De Longhi Spa

Good afternoon, this is the Chorus Call Conference Operator. Welcome and thank you for joining the De'Longhi First Half 2024 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. Fabio De Longhi, Chief Executive Officer of De Longhi. Please go ahead, sir.

Good afternoon, ladies and gentlemen, and welcome to the De Longhi Group First Half 24 Results Conference Call. Today, together with me are Nicola Serafin, Group General Manager, Marco Cenci, Chief Planning and Control Officer, Stefano Biella, CFO, Samuele Chiodetto, Investor Relations Director, M&A Manager, and and Sara Mazzucato, IR Specialist. The group maintained its upward momentum in the second quarter, demonstrating yet again its ability to realize consistent growth in the core business segments and, at the same time, noticeably improving profit margins. Turnover went up by more than 10% in the last three months, thanks to the consolidation of La Marzocco and a 6.9% increase in the household segment, excluding comfort. In detail, this category suffered during peak seasonality because of an unfavorable climate in Europe and the aftermath of the discontinuation of the American mobile air conditioning business in Health One 2023. However, the impact will be diluted during the year. Organic growth in the core categories remains strong, following the trend experience over the previous 12 months. Home coffee continued to grow structurally, expanding at a high single-digit rate in line with the first quarter, thanks to the De'Longhi brand gain in market share in the espresso area and the sound market development supported by solid megatrends. The food penetration and nutrition segment grew as well, extending its upward trend in the quarter, largely driven by the blender category, including blenders, hand blenders, and personal blenders. In addition, iron in products achieved double-digit growth for the fourth consecutive quarter, boosting market share. Organic turnover expansion coupled with an upgrading product mix and a further softening of inflationary pressure on certain industrial costs enabled us to achieve a significant improvement in the profitability at constant perimeter, enhanced by the consolidation of La Marzocco. These favorable dynamics allowed us to jump back to the historical profitability range, reaffirming the upward margin guidance for the year. The group confirms its robust cash generation ability with approximately $425 million of free cash flow before dividends and M&A generated in the last 12 months, employed to finalize the strategic acquisition in the professional coffee business and to remunerate the shareholders, distributing more than 100 million euro dividends. Now, let me focus on the quarterly results. In the second quarter, the group revenues reached 765 million euro, recording an 11% increase compared to the previous year. The group was able to expand its business in all key geographies, with the European area still leading and growing at a high single-digit rate. More details. Southwestern Europe grew at a pace of 6.5% in the second quarter, translating into low single-digit organic growth. The business in the area was impacted by weakness of the comfort segment. due to unfavorable climate conditions. Within the context, certain markets like Austria, Iberian Peninsula, Switzerland, have experienced a robust growth, aligned to the strong trend experienced in the last 12 months. Northeast Europe continues running, registering a growth of almost 14% in the quarter, corresponding to an organic rate of around 9%. The second quarter is the fifth consecutive one of organic growth for the area, driven by the performance of the coffee and ironing businesses. The media region went back to growth, expanding at a high teen rate, 10% organic after a tough first quarter, highly impacted by geopolitical uncertainty. The growth was pushed by positive performance of the coffee area and certain categories within the nutrition and food preparation segments. Americas grew by 10% thanks to the consolidation of La Marzocco. The organic perimeter experienced a slowdown due to the aftermath of the discontinuation of the mobile air conditioning business and the weakness of the overall comfort segment. The core categories were up thanks to a solid expansion of Nutribullet products and positive developments on the fully auto coffee makers and espresso capsule systems. Finally, Asia-Pacific grew at a mid-teens rate thanks to the consolidation of Lamarzocco that upset the slight organic decrease in the area. Specifically, oasis, as expected, suffered a tough comparison with a weak demand on certain countries, while the home coffee achieved a positive expansion in the period. Regarding product segments, it's worth highlighting that there were There has been positive tendency across all macro categories, with only exception of the comfort business, allowing the group to maintain the positive momentum achieved in the last 12 months. Specifically, the coffee machine sector, both for domestic and professional use, which currently accounts for approximately 62% of total revenues, expanded significantly in the quarter. driven by the contribution of Lamar Zocco consolidation and the double-digit growth in household fully automatic machines and espresso capsule systems. The growth of nutrition and food preparation category in the quarter was driven by personal blenders and hand blenders. Lastly, it is worth mentioning the significant growth of Brown branded ironing products, which recorded a 35% growth rate in the second quarter. Looking now at the evolution of the operating margins in the quarter, the net industrial margin stood at 391.5 million euro, equal to 51.2% of revenues, compared to 48.8% in 2023, benefiting from a positive effect of La Marzocco consolidation, the mix, and an easing of inflationary pressures on product costs. The VDA adjusted was 110.9 million euro, or 14.5% of revenues, compared to 12.5% in the previous year. The expansion of volumes, a further easing of inflationary pressures on some industrial costs, and an investment in media and communications substantially in line with respect to 2023, translated into an improvement in margins, despite the increase in labor and logistic costs. As to the balance sheet, the group ended the quarter with a positive net financial position of €305.3 million, following the distribution of €104.8 million dividend to shareholders and €326.8 million of net absorption in relation to the closing of the business combination between Lamar Zocco and Avesis. The four pre-cash flows before dividends and acquisitions amounted to 425.2 million euros in the 12 months and 74.3 million in the quarter, thanks to significant contribution from current operations. To sum up, over the last few quarters, we've been able to successfully capitalize on structural coffee market growth in both household and professional segments, as well as to meet consumers' new needs in nutrition and food preparation segments, focusing on healthy food and cooking, and fast and user-friendly kitchen appliances. This allowed the group to go back to a medium-term growth path consistent with its potential. We believe the general outlook for our core products and market remains positive, notwithstanding the uncertainty in characterizing current economic scenario. The consolidation of La Marzocco, the continuation of the upward trend in home coffee, and the stabilization of the nutrition business, along with the outstanding margin recovery and robust cash flow generation, give us confidence in reiterating the guidance for the full year. Before, we confirmed the forecast of a 9% to 11% increase in sales for 2024, including an enlargement of the perimeter through the business combination of La Marzocco and Eversys. In terms of margin, the quarterly results reinforce the expectation of reaching the upper end of the guidance, which foresees an adjusted BDA in the range of 500 and 530 million euros for the new perimeter. Now, we can open the floor to Q&A. Thank you.

