De Longhi Spa

Good afternoon, this is the Coruscall conference operator. Welcome and thank you for joining the De'Longhi full year 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.

Thank you very much. Good afternoon, ladies and gentlemen, and welcome to the De'Longhi Group Full Year 2024 Results Conference Call. Today, together with me, are Nicola Serafin, Group General Manager, Marco Cenci, Chief Planning and Control Officer, Stefano Biella, Chief Financial Officer, Samuele Chiodetto, Investor Relations Director and M&A Manager, and Sara Mazzucato, IR Specialist. I am extremely pleased with the Group 2024 results, which show a significant improvement in all the financial key performance indicators. These results reflect consistent organic growth combined with an acquisition-driven turnover expansion. A record EBITDA level, more than €200 million in free cash flow before dividends M&A. Establishment of a professional coffee hub and a straightened market position. As can be observed on slide 5, the group revenue growth has been consistent and solid throughout the year, with the household business experiencing robust organic expansion for the sixth consecutive quarter. thanks primarily to the structural trend in coffee and the renewed consumer focus on nutrition, driven by consumer changing habits. These trends, combined with Amarzocco consolidation, has supported a 14% turnover increase, which accelerated to 18% in the fourth quarter, equal to 11% on a life-for-life basis. We have sustained this upward trend over the years by investing continuously in innovation and communication, resulting in market leadership and growth. Specifically, in 2024, we spent more than €430 million in AMP, €40 million above previous year, backing new product launches and established brand awareness across regions and categories. Furthermore, in the recent months, we've been working on the new Perfetto campaign which will once again feature Brad Pitt as a coffee ambassador in the global advertising campaign. Looking ahead to 2025, these investments, combined with a new product introduced in recent years, are critical for driving categories expansion and capitalizing on market opportunities, giving us confidence in the growth year. In terms of profitability, as shown on slide six, We were able to significantly improve the level of EBITDA margin over the last two years thanks to volume growth, stabilization of production costs, and a positive product mix effect, indicating that consumers' interest in the premium segments of our product portfolio keeps increasing. In particular, we're considering in the last 12 months the light-for-light margin enhancement and the creative professional coffee consolidation has allowed the group to target a record EBITDA. Looking ahead to 2025, we believe that expected volume growth and improved product mix will offset the impact of current tariffs regarding goods produced for the U.S. market, as well as ordinary investments in organizational structure, resulting in an increase in EBITDA. Finally, slide 7, the group ended 2024 with a positive net financial position of more than $600 million, roughly equivalent to the previous year, but after funding approximately $100 million in dividends and more than $300 million for the business combination of Lamar Zocco and Edesis. This solid financial position enables us to maintain full flexibility on capital allocation for potential external growth opportunities, as well as shareholder remuneration as demonstrated by a substantial increase in the proposed dividend for 2025. The past 12 months have been extremely fruitful for us in terms of the accomplishments made. Consumer preferences and awards for distinctive design and innovation have been rewarded our products in the key areas, reinforcing our position as an industry leader in our core categories. Sustainability remains a fundamental element of our company's strategic vision, and in recent months we have been working on a number of initiatives, including pioneering eco-design guidelines for coffee makers, an original product refurbishment project, and commitment to science-based target initiatives. Lastly, let me remind you that the business combination between Landmark Zocco and Eversys has accelerated the group growth rate, straightened its margin profile and increase business diversification. This has reaffirmed the group capacity to identify successful companies in the market for innovation and brand, which is consistent with the strategy implemented in recent years. After less than a year, we began putting in place a stronger governance system with a goal of further leveraging the market leadership and superior technological innovation capabilities of Eversys and Lamarzo. This will be done by making the most of shared resources and exchanging best practices and knowledge to enhance value creation. Now, let me focus on the quarterly and full-year results. The group achieved a robust increase in turnover of 14% in the 12 months, due to a considerable 6.6% growth on a like-for-like basis, as well as the consolidation of Lamar's office. Specifically, in 2024, the group recorded a positive trend in all geographical areas, with Europe experiencing significant growth in all the quarters. Under analysis, and America accelerating the second part of the year in more details, in Western Europe, the turnover grew 10.4% over the year and 6.8% on a life-for-life basis. accelerating to 10.5% in the quarter, with countries such as Germany, the Viennese Peninsula, Austria, and