De Longhi Spa

Good afternoon, this is the Coruscall conference operator. Welcome and thank you for joining the De'Longhi Full Year 2025 consolidated results. As a reminder, all participants are in listen-only mode, and 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. Please go ahead, sir.

Good afternoon, ladies and gentlemen, and thank you for joining the De'Longhi Group Conference call for our full year 2025 results. With me on the call today are Nicola Serafin, Group General Manager, Stefano Biella, CFO, Samuele Chiodetto, Investor Relations Director, and M&A Manager. Very pleased with the results delivered in 2025, which strengthen our standing as a global leader in the coffee industry, extending our reach across both home and professional areas while maintaining a significant presence in the domestic nutrition space. The market backdrop has been challenging over the last 12 months. On one hand, navigating a number of geopolitical events, and on the other, witnessing an evolving competitive scenario. In this complex context, the group was able to deliver solid revenue growth of 10.4% at fixed exchange rates, consistently supported by both divisions in all quarters of the year, while enhancing profitability in our financial position. Over the last two years, the group performance has been firmly aligned with the 26 strategic targets outlined during our 2024 Capital Market Day, as shown on slide five. Revenue growth has been driven by La Marzocco acquisition and by robust organic expansion, with margins consistently maintained within our medium-term target range. Total free cash flow pre-M&A dividends buyback reached about €800 million over two years, supporting a disciplined capital allocation strategy by significant shareholder returns, including in two years over €300 million in dividends and €61 million in buybacks, while simultaneously finalizing the strategic combination of Eversys and La Marzocco. Shifting our focus back to the market trends seen in 2025, the business combination of La Marzocca and Eversys has confirmed its strategic value, yielding outstanding results and global recognition. The professional coffee market continues to benefit from structural tailwinds, driven by the rising of global consumption, the proliferation of specialty coffee shops, and accelerated demand for premium quality and variety. Leveraging high brand awareness and a superior product portfolio, the group has successfully capitalized on these tailwinds, delivering remarkable organic growth above 30% over the last 12 months, accompanied by an adjusted EBITDA expansion exceeding 50%. Specifically, the professional division maintained its strong momentum to the fourth quarter, achieving revenue growth at constant exchange rates of over 40%, thanks to the positive contribution of all subcategories. The household division maintained its strong momentum, with quarter four revenue growing 5.2% at constant effects. This performance is fully aligned with our medium-term, mid-single-digit growth target, and is particularly significant given the challenging comparison against the exceptional 12% growth delivered in 2024. The positive momentum has remained primarily driven by the coffee category, which continues to benefit from resilient structural trends, the increase in penetration of espresso at home, a widening variety of milk-based drinks, and the ongoing premiumization of our product range. To support this growth, we have executed several high-profile global activations, including Milan Design Week, the Formula One movie premiere in New York, the Venice Film Festival, combined with the launch of the third global campaign on coffee, starring Brad Pitt as ambassador. These initiatives are strategically designed to broaden our audience reach and stimulate engagement throughout the entire consumer journey. This investment will also support our recent product launches, which continue to expand and enrich our portfolio. As you can see in the presentation, to name just a few, the Letta Ultra coffee machine, featuring our silent technology, under the Kenwood brand, the new generation of our cooking shelf, and for Brown, the extension of cooking and ironing ranges. For Nutribullet, Flex portable blender. Now, let me focus to the results. In 2025, the group growth was well-balanced across all quarters and all geographical regions. In more details, the European region posted a 9.1% top-line increase, plus 8% in quarter four, with positive results across all geographies. The Bigham Peninsula, the UK, and Nordics delivered sustained full-year growth, further supported by a robust mid-teens increase during the fourth quarter. Within the household segment, momentum was primarily driven by the sustained expansion of the coffee category, further reinforced bar, the new Nespresso markets, the continuing international rollout of Nutribullet, and the steady progression of Brahman Organic Systems. Media maintained strong positive momentum, growing 11.2% year-on-year, plus 16% at constant exchange rates. This result was underpinned by a robust fourth quarter, which saw a low teens expansion at constant exchange rates. The American region grew 8.5% at constant exchange rates, despite tariff pressures. Within the household division, exceptional growth in the coffee machines successfully mitigated softer Nutribullet sales, which were impacted by a broader category slowdown in the challenging prior year comparisons. Meanwhile, the professional segment continues its double-digit momentum, supported by the steady expansion of both