Thank you. This is the Chorus Hall Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, please press star and 2. We kindly ask you to use the handset when asking questions. Anyone who has a question may press star and 1 at this time. The first question is from Nicola Storer with Kepler Chevres. Please go ahead.

Thank you and good afternoon. I have three questions. If I may, the first one is a clarification on food preparation trend in Q2. If I make the math based on your presentation, I calculate that actually the preparation was negative by 1% in Q2. And this contrasts basically with what you are saying about further growth. So if you can clarify this. Second one is on margin expectation for the second part of the year. If we take your guidance and also the fact that you're expecting to reach the upper end in terms of EBITDA, Basically, implied margins for the second part of the year are flattish versus the second part of previous year. So I was wondering which kind of dynamics are you seeing on revenues and costs justifying flattish margins? And the last one is on price mix. I saw that price mix was still positive in Q2. Can you please give us more granularity on how much has been priced, how much mixed? Thank you.

Yeah, sorry. First question, I don't know.

Food preparation was positive in quarter two with a plus 2.4 percent, sorry, 1.4 percent growth in quarter two. Okay.

This is the same forex because maybe it's a foreign forex issue. I do not know, maybe rounding.

No.

Okay.

So second question is about the margins, margin expectation. Yes, I think that we're very encouraged by profits and margins in quarter two. As said, we are enjoying higher gross margin, thanks also to the industrial cost savings. We are also supporting our commercial initiatives, so we're giving back partially some of the savings. But we are able still to maintain a better profitability. I think that we expect the margins to continue to be good also in the second part of the year. It is true that we were just slightly, say, added some color around our guidance. We haven't changed our guidance, but we think that the results are coming in and in line or even slightly better than expectations. I think that we have to account that the second part of the year accounts for approximately 70% of the profits. Therefore, it is a bit too early to improve, eventually, guidance. I would be a bit prudent on that. Although I think that we feel comfortable that we will continue to maintain a positive gross margin in the second half, we still continue to give something back to the market to boost our shares and our market condition. The last one is on price mix, and this has been positive again for quarter two. So is there, can I have this? Yeah. Oh, no. Yes, sorry. So positive. Price mix was positive for approximately? Three million. Three million. Three million. Three million in the quarter.

And price was positive or negative, if I may?

Price was likely negative.