Switzerland leading the pack. The solid expansion of Northeast Europe persists in the fourth quarter, recording an increase of 14.1% on a life-or-life basis, thanks to considerable contribution of markets such as United Kingdom and Czech Republic, Slovakia, Hungary, area with experienced like-for-like growth at around mid-teen rate. May achieved a significant recovery in the fourth quarter with a performance of 47.3%, 38.1% at Constantine Perimeter, resulting in a 12-month growth of 9.2%, despite geopolitical tensions and micro-economic The Americas recorded growth of 19.2% in the 12 months, equal to 5.9% at the consistent perimeter, accelerating to 14.3% in the fourth quarter, benefiting from the double-digit progression of fully automatic coffee machines and the new bullet personal blenders. Finally, the Asia-Pacific region benefited from the consolidation of Lamazoko, achieving a 10% increase of turnover compared to Q4 2023. However, like-for-like revenues showed a partial decline in both periods analyzed. In both periods, under analysis, all key categories except comfort showed a positive trend, with the nutrition and food preparation sector accelerating in the second half of the year in details At the end of 2024, the overall incidence of the coffee area on the group turnover was approximately 62%, also thanks to the consolidation of La Marzocco. The significant increase of the home coffee was driven by the growth of fully automatic coffee machines. Regarding the professional sector, we know the continuous progression of La Marzocco that consolidates the strength of its brand, both in the semi-automatic professional coffee machines and in the home premium segment. Nutrition and food preparation segment recorded a major acceleration in quarter four, at a rate higher than high teens. We emphasize the evolution of the blender category, personal blenders, hand blenders, and blenders, through the year, together with a return to growth of the more traditional products, such as kitchen machines. Concerning the home care sector, Let me highlight the significant expansion of brown brand ironing products, which experienced a double-digit growth in the 12 months. While unfavorable weather conditions in both summer and winter, as well as the tail end of the discontinuity of the mobile air conditioning in the American market, affected the comfort sector in 2024. Looking now at the evolution of the operating margins, the net operating Industrial margin stood at 50.6% of revenues compared to 48.9% in 2023, benefiting from volumes and mis-increase in the easing of inflationary pressures on product costs. The BDA adjusted was 559.8 million in the year, or 16% of revenues compared to last year, 14.4%, with a quarter Quarter 4 highlighting margin of 17.7 versus 16.6 in 2023. Aside from Lamazoco consolidation, profitability has been enhanced by a significant volume in effect, cost stabilization, and a positive prime mix contribution. I'd like to point out that the margin improvement occurred despite a 42% increase in investments in media and communication, AMP, which accelerated in the second half of the year to support the launch of the new products and neutral bullet geographical expansion in Europe. As to balance sheet, the group ended the quarter with a positive net financial position of 643 million, following the distribution of more than 100 million in dividend to shareholders and 327 million euro of net absorption in relation to the closing of the business combination between La Marzocca and Everest. Four, free cash flow before dividends and acquisitions amounted to €416 million for the year, demonstrated the group exceptional ability to maintain a high cash conversion rate, which in the last 12 months was around 74% unadjusted at BDA. This enables us to be more flexible in terms of capital allocation, resulting in a significant higher dividend proposal for 2025. The proposal implies a distribution of a dividend of 1.25 euro per share and an 87% increase over the previous year, resulting in a payout ratio of around 60% compared to the standard 40% defined by the dividend policy. Summary, we are extremely satisfied with the latest achievements, which underline the group's ability to deliver results. The SDA market has shown positive dynamics across the quarters, with our categories benefiting especially from the structural trend in coffee and a renewed focus on nutrition. These consistent growth trends combined with industrial cost stabilization and the mix improvement have enabled us to significantly improve the group profitability, which combined with expansion of the perimeter in professional coffee has resulted in a record EBITDA level. Thanks to these results, we were able to generate important cash flow, once again, allowing the group to maintain full flexibility on a capital allocation to promptly exploit potential external growth opportunities, as well as in terms of shareholder remuneration. Despite the increased volatility that characterizes the current geopolitical backdrop, we believe that the overall outlook for our key sectors and markets remains favorable. We expect a turnover increase between 5% and 7% for the new perimeter in 2025, based on the recent growth trends in the market and product launches supported by communication investments. In time of margins, we anticipate an adjusted EBITDA in the range of €550-600 million new perimeter, given the current situation with tariffs. on new products inbound for the American market. Now we can open the floor to Q&A. Thank you.

