Seb Sa Unsp/Adr

Hello and welcome to SEB 2025 First Quarter Sales and Financial Data hosted by Senesa de Bromont, Chief Executive Officer, and Olivier Casanova, Chief Financial Officer. My name is Melissa and I will be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star followed by one on your keypad to register your question at any time. If you require assistance, please press star zero to be connected to an operator. I'd now like to turn the call over to Mr. DeGremant to begin today's conference. Please go ahead.

Good afternoon, everyone. Welcome to this conference. I will be managing this presentation and the questions and answers together with Olivier Casanova, our chief financial officer. You've received the press release, I think, half an hour ago. So I'll take you through the key highlights of this quarter, starting with the executive summary, which is all the highlights of the activity, which is basically a good start to the consumer business in the first quarter. and a key element, which is the return to growth in China, which is, as you know, a quarter of the group's business. What you see overall is broadly stable sales. We see markets which are, in most regions, mainly well-oriented overall, and this is driven by innovation. We'll come back to that. Good dynamics, as I said, in consumer return to growth in China. As expected, we have a comparison base that is still high in the professional coffee business, and that weighs on the professional coffee professional number and the total number in the quarter. We have a negative of evolution that reflects the lower contribution in professional and some one of negative effects of currencies. But you will see and you know that Q1 is really not representative at all, so I will not Expend too much time on that topic. And last, the first quarter saw the consolidation of La Brigade de Bouillet, which is a premium and professional cookware French company that were acquired back in January this year. Getting to the numbers, so like for last sales which are essentially flat minus 0.6% versus Q1 last year, a profit at 50 million 54% below last year and an operating margin again not really representative of the full year. If we go into the sales analysis and what happens by regions, as I said, broadly flat sales, organic minus 0.6. We have a very minor currency effect, minus 0.4. Some scope effect linked to the integration of La Brigade de Buye and the last quarter of integration of Sofilac that started in April last year that gives a 0.7% growth. year-on-year in reporting. When we look at the currency impact in the first quarter, this is a pretty unusual picture for what we've seen in the last three, four years, with a pretty minor currency impact, minus 7 million euros in first quarter. Just as a reference, last year first quarter, the negative currency impact on sales was minus 75 billion euros. and what we see is Chinese Yuan and USD which are positive contribution in this quarter when actually the Euro is much stronger than it was in the average of the quarter. I think we'll have questions on that later on in the call. When we go into the split of business between professional and consumer, We were all expecting negative professional sales, and we see that professional is down 21%, 21.7% like for like, and 9.2% in reported. Of course, the main parameter effects are on the professional side. When the consumer business actually posts a 2.2% sales growth, 2.8% like for like, and if we were to exclude the loyalty programs, 3.3%. Now, if we go into a more detailed analysis of the two segments, as I said, we have a very high base of comparison last year. Last year in Q1, our sales were growing to 18.5% versus a year ago. That base effect is focused on China in professional coffee. And we already expect a substantial sequential improvement from the second quarter onwards towards the normalization in the second half of the year. Normalization means towards more regular growth patterns we see and we expect on this activity. On the rest of the activity, what we call the core business, it's near stable in Q1. We see a gradual ramp up of new customers, particularly in Asia, where we see some good dynamics. We have continued through the quarter to build our business in China. We are continuing the construction of our new hub in Shaoxing, which is a production, development and manufacturing hub. That's an expected investment of 60 million euros. We should start production first quarter in 2026. And we've made a small acquisition on a small Bolton acquisition in services, which in China still or always in China. that is offering complementarity in our maintenance, repairs, spare parts and refurbishment services to our Chinese customers. And lastly, I said in professional, we've integrated and consolidated for the first time La Brigade de Bouillet. Consumer business was much more dynamic than the professional business. And so, as I said, 2.2% growth, 2.8% life for life, 3.3% excluding loyalty programs. And that stems from several facts. The first one is our small domestic equipment markets are still well-oriented overall. And we'll see there are some couple of hiccups that are well identified and I will explain. We see some very promising product launches and encouraging success for the upcoming quarters. We see a strong dynamic in versatile vacuum cleaners, in washer vacuum cleaners, in blenders, in spot cleaners, in garment steamers. So we see a lot of positive start of the innovations that are planned and pegging this year, and that's great. And last, but very importantly, a noteworthy return to growth in Asia, and more particularly in China, which is showing, as you will see, a 3.5% like-for-like growth, 5.5% reported. Now the next slide gives you a hint or an indication of how sales have been evolving. Half one, half two last year and Q1 this year. So if I start top left with North America, we are posting 4.9% growth in this quarter, always organic sales growth against 5.6% growth in half one last year. South America minus 8.3 against the plus 29% last year. So here the base was very high, and I'll comment that a bit further. In Western Europe, excluding loyalty programs, 1.5% half-won last year, 1.7% Q1 this year. I'll come back to that. Other EMAs is 7.2%. The base is plus 30.5%. So a very, very high comparison base again. On China, we post 3.5% growth on a flat base last year, which is great. And other Asian countries, which is the other great news of the quarter, 7.7% growth against flat last year. Now, if we go into more details and analyze it by regions, starting with the EMEA, our core business is growing in Western Europe. And we see a solid performance in other EMA countries. Starting with Western Europe, our sales excluding loyalty programs are up 1.7%. We have more positive sellouts in all countries in the region, in particular in France, where we see a negative selling this quarter, but a positive sellout. And that's great. And that's in a positive market conditions. We see double GDP growth for key categories such as cookware, floor care, blenders, oil as fryers. All these categories are showing strong growth and contributing very positively to