Fnac Darty Sa Ord

Good afternoon and welcome to FNAC Darty conference call. Mr. Enrique Martinez, CEO of FNAC Darty, and Jean-Brieuc Le Tinier, CFO, World Moderate, this call. The floor is yours. Good evening, everyone. We are pleased to be with you tonight to comment our 2026 half-year results. Particularly in France, over the past few years, we've experienced several early heat waves of unexpected intensity. These episodes had an impact on many of us and naturally on our customers, and I wanted to start by acknowledging the extraordinary dedication of our team during these exceptional weeks, especially our purchasing logistics store teams and our home service technicians who intervene on products affected by the extreme heat. Everyone across the group worked tirelessly to step up and help our customers cope with these extreme temperatures. Right, the agenda. I'm going to present the highlights of the first half of 2026, then Jean-Brieuc Le Tinier, our Chief Financial Officer, will detail our financial results, and finally I will return for the conclusion. And both of us will be available to answer your questions. Slide number four. The highlights of H1. Our revenue grew by 0.6% on a like-for-like basis. This growth was Transcription by CastingWords This has yielded significant effect on our gross margin rate, which expanded by 40 basic points to reach 29%. The growth of our service business remains the key engine for growth, and services are contributing very positively to improving this metric. Finally, as you already know, our main shareholder, EP Group, announced a tender offer for our company at the beginning of the year. After obtaining the required regulatory approvals, notably clearance from the AMF, the offer has been open since May the 12th. Subject to receiving merger control approval from the European Commission, completion is expected in the second half of this year. So, our first half of 2026 reflects positive transformation momentum and growth in services. In a moment, I will also return to the performance of online sales which both sustain growth and digital as a whole. Overall, commercial performance remains solid in an environment that remains challenging in France. Slide number five now. Since launching our new strategic plan, Beyond Every Day in June 2025, we have rolled out numerous initiatives. I wanted to highlight two of them, which fall under the integration of uni-euro through synergies and the development of high-value added services. They are illustrated on slide five. First, dual launch resulting from expertise sharing between the group and Uniro. First, the launch in front of a professional TV calibration service. This is the first directly inspired by the success of a similar initiative deployed at Uniro. Conversely, Uniro launched Digital F-Secure, its very first subscription service offer. Inspired strongly by Fnac V Digital, which has been successfully offered in France in 2021. Now, second key initiative, we accelerated the integration of our own brands across the group. We previously announced our goal to pool expertise around private label products and licenses to optimize product offerings and better leverage existing group structures particularly sourcing offices in Hong Kong and Shenzhen. 80 group employees are dedicated to this business, which we have mastered over 20 years now. We work with approximately 190 suppliers worldwide and ship over 4,000 containers annually. Since 2025, we have finally expanded our product offering with more than 1,300 new SKUs, and we confirm our target to increase sales by €300 million by 2030, doubling compared to 2024. These examples illustrate that Unirova's integration is progressing successfully, and we confirm our target of delivering at least 20 million euros in synergies by the end of this year. Moving on to slide number six now, we are going to talk about digital performance. So regarding digital, as I mentioned earlier, we continue to accelerate, as shown on slide six. With a selection of significant key metrics, our online sales grew by 4% in the first half of the year and now represent 21% of total group sales. Click and collect sales are growing and now account for nearly 50% of total group online sales. This confirms once again the relevance of our omnichannel strategy, especially when foot traffic in city center stores was impacted by the heat wave. The use of AR in purchasing behavior, while still marginal today, is accelerating rapidly. We pay close attention to ensuring strong visibility in LLM models, which already influence more than 3% of our gross merchandise value on our platforms. Our marketplace delivered strong performance in H1, with GMV increasing by 15% over the period. The business or the activity within our reverse marketplace is also showing a very strong growth. Finally, we are accelerating the deployment of Wiven, the joint venture created with Siva Logistics. Wiven offers a unique, fully integrated solution combining best-in-class marketplace tech solutions with high-performing fulfillment for multi-channel retail. Now, since its launch, Wiven has collected over 100 marketplaces across Europe and processed around 1 million orders. Overall, for technical products, one-third of units sold on the Nac Darty marketplaces are powered by or fulfilled by WIPEN. Moving on to the next slide, slide 7, to conclude my section. I wanted to briefly review the ongoing tender offer by EP Group and provide a quick update on the timeline. I have already noted that EP Group's offer aligns with the Solid Partnership built together over several years. It represents a key new milestone supporting the acceleration of our Beyond Every Day strategic plan. Moving on to slide 8, the illustrative timetable shows all the steps already completed as well as the final milestone before closing the offer. We are still awaiting merger control approval from the European Commission. We are working on it, though we have not yet formally notified Brussels to date. Subjects who are planning this clearance, and if successful, the offer should reopen for a period of at least 10 trading days. I will now hand over to Jean-Brieuc en CFO, who will walk us through our financial results in detail.

