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.

Good afternoon. Thanks for taking my questions. Three, if I may. The first one is about your guidance on 2026. If I take the midpoint, the implied APDA margin is down year-on-year, right? So, if you can help us understand what is basically offsetting or more than offsetting the volume effect and in particular how much of the new scenario with oil at $100 per barrel is already embedded in these figures. Second question is about dividends. You basically will propose, let's say, a standard payout, notwithstanding very happy cash generation in 2025. So I was wondering if this is a sort of signal that something on the M&A side is moving or is getting closer. And the question very quick about your exposure to gas countries. I see that is 6%. How much of this 6% is related to countries now, let's say, hit by this war?

Thank you. Okay. Nicolò, thank you for your questions.

Yeah, I agree. I mean, our guidance on APDA would imply some, let's say, slight margin dilution. I would say to highlight strong performance that we had in 2025. We think that we are probably going to be impacted by some currency effect, some currency negative impact. We are now more naturally edged to the dollar, but we still export to many other markets, Japan, Australia, so all these markets have such a magnitude that would eventually translate in some negative short-term currency impact. We still believe that The market might be competitive, has been competitive in quarter four. We have reinforced our investment above the line. We think that we have to be ready for such a competitive environment, and therefore we are also thinking maybe some incremental investment in AMP. And also we're seeing that in certain very specific moments of the year, the market is very promotional. So in order to continue in our long-term growth plans, we have to also price somehow a higher price effect to sustain long-term growth. So this just to give some color around our early guidance for the year. With regard to conflict, to the recent conflict, our numbers are not including any impact arising from eventually a continuation in the Middle East on the crisis and a more persistent inflation maybe in oil or energy. For the moment, we still have a plan for, actually, our budget is pre-conflict, but we think that our exposure for the moment to Maya is 6%, but the Gulf area, which is more directly impacted by that, because Maya, I would highlight, we have also North Africa, South Africa, Turkey, and the more specific Gulf region is only 3% of total sales. So I hope that this answers your questions. Thank you. No, last one is on capital. Yeah. Yeah, again, our priority would go to M&A for sure, and also we're very pleased also with buybacks, which have been accretive. So for the moment, we are not considering any extraordinary dividend. We go back to what was the, let's say, the payout ratio that we had before. And I highlight that, yes, priority would go to M&A this year and also buybacks eventually.

Grazie.

Next question is from Isacco Brambilla, Mediobanca.

Hi, good afternoon, everybody. Thanks for taking my questions. I have three. The first one is on the EBDA bridge for the final quarter of the year. I see price mix slightly negative, even if you mention price increases in the U.S., so if you can elaborate a bit more on the drivers of this bridge. very limited but negative impact. Second question is a more general one on how do you see the US market reacting in terms of demand to the round of price increases applied by basically all the players in the past month. Final question is on the professional business that reached an excellent margin of 27%, if I'm not wrong, this year. So Lamar Talk and Diversys were already two very well-managed companies at the moment of the combination. So just your view, Fabio, on what has been the boost within the long to even expand the margin so much.

Okay.

Thank you, Isako, for your questions. So the first one is the bridge on EBDA for the final quarter of 2025. Nicola, maybe you'd like to handle this.

Most of the impact of the net impact that we had in terms of tariffs occurred because of seasonality and because also the phasing of the incoming goods from overseas because all the goods that are coming to the US are imported for us either from Europe or from China. It's happening as we speak. And in terms of price increase, as already mentioned previously, the two categories that we are playing in the U.S. has two different dynamics. A bit of price increase has been possible to partially offset tariffs more on coffee, while the nutrition category has been proven to be much more elastic and this partially answers also to your second question about how the market is reacting to price increase not in all categories indeed it's happened that the price increase has occurred and nevertheless the market is still soft in particular in the nutrition area so it's under challenge in this moment Yeah, exactly.