Thank you. This is the Corusco 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 touchtone telephone. To remove yourself from the question queue, please press star and 2. We kindly ask to use handsets when asking questions. Anyone who has a question may press star and 1 at this time. The first question is from Nicola Storer Kepler. Please go ahead.

Hi, Fabio. Hi, everyone. Thanks for taking my questions. Three. The first one is on your ABDA guidance. I was wondering how big is the impact of tariffs, and where are you in the process of moving sourcing to Indonesia? The second question is on working capital evolution. Also this year you ended with negative working capital, broadly in line with previous year. Should we expect this to continue in the future or also this year We had some exceptional positive impacts, which will not be recurring. Last question is on cash flow. If we go to presentation slide 18, if you comment on what is the adder for positive 57 million. Thank you.

First question, Nicola, was on ABDA guidance. Yes, ABDA consider the tariffs that have been announced. We think the impact will be between 15 and 20 million net of actions, which means that in the plan we have some plans. price mix effect as well as volume effect, but the net impact, which would be offset, would be around 15 and 20 million. We were moving, yes, indeed, so the plan is still in place. We're moving to Indonesia and Southeast Asia, and we think by September, we will have about 80% of the Nutribullet production move to Southeast Asia. Second question is about networking capital. It's negative. It's a number of years that we end the year with a negative working capital. I think this is... I would say a new normal, so you can expect working capital to be around this level as a percentage of sales in the next year or years. Third question was about the cash flow.

Yes, sir. For, yeah, maybe, Nicole, you want to end on this? Exchange rate is more related to exchange rate effect. Yes.

Exchange rate effect on balance sheet.

On balance sheet, yes.

So, say this again?

It was more the exchange rate effect on balance sheet.

Thank you.

The next question is from Natasha Brilliant, UBS. Please go ahead.

Hello, good afternoon, everyone, and thank you for taking my questions. Three as well, please. So the first one is just on current trading. We've seen some negative signals from other consumer companies in the last couple of weeks. So can you just give us an update on current trading so far this year and any changes, particularly to the sellout rate that you might be seeing? Second question is on capital allocation and obviously a higher dividend with the strong cash flow. Is this a signal together with the small buyback about higher ongoing shareholder returns or is M&A still the top priority and any updates on the pipeline there? And then question number three is around the overseas contracts with Starbucks. If you could just give us an update as to where we are with the trial and the rollout. Thank you.

Well, Nicola, maybe you can handle current trade? I can take the question on current trading. So, for the time being, on the first two and a half months, we see a positive, still a positive momentum in this moment. Yes, that is in line with the forecast and in line with the guidance that we are providing. Market is... is positive in this moment, so we do not have a major concern. It's not the impact that we have spoken before about the tariffs and the U.S., but in general, in all the other geographies, it's a positive trend.