I said we got some savings and it was planned to give back some of the savings that we were getting and still improving the overall margins for the group, but supporting our market position and sales.

Thank you.

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

Hi, good afternoon everybody. Three quick questions on my side. The first one is on coffee makers division. I was wondering if you can give us a bit more color on the performance of Eversys and if there is any specific difference with the performance of B2C coffee in the quarter or in the semester, as you wish. Second question is on Americas. The segment was negative in the quarter if we exclude La Marzocco. Can you give us a bit more color on performance of coffee makers and food preparation in the region? Last question is on AMP. You mentioned in the speech AMP expenses are substantially in line. Could you give us the figure in absolute terms or as an incidence of sales for the first alpha would be really helpful for our modeling?

Thanks.

Okay, so the performance of Elvis has been negative. It was expected and somehow anticipated that is particularly due to a slowdown in Asia. I think last year we had, first of all, the first part of the year was still very high comps generally, particularly in Asia, and we have experienced a negative market, particularly in China. On the contrary, on the contrary, Lama Joko, which probably had less avoidance growth during 2023, is holding on and is fairly in line with the 2023 performance. Actually, has shown even an acceleration in the last quarter. So, we confirmed that probably is going to be a a stabilization year for the professional business in coffee. While we continue to grow with our household coffee division on the back of the success of the fully automatic coffee makers which are the main portion of our business and also the return to growth of Nespresso which is the second most important product line within the the coffee category. With regard to the USA in particular, the question was about nutrition, coffee, and comfort. Exited, let's say, totally. We had a closeout last year of some inventories, which didn't happen this year, so we still have a negative effect.

Maybe, Nicola, you want to pass on that? I can give a bit of color on this, because U.S., let's say North America and U.S. in particular, you are correct that offsetting the contribution of La Marzocco is negative in the period in the first half. But neutralized by the effect of the comfort discontinuation is positive. It's 7%. It could be something like 7% positive, the growth. That is supported by the growth of both coffee and nutrition. So the effect of... Comfort was negative. We completely exited. We completely exited. It was the tail of the discontinuation that it was several times mentioned last year.

Excluding all port, the growth was at 7% between nutrition and coffee.

Nutrition and coffee. It's sustained by both categories. It's steadily growing, both Nutribullet in particular with personal blender and espresso in coffee. And it's ramping up in espresso that was a bit weak in the first quarter. It has increased in the second quarter.

With regard to your question on AMP, it has been in line in absolute value.

Yeah. It's 11.6%. 11.6%, yes. In line with absolute value. Yes.

Okay, clear. Many thanks.

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

Yes, good evening. Thanks for taking my question. A couple of questions from my side. The first one is on current trends in the market. You can share with us what you are seeing the latest weeks for in July by region, if I may ask, and if you can also share with us the level of competition on specific product segments. And the second one is on working capital. If you can shed a little bit of color on that. If it's something the trend of the first half of 2024 is something specific for the second quarter and can be sustainable also for the rest of the year. And And the third one, if I may, if you can just give us a little bit more color on the accretion from La Marzocco on gross margin, if you can just add some detail on that.

Yeah, so the question, we accept a positive July.

July is coming in line with the expectation and would be a positive month. So far, the market is continuing at a similar path.

Despite, sorry, if I can be done this, despite still comfort negative.

We're still with negative contribution of unfortunately air conditioning. Competition is fierce. Of course, probably the market is, you know, is It's a tough year overall, but we don't see any change in aggressivity of competition. So we see competition is more or less the same. With regard to working capital, we have a working capital development which is in line with our, let's say, objectives. We're going to have a higher inventory level during the year compared to last year. Yeah, we said we're going to have a slightly higher. But again, we said also that we will make sure that there will be product available to sustain the market growth potential and opportunity we have. So this will happen, but the inventory level will be in line with our usual seasonality and usual trends. With regard to La Marzocco, La Marzocco is not, in terms of gross margin, is no higher. It is not, and it is for sure is delivering a higher BDA. That's for sure. But in terms of gross margin, it's fairly in line with the group average.

Thank you.

Next question is from Zarok Hella with OddoBHF. Please go ahead.