Jean-Brieuc Le Tinier Thank you, Enrique. Good evening, everyone. As Enrique mentioned in his opening remarks, group revenue increased by over 0.6% on a like-for-like basis during the first half, driven by the strong performance of the rest of Europe in our online sales. Online sales now account for more than 21% of revenue over the period and grew by more than 4%. Click and collect remains a cornerstone of our omni-channel model, with nearly one out of every two online orders collected in-store. Slide 10. Let's look at our performance by product category. The categories highlighted in green are those that deliver the strongest growth. Let me start with home appliances. Small domestic appliances benefited in particular from innovation in the beauty and home care segments. Large domestic appliances also proved resilient, supported in particular by the two heat waves in May and June, which boosted demand for products related to thermal comfort. Services and diversification continued their positive momentum and remained on a growth trajectory. Overall, consumer electronics recorded growth, although performance varied across categories. The personal computer market continued to benefit from the replacement cycle driven by the end of Windows 10 support, as well as a new post-pandemic renewal cycle. Television sales accelerated, particularly in June, posting double-digit growth supported by the FIFA World Cup. By contrast, mobile phones, highlighted in red on the slide, as well as audio and photography products, posted a slight decline. Editorial products also declined, reflecting a subdued book market, and like in previous years, there were no major publishing releases during the period. By comparison, last year's sales were significantly boosted by the success of the house-made book series. Gaming was affected by a negative comparison base. As a reminder, the second quarter of 25 benefited from the highly successful launch of the Switch 2 console. Looking ahead, the second half will be marked by the release of GTA 6, undoubtedly the most eagerly anticipated video game of the decade. Turning now to slide 11, let's review the group's performance by geography. France, which accounts for 58% of the group's total revenue, was broadly stable, with like-for-like revenue down just 0.7% compared with the first half of 25. The consumer environment in France remains challenging. Nevertheless, we delivered a solid performance that significantly outperformed the overall market trend based on the latest Banque de France data published at the end of May. As a reminder, June data are not yet available. In the rest of Europe, which now represents more than 40% of the group's total revenue, business remains strong with like-for-like revenue increasing by nearly 3%. Italy delivered growth with strong momentum across all sales channels and product categories. Belgium grew by nearly 6%, gaining market share in a favorable consumer environment. Portugal recorded 9% growth, driven by the strong performance of both brands and the successful rollout of the Darty brand. Spain posted growth of nearly 2%, driven by in-store sales. It is also worth noting that stores refurbished in 2025 are delivering particularly strong performances. Finally, in Switzerland, revenue declined by 1.9%, reflecting the weaker book market and the negative comparison base in gaming. Turning to slide 12, our gross margin also improved, increasing by 40 basis points compared with H125. This improvement primarily reflects the continued expansion of our services business, whose contribution to value creation continues to grow. The continued rollout of Darty Max, Thank you for joining us. Let me now turn to the other components of the income statement on slide 13. As I've just highlighted, our gross margin rate improved as of the end of June. Operating expenses amounted to $1,325,000 in H-126, up $23 million compared with H-125. Overall costs remain well under control, despite higher expenses, particularly logistics costs associated with a strong level of business toward the end of the half-year period. The many efficiency initiatives implemented across the group nevertheless offset the vast majority of inflationary cost pressures. Recurring EBITDA reached 197 million euros at the end of June 26 and increased 4 million euros year-on-year. Recurring operating income, or ROI, came to a loss of 34 million compared with a loss of 38 million at the end of June 25. This improvement of nearly 10% reflects the group's ability to preserve both margins and cost discipline despite a subdued consumer environment. The integration of UniEuro is progressing very well. We have successfully implemented our initiatives, both in terms of procurement synergies and sourcing, and reaffirm our target of delivering 20 million euros of synergies by the end of 26. As Enrique mentioned earlier, we have also begun deploying each other's areas of expertise since the beginning of the year. Non-recurring items amounted to a net expense of €16 million. The €5 million increase compared with last year mainly reflects restructuring costs related to workforce and organizational adjustment plans in France and internationally. As a result, operating income came to a loss of €51 million for the first half, broadly stable compared with last year. Net financial expense amounted to 62 million euros, an increase of 7 million euros compared with the end of June 2025. This change mainly reflects the group's new financing structure as well as one-off financial income recognized in the first half of 2025 following the early redemption of the OCEAN convertible bonds in March 2025. After recognizing a tax benefit of 28 million euros, net income from continuing operations attributable to the group amounted to a loss of 82 million euros. Let us now move on to the analysis of free cash flow at the end of June, shown on slide 14. Operating free cash flow, excluding IFRS 16, amounted to negative 793 million euros, compared with negative 845 million euros as of June 30 of 25, in line with our expectations. The improvement was primarily driven by better working capital performance. As a reminder, working capital is highly seasonal and typically reaches its lowest point in June. operating capital expenditure totaled 74 million euros as of June 30 of 26 fully in line with our beyond everyday target of investing around 200 million euros per year on average through to 2030. The group's financial position remains healthy and robust as you can see on slide 15. Gross Financial Debt, excluding IFRS 16, amounted to 1,253,000,000 euros and includes our two outstanding debt instruments, the remaining OCM convertible bonds and the European Investment Bank loan. At the end of June 26, the group reported a net cash position of 516,000,000 euros, complemented by 600,000,000 euros of unjouant committed credit facilities, comprising the revolving credit facility and the DDTL. As a reminder, these undrawn facilities fully cover both our 29 refinancing requirements in terms of amount and our 2032 maturity profile. Accordingly, net financial debt excluding IFRS 16 stood at 737 million euros at the end of June 2026. Finally, the rating agencies S&P Global Fitch Ratings and Scope Ratings currently rate the group BB+, BB+, and BB- respectively. In early June 2026, S&P revised its outlook to positive from stable This reflects the potential for an upgrade of Nac Darty's credit rating over the next 6 to 12 months should EP Group's acquisition be successfully completed. Fitch ratings and scope ratings continue to maintain a stable outlook. Overall, we continue to benefit from a strong long-term liquidity profile. With that, I will now hand over back to Enrique for the concluding remarks.

Thank you, Jean-Brieuc.