Good. Thank you, Nicola. Yes. So, second question is on capital allocation. No, M&A is still a priority. still our top priority for the year. They say that the new or extra initiatives that we have announced, which are the buyback and the increased dividend are just a consequence of the superior cash generation that we experienced in the final part of the year. which is, in the end, leaving unchanged our firepower with regards to acquisition, with a cash position of net financial position of $640 million. Even if we have announced $60 million increased dividend, the firepower remains almost unchanged. And the third one is on evasives. Yes, we are moving on. We have good news. I mean, the SABAX is extremely committed, and we have maybe slightly accelerated the plan. 30 units will be invoiced in the month of March, which is good news. This is the final test, and we are now discussing the 400 units that we were We had already announced and will be invoiced before year-end, so in the second part of the year. But SABACS has confirmed that cold brew is at the top of their priorities, and they're pleased with the project, and we're moving on.

Super. Thank you very much.

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

Hi, good afternoon, everybody. Thanks for taking my questions. I have two. The first one is on AMP. Fabio, you mentioned briefly the commitment to work on a new Perfecto campaign. How should we figure out the impact on AMP on sales this year compared to compared to last year, if we have any specific impact meaningful for that. Second question is on the Americas region. Many concerns over the past weeks over deterioration of U.S. consumer environment. Actually, the final quarter of the year for you was very positive. Could you just comment on the approach both by consumers and distributors you are seeing over the past weeks? amid growing tariff news flow?

So first question is about AMP.

Maybe I will leave the... No, Nicola, just a minority that... No, the marketing team just returned from New Zealand where we have shot the new infomercial with Brad Pitt starring. So we will kick in... by mid-year with a new campaign. We're very excited about that and the continued relationship with Bread, which has been very effective in the past years and helped the company to have more visibility globally and improve its position in the marketplace, exploit good share performance. Have you said so? Maybe, Nicola, you can handle what are the investments that we expect for the year.

Thank you, Fabio. Yes, as you have seen, we have invested more in 2024 compared with 2023, and then we have the plan also going on growing the investment also in 2025, supporting also the new the new campaign that will be launched soon. Obviously, we will... A&P is a growth driver for us. We will grow on this, and so we want to support this, keeping more or less the same incidence on revenue. We need to consider that now that we are consolidating the professional business, you can see a bit of dilution, but if we look... the incidence on the household business, we are keeping the same level incidence. So A&P will grow with the growth of the business.

Okay. Now, Nicola, if you can also elaborate a bit about the North America. Well, CESA, Nicola, you said there are In line with our guidance?

In this moment, yes, overall in the geography. Obviously, in the U.S., for the time being, we didn't have major effects. Obviously, we are managing duty in terms of impacting P&L. We are in strict contact with all the retailers and customers to minimize and keep momentum with consumers. Obviously, we could expect a bit of shortening the market, but we will put all the necessary action to keep. Espresso is not a highly penetrated category, so it could be even not that effective. So we want to be still positive, and we will work to have all possible actions with retail.

Yeah. Okay. Many thanks.

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

Hello everybody and thank you for taking my questions. The first one actually is on the pipeline of new product launches. In particular, we saw last year, so 2024, that manual machines were actually down year-on-year. So just to understand if you expect 2025 to be a good year in terms of product launches, in particular in the coffee business and the manual machines business, in order to support the top-line expansion. This is my first question. My second question is instead on the professional business. I mean, last year was all in all probably up versus down, La Marzocco up, but it's larger, so overall probably it was up. What are your expectations for this year for the professional business, considering the that probably overseas is turning around so if you can elaborate a little bit more on these and finally on the net income we saw that you had a very small negative financial expenses probably there are some one-off Forex something negative to smooth the total figures. So, thank you.

Maybe, Nicola, you want to comment on the launch?

So, on the new product launches, pump machine had, let's say, overall a slightly negative year, but there was a fourth quarter very strong, double-digit. So this is already giving a signal of the momentum that is already there also in the current trading. And it's on the back of a couple of important launches that we had on the specialist range. We have launched a digital machine and also in the pump range we had a mainstream product that is very successful in this moment. So it's keeping momentum. Then we had a robust pipeline of launches. We have some novelty coming fully auto machine in Nutribullet and Brown and also in a premium kitchen machine. So we are quite positive and optimistic in the contribution of the new launches for the next month.