Yes, thank you. Good afternoon. I have two follow-up questions, please. So, the first one is on the comfort segment. Could you please remind us the part of this comfort segment alone in your consolidated sales and your expectation on this segment, how to develop over the second half of the year? And my second question is on the project that you have with Starbucks. regarding the development of the coffee machine for cold brew. Could you please make an update on the development of this project? During the Q1 call, you mentioned that the test phase should be launched in Q4 and then to roll out fully in 2025. Is this still relevant? Thank you.

First question, comfort.

We expect to continue, say, having a negative impact on comfort also in the second part of the year. If in the first half has been around... The incidence is 4% to 5% of our business. No, I want to say, no, we are in a negative 25% now. We think that in the second part of the year we can have an additional maybe 5 to 10 million of decline in the segments, but will be diluted on sales of approximately 1.6 to 1.8 million for the second half. So it's going to be very minimal. Despite the expected negative impact, very minimal now. We expect maybe further 5 to 10 million decline in the second half. The rate of comfort in our business is giving us 4 to 5%. It's 4 to 5% on total business now. With regard to Starbucks, yes, we met. We are now in modifying, let's say, the products according to the latest request. The goal was to get started in the quarter three, oh, sorry, quarter four of 2024 with 400 units. Probably will be a slight delay. It is possible that won't happen in quarter four, but maybe in the first quarter of 25, but this is a minimal delay. A minor change in the plan is due to this new modification that were required, but the project is still on track, and we expect now to kick in with the first delivery in quarter 1.25.

Okay, thank you very much.

The next question is from Natasha Brillant with UBS. Please go ahead.

Thank you. Three questions for me, please. Just to come back on the guidance. For La Marzocco, I think previously you said it should deliver around 200 million of sales for the full year and that there's not any huge seasonality. So if we take what you did in Q2 and assume that you can do the same in Q3 and Q4 and then add in the Q1 contribution, I think it gets to more like 220 million sales. So I guess the question is, is that achievable? And against that, does that mean a slightly softer outlook for the rest of the business, just in the context of your revenue guidance? Second question is just more broadly on the consumer backdrop. You've said that July is okay. You obviously reiterated the guidance, but if this sort of volatility and softness within the consumer continues, how should we think about your business and consumer spending patterns more broadly? And when you look back to periods of consumer softness, obviously after COVID, but how typically would you expect your products to perform? And then similarly, just lastly on the B2B side, we're seeing coffee prices continue to rise, coffee shop margins potentially getting squeezed. Are you noticing any changes in behavior from customers on the professional side? Thank you.

Okay, about the guidance, no, we feel comfortable with the guidance. Actually, we think that with our quarter two now, we are in a better position to achieve the full year guidance. We didn't feel it was timely to revise upwards our guidance. As I said, the second half of the year is so meaningful. So, but again, we confirm it, and also La Marzocco is in line with the our region of land. So we confirm the guidance, not just for the group, but also for Lamanzocos. With regards to the consumer potential backdrop, I think that from a historical standpoint, DeLonghi has been quite an anti-cyclical company and product. We tend to see that in a difficult cycle, Families tend to postpone major family investments. Often they don't buy a new home, a new apartment. They don't renovate fully home or apartment. They buy less new cars. But they travel less and they go less to restaurants and they cook more at home and make more coffee at home. So we think that besides the secular trend that we are experiencing on espresso coffee making in particular, we don't think that the new scenario, although it is a more complex scenario with more inflation and pressure on families and weaker economies, we think it is not necessarily a bad environment for the longi and we tend to outperform other industries. In this perspective, we are confirming our marketing plans for the second part of the year. We feel comfortable because margins are coming in strong. Again, if markets should become more difficult and weak, we have a lot of room to revise downwards our marketing investments to be aligned with the needs and requirements but at the same time we feel that we have such a strong P&L and we have such a strong balance sheet that probably makes sense also in tough times to take advantage of the opportunity that is maybe offered by the fact that competition is getting weaker and they maybe pull out investments and we have a solid position, good products, good market shares and we can probably capitalize on a more difficult year in general. We feel that we're in good position to take either route. If necessary, we can reduce the investment, but I feel that given the financial means, the financial structure we have, the success of our products, the profitability of the group, I think it would be a good opportunity, maybe in a top market, to continue investing and take share to competition. The point is, on the professional, I have to say that we are experiencing maybe different trends in different geographies. I think that Marzocchi is performing quite well everywhere, with the exception of professional in China. Actually, Marzocchi is doing fairly well in the household. B2C in China, which is partially offsetting the weakness in China of the professional business. Ever since being fully exposed to just the professional B2B products, it's suffering more in Asia and in China of Lamazoco. Probably it's becoming slightly more competitive, more price pressure. But excluding China, I would say that the other markets are not, we are not witnessing the same trends and same weakness. Lamazoco is growing nicely and ABC is more stable, more stable. Actually, we think in the key markets, United States, UK and Ireland, but as well as the Nordics now or some other markets, we see a fairly stable development.

