Aquafil Spa

Ladies and gentlemen, welcome to the Aquafil Group 2026 Q1 results presentation conference call. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing the pound key, then 5, on their telephone keypad, or by clicking the hand button on the web player. Now, I will hand the conference over to Giulia Rossi, investor relator. Please go ahead.

Thank you, operator. Good evening, everyone, and welcome to Aquafin Investor Conference Call. Today, we will update you on the company's first quarter 2026 results. Before going ahead, let me remind you that this presentation may contain certain statements that are neither reported financial results nor other historical information. Any forward-looking statements are based on apophis, current expectations about future events and are subject to risk and uncertainties that could cause results to differ from those expressed by the statements. For a discussion of these risks and uncertainties, you should review the disclaimer in the presentation we issued today. I will now leave the floor to Mr. Giulio Bonatti for his remarks.

Thank you, Giulia. The results of the first quarter of 2026 demonstrate with great satisfaction the group's ability to translate commitment into tangible results. Margins showed an excellent performance despite market uncertainty. A strong benefit derived from the cost rationalization project launched in 2025. The plan of approximately 17 million euros is generating the expected structural savings and cost containment actions will continue in the coming period. We also continue our debt reduction path with discipline. The net financial position decreased sharply compared to the first quarter of the previous year, supported by robust operating cash generation. This result is a significant achievement even when compared to that of the previous financial year, especially when contextualized with the typical seasonal fluctuations of the period. Sales volumes are in line with expectations, showing extremely positive dynamics in the North American region. In Europe, the fiber for textile market is showing order intake above previous periods. In parallel, the growth of the engineering plastics segment also continues. Our Econy brand maintains a significant share of total fiber revenues. The current macroeconomic framework presents elements of instability, with further strong upward pressure on raw materials and other costs. Within this context, we reiterate our historical ability to pass through the increase in operating costs to selling prices, even in the most challenging market phases. The results of the quarter make us confident in achieving the target set for 2026. We are now ready to welcome your questions.

If you wish to ask a question, you may do so by clicking on the Raise the Hand button on the player to ask your question orally. Or if you're going to assist by conference call, please dial pound key 5 to speak. If you wish to withdraw your question, please dial pound key then 6 on your telephone keypad. And the first question comes from the line of Filippo Lupi of Kepta Shibu. Please go ahead.

Hi, Filippo from Capacevo. Thanks for taking the question. First one, you indicated firstly that the 17 million cost rationalization plan is generating respected structural savings. How much of this benefit was already visible in Q1 EBITDA? How much remains to be delivered over the rest of 2026 and 2027? Second one, the competitive environment and how it has evolved since the beginning of the year given the volatility of raw materials. Have competitors changed their behavior Are you seeing pressure or gaining market share?

Thank you. The 17 median cost savings is a number which is comparison 2024 with full year savings. So they are practically almost all equally divided by quarter. In fact, there are still a portion of these 70 millions that are going to be realized during 2026, and that will show their effect even during 2027.

About competitive environment.

As I have said, particularly raw materials, but not only, transport, energy, and all other consumables have, of course, they say, reacted with a big increase because of the war of the Middle East, which started at the end of February. This has forced everybody in the industry to act through a price increase. So it is not just Aquafil, but it's the behavior of all the sectors that must recover through price increases. The really big cost increase that we have suffered, particularly starting from April. is gaining market shares, particularly in Europe, and this is happening because not of the present situation, but because of the hard work that we have realized during 2024 and 2025 in launching new products and in servicing the market in the best possible manner.

The next question comes from the line of Carlo Moritano of InterMonte. Please go ahead and ask your question.

Hi, good day, good evening everyone. I just have three questions. The first one is if you can provide more color on the volumes performed in the media in Europe. So I just want to understand what is the idea with Messeur. And the second one is on the NPF in the US. In the first quarter, there's a quite a surprising rebound in points. So it's also in the space that you can try to avoid. And the third question is about the current trading. I was wondering if you would see the same trend starting in the second quarter, in April and May, or if there's anything else that you have to be mindful of. Thank you.