Okay. So if this answers also the U.S. market question, I would move to the third question about professional. Yeah, it has been a very strong year with both companies performing very well. I would highlight as main drivers for the success of La Marzocco, Continued international expansion. La Marzocco is already a global leader within professional and in particular bar coffee equipment. But some of the markets are quite new or at least we have established branches very lately. I'm speaking also key markets like France or Germany. We're just expanding Far East and the presence is in Middle East also is quite recent. So international expansion is certainly a driver. Second main driver is the bounce back in the bar market. I mean our customers definitely are stepping up in terms of new stores opening and so we see also a strong development of the bar equipment. The success of home, a phenomenal success of Mini and now also Micra, and also the early success with our grinder range. I highlight that La Marzocco was not a manufacturer of grinders and entered the market with three items and Pico. was very strong in the last 12 months because the more, let's say, domestic grinder product we have within the range. For overseas, normalization of the growth trend in China, I would say, the development of the high productivity, high quality segment And I would say also the acquisition of very important customers in the U.K., in Europe, and in the United States and China also. So customer expansion.

Next question is from Francesco Berilli in Termonte.

Francesco Brilli, your line is open.

Francesco Brilli from Intermonte, your line is open. Next question is from Natasha Brilliant, UBS.

Hello, thank you for taking my questions. I've got three. So first of all, just on free cash flow in 2026, obviously a slightly higher EBITDA, but any other changes we should think about as of 25 on CapEx, working capital, anything like that? Second question is just on the tariff impact in 2026, just so I understand it, because I think the impact was really just in the second half of last year. So we need to annualise that for the impact on 2026. And then last question, just on M&A, you said it's a priority still, but any thoughts on the pipeline, if anything's changed in the last few months, or any more color you can share on that? Thank you.

Thank you, Natasha, for the question. Well, the first question is about the cash flow we expect for 2026. Going back to what happened in 24 and 25, I think we have continued with a very strong cash generation. I think we also got some tailwinds in the last two years because of the working capital normalization. You might remember that we had a strong buildup of inventory in 2022 and resulted in a release in the following years. But we still feel strong about one of our pillars in our equity story, I think, is the cash generation. So you should expect strong cash generation also in 2026, probably to a lower extent. I think we inventories can – we don't feel we should, say, try to further reduce inventories. I think that we feel that the levels we have reached are – very low and we think that in particular in a more competitive market, we would like to have full availability of products to support our growth. Also, it's not impossible that given some weakness in certain geographic regions, we should potentially use more our credit lever to support more our long-term strategic partners in the regions to capture, again, all growth possibilities. So we can be a bit less aggressive in, say, generating cash flow through working capital, but we feel still about our ability to contain also the investments and continue to generate Nicola, I don't know if you want to add some color on the investment.

In terms of tariffs impact, as we speak, for 2026 is really an evolving scenario. We were factoring in our budget an impact, or less on the scale of last year, something on the ballpark of the 10 million net additional impact for 2026. considering the pricing setup that I mentioned before, something on coffee feasible and that has been implemented while we're back on the pre-tariff pricing on nutrition. And this is what we have factored, but as we know, it's a very evolving scenario. In terms of capex and investment in 2026, we are planning and we have an outlook that is in the level of 2025.

Okay, a question about M&A. Let me step back for a moment. Again, we're going to focus in creating value for our shareholders through better allocation of capital. Priority would go to M&A. Also buybacks. In M&A, priority would go always to North America as a market, professional preferred, and And also we consider eventual opportunities to strengthen our position within professional coffee machines.

Thank you.

Next question is from Hela Zaruk, Adobe HF.

Yes, good afternoon everyone and thank you for taking my questions. I have one on the price mix effect expected on 2026. So, if you can share with us your expectations in terms of price mix effect expected in 2026. Also, if you can share with us your expectations in terms of labor and logistic cost impact, maybe evolution of the logistic costs and labor costs for 2026. Thank you.

Nicola, you want to handle the questions? Price mix, it has been in 2025 pretty flat, neutral, and we see competitive pressure considering the consumer landscape in 2026. So there could be some slight erosion there. In terms of labor and logistic costs, logistic costs, in particular, not only sea freight, but also road transportation, it is in a steady growth, and obviously the oil cost in this moment is not happening, looking forward. This is part of what has been incorporated also in what Fabio mentioned before, a bit of... potential dilutive ABTDA built for 2026.

Okay, thank you.

Next question is from Alessandro Cecchini, Equita.