Professional business, we are very positive for professional business. Last year was a very good year for La Manzocco. Unfortunately, it was a weak year as anticipated for overseas, in particular with suffering from weakness in Asia, in particular in China. But this year we have expectations to see both companies positive. in particular with the bounce back at overseas, also on the back of significant contract in China, and continued positive performance in the key markets, namely North America, United States, and UK and Ireland. So positive on both businesses. And with regards to the final expenses, So you want to end on that?

The next question is from Luca Baccoccoli in Tiso San Paolo. Please go ahead.

Hello. Good afternoon, everyone. Can you hear me?

Yeah, yeah. Sorry, there was a... Luca, sorry, if you can hold a moment. We have to comment on the financial expenses. Excuse me for that. Yeah. Yeah. Sorry. Mr. Micheli will handle this question. Sorry, Mr. Biela will handle this question.

There will be interest income deriving from the cash that we have on hand. Therefore, if we continue to have a positive cash, we have also positive income from investment.

Can you hear me?

Yeah, yeah, you can go.

Okay, okay, because I follow up. Thank you for this. In particular, I would like to be back a little bit on the U.S. coffee industry. so probably you will launch Rivelia also in the US you are addressing manual machines so can you provide maybe more granularity what you are seeing now in this moment in the coffee business US market because actually you said that is not so well penetrated so I would like to understand if actually the momentum that you had in the four quarters is continuing in the US also driven by this kind of products in this market.

Okay, yeah, we are launching Revellium and fully auto has a good momentum in this moment. And they are not affected by any tariffs. So this is definitely a good potential growth pillar for us. And then the capsule machines are going still pretty well. The major area of attention in this moment can be eventually other categories. But for the time being, we are positive on coffee in the U.S.

Thank you.

The next question is from Luca Baccoccoli in Teso San Paolo. Please go ahead.

Yes, thank you. And first of all, congratulations for the very strong results. So some follow-up questions. The first one is on duties. I was wondering if can we expect some positive impact once you have completed the relocation of the production to Southeast Asia, so let's say starting from 2021. given the 15-20 million euros net impact that you are expecting in 2025. And also still on duties, if you can help us in quantifying what could be the impact if Trump were to impose similar tariffs on European countries, products and the other question is on capital allocation I understood that this let's say external dividend is because of the massive cash flow generation that you delivered in the last quarter last year but is it fair to assume a 60% payout ratio going forward in the absence of any M&A, or is this too optimistic assumption? And finally, on the professional coffee, you're expecting both the two brands or companies, Sola Marzocca and overseas, contributing positively to the growth, But in terms of cost, should we expect some savings, given that, if I understood correctly, you have started to really integrate the two companies? Thank you.

So the first question is about duties. Well, on targets to expect positive, I think it's too early. I mean, we are very happy. In the end, we think that... the longer equity story and the longer ability to be a successful player in the industry given to a stronger industrial diversification will be improved after this initiative to offset the tariffs. I think to have another area of sourcing, namely Indonesia and Southern Asia, in the long run will be an asset. But it's too early to be positive. I think new factories will be up and running. We're confident that we can offset the incremental cost due to the tariffs, but to have positive expectations is a bit too early to say. I think this is something that we will certainly look at, but probably Maybe next year we'll be in a different position to see what is the opportunity arising from the relocation to southern Asia. The second question is about Europe.

More or less we have a balanced cost of goods and supply from Europe and from China and Europe. Obviously, the impact on Europe for the time being will be in fully. While in China it's partially mitigated going to Indonesia and Thailand, in Europe it could be a bit higher for the same level of tariffs. But the major concern at that time could be really the consumption level of the U.S., if also goods from Europe can be imposed. Yeah, and this would affect all players on the fully automatic coffee machine, because all fully automatic coffee machines are coming from Europe.

So, capital allocation.