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

Hello, everybody, and thank you for taking my questions. I have some questions. The first one, actually, it's on your – if you can share your outlook, your business momentum in the U.S. in the coffee business – You stated about positive second quarter and during the last conference call you stated about very interesting plans for Nespresso in the second half. So just to better understand what kind of market you expect in the coffee for U.S. and maybe in terms of you can elaborate a little bit more in terms of competition for the U.S. market. My second question is instead about you stated gaining market share in the coffee business in the second quarter. So if you can elaborate a little bit more on where in particular and if you see this kind of increasing market share to continue and why actually, maybe new products, etc., Then my third question was about the price mix. I was not actually expecting price mix to be so positive in the second quarter. The last time you stated about pricing to be relatively better in the second half versus first half given different phase out, so we do expect still price mix to be positive in the second half, so these are my questions. Thank you.

Okay, the answer when you're asking coffee, no, again, probably I mean our guess or our understanding of the market development post first quarter results was correct. I mean the weakness that we were experiencing in terms of sales was due to high inventory levels at the end of 23. I think that the markets have developed nicely in the past six months. And we saw already in quarter two, as we were hoping, a pickup in our coffee machine sales in the first half, and in particular in the second quarter. So I would say the development is in line with our expectations. In particular, we are very pleased – Nespresso is still a very meaningful portion of our business in North America, and we are happy to see that there has been a recovery in the market and a pickup, and now that the inventory levels have stabilized, selling is in line with our plans.

We can see your first quarter was more at the sell-in level than the sell-out level.

So what we are seeing in the U.S. is that, yeah, the positive development of the espresso market, still in the positive area. With regards to the market shares, market shares in coffee, we monitor 40-plus markets. In the first half, we monitor 35 markets. In the 35 markets, our shares are up. Maybe, Nicola, you want to comment on which are the best performing?

We are up in almost 30 of these 36 markets. So overall, definitely we had a significant uplift in some markets. This is something that is more something to maintain, that push further. Definitely, we got benefit from product launches. The past 12, 18 months has been significant in terms of novelties, and novelties are coming also. We have products that are planned also for this year, and this is something that has allowed us to have this benefit also. in particular in terms of innovation that we brought. So from Rivelia to Evo Next, Evo Plus, there are products explored that are blockbusters in the market in this moment.

That question is on price mix. You said you were not expecting such a good performance in quarter two. I think that the weakness of... Comfort, which is offset by growth in coffee and also Nutribullet and nutritional products, is helping on the mix side. On the price, we are giving back some pricing that we increased last year on the back of also the savings we have on the cost of goods sold. But we'll be done in a way to be commercially effective to win shares, to be well positioned in the market, but still allowing the group to improve its profitability over the next six months. So we are not under a competition pressure. We are more in a phase of optimizing our commercial strategy to fully capitalize on the opportunity in the market.

Okay, thanks. If I may, last question about your outlook for the professional business that you see, I mean, stable year on year. You stated about a stable trend for La Marta. So I, therefore, calculating is very simple, but I mean, after a negative first half for overseas, you expect maybe due to easier comparison to recap the a little bit the ground lost in the first half for Eversys, or I misunderstood something. Thank you.

No, no, no. Marzocco will be flattish. We are encouraged by the short-term trend of La Marzocco, so we feel confident about being in line with last year. On the contrary, we think that the weakness at Eversys will continue in the second half.

Okay.

So the goal is to go back to growth in 2025. In Asia in particular, I would mention China and some high levels or inventory levels in certain European distributors.

Okay. Thank you.

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

Hi, good evening to everybody. I've got a couple of questions. One is related to the evolution of the gross margin in Q2. There is a clear acceleration in Q2 versus Q1, 240 basis points from 40 basis points. So if you can elaborate on that, you already commented that La Marzocco has got more or less a gross margin in line with the group. So I was wondering why this performance. And the second one is if it's possible to have the breakdown of the coffee sales between consumer and professional.