Hello everybody and thank you for taking my questions. The first one is actually a follow-up because my line was noisy, so I didn't take your view on the first quarter organic performance, so this is my first question. My second question is instead of product launches for 2026, if you expect it to be bolder in the market, in the coffee, on the food preparation, This is my second question. And then my third. So we talked about maybe in terms of some headwinds for price mix. We had some logistic, but I mean just wondering if you can elaborate a little bit on maybe some tailwinds if you have in this moment. So making the math also, I don't understand why it's sort of dilutive because in the midpoint is a flattish margins. Probably you are saying in the consumer space while the professional to add because making the math, the margins is flattish, erroneous at a group level. So thank you.

So the first question, thank you, Alessandro. On first quarter, yeah, we have anticipated that the performance in the first quarter is still at constant currency effect. It's positive and in line with our mid-single-digit medium-term growth targets. So we see Yeah, in particular, I would say professional, stronger than one might expect, and maybe household somehow a bit softer, affected by strong negative effects, which we think will get better from April. If you recall last year, the dollar in January was around 1 to 1 to the euro. and then progressively deteriorated. So we still have a strong comparison in the first quarter, but then kind of reached the current levels already in April. So we think that the negative effects in particular relate to the dollar will happen in the first three months, and then we'll get better with maybe still some negative effects. export currencies like Japanese yen or Australian dollar which might impact but far less than we might have in the first half.

About new product launches so we have I would say that across 2025-2026 we have really a robust market launch of a pipeline of new launches in coffee and also in nutrition and cooking ranges from prima donna aromatic that we have launched last year specialist attach and dedica duo then this year we have a a new range of products in hot and cold coffee and milk frothing. We have Specialista Duo and Magnifica Duo. Then we have Electra Ultra, that is a new high-end product, so we have definitely a robust pipeline of launches in coffee, as well as in nutrition. I mentioned before the new cooking chef. We have all the go range for Kenwood cooking products in brown, both air fryers and grids. And we have Nutribullet, a new range of products in Nutribullet with also across new categories. And expanding the ironing segment.

Yeah, about the last question is about the tailwinds. So in general, I don't see many tailwinds this year. I think that the last thing in particular was tailwinds were coming from the raw materials and from savings in China. I don't see many tailwinds. Actually, I think this year we have to rely on our ability to grow based on the innovation and the strength of our products. I think also the secular growth in many segments where we operate. But in general, I think the tailwinds are, I don't see many, Nicola. I don't know if you want to see some.

We had, in terms of product cost, most came last year from the ability of efficiency and some raw materials, but already by the end of the year, Copper and aluminum was getting an upward trend before oil. And in general, this is the outlook on 2026. Before the recent crisis, it was already more on flat-ish trends. While logistic costing in general, they have a bit of upward trend since few years. Nothing particular concerning, but definitely with increasing more than the average market cost increase.

Okay. My last point was... mean on guidance I didn't understand so the the concept of dilutive margins probably is in the consumer space because in the overall making the math is flattish margins no actually also for for professional probably

Again, yes, we have highlighted a very strong performance of profession in quarter one, which is happening, but then also we're going to have a tougher comparison for profession in the second half. So maybe you're expecting a stronger growth from profession in the second half, and then you might imply more dilution on our household division. is not very much this. We're just incorporating some incremental investment above the line, a slight maybe negative impact because of promotional initiatives, but ballpark, we don't expect any major dilution within households. I would say more like a year of stabilization. Consider also that, as you see, there are many... No, the question was... I will ask about the tailwinds. For the moment, we don't have many tailwinds. I think it's only about our ability to continue our growth trajectory. We're sitting on solid structural growth in coffee. We think also we can bring back to growth nutrition, but no tailwinds on cost. Currencies would be slightly lower. negative to be upset and therefore we think that this guidance is quite realistic at this time.

Okay, thank you.

Next question is from Luca Baccoccoli in Tesa San Paolo.

Yes, hello, good afternoon everyone. Three from my side. The first one is on Nutribullet and You said that the growth was very strong outside the U.S. market, so I was wondering what is the split between, let's say, the core market and the new markets where you are launching and introducing a Nutribullet product. The other one is, again, on a trading update. If I got it right, the household division at same effects is slattish in the first quarter. So what are the geography and product categories which are not growing or even going down? And finally, on trade payables, which at the end of last year were decreasing despite the strong top-line growth. So I was wondering if this is either related to the FX depreciation or the fact that you are already implementing better terms and conditions to your commercial partner. Thank you.