We think that the increased dividend is in the end a small increase compared to the cash that we have generated, frankly, we could have increased the dividend easily to 400, 500 million, given the net financial position. But our priority remains M&A, and we were just a small... allocation to improve the remuneration of our shareholders, but maintaining intact the firepower on M&A, which in the end, we think that maybe the complexity in the world due to the current commercial war between the United States and China We will maybe give an extra opportunity to the ones that have a more solid position from a financial standpoint, as De'Longhi with a strong cash position, and we want to maintain M&A as a priority for us. Although we continue to utilize, potentially, initiatives as a buyback, eventually in the short term. Last question on professional. Yes, I think I commented before. Both brands are also growing in the short term. I think we have the positive January and February for both brands. We think that this will continue, the good momentum. probably with a strong acceleration for overseas, which will bounce back after a very weak 2024, in particular with back to growth in China. We discussed about the coffee hub and the new division. We don't like to talk too much about integration. We think we have two companies with a very different identity, culture, and focus. And we want to leverage opportunities together. And we are already starting initiatives in the commercial side. In particular, we have announced that a company that is... controlled by La Marzocco in Australia. We started the distribution of the Evasys machines and also support Evasys with after-sales service. We have a new commercial organization in Asia in place, which is now starting to follow both brands in Japan in particular. And we have initiatives now with the teams in terms to extract synergies on the on purchasing and on the cost side. So we're at the beginning and we think that probably by June we will start explaining what are the results of this initiative to you.

Okay, thank you very much.

The next question is from Hela Zarouk, Odo BHF. Please go ahead.

Yes, good afternoon everyone and thank you for taking my questions. I have two. The first one is on the professional coffee. Could you please give us the contribution of the professional coffee segment in 2024 in terms of revenue and EBDA and maybe we can have the split between Eversys and La Marzocco. And my second question is on Nutribullet. Could you give us the contribution of Nutribullet in full year 2024 results? And you talked about the geographic expansion of Nutribullet in Europe. Could you give us more details about this? Thank you.

Okay, so in terms of...

Yes, we will give visibility to the division for next year. And at the moment, the revenues for the professional division will be about 10% of total sales and around $330 million for the 12 months, which includes only 10 months for La Mazzocco.

About Nutribullet, it was a great year for Nutribullet because the brand has grown 20 plus percent overall with a pretty consistent growth both in the U.S. thanks also to a couple of new important listings with some relevant customers and the international expansion that was 25 percent plus.

Okay, thank you. Thank you so much.

The next question is from Francesco Brilli in Termonte. Please go ahead.

Yes, good evening to everyone on the team. Thanks for taking my questions. I have three questions. The first one is just a clarification on the guidance and the relative impact on tariffs. I'm not sure to to catch it correctly. Just if you can go through again if the guidance includes some mitigation actions that you could take to mitigate the impact on tariffs or something that should be added to this in case. and the magnitude of tariffs that you have assessed in this analysis in terms of impacts. The second one is a follow-up on Nutribullet. If you think that the international expansion is on the way and sustained revenues in Western Europe, Do you think that further tariffs between Europe and the US can be detrimental to the expansion of Nutribullet in Europe? And the last one is on CAPEX. I saw a slightly declining percentage on sales of CAPEX. Should we expect the same going forward for the next year?

Thank you. Without the 20 million of tariffs, probably Agada would be closer to 600, 620. But given the extra costs, that net effect of about 20 million, The guidance now is 580, 600 net. Just to give you an idea, it is incorporated. The net effect, the negative effect of the 20 million is in the numbers. On the current numbers, on the new guidance.

Yes, that's it. Okay. And it's including the mitigation effect that you can put in place. Exactly, exactly. Okay, perfect.

Thank you. The net effect.

About NutriBullet, we do not see major risks that the current situation can affect the international expansion. International expansion is on track, as I mentioned. in between 25% to 30% of growth year on year. And we see this also from market share point of view in blending. Outside of the U.S., we are heading to close to a leadership position that is very promising in this moment. So there is a positive momentum on this.