our growth. Southern Europe has been since the second half of last year posting remarkable growth performance and DACH region which as you remember we started a new market company back in January last year is now posting close to five percent growth if we exclude some loyalty program in a big German customer. In the other EMEA countries we have good growth and that's on a demanding comparison base The sole performance is very solid in Eastern Europe, in markets which are still very buoyant, and we again see double-digit growth in our key categories, RS Friars, Versatiles, full-auto coffee machines, and even in Turkey, where currency has been hard, especially in the latter part of the quarter, sales are still well-oriented, and that's beyond currency compensations. Moving west to the Americas, as I said, North America shows a positive performance despite, and that's a euphemism, an uncertain context. We see well-oriented sell-out in the US and growth in our key categories, cookware and linen care. You will remember that the bulk of our US business and consumer is cookware and linen care. Continued sales growth in Mexico, again fueled by our traditional categories, cookware, linen care, but also product line expansions, full auto coffee machine in particular, are a strong line growing in Mexico. And Canada shows good numbers this quarter based on a pretty favorable or easy comps base. Latin America saw a different evolution. Of course, we had an exceptional Q1 2024. You remember that our Q1 in LATAM was up 29% or 30%, I think. Let me check. I think it was 27%. Rafael, it was 27% growth last year in Q1. So that minus eight is against the plus 27. Of course, majority of our SDS sales in Latin America is made of fans. And you remember that last year, we did explain that the surge of fans sales growth in Latam was due to the El Nino weather phenomenon, very hot weather, high consumption of fans. This year we're more in a La Nina year, which means a colder weather, more humid weather and therefore lower fan consumption. So it's a slightly negative trend against a very positive trend and that explains the bulk of our business. We're not concerned about that because when you look at the rest of the business in Colombia, for instance, excluding France, our organic sales are growing 20% year on year. So that tells us that the business is and stays very healthy. Of course, Brazil remains a highly competitive environment, but we see some good performance in key categories like lending. Now, moving on to the very positive news of that publication and that quarter, it's Asia. And in Asia, with two great news, the first one is China back to growth and the acceleration of growth in other Asian countries. China's return to growth is due to, first, a slightly more supportive macroeconomic and consumer environment. On that context that is slightly more favorable, we see that support is confirming its ability to gain market shares. It's continuously outperforming the market in a market that is now stabilizing after several quarters of decline. We see, to anticipate the question, some positive yet limited impact of the authorities stimulus program. So we are not dependent, we don't see ourselves dependent of such and such or such or such support program. And we are pretty positive for the outlook for the full year in terms of China being able to post a positive sales growth number. The other good news is that the other Asian countries where we see a sequential improvement in growth, we also already saw some signs of improvement in the second half of last year, which was already positive, but we confirmed that with the first half at 7.7% growth organic, driven first by Japan and primarily in cookware, which is the bulk of our business in Japan. Yes, we have a favorable comparable basis, but we still take it as good news. We see some slight sales growth in South Korea, yet the market is still very challenging, so we are less optimistic, if you want, about South Korea. And we see good sales growth in the rest of the region, both in sell-in and in sell-out, and that's driven by the three star countries of the quarter, which are Australia, Vietnam, and Malaysia. I'll spend one slide talking about the Orpha. Maybe starting to say that the first quarter is traditionally a weak quarter for the consumer business, both in terms of volume and in terms of value. And therein, the profit of the first quarter on the consumer is traditionally fairly low. And to that extent, then the decline of the professional business sales and the for contribution is more impactful and more visible on the R5 evolution year on year. But as I said, we expect professional to substantially improve sequentially as of second quarter and later on in the year positive. So we expect that situation to course correct by itself. And we've had, I mean, we've seen a lot of variations of currencies. We started the year with a US dollar around 102, 103. It touched 115, 116. So a lot of variations which have had some negative one-off effects on these highly volatile currencies. Olivier Casanova will be able to explain that much better than I would ever be able to do that for you guys. Now, The outlook for 2025, you will remember that at the end of February when we presented the financial results, we indicated that we would see another year of sales and profit growth for 2025. And we have decided to confirm that sales and profit growth we have decided to quantify our full year organic sales growth target to be around 5% and an increase in alpha as reported. Now what's behind that guidance, that quantitative guidance, is the following things. First, we have a median estimate of the impacts linked to the tariffs known to date. And within that, we've identified several positive levers. The first one is we see market resilience in EMEA. We confirm our growth prospects in Asia and particularly in China for the full year. We see a good ability to compensate most of the tariffs increases in the United States. We see a good performance of our new product innovations in the consumer. On the professional, we see a gradual exit from that demanding comparison base that we've been suffering in inverted commas in the last three, four quarters from Q2 with a sequential improvement and the normalization of growth in the second half. All this, of course, in a very volatile and uncertain environment. We are, as you would expect, monitoring daily the development of tariffs, the potential consequences on tariffs, including currencies, including raw materials, including, why not, economic demand. So that scenario is based on no drama on the worldwide economy status and on the worldwide economic conditions. Now, this is what we wanted to share with you. Thank you very much for your attention. And Olivia and myself are now ready to take all your questions. Thank you.

Thank you. As a reminder, if you would like to ask a question on today's call, you may press star followed by 1 on your keypad to register your question. To withdraw your question for any reason, you may press star 2. You will be advised when to ask your question. Our first question comes from Louise Vicer with UBS. Please go ahead.