Intercos Spa

Good evening, this is the court court conference operator. Welcome and thank you for joining the Intercost Court Court 2026 Financial Results. As a reminder, all participants are enlisted in only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, please signal an operator for question star and zero on their telephone. At this time, I would like to turn the conference over to Renato Semerari, Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good evening, everybody. In a global context still marked by geopolitical tensions, currency headwinds, and the beauty market slowly recovering its historical growth pace of 4% to 5%, Intercos came back to growth, registering a quarter to with solid results, both at top and bottom line level. Summarizing the key highlights, Regarding top line, Q2 was the best ever second quarter of our history at 285 million euros, a 5% growth at constant rate. This result allowed us to close the gap versus 2025 accumulated in Q1. The first semester was only 0.5% below a year ago. Important to note that such a result was achieved despite a decline of the packaging component of our revenues. As such, our value-added sales, i.e. net sales minus PAC, resulted in first semester down by 0.9% at reported rates, which means low single-digit up at constant rates. This was done without depleting our order portfolio, which remained up mid-teens versus a year ago, thanks to continued strong order intake. As for EBITDA, Q2 was our best-ever quarterly result at 47.5 million euros, with a margin of 16.7%, which was 16 basis points better than a year ago. First half was therefore at 72.6 million euros, with flat margin at 14.2% on net sales, or 17.9% on value-added sales. EBITDA was helped by a prestige segment, which was up 4 percentage points over a year ago, and the PAC component reduction, which was down by over 1 percentage point. As for net debt, we also were down by over 10 million euros, actually 12 million euros, after having covered for the share buyback expenses. Our strong cash generation led leverage to go down to 0.80 times EBITDA versus last year 0.87 times. So summarizing our financial results, that you will see in greater details with Victorium in a few minutes. Second quarter saw sales up by plus 4.9% and constant effects, plus 4 at reported rates, with an EBITDA of 47.5 million euros up plus 5%. Margin was at 16.7%, an improvement of 16 basis points versus 0.0. First half, reported sales at 512 million euros, minus 0.5% versus the year ago, or minus 2.4% at reported rates. Value-added sales were minus 1% at current forex, and low single-digit up at constant rates. EBITDA at 72.6 million euros, with 14.2% margin in line with the year ago. or 17.9% on value-added sales. Net income was up by 33%, tracing to reductions in financial costs and tax rates. Net debt down by €12 million, despite share buyback equivalent to €16 million. Moving to sales details now, and starting by revenues by business unit at reported forex, makeup second quarter was down by minus 1.4 over a high base of year ago of plus 13%. So this means it was basically flat at constant rates. There are a couple of important points to underline to fully understand the underlying trend of this business unit. First, the PAC component was sharply down. As such, value-added sales were up at mid-single-digit rates, at constant rates. Second, the performance accelerated throughout the second quarter, exiting the quarter at a very fast pace. Test semester closed at minus 3%, again on tough comps. Last year we grew 18%. Again, value-added sales were up low single-digit. Prestige clients were clearly up while mass suffered. EMEA region was the best performer, followed by Americas. Asia was down after years of double-digit expansion. driven by market dynamics that I'll elaborate in a moment. As for skincare, second quarter was down by 3.4%. Also in this case, on top of the currencies headwinds, pack component went down, so value-added sales were low single-digit up. First half was down by 9.5%, with Asia growing, but Western countries offsetting this growth. Air and Body reported an exceptional plus 27% in the second quarter, driven by European clients, especially in fragrance. As such, first half closed at plus 5%, in this case also helped by the packaging components. Moving to revenues by region, EMEA was up plus 10% in the second quarter, driven by prestige clients in both makeup and air and body. Emerging brands took back their growth driver role after one year of multinationals lead. First semester, therefore, ended at plus 1% after the difficult first quarter. Americas closed the second quarter slightly positive, plus 1%, overall in line with the duty market volume dynamics. Prestige multinational clients were the best performers. First half resulted a such down by 4%, also paying the weak dollar toll. Asia was the most challenging region. Here we witnessed a comeback of the Western brands who gained shares back from Chinese brands. Hence, in our numbers, where we post only our sales to local clients, you see a decline in re-authors. As such, after years of double-digit growth and, again, tough days, we recorded a minus 5% in second quarter and minus 8% in the first half. Also, this region was impacted by currencies headwinds, especially in Korea. Moving to client clusters, in general, this year we see the reverse picture of 2025. Multinationals, which were growing at double-digit pace last year and are therefore at tough compatibles this year, closed the second quarter at minus 2%, with American makeup clients performing well, but Asian and skin and hair clients declining. The first half ended at minus 8% versus last year, when we had recorded a plus 18% growth. Emerging brands, conversely, took back their historic driver's seat. In the second quarter, they grew by plus 13%, driven by Asian skincare and European air and body. In the first half, they registered a plus 6% growth. Retailers also went back to a negative trend after an extremely high 2025. Specifically, in the second quarter, they posted minus 14% versus last year, plus 20%. And the first year closed at minus 19% offsetting last year equivalent growth. I now pass the mic to Vittorio, our Chief Operating Officer, who is asking us here for an interim to take you through financials.

Thank you, Renato, and good evening, everybody. Going to the economics of the first half. As you saw in the first part of this presentation, the stop line went down 2.5% reported rate and 0.9% on the value-added sales going at the custom rate in the positive territories, which is a good sign of our value-added sales. Going to the gross margin, we have been able to increase the gross margin percentage of 36 bps, thanks to the mix and the execution of the operational efficiencies we are executing our plan. And thank you to the lower packaging rate, which is one point lower than comparable to last year. This brought to a bid of 72.6 million, which is 2.6% lower for the last year or €2 million, but we recorded the highest quarterly adjusted bid on the Q2 at the €47.5 million or plus 5% compared to last year. So 16 bps increase year-on-year at 16.7%. If you go at the net income, we have a very positive progression at 33.3%. driven by a positive impact of the financial items that last year was driven by the headwinds of the Forex, and a lower tax rate that is from 45.5% last year to 34.7% this year, thanks to the influence by the intercompany dividend that has not been yet distributed, and the mix of the different countries' profits. going up to the business unit to give back we see a progression of the make-up of 9% with an increase of 180 bps and this is thanks to the prestige part of our business that is growing and the positive impact and the EBITDA of this category so increasing 180 bps at 53.2 million euro going to the skin care the opposite to the climbing top line and the under absorption driven by the by the fixed cost drove the 24% drop or 300 bps lower bid margin compared to last year, despite in the second quarter the client mix is rising towards the prestige. Going to R&Body, we saw a 25% reduced bid compared to the last year or 280 bps. This is mainly driven by the contra-manufacturing weight within the category that historically has a lower marginality and a higher weight of packaging within the business unit. Going to the operating cash flow and the net devolution, as anticipated, we had a strong cash generation thanks to the level of the working capital management, and so we hosted an 18.6 million euro progression compared to the last year's H1 at 26.2 operating cash flow. If I take out the capex, the conversion rate is 75%, which is a good sign of the cash generation. The reduced financial expenses and the reduced tax drove to a cash flow before deed and distribution and buybacks at 13.3 million euro that is a progression of net €32.4 million compared to the same period of last year. We then go to the buyback that absorbed €17 million cash in the dividend distribution 18 and then we had a €22.2 cash absorption in the first half compared to €36.8 of the last year. This is driving the hour net debt at €122.7 million including FX16 compared to 134.4 of the last year with an improvement of 12 million euro roughly 12 million euro that is driving our leverage ratio down to 0.8 per compared to the 0.87 of last year with this generation thank you thank you Vittorio moving forward so overall