of two years in advance?

Thank you.

Yeah, Lorenzo, thank you very much for the question. Yeah, for sure, obviously, on the components, you know, is something spread in the industry, not in our industry, that, yeah, there have been challenges there. in the past months. I have to tell you that we have been managing too in a way that we didn't have and we don't expect to have disruption in our chain. What we did was, again, early in the year to put together a task force that has been working relentlessly to make sure that any possible shortage that would have come on some strategic component, we were able to address it and take the right measure in order to prepare for that. And that has been a very hard job that has to continue, by the way, because obviously, you know, this situation is still there and it still has to be managed. But I have to say that from what I could see in the first semester, what we see now in the second half of this year, the results of all these proactive activities that has been including people from supply chain, from operation, from R&D, from procurement, has really helped us and put us in a position to say that we are ready to deploy our plants in terms of our commercial plants and our launches without having a disruption compared to what we originally planned. So I think this is a big achievement, in my opinion, of the group. And that's why I mentioned before, we see with productivity the evolution of the future. For what is concerning our guidance for the three years, we are aware. We are happy with that, I have to say. at the same time as i mentioned i think in the last call we want to take the right time after the summer in the in the months in the months after the summer to have a good assessment for the for the future and in light with all the plants that we have already prepared for in our MTP that we have been disclosing also during our analyst day. So in terms of quality of the plan, we believe that we need to stick to what we have been prepared. What we have to review, obviously, are the numbers, are the figures, because we had an acceleration in in the course of the past, you know, last year and also obviously this year. We believe a lot that our business model and the quality of the work that we have been preparing will be very effective for the years to come. And of course, we started, for example, we started to work on some very important pillars for our future growth. that talking, for example, about U.S. and about China. We are still working on that. We've been working even faster in the U.S., but we want to do the same in Asia. They have to represent important gold pillars for the future, and I was very happy to see the evolution that we had in this first, at the end of 2020, the first six months of this year. So overall, I can already announce that our strategy will not change. So in the way in which we presented our strategy, if you recall our temple, where you see the pillars, where you see the enablers, where you see the project, will not change. What we will have to review, and obviously in due course we will communicate, will be obviously the financials and all the rest of the numbers. and we will do it after the work that the team will do in the months after the summer.

Thank you. That's very clear. A good problem to have, hitting your guidance two years early. Well done, and thank you again. Absolutely. Thank you. Thank you.

Once again, if you wish to ask a question, please press start M1 on your telephone. The next question is from Luca Baccoccoli with Intended Campaolo. Please go ahead, Mr. Baccoccoli.

Yes, good afternoon, everyone. Three questions from my side. The first one actually is a clarification on capital grant profitability. If I understood correctly, you guided for a profitability aligned with the group level. while during the recent past call you were mentioning a sustainable profitability at 20 in the region of 20 percent margin level so i was wondering if there are strong cost headwinds that are changing basically the the indications for for the rest of the year the second one is just if you can give us a flavor on how the third quarter um has started so if you can provide us a trading update on on july if you see a similar trend of the second quarter or you see a slow and slow down and the The final question is on the net debt target or guidance, if you want, for the full year. And so on the cash flow generation in the second part of the year, in the second semester, how do you see it given the very strong comparison basis of last year? You generated approximately 200 million euros of cash excluding the um cash out for uh capital brands and uh i was wondering if this uh call is achieved also this this year or you see headwinds from the networking capital which by the way at the end of first semester and i think to the father thank you

Luca, thank you very much for the question. Maybe it's a correct clarification on the profitability of the new acquired businesses. We see capital brands like for like, so cost of exchange rate delivering in line with the objectives. So we'd be above the the group average in terms of constant exchange rate. We know that there are some fluctuations obviously on the dollar, but the business is targeting in that direction. We made in the first part of this year additional investment to support it, also to prepare the growth, but ultimately we target to achieve a profitability that is accretive the group and is in line with our objectives, so it's good that I could make a clarification of that. I was referring to Eversit that we expect to be in line with the average of the group and where we have also there planned some investment to reinforce the team and to prepare for further expansion in our medium term plan. On our top quarter, yeah, there I would like to say, look, with the visibility that we have, we've been in line with the expectation, with our expectation. I want also to, you know, be very consistent in looking at things with a certain perspective because, as you know, you know, all these, yeah, kind of... that have been in the market due to the situation that we are all living in can have an effect between months and quarters and so on. What we can see is that our business, I'm talking about the long group business, is heading in the direction that we were expecting and we said it in fact targeted the higher part of our guidance at the end of this year and we see that is happening in the second part of this year. Therefore, we remain positive on that because we have seen the market reacting and the consumer reacting very nicely to our products. We see the consumer reacting nicely to the communication that we are doing to support our brands. We see our activity on the online, the e-commerce business that is really picking up. And overall, you know, if I look also at the quarter three, we'll be in line with what we are expecting and then With the plan that we have in the second or in the back end of this year, we trust that we are going to achieve the target for this year. We said it with the growth in high-end part of our original guidance. Crash Pro generation and the second alpha, we believe that there will be a continuity in the first half and we are very determined to continue with what we already started some time ago in managing our working capital, remaining disciplined in our investment despite we want to enforce our manufacturing footprint but that will be within our plan. So as you know, Luca, our target was that we communicated it was to generate 250 million before dividend and acquisition that was in our MTP. We are going to be above. We have been accelerating. So I see the second half cash generation that will be in the trajectory of what we have seen in the first half.