The first question is on Nutribullet. Maybe, Nicola, you want to handle this one.

As we speak, currently, the split between the U.S. business or the American business is more 55-45, 50-50 with the international market. And the growth of the international is upsetting the, let's say, a bit of the setback in the U.S. and in the distribution market. In terms of geography?

Yeah, the second question was about last year, quarter four, quarter one results or outlook. I would highlight that we finished the year quite strong. I don't think that we pushed to get to the year-end result that you saw. It was not a push. It was really a strong intake from retailers. I assume that after Christmas days, probably the stock levels increased. were a bit higher than one year ago, so this has resulted in a weaker January. In particular, I would highlight two geographies, which are Germany, we saw a weak German market, and then also North America in particular for Nutribullet, where we still had a strong comparison. This might give some color around our guidance or expectations for Quota 1. Nicola, do you want to add anything on this? I would say that... Well, we have seen also practically a normalization, and so we expect that... Probably the stock levels as we speak are already normalizing.

In the U.S., there has been a bit probably of upfront intake, the last orders before the start of the duties also from the retailers. So the comparison with last year, the first quarter in the U.S., it has been particularly strong in terms of comparisons.

Yeah, can you rephrase the last question? Because we are not sure that we captured properly what you wanted to hear from us.

Yeah, sure, Fabio. So on the trade payables, which were decreasing year over year by approximately 20, 30 million euros in a year when the top line was growing on a reported basis by 10%. So this decrease is due to the effects so just simply a lower amount of trading paybots that you are recording or instead that you are shortening the paybot terms in order to let's say benefit your sourcing partners.

Next question.

So looking at the payables last year, it's been a bit of phasing in terms of timing of purchase. We have built also the upfront stock level that we built in particular for the U.S. has been anticipated a bit. The the timing of the process, and there is also an exchange rate factor. It's a bit of a combination.

Okay, thank you.

Next question is from Fraser Donlon, Ben Bernberg.

Hi, everyone. Thanks for the presentation. It's Fraser here. I had three questions, so... just going through the slides you mentioned that you would have this controlled investment to strengthen the organizational structure so i just wondered if you could clarify what that relates to whether i'm not sure if it's maybe the diversification of the supply chain you've been doing but it would be good to just hear about any specific projects um the second question was on amp because it sounds like it still remains quite a promotional environment but on the in the deck you talk about a lower incidents of AMP to sales. So I just wanted to clarify, like, what is your base case almost within the guidance for promotional activity? And then the final question was just about professional. Could you maybe give an overview of kind of like the backlog you see there or what visibility you have in the rest of the year?

Thank you very much. Hi, Frasier. So the first question, we didn't get, the line is pretty disturbed, so if you can rephrase the first one, please.

Sure. Hopefully you can hear me. Now, so the first question was just you mentioned in the slides a controlled OPEX to increase the strength of the organizational structure. I just wondered if there are any particular projects you would point out there. I'm not sure if it's about the diversification of your supply chain in Asia or something else.

Okay, so probably the OPEX we're referring to maybe is the investment in the new commercial and digital marketing structures which are, as you know, we have just opened an office in London to strengthen our know-how and our capabilities in marketing.

We are strengthening also, if I can step on this, also our e-commerce platform. As we say, we have done a full replatforming to boost in terms of direct-to-consumer as an acceleration and growth driver for us. This has been a significant investment.

On AMP, the question is, yes, I think the market is... It's more and more competitive in general. I think that as the market leader, we need to continue or strengthen our market position throughout investment in A&P. But at the same time, we know that the market, our customers are also being very promotional, particularly in very specific times of the year, you know, there's a Black Friday, there is a Christmas say, there are post-Christmas say, so we need also to be ready to do a bit both. So, we think that is manageable. It is in, yeah, it is in, within our numbers and within our guidance. If this answers your second question, I would move then to your third question on the professional. Indeed, we are seeing still a strong quarter, very strong quarter for La Marzocco and Eversys. This is supported by order backlog, which is record high for both companies indicating that, yeah, we have ahead of us a positive year, a positive year for both brands and with La Marzocco in both business segments, I mean, not just professional and bar equipment, but also for mini and micro and home lines.

