Intercos Spa

Good evening, this is the Coruscant Conference Operator. Welcome and thank you for joining the Intercost First Quarter 2026 Financial Results Conference Call. 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 friends star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Renato Semerari, Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good evening, everyone, and thanks for connecting to our earnings call. We'll present you our Q1, which, as expected and communicated, was difficult due to a convergence of negative factors. First of all, the currency headwinds. Second, the continued reduction of packaging component in our top line. Third, the softer reorder trend post-summer 2025, which impacted Q1 invoicing, which was ahead of the order's peak at the end of the year, which will impact Q2 onwards. All this on a high comp basis. In fact, last year in quarter one, we grew 13%. Going to the specific results, sales were down minus 6% at constant rates. Adjusted EBITDA margins stood at 11%, which was 66 basis points below a year ago. And this drop of marginality was entirely due to fixed cost absorption. Conversely, the quarter was extremely positive in terms of cash, which was positive by 7 million euros, despite 25 million euros of shares buyback and 19 million euros of dividends distributed. Last but not least, it's very important to note that in the past six months, we had an order entry in double-digit growth. So very, very solid order entry. Looking in more details at our sales development at current rates, make-up, and starting with views, make-up, which represented 65% of sales, was the segment that held the best as already seen in 2025. Sales were down 5% on a very high base of last year, which drew 23%. Considering the headwinds in currencies and the pack sales reduction, we were effectively flat. Emerging brands performed well, but offset by multinationals, whose order entry has recently accelerated in a very visible manner. Prestige brands performed well, while mass declined. Moving to skincare, which represented 13% of total sales, we continued to suffer. We posted minus 17%, mainly due to the Western emerging brands, while Asia continued to perform well in this segment. We expect a comeback in the second half of 2026. Air and Body, which was 21% of our total sales, also posted a double-digit decline, minus 16%, mostly due to fragrances which, as you know, did not have the benefit of significant launches in the past months. Despite we remain focused on innovation, as witnessed by the recent Air Care Award for Innovation, which we got during Cosmoprof this year, We also see a forecast for fragrances that is very solid for the remaining part of the year, so we expect to come back very strongly in this segment as well. Moving to the results by geographic regions, EMEA, which was 52% of total sales, was down 8.5%. I'm always referring to current rates. Makeup posted growth in the region, but this was offset by the negative trend of air and body and skin care. We expect an immediate rebound of the region, as the order intake from November onwards was extremely strong for the region, and we now have an order book which is the strongest ever for this region. As for Americas, representing 28% of our sales, quarter one posted a decline of 8.8%. The region was obviously very much impacted by the dollar devaluation. In the region, makeup was broadly flat, but results were affected by skin care, where our lack of manufacturing sites is penalizing in the current tariff environment. Also for this region, order entry has been extremely strong in the past six months. Asia, which was 20% of our sales, was down 12% on a very high base of last year. Last year we were plus 18%. And also in this case, Forex accounted for more than 50% of the decline. and we saw skin care doing well in the first quarter, but this was offset by makeup. Moving to the customer site, multinationals, representing 50% of our sales, posted a 13% decline on last year, very high base. Last year, we grew 28% in quarter one. All the views suffered in this cluster of clients. However, the order entry trend highlights a comeback of multinationals in the rest of the year. Emerging brands, which were 45% of our total sales, remained overall stable at current rates and quite positive at constant rates. Important to note that we registered a recovery of US brands after the soft 2025. Retailers, which only weighted 5% on our total sales, also posted a double-digit decline, closing first quarter at minus 25%. The result was entirely driven by the Western retailers, while the Asian ones were positive. Now, Looking forward, let's talk about the months ahead of us. First of all, we remain optimistic about the beauty market trend overall. The signs of a progressive comeback to the historical trends of beauty are getting confirmations in the first months of 2026. Both US and China are coming back and Europe is holding quite well. So we expect the market to grow between 4% and 5% in the year. So far, makeup is the less dynamic segment, but we think it will progressively accelerate in the rest of the year. Obviously, the darkest cloud in the coming months is the Middle East crisis with the connected energy impacts should the crisis continue on a longer period. For what concerns intercosts, we remain confident to beat market trend despite our slow start in the year. And there are three factors that are backing our confidence. First of all, the past six months order entry is a double-digit growth versus a year ago, and the order book we had in our hands is also double-digit up versus a year ago. Second, last year launches are getting... strong consumer response in the market, and this should sustain reorders going forward. Third, the new collection of innovation presented at Cosmoprof in over 300 meetings got enthusiastic response from clients, including AirCare, where we won, as I just said, the Cosmoprof Innovation Award. As such, we confirm our guidance for the year, expecting net revenues to grow by about 5-6% versus fiscal year 2025. Thank you very much. I'm ready to get your questions.

This is the Coruscant Conference Operator, where we now begin the question and answer section. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. We will pause for a moment as the callers join the queue. The first question is from Andre Condea of UBS.