Okay, thank you very much. Just one additional question, if I may, which is a broader one on the advertising and promotion. You said that you are ready to launch a global advertising and promotion campaign. If you can just elaborate a little bit more on that, if possible, just to better understand what are you going through, basically. Thank you.

Sure.

I need to ask you to be a bit patient, but not too long. Just after the holiday, we will give more information and our team is planning to reach out to provide all the details. For the time being, I cannot add on that for several reasons that I'm sure that you will understand. but it's something that we plan soon after the summer. We believe it will be very important, and obviously we require, as required, a lot of preparation from our team, because we'll be a global campaign. We require it to be supported by adequate financial resources, and that's why I explained we already plan it in large advance to increase our MP by 100%. And if you allow me, we believe that we are in the right position for doing that also thanks to our current competitive position, but also because the team has been doing a very good job to protect our operating margin. And I think it's the right moment in line with our medium-term plan to implement these investments that have the objective to be part of a long journey that will continue also in the future. So I'm just a bit patient, but soon after the holiday, we'll be in a position to give more disclosure.

Okay. Thank you very much.

The next question is a follow-up from Mr. Murad Lamidi of BNP Paribas.

Please go ahead, Mr. Lamidi.

Yes, thank you. I have two follow-ups. So the first one is on the sell-in, sell-out trends. We saw at the end of Q1 that both were heading pretty strong, which led retailers to run with very low inventories. I was just wondering what kind of sell-in, sell-out trends are you seeing right now and the inventories in the channels? that you're looking at at the end of Q2. And finally, a question about China. We've seen some slowdown in consumer spending in China since the Q2. I was just wondering, I mean, I know that you achieved 17% growth at DeLonghi in China. But I was just wondering what's your general view on the country and what are your teams are seeing in terms of trends? Thank you.

Thank you very much for this follow-up question. Talking on the market trend in terms of selling and sell-out, what we are seeing is that obviously it remains a certain level of volatility in the market because of the condition and the very special condition of the market. For sure, what we are seeing is that coffee is a very long-term trend. We see it growing. We have been seeing it growing for several years. We still see a lot of opportunity to grow. Therefore, I think we are very well positioned to continue, and we are falling very closely evolution in each market, but we have also a lot of support from our customer on that. The same goes for the, you know, food preparation, especially for Kenwood and Brown. They are two very strong brands, so they are very well positioned in this part of the business, and I would say also with Nutribullet that has a very strong leadership position in the personal brand segment in the U.S. So we see these segments that are very well supported by the consumer and also by our customers. Obviously, there is a certain volatility that we will have to live with, but also we see a trajectory for our brands supported by our investments, supported by our launches. They make us confident that we can continue to grow. in that area and we know also that if we look at the medium long term view many of the changes that happened in this past year are going to stay also in the future so we see things changing in habits of people changing working condition of people that are there to stay. And we believe that we have a very strong proposition for lifestyle products that are enhancing the domestic or in-house experience. So on that side, we are confident to see that there is a good evolution also for our food preparation business. Concerning China, I have to say that we have been working very hard with the team. We have been redirecting our go-to-market, being direct with our, as I mentioned already last time, being direct with our presence in the big e-retailer in China. We see nice results coming, and the categories where we are playing we see that there are big opportunities ahead of us. Obviously, the overall economic environment, the overall environment, as you correctly mentioned, has a big change in the past months. But for what we are concerned, for the categories where we are, with the new enhanced go-to-market strategy that we have, We believe we are supported by the right investment and we believe that there is space for us to continue to grow in the future in the country.

Thank you very much.

The next question is from Mr. Andrea Bonfa of Banca Altos. Please go ahead, Mr. Bonfa.

Hello, good afternoon. My question is quite simple in the sense that I'm wondering if you can elaborate and share with us, let's say, your attitude on price increases on H2 of this year compared with H1. Would you dare to say that price increases will be higher in H2 than H1, also in light of your inflation?

Just some comments for you would be nice. Thank you very much.

Yeah, I mentioned before, maybe I can give a bit more detail, that we had really a policy strategy in mind already at the beginning of the year in a very structured way. The first round of activities has been done already in the first alpha. A second one will become more effective in the second alpha. And has been done in a way that we've been very selective throughout our portfolio, making sure that we are Retaining certain price points, making sure that we are correctly looking at the positioning of each single product in our portfolio. That's why I say it's been a very granular work where part has been benefiting already the first alpha, and the remaining part will come in the second half. We have been trying to do that, looking also at the evolution of our costs. Obviously, we'll weigh more in the second part of this year. Overall, as I said before, if we are seeing an impact of 2.5% on revenue and on the cost, this way of working on the prices, with Sam starting earlier, that we start soon later, will help us to cover the impact of, largely cover the impact of the cost.

Thank you very much.

Gentlemen, there are no more questions registered at this time.

Okay, thank you very much, thank you all, and I take the opportunity to wish you all a good restful holidays and we will have the chance to talk soon after the summer. Thank you.