Thank you, Carlo. If I have to comment the sales of BCF in Europe in comparison with the first quarter of 2025, I have to remember that in 2025 we enjoyed a strong result deriving from the shutdown of our competitors, Mayoga, which took place in September of 2024. And particularly one customer had placed a lot of orders during the first quarter of last year. If we deduct this effect from the first quarter of 2025 and the first quarter of 2026, I must say that there are no big differences, or 2026 is even slightly better than 2025. Nylon textile filament in the United States, the first quarter of last year, has suffered a very weak demand It has not happened during January and February and the first part of March. During the second quarter of this year, we are noticing, particularly for these kind of products, a very slow demand, and this is because Atrofilomera is targeting customers that are more connected with consumer market in the medium or low end of the market. And, of course, they are the ones that are mostly hit by all the inflation costs that are deriving from the war in the Middle East and the rise of petroleum and gasoline in the United States. The current trading is showing, of course, a lot of uncertainties. The demand, particularly in Europe, is weak, is not strong. not with big differences, at least during April and May, in comparison with our budget for 2026, while the demand for North American and Asian markets is pretty stable for the time being. Engineering plastic is continuously giving us good ceilings and good numbers. So overall, of course, We are not enthusiastic of this current situation, but we are still, let's say, confident that we will be able to deliver the expected results first semester.

Thank you.

The next question comes from the line of Dave Storms of Stonegate. Please go ahead and ask your question.

Hello, and thank you for taking my questions. My first one is maybe just around your consolidated margins that seem to be continuing to grow. I know you've called out the performance driven by the cost reduction strategy. Just curious if you think price mixer volume could be a contributor to growing margins going forward. And then my second one is around the debt reduction that you've taken in the quarter. Maybe any thoughts on the outlook. Does debt reduction remain a priority or do your capital allocation priorities shift now that you've taken a lot of work out there?

Thank you, Dave. I will start from the second question. Debt reduction remains a priority and our capital expenditures for 2026 are still course in line with our budget forecast and as we say with the original plan but also they will continue to be under control in order to avoid any deviation if of course sales and margins continue the current trajectory we expect a strong reduction during the 2026 please remember that last year we have to change the mix of purchasing of raw materials, and this has caused a temporary absorption in the networking capital, which is not continuing during 2026. I mean, we are, of course, continuing with the same supplier mix, but we have absorbed these shorter terms of payment because of importation of raw materials. Consolidating margins are good because we are selling good products with the right pricing and having cut fixed costs and other, let's say, cost factors, this has, of course, delivered a higher unit margin. Clearly, if we are able to hold volumes or even to increase them, the effect was better. The marginal effect would even be stronger than the current situation. Clearly, the current rating of the market because of the war in the Middle East is not making us very optimistic of increasing strongly our sales volumes during this financial year. But we are working hard to keep growing during 2026, 2027, and 2028.

As a reminder, if you wish to ask a question, please dial pound key then five on your telephone keypad. The next question comes from the line of Francesco Tadei of Banca Acros. Please go ahead and ask your question. Sorry, we just lost Francesco today.

Hopefully not forever, just temporary.

Francesco, if you could press pound key then five again.

Yeah, thank you. Thank you. Sorry. So thank you for taking my questions. I have two, if I may. Could you comment on the impact that the European anti-damping measures that I think on the nylon market, both maybe in terms of competitive dynamics and pricing, and linked to that, how are you currently seeing the spread between virgin nylon and eco-neal evolving? And what implications could that have for demand trend and margins over the medium term? Thank you.

Yes, we didn't speak much about what happened at the end of March with, let's say, the imposition of a temporary anti-Gantt against import of Chinese sector Gantt. Please be careful. Please mute the microphone or we will hear you taping like crazy. So the European Commission at the end of March has imposed a temporary anti-dumping duty against the importation of nylon textile filament from several Chinese companies, and they average from a minimum of 56% to a maximum of 91% of the selling prices. So as you can understand, they are quite substantial. This, of course, should created a better possibility of local producers to sell in the local market. But I must also comment, saying that our results originated before this unredempting duty in position by the European Commission. So our performances have been strong already during February and March. and they are continuing to be strong also during April and May when we speak about nylon textile filament products in the European market. Of course, nobody knows what is going to happen in the second semester given the current uncertainty, but if the market continues like today, we are confident to have a strong performance for our NTS, which is very important for us because this has been the part which has suffered most during the last couple of years. Spread of economic prices versus verging are currently getting lower in comparison with the previous year and 2024. And this is naturally coming from the fact that when petrochemical prices are going up, economic prices are going up normally about 50%. So this making the spread little less. It is not changing much in the short period, but normally, at least per our experience so far, has delivered a stronger demand in the coming period, because people are gaining confidence when the two prices are closer than, of course, when the two prices are much more different and equally much more expensive, as it happens when at the end of the presentation.

Thank you very much.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Thank you to everyone for taking part to our video conference for the first quarter financial results of Aquafil 2026. Hopefully, we will talk soon again with good news at the end of this semester. And for every question, please feel free to contact Julia Rossi. She's always available to answer to all your questions.

Thank you very much for attending the conference.