Thank you very much.

Okay, the gross margin are not dissimilar. The cost structure for the two companies is very different. I mean, usually consumer companies have to overinvest compared to professional or B2B companies in marketing initiatives, commercial initiatives, sales structures, and some... Yeah, initiatives to support sales, while the B2B businesses are pretty lean. So the margins, the growth margins, which are similar, are then translating in a different profitability, and Marzocco is a record profitability for the group. It's the highest profitability in the group. I don't know if I answered fully the question. If so, I can maybe move to the second question. It's okay.

Thank you.

Okay. So the second question was about the breakdown between professional and consumer sales. Yeah. What we said... Professional business is approximately 400 million in sales for the group, you know, on a full year basis. While, you know, in household, it's about 2 billion in coffee. So is about two-thirds of the professional business.

Okay. But I was wondering if it's possible to have the combined H1-24, let's say, breakdown between professional and consumer. So the professional overseas and Lamardocco combined at the end of the day.

As a reminder, if you wish to register for a question, please press star and one on your telephone.

Sorry, the question is, what is the total turnover for our professional division on a yearly basis?

On the semester.

On the semester. On the semester, we have a data consolidating only four months of Lamazocco. Yes.

Okay, so we can quickly calculate it if you hold on a second.

Okay, total progression for the first half has been around 150 million euros. Okay, thank you very much.

The next question is from Fraser Donlon with Berenberg. Please go ahead.

Hi, Fabio. Thanks for the presentation. I just had one question. I wondered if you could maybe comment on the sellout of your kind of key categories around Prime Day and if there's any kind of concerns or positive takeaways with respect to stocks and so on in Europe or elsewhere post that event. Thank you.

Maybe, Nicola, you want to take this?

In general, we got a positive outlook of the results of Prime Day. Let's say that in the specific promotional period, well above the average growth, so promotional time is becoming relevant. so more than the average growth that we had in the quarter. And the retailers are in this moment with normalized stock levels, so we do not have – that's why the outlook and the trend also for July has been good, and we have a positive outlook for the next month.

Thank you.

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

Hi, good evening everyone. Three questions from my side. The first one is a follow-up on the guidance. So basically, if I understood correctly, La Marzocco is performing in line with what you were expecting a few months ago. No big surprise on the top-line evolution, while it seems that the more optimistic outlook on EBITDA is coming from the cost side. So I was wondering if you can elaborate a little bit more on this, what are the drivers behind the greater savings that you are achieving? Because recent statistics, for example, on logistics suggesting a further spike on the freight costs and so it would be helpful to understand different components on the cost base. The second one is on the hiring business, which is still performing very well from several quarters, so how should we expect this business evolving in the coming quarters? There are some new products which are very appealing to the market, some new product innovations. So how do you explain this strong performance of the ironing system? And finally, on La Marzocco, we understood that the cost structure is basically different below the gross margin because of the A&P. So if Can you give us an idea of the EBITDA margin in the first semester, or if you want in absolute terms, the contribution of Lamar Talk to the overall consolidated performance?

Please. Thank you.

So going on the cost side, Definitely, for the time being, we see this increase of cost on logistics. That is something that we are strictly monitoring and managing. That is, by the way, on top of the extra labor cost that was already expected. For the time being, also in quarter two, the benefit on the industrial costs has been more than offsetting this extra cost that we are getting. So we have still a positive outlook in terms of cost, overall cost also for the coming quarter. It was even more positive this offset in the first quarter, so it's overall well positioned for the alpha, and we have still a positive outlook. On ironing, obviously the category is still small to us, because it's... A few percent of the business is something between 3% and 4% of our business, but it's at this point of time the fastest growing. So it's something that we are investing on. We have a completely new range of products, both in ironing systems and in steam stations and in irons. We have new launches to come, also with significant innovations, and this is a good add-on in terms of growth. Obviously, there's still a limited impact despite this fast growing because of the total impact, the impact on the total business.

The profitability is in line with the profitability we made acquisition upon last year, so it's above 20%. Profitability is coming in line with last year, in line with our expectations.

So in the range of 23, 24%, which was the... Yeah, it was around 25%, yeah, more or less.

Okay. Okay. Thank you.

Delonghi, gentlemen, there are no more questions registered at this time.

So thank you. Thank you all for attending the Delonghi first half 2024 conference call.

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