Thank you very much.

Next question is from Francesco Berilli, Intermonte.

Yes, good evening. Can you hear me now?

Yes, we can.

Yeah, okay. I apologize. I wasn't able to use my microphone before. I have a couple of questions. Many have been answered already. The first one is just trying to understand. I... I know it's still very, very early in the year and visibility is, of course, very limited, but based on your initial assessment of the current situation, do you think the current ABDA guidance could already embed the potential impact of factors related to the current environment, such as, for example, logistics costs or other higher costs? could be something manageable, similar to how you successfully managed last year, the tariff situation. And the second one is a more general one on the outperformance of the Asia Pacific, which has confirmed the tax continued to perform incredibly well. It was a plus 18% increase. throughout the year, 16% in fourth quarter, and if you can provide us with some additional color on the performance of this region and perspectives. Thank you.

Okay, Francesco, thank you for your questions. No, our guidance is before, let's say, before the conflict, based on assumptions before the conflict So we still think that the conflict will have little impact on the business for the moment on both, say, the market development in the region as well as cost, eventual cost impact or inflation in energy and cost. So yeah, this is, we're not taking, any adjustment on that. The second question is about the performance. APA is stronger. Maybe China was pushed or supported by the incentives that Nicola has mentioned already. Nicola, do you want to take it?

In terms of performance in the Asia-Pacific region, most of the growth is coming from the strength of the performance of China of last year, that has a robust double-digit growth, while there are other countries that have been, let's say, more soft than this. related to China.

Okay. Do you think it's something that can continue going forward?

There has been this government incentive on internal consumption in China that we have benefited with our product categories and coffee in particular. These are not anymore in place so the The comparison will be much tougher. We cannot expect this upside also this year in the comparison. Still, we see China as a potentially growing country.

Thank you. Very clear.

Next question is from Andrea Bonfa, Banca Acros.

Hello, good afternoon. I hope you can hear me. Most of my questions have been already answered. So I got a curiosity. Is it possible to remind us how much of your production volume are made in China today out of the total? And if you still see some deflation ongoing there, which is what the production price index of China is suggesting. Thank you very much.

Okay. Andrea, thank you for your question. And, Nicola, you want to take this?

More or less, we are in a balanced sourcing. Let's say that it's more, let's say, 50-50 from China and Southeast Asia. Compared with Europe, then Southeast Asia is more related to the U.S. It's certainly in the space of this 50, this single digit of this In terms of cost index from China, last year there has been a bit of benefit. That is what we mentioned before, that we had a slight benefit in terms of cost of goods that we do not see in this moment. As we speak, there is a bit of pressure from overall the supplier base for price increase. So do we have a factor for 2026 is a stable cost from the China sourcing?

Okay, just to understand, so out of the total, China is 50% of your volume manufacturers?

Southeast Asia is 50%, and out of this 50%, something between 5% to 10% is Thailand, Indonesia, Cambodia, Vietnam. So it has a relocation that it has been made for... for offsetting the U.S. targets. Now the scenario is a bit different, but this has been the relocation done along 2025. That is still in place. It's an alternative and resilience in terms of supply chain that we are keeping alive.

Thank you very much.

As a reminder, if you wish to register for a question, please press star N1 on your telephone. For any further questions, please press star N1 on your telephone. Gentlemen, there are no more questions registered at this time. We have an additional question from Davide Longo, Independence AM.

Hello. On my side, only a question on the share-based plan. We've seen that there has been a bit of impact in 2025. What can we expect for 2026 on this side?

Sorry, we didn't hear you. Can you say it again?

Of course. It was related to the no recurring expenses that you experienced in 2025. What will be the number to expect on this no recurring side in 2026?

Yeah, we think that, yeah, we expect this figure to be more in line with the previous years.

Great. Thank you very much.

Thank you.

Gentlemen, we have no more questions registered at this time.

Thank you.

So, as there are no more questions, I thank you all for attending the De'Longhi Full Year 25 Conference Call. Thank you so much.

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