It's a very fragmented market. We are just monitoring about 30 plus markets around the world, including China, where blenders are usually cooking blenders and not the traditional blenders as we know them, and excluding also North America, where in the end Nutribullet has by far a leading position in the personal blending segment. We have a market share now around 10% globally. which makes us one of the leading brands. Yeah. Great, well done. And the third question is about capex. Yes, slightly negative. Nicola, you can add.

Yeah, we are, let's say, we are beating also, we had some investment in the past few years. As you know, we are expanding also our manufacturing capacity to support volumes. 2024 was a bit lower and we see more or less the same trend also for 2025. This moment is... we are exploiting the capacity that we have built, that is there and sustain growth that is coming.

Thank you, thank you very much.

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

Hello, good afternoon to everybody. Most of my questions have already been answered, so I would like to know if it's possible to expand a little bit let's say the competitive situation of your, sorry, again, the repetition competitors in the US market as far as industrial production concerns. For what I know, your industrial footprint or better your, let's say, exposure of Chinese products to UDS is lower than your competitors. If you can comment on that and what's the state of the art in terms of local production, if there is any, or if that is essentially manufactured in Mexico. Thank you very much.

Our competitor situation is going in different category by category. For the category that are relevant to us, I don't want to say that we are ahead of the curve, but we are in similar position. Some of our relevant key competitors are falling behind. For example, in blending, there is still a competitor and probably the major one that has most of the production still in China. In terms of coffee machine, there is limited production for the time being outside of China. And we are leveraging on our internal competencies also to build capabilities outside of China. So I would say that... More or less, we are in a slight advantage, and there is no competitor that can have, in our category, in the category relevant to us, advantage compared with us. There are some other categories that are not relevant to us where probably you can have news of competitors that are well positioned, but not relevant to us.

Thank you very much.

The next question is from Geoffrey Daluen, BNP Paribas Exxon. Please go ahead.

Yes, good afternoon, gentlemen. Two questions, please. Just a follow-up on the competitive environment. Just curious if you've seen some changes in terms of competitions, but much more on the European markets and much more on the coffee machines category. especially given the success of the coffee business. So have you seen some players being a bit more aggressive into these categories? And my second question is related to your comments on M&A. So you've said M&A is the top priority for the company. Any thoughts regarding which categories or which geographies you are looking for and which might be interesting to Delonghi? Thank you.

Well, first question about coffee, I would say that then maybe I would handle the answer to Nicola. But in coffee, we have grown our shares last year. In fully auto, the competition landscape is exactly the same. Maybe a newcomer is in the pump and grinder, which is just a specific segment with Ninja in the United States and China. But I would say that it's more or less unchanged, the landscape. Yeah, we don't see major changes. major changes. I would say that with Nespresso, for instance, we are consolidating. We are now winning four new markets. We have announced that. We're very pleased. This is France, Belgium, Netherlands, and UK. So I would say that, in principle, there is more consolidation on the country, on the capsule market. a new player, to sum up, on the pump and grinder, a fairly stable environment. Where the market is expanding. New player means also opportunity. Market is expanding and fairly stable on the fully automatic, which is 60% of the longer revenues in home coffee machines. Second question on M&A. Coffee, we said, provided there is no issue in antitrust, priority. Professional, maybe in the coffee, in adjacent segments. Still in the kitchen or more typical appliances. U.S. was a top priority. Maybe it still is, but probably for the moment... It's a very unclear situation also what's going to happen to U.S. players after the tariff. I think we are in a better position as most of our states are outside the United States. Probably there is an opportunity in the U.S. market, maybe a player with a specific interesting product or segment and leadership, maybe in the new... geopolitical situation, there are opportunities which will come up.

That's clear. Thank you very much.

Gentlemen, Mr. Delonghi, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

No. Thank you so much for attending the Delonghi Full Year 2014 call press call. Thank you.

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