brands. In the Pacific, revenue grew by 10.8%, plus 18.1% at constant exchange rates, driven by excellent results in China and Oceania. Despite currency volatility, the region maintained a robust trajectory, closing the fourth quarter with mid-teens growth at constant exchange rates. Regarding the divisions, we're very satisfied with the performance of both, as they've realized a solid and resilient pace of growth in recent quarters. Concerning the household division, we highlight what follows. Coffee segment recorded solid high single-digit growth across both analyzed periods, driven by the strong performance of manual machines, and Nespresso products, as well as low teens growth in the coffee accessories category. Nutrition segment experienced a mid-single-digit decline over the 12-month period, primarily due to a slowdown in the U.S., marked caused by shrinking demand in the blended market and unfavorable exchange rate effect, as well as a challenging comparison with 2024, when growth reached the double-digit. In contrast, Kenwood Kitchen Machines delivered mid-to-high single-digit growth, marking its second consecutive year of positive momentum. Regarding other categories, Braun Brand Ironing System delivered double-digit growth for the third year running, validating the group's recent product innovation and communication strategies. Finally, the comfort sector, portable heating and air conditioning, recorded a partial decrease compared to the previous financial year. The professional division delivered another strong quarter, with revenue growth close to 40%. The premium positioning of Iversys and Lamarzocco, combined with their robust brand equity, allowed the division to significantly outpace the market, leading the premiumization trend. Moreover, the prosumer category emerged as the key growth driver, showing strong double-digit momentum compared to the previous year. Profitability remained strong across the board. Household reported an adjusted BDA of €492 million, equal to 14.8% margin, while the professional segment displayed its accretive impact on the group, with €133 million in adjusted BDA, equal to 27.3% margin. In details, in the full year, adjusted BDA was 625 million, representing 16.4% of revenues, an improvement of 40 basis points over last year. This was supported by a higher contribution from the professional division, while the household division margin remained nearly in line with the prior year, excluding the impact of tariffs. Regarding the household segment, the price miscontribution was nearly flat for the full year, while in currency, Well, the currency effect had an impact of approximately 8 million euro. Investments in media and communication increased by roughly 40 million euro in absolute terms, remaining stable as a percentage of turnover. During the year, we faced slightly higher logistic costs and a negative impact stemming from additional tariffs in the U.S. market. Specifically, despite the tariffs headwinds, we limited the net impact to approximately 10, 15 million euro. This was achieved through a proactive mitigation plan focused on strategic inventory buildup, targeted price increase, and supply chain optimization. As shown on slide four, our diverse and flexible U.S. supply chain position has well to navigate the current target regime should it remain in place for the full year, 2026. In 2025, the group net financial position was positive at 770 million euros, an improvement compared to 643 million euros in December 2024. With regards to the cash generation, the cash flow before dividends, buybacks, and acquisitions was positive for 384 million euros in the 12 months. Capital expenditures for the full year amounted to 101 million euros, representing a decrease of 27 million compared to 2024. In terms of shareholder returns, the group distributed 196.5 million euros in dividends and executed a 61 million share buyback program during 2025. Summary, fourth quarter results confirmed a positive growth trajectory and margin expansion observed throughout the year, with both divisions playing a key role in achieving these targets. Strong operational performance generated robust cash flow, enabling us to deliver attractive capital returns through the extraordinary dividends and buybacks, while further strengthening the balance sheet. This ensures maximum strategic flexibility for future capital allocation. Looking ahead to 2026, we maintain a vigilant stance regarding the global microeconomic and geopolitical uncertainties, although we're not seeing any material disruption to the business related to the recent developments for the time being. In particular, during the first quarter, the group performance at constant currency remains positive in line with a mid-single-digit medium-term growth target. This is driven by strong momentum in the professional division, while the household segment is foreseen flattish at the constant currency, but impacted by currency headwinds similar in acting to those experiencing quarter form. Despite the backdrop, we project a mid-single-digit revenue growth consistent with our medium-term strategic goals and anticipate and adjust the BDA in the range of $640 million to $660 million. Now we welcome your questions. Thank you.

Thank you. This is the Coruscant Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. To remove yourself from the question queue, please press star and 2. We kindly ask to use the handset when asking questions. Anyone who has a question may press star and one at this time. First question is from Nicolo Storer-Kepler.